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POLITICAL ECONOMY
EU coming round to pro-stimulus measures instead of cuts
by Staff Writers
Aylesbury, England (UPI) May 10, 2013


China banks scale back lending in April: govt
Beijing (AFP) May 10, 2013 - Chinese banks lent less in April than March, official data showed Friday, after other recent indicators suggested a rebound in the world's number two economy was flagging.

Banks extended a total of 792.9 billion yuan ($129 billion) in new loans last month, down from 1.06 trillion yuan in March, according to the central People's Bank of China.

Total social financing, a broader measure of credit, totalled 1.75 trillion yuan in April, it said in a statement, falling from 2.54 trillion yuan the previous month.

But analysts said the April lending figures were better than expected and it was premature to interpret the fall as credit tightening because monthly figures tend to be volatile and affected by seasonal factors.

Authorities were likely to keep monetary policy relatively loose to boost economic growth, which has lost momentum in recent months, they said.

China grew at its slowest pace in 13 years in 2012, with gross domestic product expanding 7.8 percent in the face of weakness at home and in key overseas markets.

Economic growth rebounded to 7.9 percent in the final quarter of 2012, raising hopes for a recovery, but in the first three months of this year growth slowed to 7.7 percent.

The official purchasing managers' index (PMI), a widely watched indicator of the health of the Chinese economy, slowed to 50.6 in April from 50.9 in March.

Separately, industrial output -- which is crucial to job creation -- slowed in the first quarter to 9.5 percent, from 10 percent in October-December.

EU senior ministers attending a G7 summit northwest of London are having to wriggle back into a pro-growth posture after months spent on fractious -- and expensive -- campaign for cutbacks, economic retrenchment and overall austerity.

Months after French President Francois Mitterrand broke ranks from Berlin's pro-austerity mantra, the European Union is having to listen to its own rebels as well critics elsewhere -- including the United States -- who want more European stimulus-driven policies and less tightening of belts.

EU economies that slashed away at Berlin's bidding now face deep recessionary trends and are under pressure from furious electorates as the numbers of the jobless multiply.

The meeting began Friday and will continue over the weekend. The Group of Seven includes Britain, Canada, France, Germany, Italy, Japan and the United States.

Leaders of the seven plus Russia will meet in a wider meeting June 17-18 June at Lough Erne Golf Resort, Enniskillen, Northern Ireland.

Friday's talks were to focus mostly on European Union's woes but a row was brewing as ministers took issue with Japan's stimulus measures, seen as a backdoor strategy to drive down the yen's value and promote Japanese exports.

Analysts said Japan was under pressure to avoid measures that could trigger a currency war. EU ministers are particularly sensitive, as their countries want to boost exports, too.

Cash-strapped Europe is also pushing for closer collaboration on tax collection, and new data collated with help from intelligence agencies suggests the continent's rich and famous are in for a few shocks.

Hundreds of Europe's rich were named in lists alleging elaborate tax evasion schemes involving EU accountants and lawyers and the EU states' own overseas tax havens. Britain, president of the Group of Eight this year, is top of the list with overseas territories named as tax havens.

The tax recovery proceeds are seen by governments as timely cash boost in lean times.

British Chancellor of the Exchequer George Osborne said the European Union faced the challenge of embracing urgent measures to nurture recovery.

"Our challenge is not to falter in the difficult steps we need to take to make that recovery sustainable and lasting," Osborne said.

"Markets have calmed, and there are signs that this is feeding through into greater confidence. But we cannot take the global recovery for granted," he added.

Analysts said European Union's toughest challenge was how to row back on months of policymaking and pronouncements that advocated the opposite of what the union is having to accept. Severe budget cuts are now seen to be a discredited option, but EU leaders are loath to admit their failed attempts at reform.

U.S. Treasury Secretary Jacob Lew called for "the right balance between austerity and growth."

Recent economic data from Germany and the United States are helping ministers argue for more stimulus measures.

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POLITICAL ECONOMY
China banks scale back lending in April: govt
Beijing (AFP) May 10, 2013
Chinese banks lent less in April than March, official data showed Friday, after other recent indicators suggested a rebound in the world's number two economy was flagging. Banks extended a total of 792.9 billion yuan ($129 billion) in new loans last month, down from 1.06 trillion yuan in March, according to the central People's Bank of China. Total social financing, a broader measure of ... read more


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