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TRADE WARS
Sata eyes Chinese mines to help Zambia's poor
by Staff Writers
Lusaka (AFP) Sept 23, 2011

Zambia's new President Michael Sata, who made his name denouncing China's presence in the country, has vowed to ensure that ordinary Zambians benefit from Beijing's heavy investment in mining.

China has poured an estimated $6.1 billion (4.3 billion euros) into the southern African nation since 2007, equivalent to more than one third of gross domestic product last year.

That investment has financed a boom in mining in Africa's largest copper producer -- the seventh largest in the world -- but also stoked tensions with Zambians wary of Beijing's rapid rise.

Nearly two thirds of Zambians live on less than two dollars a day, and Sata has vowed to ensure that the poor benefit from the booming economy, which grew 7.6 percent last year on the back of strong mining growth.

But in his campaign this year, Sata avoided singling out the Chinese, rather saying that he would review the tax regime for all mining houses "to promote rapid investment and employment in the industry".

"He's often come across as very populist and very aggressive in speaking out against the government and the fact that none of these resources have been made to ordinary Zambians, most of whom are still living in poverty," said Matthew McDonald, a researcher at the Centre for Chinese Studies in South Africa.

"The opportunity is now at a policy level for a Zambian government... to start leveraging the influence they have with Chinese investors."

That will be a tricky balancing act for Sata, who tapped popular anti-Chinese sentiment to recast outgoing president Rupiah Banda's economic success as a sell-out to foreign investors.

As Chinese banks and markets have opened on Lusaka's streets, poor Zambians have accused Chinese companies of importing their own workers even for jobs that Zambians could do, and of mistreating those locals they do employ.

The anti-Chinese sentiment was evident as Sata's supporters spilled into the streets during the night as his victory was announced.

"We are not happy about the Chinese!" one shirtless young man shouted over the din of car horns, chanting and singing.

"The condition of work is bad. We are in need of good salaries. We need to get something from this country."

Another reveller told AFP: "They bring their own people to do work that we can do. They paint. They dig graveyards. They're taking away all our little salaries that we deserve."

While Sata has benefited from such sentiments, he's also gradually toned down his rhetoric from his failed 2006 presidential bid, when he vowed to run the Chinese out of the country.

That has not eased the fears of the local Chinese community.

"Many people this time, we don't go outside. We just keep home," a Chinese woman at a gated expatriate hangout, aptly named "Chinese Restaurant", told AFP.

Senior officials at various Chinese companies said they had been told not to speak to the media and to stay at home during the period around the vote.

But political analysts say Sata has realised he has no choice but to work with the Chinese.

"Given the importance of China in the world economy today, I think he must have been advised that he tone down his rhetoric on the Chinese," Neo Simutanyi, head of the Centre for Policy Dialogue, told AFP.

Now Sata's policy ideas fall well within the mainstream, even echoing proposals made by the International Monetary Fund, which in recent years has sanctioned higher mining taxes.

"The Chinese have the potential to be quite helpful," said the IMF's Zambia representative, Perry Perone. "There is a very large financing need for public investment projects."

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WTO cuts 2011 world trade growth forecast to 5.8%
Geneva (AFP) Sept 23, 2011 - The World Trade Organization on Friday cut its 2011 trade growth forecast to 5.8 percent from 6.5 percent as earlier predicted, amid increasing economic uncertainty.

"Members must remain vigilant. This is not the time for go-it-alone measures. This is the time to strengthen and preserve the global trading system so that it keeps performing this vital function in the future," warned Pascal Lamy, director-general of the WTO, in a statement.

Trade volumes in developed economies are now projected to grow by 3.7 percent for 2011, as opposed to the 4.5 percent predicted in April.

For developing economies, full year trade growth is expected to reach 8.5 percent, down from the earlier forecast of 9.5 percent.

WTO economists said that since their previous forecast, "developed economies in particular have been buffeted by strong headwinds, including the lingering effects of the earthquake and tsunami in Japan, the prolonged budget impasse and credit downgrade in the United States, and the ongoing euro area sovereign debt crisis."

Poor output and employment data have also hammered consumer confidence and contributed to the turmoil in the financial markets.

The economists also warned that the current forecast still carries "an unusually high degree of uncertainty" as it is made on the assumption that trade would slow down instead of declining drastically.

On the upside, the economy may see a pick up in growth if policymakers are able to find credible solutions to the debt crisis.

"On the other hand, policy missteps could trigger wider instability along the lines of the crisis that followed the failure of Lehman Brothers in 2008," it said.

"Weighing these factors, we believe that risks to the forecast are firmly rooted on the downside but we should not ignore the fact that there is some upside potential," it warned.





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Shanghai's young high rollers splurge on luxury
Shanghai (AFP) Sept 23, 2011
Kelly Ying, one of a swelling group of young high-rollers in Shanghai, has just treated herself to a birthday present of a $45,000-dollar watch. But the 30-something - who likes "big watches" - has elected not to wear what she calls her "PP" (Patek Philippe) today, opting instead for an imposing, gold-plated Rolex Daytona that she bought for her previous birthday. Thousands of rich Sha ... read more


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