BBC News - India's economic growth better than forecast

India's economy grew faster than expected in the three months to the end of June, easing some fears about a sharp slowdown in Asia's third-largest economy.

Growth was 5.5% in the April to June period from a year earlier. Most analysts had forecast a rate of 5.2%.

That compares with a 5.3% annual growth rate in the previous quarter.

However, there are concerns that a lack of reforms, slowing factory output and investment may hurt long-term growth.

"Whilst an upside surprise at 5.5%, the pace of growth is undeniably below potential and validates the need for the government to address sluggishness in investment and external sector activity," said Radhika Rao an economist at Forecast Pte.

Push for reforms

India's economy has been been hurt by a variety of factors in recent months.

Slowing global demand has affected the country's exports and dented industrial production. India's factory output fell 1.8% in June from a year earlier, the third fall in four months.

At the same time, the government has been locked in a political battle with the opposition that has resulted in key reforms hitting a dead end.

To make matters worse, a number of corruption scandals has not only dented India's image but also hurt investor confidence.

Foreign direct investment in India fell by 78% in June, from a year earlier.

Analysts said the government needed to take action to improve the investment climate in India if the country was to maintain a high rate of growth in the future.

"A sustainable growth in the coming quarters would largely depend up on well defined policy reforms," said Shakti Satapathy of AK Capital in Mumbai.

Rising food prices have been a hot political issue in India and have influenced the RBI's policy

No policy easing?

As India's economy has slowed in recent months, there have been calls for the central bank, the Reserve Bank of India (RBI), to cut interest rates in order to spur growth.

The central bank lowered its main interest rate in April this year to 8% from 8.5%, the first cut in three years.

However, despite calls for further cuts, it has kept the rates unchanged since then, in an attempt to keep consumer price growth in check.

The rate of inflation has come down gradually in the past few months. Consumer prices in India rose by 6.87% in July from a year earlier.

That was down from a rate of 7.25% in June and 7.55% in May.

How ever, analysts said that the better-than-expected growth data may see the central bank keep its policy unchanged for the time being.

"I would think RBI would be reasonably happy with this number as it doesn't look as bad as they would have feared in July and most likely will keep rates unchanged next month," said A Prasanna, an economist with ICICI Securities Primary Dealership Limited.

BBC News - China to buy 50 Airbus planes for $3.5bn

China has signed a deal to buy 50 planes worth $3.5bn (£2.2bn) from Europe's Airbus.

China and Germany signed trade deals in aviation energy, environment, health and maritime co-operation

The agreement is part of a slew of trade deals signed by German Chancellor Angela Merkel at the start of a two-day visit to China.

An agreement on Airbus plane assembly in China was also signed, according to the Xinhua news agency.

Chinese Premier Wen Jiabao said on Thursday his country would continue to invest in the EU.

Emissions row

This is the first significant deal in China for Airbus, whose parent company is EADS, since a dispute between the country and the European Union over the Emissions Trading Scheme (ETS).

Effective from 1 January this year, the ETS charges airlines for the carbon they emit.

China and other countries say the system is not fair, as it charges airlines for the full journey, not just over European airspace.

Following this in March, EADS chief executive Louis Gallois said Airbus was facing "retaliation measures" by China.

According to him, China had blocked firms from buying planes made by Airbus. Beijing did not comment on the allegation.

Merkel visit

Ms Merkel is in China for the second time this year, as she tries to improve relations and drum up business for European companies.

She is being accompanied by several ministers, as well as top German executives.

Bilateral trade between Germany and China totalled about $180bn dollars last year. That is nearly double what it was five years ago.

On Thursday, the two countries signed 10 further agreements, in the sectors of communication, energy, health and maritime co-operation, among others, Xinhua said.

Reuters News - July consumer spending posts strongest rise in five months

WASHINGTON | Thu Aug 30, 2012 8:33am EDT

(Reuters) - Consumer spending got off to a fairly firm start in the third quarter, rising by the most in five months, offering hope economic growth could pick up this quarter.

The Commerce Department said on Thursday consumer spending increased 0.4 percent after a flat reading in June. Last month's rise in consumer spending, which accounts for 70 percent of U.S. economic activity, was in line with economists' expectations.

When adjusted for inflation, consumer spending increased 0.4 percent, also the largest increase since February.

Real consumer spending dipped 0.1 percent in June and last month's increase was an encouraging sign after consumption growth slowed by the most in a year in the second quarter.

Sluggish consumer spending held back economic growth to a 1.7 percent annual pace in the April-June period.

Data on housing, job growth and retail sales suggest the economy fared better early in the third quarter, but was not strong enough to take additional monetary easing by the Federal Reserve off the table.

Policymakers from the U.S. central bank meet on September 12-13. Economists are divided on whether the Fed will announce a third round of bond purchases to spur faster economic growth.

Real spending last month was lifted by subdued inflation pressures. A price index for personal spending was flat after edging up 0.1 percent in June.

In the 12 months through July, the PCE index rose 1.3 percent -- the smallest increase since October 2009 -- after increasing 1.5 percent in June.

A core measure that strips out food and energy costs was also flat for the first time since September after gaining 0.2 percent in June.

In the 12 months to July, the core PCE index slowed to 1.6 percent, the smallest rise since October, from 1.8 percent. The Fed aims for inflation of 2 percent.

Last month, households increased spending as income increased 0.3 percent after rising by the same margin in June. Income available to households after stripping out inflation and taxes increased 0.3 percent after gaining 0.2 percent in June.

With spending a touch above income growth, the saving rate slipped to 4.2 percent in July from 4.3 percent the prior month.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Reuters News - Draghi tells Germans ECB action needed for stability

European Central Bank (ECB) President Mario Draghi speaks during the monthly news conference in Frankfurt August 2, 2012.

Credit: Reuters/Alex Domanski

FRANKFURT | Wed Aug 29, 2012 7:13am EDT

(Reuters) - The European Central Bank must employ "exceptional measures" at times to fulfil its mandate of delivering stable prices, ECB President Mario Draghi wrote in an opinion piece on Wednesday aimed at calming German angst about the bank's policy course.

The ECB is drawing up a new bond-buying plan to lower the borrowing costs facing Spain andItaly, which Draghi is expected to detail after a September 6 policy meeting. Germany's Bundesbank - highly respected by German voters - opposes the plan.

Draghi wrote his opinion piece in German weekly Die Zeit after Bundesbank chief Jens Weidmann told magazine Der Spiegel the ECB bond-buying plan verged on the taboo for the bank of outright financing of governments.

Juergen Stark, a former ECB chief economist, piled on the German resistance in another newspaper interview on Tuesday, saying the ECB's policy course meant it was being politicised and would ultimately no longer be able to deliver stable prices.

Draghi sought to dispel those concerns.

"The ECB will do what is necessary to ensure price stability. It will remain independent. And it will always act within the limits of its mandate," the Italian wrote. "The ECB is not a political institution."

The independence of the ECB and the Bundesbank is highly prized in Germany, where the politicisation of monetary policy led to hyperinflation in the 1920s - an experience that still scars the national psyche today.

"Yet it should be understood that fulfilling our mandate sometimes requires us to go beyond standard monetary policy tools," Draghi, adding that the ECB's monetary policy is not transmitted evenly when financial markets "are fragmented or influenced by irrational fears".

"We have to fix such blockages to ensure a single monetary policy and therefore price stability for all euro area citizens. This may at times require exceptional measures," Draghi wrote in the article, released in English by the ECB under the title: "The future of the euro: stability through change".

ECB policymakers are posturing over the shape of the new bond-buying program ahead of their policy meeting on September 6.

ECB policymaker Joerg Asmussen, also a German, sought to assuage Weidmann's concerns about the new programme on Monday, saying the plan would ensure countries whose bonds the ECB buys do not soft-pedal on reforms.

The ECB said on Tuesday Draghi will not attend the annual Jackson Hole meeting of central bankers at the end of this week due to a heavy workload as he gears up for the September 6 meeting.

German Chancellor Angela Merkel gave her tacit support to Draghi on a trip to Canada earlier this month and reiterated in a weekend interview that she believed the ECB's policies were in line with its mandate to ensure stable prices in the bloc.

Weidmann's predecessor as Bundesbank chief, Axel Weber, quit last year in protest at the ECB's previous, now dormant bond-buy plan. Stark followed him out of the door. Weidmann has indicated, however, he has no plans to resign.

(Writing by Paul Carrel. Editing by Jeremy Gaunt.)

BBC News - Curiosity rover's intriguing geological find

The Mars rover Curiosity is indulging in a flurry of multimedia activity ahead of its science mission proper.

 
The rover has spotted an "unconformity" in the layers of Mount Sharp, towering above Gale Crater

It sent the first image from its 100mm telephoto lens, already spotting an intriguing geological "unconformity".

Nasa also released a colour panorama of Mount Sharp, the rover's ultimate goal.

On Monday, the rover relayed "the first voice recording to be sent from another planet", and on Tuesday it will broadcast a song from artist will.i.am as part of an educational event.

But alongside these show pieces, Curiosity - also known as the Mars Science Laboratory - is already warming up its instruments for a science mission of unprecedented scope on the Red Planet.

Nasa said that the rover was already returning more data from Mars than all of the agency's earlier rovers combined.

It will eventually trundle to the base of Mount Sharp, the 5km-high peak at the centre of Gale Crater, in which the rover touched down just over three weeks ago.

For now it is examining the "scour marks" left by the rocket-powered crane that lowered the rover onto the planet's surface, giving some insight into what lies just below it.

The rover will now employ its Dan instrument, which fires the subatomic particles neutrons at the surface to examine levels of hydrogen- and hydroxyl-containing minerals that could hint at Mars' prior water-rich history.

Another tool in its arsenal, the ChemCam, which uses a laser to vapourise rock and then chemically examine the vapour, will also have a look at the scour marks.

And the Sample Analysis at Mars or Sam instrument, itself a package of three analysis tools, has now been switched on and is being run through its paces ahead of "sniffing" the Martian atmosphere; the tests include analysing a sample of Earth air that was left in it at launch.

But what has caught the interest of Nasa engineers already is what is called an "unconformity" spotted in the rover's first images of Mount Sharp.

White dots mark the line between two different geological "strata"

The term refers to an evidently missing piece in the geological record, where one layer of sediment does not geologically neatly line up with that above it.

Images from orbit had indicated that the lower foothills of Mount Sharp consisted of flat-lying sediments rich in "hydrated" minerals, formed in the presence of water, but that layers above seemed to lack the minerals.

Now, the rover's Mastcam - which provided the new colour panorama image - has taken a picture of the divide, showing sediments apparently deposited at a markedly different angle than those below them. Similar deposits on Earth can arise due to tectonic or volcanic activity.

Further investigation will have to wait some time however, as Curiosity takes a bit of a side trip.

The panorama from the rover's 34mm camera shows the top of Mount Sharp, and the long drive to get there

The rover's multimedia streak will continue as it takes a short 10m drive and works on Tuesday to capture stereo imagery - like our eyes, combining two images to gain information about depth and distance.

At 20:00 GMT (13:00 PDT, 21:00 BST), it will relay a new song from will.i.am, to be broadcast on Nasa TV, as part of a primary educational initiative that will make use of Nasa technology including the rover.

On Monday, the rover received and beamed back a message recorded by Nasa administrator Charles Bolden, which read: "The knowledge we hope to gain from our observation and analysis of Gale Crater will tell us much about the possibility of life on Mars as well as the past and future possibilities for our own planet."

Next stop for the rover will be Glenelg, 400m to the east, which appears to be the intersection of three distinct geological regions - potentially rich pickings for the rover's suite of tools.

It will then set off for the base of Mount Sharp in a journey that will take several months.

• (A) Curiosity will trundle around its landing site looking for interesting rock features to study. Its top speed is about 4cm/s
• (B) This mission has 17 cameras. They will identify particular targets, and a laser will zap those rocks to probe their chemistry
• (C) If the signal is significant, Curiosity will swing over instruments on its arm for close-up investigation. These include a microscope
• (D) Samples drilled from rock, or scooped from the soil, can be delivered to two hi-tech analysis labs inside the rover body
• (E) The results are sent to Earth through antennas on the rover deck. Return commands tell the rover where it should drive next

BBC News - It's time to reap the benefits of 4G mobile networks

Viewpoint by Olaf SwanteeChief executive, Everything Everywhere

The fourth generation of mobile technology - known as 4G and also referred to as Long Term Evolution (LTE) - is the next step in the evolution of mobile network technology.

At big events, 3G just does not cut it anymore. We need 4G, Olaf Swantee says, to evolve mobile networks further

It is built specifically to handle mobile internet and data more efficiently, allowing faster and more reliable mobile connectivity in a world where data usage is increasing 250% year on year.

To date, more than 40 countries have rolled out 4G and are already reaping the benefits of faster mobile networks.

These nations include economic powerhouses such as the USA, Russia and Japan, and also smaller countries such as Angola, Kyrgyzstan and Tanzania.

These countries are investing in 4G for a very simple reason: they realise that technology is an engine for economic growth, one that will help existing businesses to grow while encouraging investment from overseas.

When the significant consumer, social and economic benefits of faster mobile connectivity are considered, it is clear that 4G is more than just an iterative improvement in mobile phone speeds.

With more - and more important - parts of our lives going online by the day, 4G will enable a fully connected world where nearly all of our digital devices are mobile-enabled and as a result become more flexible and integrated into our daily lives.

Consumers will be able to watch TV, video call, shop online and access social media, entertainment and information on the go more easily.

Plus they'll be able to get the most from mobile devices and apps that deliver best performance on 4G networks.

Meanwhile, all businesses that require connectivity, for example those that operate in entertainment, media and e-commerce, are set to benefit from faster and more reliable mobile data services, improving efficiency and productivity.

For developing nations where access to fixed line broadband connections are limited, 4G will bring super-high-speed connectivity for the first time and help them compete on a global scale.

There will also be significant gains for workers who use some form of mobile device. Many workers already use mobile internet on a daily basis for business purposes, such as checking email or accessing documents.

4G will allow them to do this faster and enable the use of a wider range of applications that will stimulate more efficient ways of working, such as allowing people to work remotely and exploit cloud services via their mobile devices.

The benefits of 4G to the economy are also significant. Recent research into the potential of 4G in the UK economy by Capital Economics estimates that the UK's adoption of the new technology could unlock £5.5bn of direct private investment.

This research also found 4G would support 125,000 jobs and ultimately provide a 0.5% boost to GDP.

Bear in mind that those forecasts are for a developed economy with a more advanced infrastructure than many other nations. The economic benefits that 4G will bring to developing nations will be just as great.

The pace at which countries are rolling out 4G varies widely as it requires both the availability of licensed airwaves - also called spectrum - from the government, and considerable private investment in infrastructure.

Here in the UK the auction of new spectrum licensed for 4G use has been delayed for several years and is now expected to start at the end of this year, a full four years behind the first European deployment in Sweden. The UK's communications regulator, Ofcom, this week approved the use of spectrum currently used for 2G and 3G services, for 4G.

The green light on this means that the country will see its first 4G services by the end of the year.

The UK's sluggishness to date goes against the grain for a country that pioneered the first private licences for alternative mobile operators in Europe and has the highest levels of smartphone penetration and mobile commerce in the region.

With the world still in the grip of major economic uncertainties, governments and national telecoms operators should be doing all they can to help encourage growth and investment.

The introduction of 4G services will play a large part in stimulating both, creating a 21st Century digital infrastructure to serve consumers, businesses and the economy for the future. 4G is the next step in the evolution of mobile network technology.

It is built specifically to handle mobile internet and data more efficiently, allowing faster and more reliable mobile connectivity in a world where data usage is increasing 250% year on year.

Olaf Swantee is the chief executive of Everything Everywhere, a mobile network created by the merger of Orange and T-Mobile in 2010. In the UK, Everything Everywhere is one of several mobile networks bidding for bandwidth in an upcoming auction led by communications regulator Ofcom. More information about the auction can be read here.

On 21 August, Everything Everywhere was granted permission to use its existing bandwidth to launch 4G services in the UK.

Reuters News - Romney seeks North American energy independence by 2020

. Republican U.S. presidential candidate Mitt Romney campaigns at LeClaire Manufacturing in Bettendorf, Iowa, August 22, 2012.

Credit: Reuters/John Gress

By Sam Youngman

HOBBS, New Mexico | Thu Aug 23, 2012 5:18pm EDT

(Reuters) - Republican presidential candidate Mitt Romney said on Thursday that if elected, he will ensure North American energy independence by 2020 by pursuing a sharp increase in production of oil and natural gas on federal lands and off the U.S. East Coast.

Romney unveiled his energy plan at a trucking company in New Mexico, seeking to draw a sharp contrast between his energy policies and those of President Barack Obama and explain how his approach would lead to job growth.

The U.S. economy can add 3 million jobs by tapping oil and gas reserves in the United States, Romney repeatedly said.

"This is not some pie-in-the-sky kind of thing," he said. "This is a real, achievable objective."

The emphasis on economic benefits was an effort to steer the campaign back to the issue Romney believes is crucial to his victory in the November 6 election.

The economic debate has been sidelined in recent days by controversial remarks about rape by a Senate Republican candidate in Missouri, Todd Akin, whom Romney has denounced.

Romney would open up areas off the East Coast to oil exploration, and in particular would reverse Obama's decision to suspend development off the coast of Virginia following the 2010 BP oil spill in the Gulf of Mexico.

He would establish a five-year offshore leasing plan that would open new areas for development beginning with those off the coast of Virginia and the Carolinas.

A Romney administration also would seek a North American energy partnership with Canada and Mexico, and it would allow construction of the Keystone XL pipeline from Canada to Texas, which has been delayed by the Obama administration.

The White House faulted Romney's plan for relying too heavily on fossil fuels.

"I think what distinguishes the president's approach ... from the Republican approach, is that the Republican approach is essentially one that is written by or dictated by big oil," White House spokesman Jay Carney said.

"REFLECTS REALITY"

But Mark Mills of the Manhattan Institute think tank, which is cited in the Romney plan, said Romney was being realistic.

"The Romney plan reflects reality, and the reality is that most of the world's energy comes from hydrocarbons and will for decades to come," he said.

Even if Romney boosted domestic oil output, it would do little to protect Americans from high fuel prices because crude prices are set on global markets, said energy expert Michael Levi.

"U.S. economic vulnerability to volatile oil markets stems from the volume of oil we consume, not the volume we import," said Levi, an energy and climate fellow at the Council on Foreign Relations in New York. "If you don't change the volume of oil we consume, you've missed most of the problem."

The centerpiece of Romney's energy plan is to permit individual states to manage energy development on federal lands within their borders.

Currently the federal government controls development on these lands. Letting states issue permits for exploration on federal lands would speed up the process, Romney says.

The states' decisions would continue to be reviewed and approved by the federal government under his plan.

Romney's proposal also supports Washington's ethanol quota, a mandate several U.S. governors want to suspend as the worst drought in over 50 years sends corn prices soaring to record levels. Corn is an important animal feed.

The mandate is aimed at encouraging the use of ethanol in car fuel.

The overall package makes little mention of climate change or greenhouse gases. Romney policy adviser Oren Cass said Romney supports green energy and government spending on energy research, but opposes loan guarantees for green companies.

The Republican candidate has assailed Obama's investments in clean energy companies like the now bankrupt Solyndra.

A tax credit for the wind industry expires at the end of this year. Obama supports an extension of it while Romney opposes it even though it could hurt him with voters in Iowa and Colorado.

(Additional reporting by Tim Gardner and Margaret Chadbourn in Washington, Joshua Schneyer in New York and Steve Holland; Editing by Xavier Briand)

BBC News - UK recession less deep than thought

The UK economy shrank by less than previously thought between April and June, official figures have shown.

Construction was not such a drag on the economy as was first thought

Revised data from the Office for National Statistics (ONS) show the economy contracted by 0.5% during the quarter, less than the 0.7% it announced last month.

The ONS said output in the construction sector was higher than it had previously estimated.

Many economists had expected the figures to show a smaller contraction.

The original estimate of a 0.7% contraction, published in July, was greeted with some scepticism by a number of experts and by some industries that claimed they had seen little sign of such a serious economic downturn.

"The production sector was not quite as bad [as we thought]; similarly the construction sector," Joe Grice from the ONS told the BBC.

He said each accounted for a 0.1% revision to the original 0.7% estimate.

The ONS had already said that output from the construction sector fell by 3.9% between April and June compared with the previous quarter, compared with an earlier forecast of a 5.2% drop.

GDP figures show the value of all the goods and services produced in the economy. The ONS always refines its GDP calculations as more data becomes available and changes to the original estimates happen on a regular basis.

Output 'stagnating'

Mr Grice said the revision did not change the overall picture of the UK economy, which has been "broadly flat over the past two years".

Economists agreed with this assessment.

"The revision is very small in the big picture and means that output is still more than 4% below its pre-recession peak," said Vicky Redwood at Capital Economics.

"Remember that the extra bank holiday probably knocked about 0.5% off GDP. But even so, underlying output is just stagnating."

A number of analysts believe GDP will rebound in the current quarter, partly due to the impact of the Olympic games. A rise in consumer and government spending, as well as the boost from ticket sales that will be recorded in the July to September quarter, should lift growth, they say.

'Difficult process'

The UK economy is in recession having contracted for the past three quarters.

Some observers have blamed the government's severe spending cuts for undermining growth.

A Treasury spokesperson said: "Britain is dealing with some very deep-rooted problems at home and a very serious debt crisis abroad, and that is why the healing of the economy is proving to be a slow and difficult process.

"Compared to two years ago the deficit is down, inflation is down, and there are more private sector jobs."

Some have questioned why the economy is shrinking when unemployment is falling.

Mr Grice said one reason for this anomaly was the move to part-time work, which had also affected the "productive capacity" of the economy. He said this was a very similar situation to many other economies outside the UK.

Reuters News - Fed easing hopes lift shares, weighs on dollar

. A woman walks past an electronic board displaying share prices outside a brokerage in Tokyo July 25, 2012.

Credit: Reuters/Yuriko Nakao

LONDON | Thu Aug 23, 2012 3:32am EDT

(Reuters) - Signals from the U.S. Federal Reserve that another dose of stimulus measures could come "fairly soon" lifted global shares on Thursday and pushed the dollar to a two-month low, outweighing poor economic data from China.

European shares, which are up over 15 percent since June and have been driving the steady 11.5 percent rise in global stocks, rose 0.5 percent in early trading. Indexes in London .FTSE, Frankfurt .DAX and Paris .FCHI were all higher.

The euro, which has been boosted in recent weeks by hopes that a new bond buying-led plan being drawn up by the European Central Bank will overcome the currency bloc's debt troubles, was at a seven-week high against the dollar at $1.2536.

The dollar sank to a two-month low versus a broader basket of currencies. Behind the move was the Federal Reserve's signal on Wednesday that more policy easing is likely to be on the way, a move that will pump more dollars into the financial system.

Minutes from the U.S. central bank's meeting earlier in the month said: "Many (Fed) members judged that additional monetary accommodation would likely be warranted fairly soon unless incoming information pointed to a substantial and sustainable strengthening in the pace of the economic recovery."

"The market seems more interested in more prospects of stimulus from the Fed than worries over the euro crisis. In the short term, the market could get back up to the highs which we've seen in the last few weeks," said Darren Easton, director of trading at London-based Logic Investments.

The markets also seemed more interested in Fed signals than the fact that Chinese manufacturing PMI data hit their lowest levels since November as new export orders slumped and the stock of unsold goods rose.

Germany will release updated second quarter GDP numbers later, while euro zone PMI data will give the latest reading of economic confidence in the currency bloc.

Meetings between Greece and key euro zone leaders will continue, with Greece's prime minister heading to Berlin to see German Chancellor Angela Merkel on Friday and French President Francois Hollande on Saturday.

European bond markets were choppy in early trading. German government bond futures opened in demand, up 13 ticks, tracking the move in U.S. bonds.

(Reporting by Marc Jones; Editing by Will Waterman)

Reuters News - China to spend $372 billion on cutting energy use, pollution

An employee walks on solar panels at a solar power plant in Aksu, Xinjiang Uyghur Autonomous Region May 18, 2012.

Credit: Reuters/Stringer

BEIJING | Wed Aug 22, 2012 6:22am EDT

Aug 22 (Reuters Point Carbon) - China will plough $372 billion into energy conservation projects and anti-pollution measures over the next three-and-a-half years, part of a drive to cut energy consumption by 300 million tonnes of standard coal, the country's cabinet said Tuesday.

A report from China's State Council, or cabinet, said the investments will take China almost halfway to meeting its target to cut the energy intensity 16 percent below 2010 levels by 2015.

The government has earmarked $155 billion of the money for projects that shrink energy use, and while the plan did not detail which types of projects or sectors would benefit from the funds, a big share of the cash is expected to go to industry.

The Ministry of Industry and Information Technology (MIIT) in February set an overall 21 percent energy intensity reduction target for industry from 2010 to 2015.

The State Council plan said steel producers must reduce their energy use per unit of production by a quarter over the five years, coal-fired power plants by 8 percent and cement manufacturers by 3 percent.

China's economic growth over the past three decades has turned it into a major importer of oil, gas and coal, and high international fossil fuel prices have contributed to huge losses at some of China's large state-owned power companies.

The central government's drive to reduce China's insatiable appetite for fossil fuels is aimed at improving the country's future energy security, and is a central plank of its policy to slow down growth in greenhouse gas emissions.

China, the world's biggest emitter of greenhouse gases, plans to cut its CO2 emissions per unit of GDP by 40-45 percent from 2005 levels by 2020.

Over the past few years China has phased out thousands of old, inefficient factories and fossil fuel-fired power plants while becoming the world's biggest producer of renewable energy.

However, greenhouse gas emissions continue to rise, and according to a recent report, China's carbon output grew by 800 million tonnes to 9.7 billion last year, or 29 percent of the world's total CO2 emissions.

Government officials said they expect China's greenhouse gas emissions to peak around 2030.

Seven Chinese cities and provinces will launch CO2 emissions trading schemes over the next two years ahead of a national scheme later in the decade, as China seeks to move away from traditional command-and-control measures to combat spiraling carbon emissions. (Reporting by Kathy Chen and Stian Reklev)

BBC News - Japan exports fall on weak demand in China and Europe

Japan has reported a wider-than-expected trade deficit in July, as slowing demand from China and Europe weighed on exports.

 
Asian countries have seen demand for their products weaken in key markets such as Europe and China

Exports fell 8.1% from the previous year, much more than the 2.9% drop economist were predicting.

High oil prices have also increased the cost of energy imports, which Japan relies on for power generation.

Many Asian export economies have reported weak trade figures in recent months.

Japan saw a 25.1% plunge in overseas shipments to the European Union as the sovereign debt crisis continues to hurt demand. It was the biggest drop since October 2009.

"Europe's debt crisis is the first factor to pull down exports, and the pace of decline is striking," said Masayuki Kichikawa from Bank Of America Merrill Lynch in Tokyo.

"This is comparable to the post-Lehman situation. We hoped domestic demand in China would support Japan's economy, but the story is different."

The drop in exports led to a trade deficit of 517.4bn yen ($6.5bn; £4.1bn), after a revised surplus of 60.3bn yen in June, data from the Finance Ministry showed.

Reuters News - Analysis: Global lenders see higher food prices but no crisis yet

A general view of drought-damaged corn stalks at the McIntosh family farm in Missouri Valley, Iowa, August 13, 2012.

Credit: Reuters/Larry Downing

By Lesley Wroughton

WASHINGTON | Mon Aug 20, 2012 12:54pm EDT

(Reuters) - Global financial lenders are advising countries to prepare for the possibility of higher food bills in the coming months, but for the moment the International Monetary Fund and World Bank see few signs of a widespread food price crisis like in 2007/08.

The worst drought in half a century in the United States and poor crops from the Black Sea bread basket have lifted prices of corn, wheat and soybeans. The price of rice - a staple food in Asia and parts of Africa - has so far been unaffected.

"We are not saying that we anticipate a major crisis at this point," said Juergen Voegele, director of the World Bank's Agriculture and Rural Development Department. "The world has enough food, but of course we cannot predict the weather and if something extraordinary happens we might find ourselves in a difficult situation again."

World Bank data shows that overall food costs are higher but not yet at record levels of 2007/08, which pushed millions into poverty as food prices rose across the board in tandem with sky-rocketing oil prices. The effects of the twin crisis in 2008 dissipated as the global financial crisis intensified and demand slowed.

"Our recommendation is that countries prepare very early on," Voegele said. "As long as our food stocks are so low,(price) volatility will not go away easily."

TOUGHER GLOBAL ENVIRONMENT

The latest run-up in grain prices comes at a time when the world economy is slowing, the euro zone is in turmoil and unemployment is higher almost everywhere.

The danger for poor countries is that their fiscal firepower was eroded by the global financial crisis and their ability to deal with bigger food import bills will be limited.

The U.N. Food and Agriculture Organization's food index jumped 6 percent in July to higher than in 2008, and the Food and Agriculture Organization warned against the kind of export bans, tariffs and buying binges that worsened the price surge four years ago.

Andrew Burns, a World Bank lead economist, said while higher food prices are not likely to contribute to a further slowing of the world economy, it is an added concern for consumers.

"This is another source of insecurity, it is another source of worry for people," Burns said. "If the situation were to become more sharply defined, if we were to see oil prices start to rise again as well, then that could very well cause that kind of pulling back from activity we have observed in the past with a significant knock-on effect on global activity."

Thomas Helbling, a division chief in the IMF's Research Department, described the current rise in grain prices as a "classical supply shock."

"If this is truly a classical supply shock, prices will spike and if the next harvest is more back to trend, or back to normal, food prices will come down," he said.

"Still, there is a temporary reduction in real incomes, especially in emerging and developing economies, and that is not helpful to the extent that the global economy is carried by emerging economies and higher food prices will feed into domestic food prices even if it is a limited pass-through."

On the upside, concerns over inflationary pressures are less than they were in 2007/08 and high world oil prices have eased. Exchange rate movements also have a role - the depreciation of the U.S. dollar against many currencies blunted the impact of an increase in the dollar price of food at the time, said Helbling.

In many developing countries, local food prices are usually lower than international prices and consumers can rely on domestically grown food.

"There are less concerns now about underlying inflation, given current global economic conditions," Helbling said. "So if it is a classical supply shock it will feed into headline inflation to some extent, but it is less likely to feed into underlying inflation. In that sense it should be less of a monetary policy concern," he added.

PROTECTING THE POOR

The world is better prepared for food price spikes due to lessons from the 2007/08 crisis that led to more investment in farming and a push for more transparent agriculture data so countries can better anticipate and manage price shocks, Voegele said.

The Group of 20 will decide this week whether to convene an emergency meeting of its rapid response forum, created last year under the French presidency of the G20 to respond to abnormal market conditions.

Voegele said the answer is for farmers to improve their yields and for governments to develop a system of social safety nets that protect the poorest against hunger and malnutrition when prices rise suddenly.

Since 2008, countries have made efforts to improve productivity and investment in agriculture has risen. The World Bank boosted its investment in agriculture to $9.5 billion a year from $2.5 billion annually in 2008.

Increased food price volatility makes it difficult for farmers to plan and price their crops appropriately.

"This issue of volatility will continue to remain with us until we can produce more food and increase the size of our stocks," said Mark Sadler, team leader for the World Bank's agricultural finance and risk management unit.

"The food system gets shocked heavier because we don't effectively have the fallback that we used to have when we had large stocks," Sadler added.

(Editing by Maureen Bavdek)