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Australian Financial Review : October 17th 2006
FBA 011 Whilst all details have been carefully prepared and are believed to be correct, no warranty can be given either expressly or implied by the vendors or their agents. Intending purchasers must rely on their own enquiries. Photographs and illustrations are for presentation purposes only and are indicative only. They should not be relied upon as an accurate representation of the final product. Correct at time of print. Specification may change at anytime. ATK9942 Achieve lifestyle opportunities never before seen on the Gold Coast brought to you by a team with a reputation for success. prestige addresses. created by the atkinson gore group. Centred within exclusive Hope Island, Ilanah Aqua fronts the newly created Hope Island canal. Each luxury apartment enjoys stunning water views. Within the opulent resort style community awaits a 15m infinity edge pool, fully equipped gymnasium, secure canal front board walk, tropical park gardens and of course 24 hour gated security. Phone 1800 633 209 Pendraat Parade, Hope Island, QLD www.ilanahaqua.net.au NOW SELLING FROM AN INCREDIBLE $592,000 Display Apartment Open 10am -- 5pm Daily REWARD YOURSELF WITH A QUALITY, SPACIOUS WATERFRONT LIFESTYLE ACTUAL APARTMENT SHOWN 3 bedroom 159m2 from $592,000 3 bedroom + study 190m2 from $610,000 3 bedroom + study + media 350m2 from $1,075,000 The Australian Financial Review www.afr.com Tuesday 17 October 2006 11 WORLD High oil price 'absurd' The head of the International Energy Agency said the Organisation of the Petroleum Exporting Countries was wrong to be worried about the recent fall in oil prices. ''Of course [prices] have fallen significantly over the past month, but they had reached completely absurd levels,'' IEA executive director Claude Mandil said. Reuters Samsung surges Samsung Electronics reported a better- than-expected 16 per cent lift in third- quarter profit, buoyed by sales of TV sets and mobile phones. Net income rose to 2.19 trillion won ($3 billion) from 1.88 trillion won a year earlier. Bloomberg Bird flu kills more Indonesian health authorities have confirmed that two more people have died of bird flu, bringing the national toll from the H5N1 virus to 54, the highest in the world. AFP France to quit war zone France plans to withdraw about 200 special forces from Afghanistan at the start of next year following a recent upsurge of violence, French newspaper Le Journal du Dimanche reported. Nine French troops have died in Afghanistan and Le Journal said the death toll had played a part in the decision to withdraw the forces. Reuters UK house prices lift UK house prices rose sharply in October as buyers chased fewer properties, Britain's biggest real-estate website, Rightmove, said yesterday. An index of average asking prices rose 11.5 per cent in the four weeks ending October 7 from a year earlier to a record £218,954 ($408,000). That's the biggest annual gain since November 2004. Bloomberg Thaksin not welcome Thailand would consider a request by ousted prime minister Thaksin Shinawatra to return to the country after martial law was lifted, Defence Minister Boonrawd Somtas said. The government was concerned that if Mr Thaksin returned too soon it could cause an ''unstable situation'' because he still had a lot of supporters. Bloomberg Ore reserves hit by strike Eramet, which operates the world's largest ferronickel plant, in New Caledonia, said strikers had blocked access to two of its mines, limiting its supply of ore. The smelter had only 10 days of ore reserves left, said Pierre Alla, chief executive officer of Le Nickel-SLN, a subsidiary of Eramet. Bloomberg Beijing changes its trade tune China observed Colleen Ryan Imports are just as important as exports, says Wen Jiabao. Photo: AP ONE SIDED China's trade balance $USbn Source: Bloomberg 05 04 Jan 06 20 12 4 -4 '' It may be the beginning of a genuine move towards restoring global economic balance.'' T he Canton Trade Fair began in 1957 when Mao was leading China, Eisenhower was in the White House and Menzies was in the Lodge. And it has continued without break, as a showcase for China's exports, for half a century. Extraordinary as it may seem in these days of the internet and just- in-time delivery, it still generates a quarter of all China's export orders, according to the Ministry of Commerce. But this is about to change. In the southern city of Guangzhou, formerly Canton, Premier Wen Jiabao at the weekend took the opportunity at the opening of the 100th trade fair (there are two trade fairs a year, one in spring and one in autumn) to announce that the official name and function of the fair would be altered. This massive exhibition, with more than 30,000 booths, will no longer be just an export fair. It will now be an import and export fair. This may turn out to be little more than a name change, from the official Chinese Export Commodities Fair to the Chinese Import and Export Commodities Fair. But all the signs suggest that it is part of a new PR focus. We will be hearing a lot more about a fundamental change in China's trade structure. The rhetoric is in place. Cynics could argue that this may be all that Henry Paulson will be able to point to as a concrete achievement from his first official visit to China last month in his new capacity as US Treasury Secretary. That is, just a tweaking of the nomenclature and a different spin on the trade figures. On the other hand, it may be the beginning of something much more significant, a genuine move towards restoring global economic balance. Ahead of the Canton Trade Fair opening, the state-run China Daily newspaper editorialised on Friday about the new focus on the trade balance. This came as it reported another booming month for Chinese exports in September, the second- highest on record. ''After five years of rapid trade growth, China is now keen to improve its trade structure,'' the editorial began. It quoted the latest Five-Year Plan (2006-2010), during which imports and exports are expected to grow at about 10 per cent year on year to 2010. These plans are not off to a good start. Rhetoric alone will get you nowhere, it seems. In the first half of 2006, exports grew by more than 25 per cent while imports grew by more than 21 per cent. In August, exports grew by a sizzling 32.8 per cent, in September by 30.6 per cent. But the editorial claimed that China ''will no longer rely on fast growing exports of labour-intensive products. Instead the authorities will throw their weight behind trade in services''. Domestic consumption will be boosted and imports will grow faster than exports. Or so the theory goes. On the same day last week, China and the US announced their respective trade figures. And these statistics, in themselves, tell a story. China's trade surplus for September was $US15.3 billion ($20.3 billion), the second-highest on record. (The highest on record occurred in August.) The US reported a trade deficit of $US69.9 billion for August, also the highest on record. One-third of this gap, or $US22 billion, was a deficit with China. China's trade surplus for the first nine months of this year reached $US109.9 billion, higher than that for all of 2005, which in turn was triple the surplus of the previous year. China's foreign exchange reserves will top $US1 trillion shortly, probably later this month. They are already the highest in the world and are widely acknowledged in China to be at least 30 per cent higher than desirable. There is mounting speculation about what is to be done with them. Could China follow Singapore and use some of the reserves to set up a state investment corporation like Temasek, for example? Or should it bite the bullet and let its currency appreciate rapidly as a means of restoring the balance? There is little doubt China is feeling the heat of international opprobrium. It has a temporary reprieve from the US Congress. After some lobbying from Treasury Secretary Paulson, senators Charles Schumer and Lindsey Graham have shelved their bill pushing for the imposition of a 27.5 per cent penalty tariff on Chinese imports unless Beijing moved to allow a greater appreciation of the yuan. This first hit the books in 2003 and was revived in February 2005. But China has to give something in return. And this may well be it ± a concerted push to change the rhetoric and shift the focus from exports to imports. And alongside this, a new official push for more growth in services trade. Currently, the country's trade in services only amounts to a quarter that of the United States and less than half of Germany's. It is likely that the import growth will have to come in services and highly sophisticated goods. After all, just how many goods will China's new consumers buy from the rest of the world? A great proportion of what China's middle class needs is made in China ± whitegoods, cheap cars, fashion, furniture, shoes, accessories. But there are restrictions on what China can buy at the higher levels. As Tao Wenzhao, of the Chinese Academy of Social Sciences, pointed out in the China Daily last week, the United States ''imposes strict controls on the export to China of US high-tech products, involving nuclear reactors, satellites, integrated circuits and sophisticated machinery''. And then there is the thorny question of the value of the yuan. Trade imbalance is a multi-faceted issue. And it will take more than rhetoric to resolve it.