NEWS,18.01.2013

US consumer sentiment hits record low

US consumer sentiment unexpectedly deteriorated for a second straight month to its lowest in over a year in January, with many consumers citing the recent fiscal cliff debate in Washington, a survey released on Friday showed.The sharp drop in sentiment over the last two months coincides with rancorous federal budget negotiations that have led to higher taxes for many Americans.Just weeks after that deal, President Barack Obama and Republican lawmakers are expected to enter another tough round of negotiations over spending cuts, which could dent consumer confidence still further."The handling of the fiscal cliff talks and the realization that paychecks are going to be smaller due to the sunset of the payroll tax holiday are probably weighing on consumer attitudes at the moment," said Thomas Simons, a money  market economist at Jefferies & Co. in New York. "With the debt ceiling yet to be tackled and more political acrimony on the way, we suspect that confidence has room to deteriorate further."The Thomson Reuters/University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 71.3, down from 72.9 the month before. The index was at its lowest since December 2011. It was also below the median forecast of 75 among economists polled by Reuters."The most unique aspect of the early January data was that an all-time record number of consumers - 35% - negatively referred to the fiscal cliff negotiations," survey director Richard Curtin said in a statement. "Importantly, the debt ceiling debate is still upcoming and could further weaken confidence," he said.House Republicans signaled on Thursday they might support a short-term extension of U.S. borrowing authority when the government exhausts that capacity sometime between mid-February and early March. A failure by Congress to raise this debt ceiling could result in a market-rattling government default. US stocks remained little changed after the data. The S&P 500 hit a five-year high in the last session. But on Friday, a weak outlook from Intel offset encouraging data out of China and a fourth-quarter profit at Morgan Stanley So far there has been a disconnect between what consumers say and do. US retail sales increased a better-than-expected 0.5% in December. But given the recent weakening in sentiment investors will be watching for any signs that spending is starting to slip."The impact on consumers will be from the hike in the social security tax. That is undoubtedly going to hit discretionary spending. So this may be a signal of things to come," said Michael Woolfolk, a senior currency strategist at BNY Mellon in New York.The consumer survey's barometer of current economic conditions fell to 84.8 from 87.0 and was below a forecast of 88.0. The gauge hit its lowest since July.The survey's gauge of consumer expectations also slipped, hitting its lowest since November 2011 at 62.7 from 63.8, and was below an expected 65.2.The survey's one-year inflation expectations rose to 3.4% from 3.2%, while the survey's five-to-10-year inflation outlook was at unchanged at 2.9%.

China's growth slows in 2012

China's economy grew at its slowest pace in 13 years in 2012, though a year-end spurt supported by infrastructure spending and a jump in trade signalled the foundation for the stable growth path Beijing says is vital for economic reform may be in sight.Evidence of a burgeoning recovery in exports, stronger than expected industrial output and retail sales, together with robust fixed asset investment, all indicated that Beijing's pro-growth policy mix has gained sufficient traction to underpin a revival without yet igniting inflationary risks.Year-on-year growth of 7.9% in the fourth quarter beat a consensus forecast of 7.8% in a Reuters poll and snapped a streak of seven consecutive quarters of slowdown.The performance was at the upper end of the 7%-8% rate economists reckon is needed to deliver on reforms essential to China's long-term development after three decades of red-hot, double-digit growth.Full year growth of 7.8% was also just ahead of the poll's 7.7% call and, although the weakest since 1999, comfortably ahead of the government's 7.5% target, which just months ago seemed to some economists to be in jeopardy."It's kind of like a golden spot - stronger growth, but not strong enough to trigger a lot more inflationary concern. That's perfect for equity markets." said Dariusz Kowalczyk, Asia ex-Japan senior economist and strategist at Credit Agricole CIB in Hong Kong."What everybody wants is growth that's strong enough to give us peace of mind that revenues will increase and there is no hard landing risk, but not excessive, not strong enough to trigger inflation. And this is what I think we are getting. I'm bullish on China still."Market reaction was generally upbeat, with Asian shares advancing and platinum and palladium following suit, while oil traders took the opportunity of data confirming the recovery to book profits after two sessions of steep rises.China's new leaders must stabilise the economy this year to keep employment high while avoiding a surge in housing prices and inflation that could undermine reforms needed to overhaul the country's export-oriented growth model.Without stability, incoming President Xi Jinping and Premier Li Keqiang, who are set to be confirmed in March, have no chance of delivering a slew of reforms they say are needed to tackle a host of financial, industrial and income imbalances that threaten China's future.China's statistics chief, admitting the country's wealth gap was "relatively large", released a recalculated indicator of economic inequality on Friday, the first time in several years that officialdom has addressed the sensitive issue head-on. China's Gini coefficient stood at 0.474 in 2012, down from 0.477 in 2011 and from a peak of 0.491 in 2008, Ma Jiantang, the head of the National Bureau of Statistics, told reporters at a press conference on 2012 economic performance. The index ranges from 0 to 1, with the 0.4 mark viewed by analysts as the point at which social dissatisfaction may come to a head. China's leaders say rebalancing the economy to consumption and away from the investment and export model followed for the last 30 years holds the key to tackling inequality, but detailed data on Friday underlined the scale of that task. While consumption made the biggest contribution to growth in 2012, with a 51.8% share, Q4 marked the third consecutive quarter of decline. The fall has been driven by the government's focus on using investment spending as the main expedient to underpin an economy still levered to external demand. Exports generate about a third of economic activity and sinking demand from foreign customers in struggling European Union and United States economies dragged on growth in 2012. Net exports made a negative 2.2% contribution, data showed. ith China's consumers still relatively poor - average annual urban disposable income was just 21,810 yuan ($3 500) in 2011 - it remains too hard for the government to rely on them to help compensate for any shortfall from the export sector. "There's just not enough money," said Liu Jiongda, 35, a manager at a Shanghai logistics company who earns just over 11,000 yuan ($1 500) per month, more than half of which goes straight into a mortgage on a property he bought in 2009. "If the government wants a so-called consumer culture, they have to cut the amount of tax I have to pay. That is simple. If I have more money then I'll be willing to spend more." Investment meanwhile, at 50.4%, has picked up as the new leadership has looked to underpin a recovery with spending on infrastructure a tried and tested method. Quarter-on-quarter growth of 2.0% was below the market's expectation of a 2.3% rise, which was taken as a sign that the recovery's momentum is not strong enough to worry the authorities into pre-emptive action to snuff out any whiff of inflation - China's long term policy pre-occupation. The People's Bank of China, which cut interest rates twice in mid-2012 and cut banks' reserve ratios (RRR) three times since late 2011, has since switched to short-term cash injections via open market operations to guide monetary policy, apparently wary of fanning price pressures or encouraging a property bubble."We need to keep vigilant against inflation," NBS chief Ma Jiantang told a news conference on Friday. The risk of policy tightening looms as growth gathers pace, leaving Beijing with a fine line to tread to ensure the recovery continues without reigniting speculative activity in the key area of real estate. Data released alongside GDP numbers on Friday showed home prices extending a slow rise in December, with an average rise of 0.3% month-on-month in 70 major Chinese cities, the fifth month in the last six to show an increase, despite government efforts to temper prices. Real estate investment, which accounted for 13.8% of China's gross domestic product in 2012, rose 16.2% last year from a year earlier and remains a key component of overall fixed asset investment - the cornerstone of Beijing's recovery strategy. Annual fixed asset investment (FAI) growth was 20.6% in 2012, versus the 20.7% forecast in the Reuters poll. "Typically FAI falls off at the end of the year - on average December FAI is 1 percentage point lower than November, but this time there was only a 0.1% edge off," said Ken Peng, an economist at BNP Paribas in Beijing, highlighting the strength of investment spending and the risk that it could be fuelling renewed speculation. Investment spending was the key near-term concern of Ren Xianfang, senior analyst at IHS Global Insight in Beijing. "We have to watch the investment numbers especially because China has started (to put) controls on local financing, so this could limit fund raising and investment by local governments," she said. "So far it's just talk, but if they implement measures like the sharp tightening in 2011 the impact on growth could be very substantial," Ren added, highlighting Beijing's policy dilemma. Other data released alongside GDP showed industrial output grew 10.3% in December from a year ago, versus expectations of 10.1%.Retail sales in December rose 15.2% on a year ago versus an estimated 14.9% in a Reuters poll.A fourth-quarter recovery had been heralded by an acceleration in industrial output in October and November and a jump in exports in December, although some analysts believe last month's sharp expansion in trade could be a blip.China's exports grew 14.1% last month compared with a year earlier, racing past market expectations of 4% and November's 2.9% pace. Ting Lu, chief China economist at Bank of America/Merrill Lynch in Hong Kong, was confident that the data would not change the near term policy stance. "Maintaining stable growth is the new leadership's key policy mandate in 2013," Lu wrote in a note to clients, adding that he expected a growth target of 7.5% to be adopted for 2013 and policy calibrated to delivering it."Pro-growth policies in 2012 will be extended into 2013, and big-bang stimulus will be avoided unless there is another global financial crisis. Within 2013, policy will likely be marginally tightened towards the second half of 2013 on concerns of rising inflation, rising home prices, investment overheating and financial system risks," Lu said.

Obama sends message with new cabinet

A dearth of diversity in Barack Obama's top picks for his new cabinet is overshadowing signs of intent the US president is sending with his freshened team ahead of his second term.Obama takes the oath of office on Sunday ahead of four more years in the White House, a watershed moment that will see familiar faces, led by Hillary Clinton, depart and new blood ushered in to implement the president's political agenda.His personnel decisions, both at the cabinet level and in a rejigging of his White House inner circle, presage a fierce defence of Obama's political legacy at home and abroad in his second term.While posts in a president's cabinet are highly sought after, the centralisation of power in the White House often leaves the secretaries of top government departments chafing at a lack of clout.But several of Obama's top cabinet picks - like Chuck Hagel, John Kerry and Jack Lew, his nominees to run the departments of Defence, State and Treasury - clearly reflect the president's worldview and may wield significant influence.Some cabinet members who are staying on, like Health and Human Services Secretary Kathleen Sebelius - in charge of implementing Obama's top domestic achievement health care reform - will also play key roles.Senator Kerry and ex-senator Hagel, Vietnam veterans both, are sceptical of US military adventures abroad, and backed a fundamental project of Obama's presidency - getting troops home from Iraq and Afghanistan.They are also wary of embroiling the United States in another war over Iran's nuclear programme, though they will publicly back Obama's position that he is ready to use force as a last resort should diplomacy fail.Sebelius will be entrusted with ensuring that ObamaCare, which has yet to be fully implemented, is irrevocably embedded in the fabric of US life by the time the president hands over the keys to the White House in January 2017.Media buzz surrounding Obama's second cabinet has focused mainly on the fact that the first African American president, who won power thanks to a diverse racial and gender coalition, picked middle aged white men for top cabinet jobs.In fact, but for winning a majority of votes among women back in November, Obama might not be living in the White House at all.Aides dismiss the idea that Obama has fallen short of diversity goals, pointing out that his two Supreme Court picks have been women, one a Hispanic, and that he has many females in positions of power around him.Perhaps Obama's closest adviser is Valerie Jarrett, a mentor who followed his family from Chicago to the White House, and he was brought up by strong female role models in his mother and grandmother in the absence of his father.Eric Holder, the African American attorney general, is also staying on.Obama had been expected to name UN Ambassador Susan Rice, an African American, as secretary of state, but her chances of Senate confirmation evaporated amid Republican outrage over the aftermath of the raid on the US mission in Benghazi, Libya on 11 September."I think his record demonstrates the value he places on diversity," White House spokesperson Jay Carney said, adding that more diverse appointments could be expected with remaining open cabinet posts.Obama also addressed the issue during a press conference last week."I think until you've seen what my overall team looks like, it's premature to assume that somehow we're going backward. We're not going backward, we're going forward." Thomas Mann, a political scholar at the Brookings Institution in Washington said that once Obama's full cabinet is announced  with expected or announced openings in big departments like Interior, Energy and the Environmental Protection Agency - the picture could be more diverse.But Obama's new cabinet will differ from his first term, in dispensing with the "Team of Rivals" approach that included his former Democratic primary foe Clinton and Republican secretary of defence Robert Gates, who had served under George W Bush's administration.The selection of Clinton, which surprised senior aides, turned out to be a masterstroke, as the former first lady proved to be a political asset at the State Department, and Obama in effect removed a potential critic from the fray.Few insiders expect Kerry and Hagel, substantial figures in their own right, to be shrinking violets, but they are expected to keep any policy differences inside the Obama administration tent.Some Obama critics question whether the president, who tends to stick to aides who have been with him for years for his White House kitchen cabinet, will get enough outside advice.In one promotion from inside, Deputy National Security Adviser Denis McDonough is expected to succeed Lew for the crucial post of chief of staff.

Tight security plans for Obama swearing-in

Crowds may be smaller on Monday than when Barack Obama was first sworn into office in 2009, but security is as tight as ever, with experts warning a "lone wolf" would pose the greatest threat.Between 500 000 and 800 000 people are expected to pass through the National Mall, the immense greenway that leads up to the Capitol, compared to the 1.8 million spectators who came to applaud Obama four years ago.Thousands of police  the official figure has not been made public  will fan across the area, with several posted at every street corner.Airspace over Washington will be under tight surveillance, as will the Potomac River that runs along the city.Teams on horseback and with bomb-sniffing dogs will crisscross the city looking for potential explosive devices.More than 13 000 soldiers will attend the parade, behind a security cordon, to escort President Obama and to keep watch on the Capitol, the seat of Congress where he will be officially sworn into office.There will be cameras everywhere surveillance, media and tourist alike - a number of roads around the Mall will be closed to vehicles and spectators will be thoroughly searched, controlled and screened at each checkpoint.On the roofs of the main buildings in the area, snipers will stand watch."We're prepared for a variety of threats," said US Capitol Police spokesperson Shennell Antrobus.He expressed confidence in the force's "robust, multi-task security plan" that has been in the works for months.Michael Clancy, deputy assistant director of the FBI's counterterrorism division, said "the bigger threat, the thing that keeps you awake at night, are the lone offenders, regardless of their affiliation"."Those are the ones that scare me the most, folks that we don't have on our radar. It's the Timothy McVeighs of the world," Clancy added in an interview.He was referring to an American former soldier turned political extremist whose 1995 bomb attack on an Oklahoma City federal building killed 168."It would be crazy for anybody to try anything because of the law enforcement in the area, but those are concerns," said Stephen Somers, vice president of operations for AlliedBarton Security Services, one of the private security firms tapped to support the force."Any lone wolf is a tremendous threat that's why security is so tight," added Somers, whose staff will be dispatched to the World Bank and International Monetary Fund."Everybody needs to be on top of their game that day."Worried about any leaks, officials have kept a tight lid on details about the security precautions.At an undisclosed location in the suburbs of Washington, a command centre will monitor in real time any developments in and around the proceedings. On the big day, agents will monitor a collage of massive flat screens and cutting-edge surveillance, while staying in contact with teams on the ground. Each one of the 42 agencies involved in security - headed by the US Secret Service that provides protection for the president will have representatives at the headquarters, the convergence of 94 bases spread across the city.Secret Service spokesperson Brian Leary said the Multi Agency Communications Centre "really gives us the ability to monitor and co-ordinate security from a central location".Antrobus, of the US Capitol Police, said this partnership helps ensure that everyone can "enjoy the democratic process and this historic day".Officials are also keen on avoiding a repeat of the planning mishaps of 2009, when thousands of spectators were stuck in a massive freeway tunnel for hours in the freezing cold, and missed Obama's speech.Survivors of the ordeal dubbed it the Purple Tunnel of Doom.

NEWS,09.12.2012

World week ahead: heading for a cliff

As investors return to their screens in anticipation of the Federal Reserve's final meeting of the year, time is running short on a budget deal in the US.On Friday, Wall Street received a boost from better-than-expected jobs data, which more than offset even more doom and gloom from House Republican leader John Boehner on the prospects of reaching a tax and spending accord.Employment in the US advanced by a better than expected 146,000 in November, the Labor Department said. The unemployment rate dropped to 7.7%, the lowest in four years, as some people stopped looking for work. Economists had braced for a tougher report in the wake of Superstorm Sandy's late October devastation.But there wasn't good news everywhere. Consumer confidence went south, according to the Thomson University of Michigan preliminary index, also released on Friday. Sentiment for December dropped more than expected to 74.5 from 82.7 the previous month.Sideways appeared to be the best description of where the US budget talks stood heading into the weekend. Boehner said on Friday that the White House had "wasted another week".Investors will be eyeing a two-day meeting by Fed policy makers starting on Tuesday for fresh guidance on the outlook for the world's biggest economy and its stimulus efforts.Operation Twist, in which the Fed buys longer-dated Treasuries and sells some of its shorter-dated ones in an effort to stimulate the economy by lowering longer-term borrowing costs, is scheduled to end this month."The real question is whether the November jobs data changes the Fed's attitude toward more stimulus. It doesn't remove the need for stimulus but might convince the Fed to opt for a smaller program," Kathy Lien, managing director of BK Asset Management in New York.Some believe that if Republicans and Democrats fail to reach a budget deal in the coming days, the odds of triggering about US$600 billion in automatic tax increases and spending cuts on January 1 are significantly higher. The result: shares are in line for a hit."After the FOMC meeting, I think it's going to be downhill from there as worries about the fiscal cliff really take centre stage and prospects of a deal become less and less likely," said Mohannad Aama, managing director of Beam Capital Management in New York."I think we are likely to see an escalation in profit-taking ahead of tax rates going up next year." Meanwhile, the US Treasury is scheduled to auction US$66 billion in Treasuries in the coming days. It is offering US$32 billion in three-year notes, US$21 billion in 10-year debt and US$13 billion in 30-year bonds. Additional clues on the US economy will arrive in reports on international trade, retail sales as well as the producer price index and the consumer price index.In the past five days, the Dow Jones Industrial Average climbed 1%, while the Standard & Poor's 500 Index eked out a 0.1% gain. The Nasdaq Composite Index, however, shed 0.4% for the week, dragged lower by a drop of almost 9% in Apple's shares.In Europe, the Stoxx 600 Index rose 1.2% in the past five days.The US needs a balanced, comprehensive approach to tackle its fiscal woes that should include a mix of spending cuts and revenue increases, said International Monetary Fund managing director Christine Langarde.My view, personally, is that the best way to go forward is to have a balanced approach that takes into account both increasing the revenue, which means, you know, either raising taxes or creating new sources of revenue, and cutting spending," she said.America is more vulnerable to its own domestic troubles than to anything else happening in the Eurozone or China, she said. 

Skycrapers go green, slash energy costs

Chicago's skyline is going green, as property managers install energy efficient tools like motion-detectors on office lights, in a project officials hope will inspire changes across the United States.At the riverside Sheraton hotel, chief engineer Ryan Egan cannot get over what his new thermostats can do or the $136 000 a year in savings they are producing.First off, they're tied into the booking management system, which means he can let the room temperature drift beyond standard comfort levels until the moment a guest checks in.An infrared sensor means the savings don't stop there. Once the guest leaves the room, the temperature starts to drift again, giving the heating or cooling system a break until it's needed again.It's not a random drift the thermostat is programmed to only allow the room to warm up or cool down to the point where it can get back to the pre-set temperature within 12 minutes of the guest's return."The brains behind how much it can drift is really interesting," Egan said. "If you're on the shady side (in the summer) it'll drift more because it knows it can recover faster."The Sheraton is one of 14 major commercial buildings that signed onto the Retrofit Chicago challenge to cut energy use by 20% over the next five years, for savings estimated at more than $5m a year.If they succeed, it will be like taking 8 000 cars off the road."The fact that this is the city that built the first skyscraper, we love that we're trying to green the skyline," Karen Weigert, chief sustainability officer for the city of Chicago, told AFP.Some 70% of greenhouse gas emissions in the Windy City come from the electricity and gas used to heat, cool and power homes, businesses, schools and other government buildings.In addition to the greening in commercial buildings, the city plans to cut energy use by 20% in hundreds of municipal buildings, for an estimated monetary saving of $20m a year and emissions savings equivalent to taking about 30 000 vehicles off the road.It has also launched a program to help retrofit residential properties and expects more big commercial buildings to join the challenge."Fighting climate change can take all sorts of forms. This one happens to also save building owners a lot of money," said Rebecca Stanfield, a senior energy advocate for the Natural Resources Defense Council."We're excited about the potential for big property owners who are in the Chicago initiative to use what they learn here in buildings across the country."A similar program is being promoted by the Department of Energy, which has racked up commitments from schools, cities and businesses to reduce energy use by 20% in 2 billion square feet."They used to run heating and cooling all year"AT&T, the first company to sign up for Chicago's challenge, is testing out a host of new energy efficiency technologies at its downtown office tower.It's just one test kitchen for the telecom giant, as it searches for best practices in its quest to cut emissions company-wide by 20% by 2020.The results so far have been impressive.They've swapped out ceiling lights with more efficient bulbs and set up motion detectors so the lights aren't burning when technicians and sales staff are away from their desks.They've put insulated shutters on the air intake system to keep the chill out in winter and the heat out in summer.They've installed regulators on the big fans that push heated or cooled air through the 1960's era building so they only operate when needed instead of running all day and most of the night.They've even swapped out the belts on the fan's motors to cut down on energy-sucking slippage. "There's no question we've identified enough opportunities to save 20%," said John Schinter, AT&T's executive director for energy.All the improvements tested in Chicago will pay for themselves in three years or less, and most will be rolled out to the 1 000 corporate and 500 retail buildings that AT&T is targeting in its sustainability plan, Schinter said."If a project doesn't have scalability for an enterprise as large as ours, we don't spend much corporate time on it," he said in an interview.Jim Javillet is amazed at how attitudes have changed in the 43 years he's been managing buildings like the AT&T tower. "In the 60s and 70s they used to run (both) heating and cooling all year why not," he recalled.Another big advance came when buildings installed systems to turn most overhead lights off at a set time so they didn't burn all night.Now, even in the middle of the day, he can see who's away from their desks by the dark spots in the room. And when he walks down an empty hall, he creates a tunnel of light.These types of innovations are common in countries like Spain and Japan, where energy is more costly and governments have been more aggressive in pushing energy efficient building codes.But Americans are ready to accept change, said Dan Tishman, whose realty company owns the Sheraton Chicago and nine other major US hotels."Consumers in this country are comfortable with motion detectors on lights and other technologies that save energy, like low flush toilets or green roofs, and they appreciate it," said Tishman, who is also chairman of the National Resource Defense Council and heads a leading construction firm."I do think that when we implement the changes we are planning, we will be successful and other large hotel properties will follow suit."

China's factory output jumps to new high

 

Growth in China's factory output and retail sales jumped to eight-month highs in November as consumer inflation bounced off 33-month lows in the latest sign that its economy is snapping out of a protracted slump.Analysts said Sunday's data showed China is enjoying an enviable mix of benign inflation and rebounding economic growth that allows Beijing to stand still on monetary and fiscal policies, or switch to an easier stance if needed. "The Chinese economy is now in a sweet spot and can stay in the sweet spot through the first half of 2013," said Ting Lu, an economist at Bank of America-Merrill Lynch. "Beijing will be happy to sustain the current policy stance."Data from the National Bureau of Statistics showed output from Chinese factories beat forecasts to climb 10.1% in November from a year ago, its best performance since March.Annual growth in retail sales also surprised by jumping 14.9% in November, while fixed asset investment rose 20.7% in the first 11 months of the year, a shade below forecasts.The batch of activity data came after an inflation report out earlier on Sunday showed China's consumer price index rose 2% in November from a year ago just under forecasts for a 2.1% gain as vegetable prices soared.But economists said the rise in consumer prices from near three-year lows was far from worrying, especially since it is well under Beijing's annual 4% inflation target."We expect consumer inflation to not see a big rebound until the first quarter of next year," said Jiang Chao, an analyst at Guotai Junan Securities in Shanghai."Therefore, the central bank may stick to its current policy stance and we see little chance of further (policy) loosening towards the year end.""Durable recovery"China's economy has slowed for seven consecutive quarters, hurt by wilting export growth and lackluster domestic demand. Growth hit a low of 7.4% between July and September and is poised this year for its weakest annual showing since 1999.But things are looking up, due in part to policy easing by the central bank.The People's Bank of China cut interest rates twice in June and July and lowered banks' reserve requirement ratio (RRR) three times since late 2011, freeing an estimated 1.2 trillion yuan ($193bn) for lending."We expect such (economic) recovery to be durable and will at least extend into the first half of next year, though the pace of recovery will remain mild," said Sun Junwei, an economist at HSBC in Beijing.As growth revives, the central bank is keeping an eagle eye on inflation, its policy priority in normal times.It has not cut interest rates or RRR since July and has instead added short-term cash to the banking system through open market operations, a move analysts say underlines its worries about consumer and property price inflation.As China's economy breaks away from central planning and as wages rise on average at least 10% each year, the central bank has warned inflation will be the biggest long-term risk, a point reiterated by Governor Zhou Xiaochuan last month.Indeed, November's data showed price momentum was gathering even in factories.Factory-gate prices fell 2.2% in November from a year earlier, its ninth straight month of declines but easing from October's 2.8% annual drop, boding well for firms struggling with falling profits.

Libya eyes olive oil

Libya is turning to olive oil the green gold of the Mediterranean - to compete with its North Africa neighbours, conquer European markets and diversify its hydrocarbon-dependent economy."Libya has decided to promote the quality of its olive production to make its olive oil more competitive and increase exports to Europe," an official of the export promotion centre in Tripoli told AFP."The centre's new strategy involves all stakeholders in the production chain of the olive tree, particularly the private sector to boost its productivity and conquer foreign markets," said Taher al-Zweibek.Libya ranks as the world's 12th largest olive oil producer, accounting for 0.25% of global production, according to the UN Food and Agriculture Organisation (FAO).The North African nation lags well behind the world's top producer Spain (43%) and its regional neighbours Morocco (4th, 10.6%), Tunisia (6th, 4.4%) and Algeria (8th, 1.7%).It has 8 million olive trees and produces 160 000 tons of olives for 32 000 tons of oil, according to figures provided by the country's agriculture ministry.Libya, a desert country with an area of 1.76 million square kilometres (680 000 sq miles), has 3.6 million hectares (8.9 million acres) of arable land, just two percent of the total area of the country.But the olive tree, a traditional crop of the Mediterranean region which easily tolerates spells of drought, is a perfect fit for the arid Libyan climate.The North African nation is currently experimenting with a new kind of olive imported from Spain, the Arbequina, which is famous for its highly aromatic fruit, said agriculture ministry official Saad al-Kunni.Introduced in Europe during the 17th century, this variety is mostly grown in Spanish Catalonia. "After an experiment that yielded encouraging results, some 1 900 hectares were planted with this variety in two agricultural projects," added Kunni.Libya, which relies exclusively on the export of hydrocarbons for its revenues, has failed to diversify its economy despite sectors with enormous potential for development such as tourism and fisheries.Both the former regime of Moamer Kadhafi, who was toppled and killed last year, and the new authorities have repeatedly expressed the desire to diversify Libya's revenues without implementing specific strategies.Speaking on the sidelines of a Tripoli exhibition of Libyan dates and olives, Zweibek noted that the new strategy also focuses on improving the packaging of finished products to make them more attractive."A national label will be created and used to identify Libyan products in order to facilitate marketing while establishing a relationship of trust with the consumer," he said.The new authorities, Zweibek added, are trying to break away from the policies of the Kadhafi regime, during which bureaucracy prevented the promotion of any exports other than hydrocarbons.Until now, the exportation of olive oil was the initiative of a few individual farmers and owners of olive presses.Zweibek stressed that the state "will become more involved in assisting the whole production chain, from making the choice of which variety to plant to the transformation of the packaging process.""The centre will also conduct studies on the European market and ensure the collection of data for the benefit of Libyan exporters to help them conquer these markets," he said.