The West envious of global economy led by China

As central banks in the euro zone and Britain edge closer this week to deciding that their flagging economies need yet more monetary stimulus, they can be forgiven for casting an envious eye towards China.

The same goes for the United States. Because of deadlock in budget talks, mandatory federal spending cuts are now being phased. They will brake a recovery that, as Friday's jobs report is likely to show, is already frustratingly weak.

China, the biggest contributor to global growth in recent years, has plenty of headaches of its own, of course.

Over reliance on investment in heavy industry, a financial system rigged in favour of the state, and a failure to integrate some 140 million rural migrant workers into urban life top the list of structural problems.

Louis Kuijs, an economist with Royal Bank of Scotland in Hong Kong, adds rising inflation, a renewed climb in house prices and a rapid expansion in 'shadow banking' to the government's to-do list for 2013.

But Kuijs and other economists expect outgoing Premier Wen Jiabao to reaffirm a growth target of 7.5 percent for this year when he delivers his last 'state of the nation' report to the annual meeting of parliament that opens on Tuesday.

China entered 2013 with solid growth momentum thanks to measured policy stimulus in the second half of last year. That impetus is now fading somewhat after a strong fourth quarter, as figures for January and February will probably suggest.

So, just as the West is looking to China to boost global demand, China is counting on a pick-up in the West as 2013 unfolds to help exports and revive corporate investment, Kuijs said.

"Looking at trade and industrial production indicators, we are all expecting a strengthening global picture, coming especially from the United States and Europe, but it's still a forecast: it's not showing up yet in the hard data," he said.

Euro Zone Disappoints

Indeed, the European Commission is projecting that the euro zone economy will shrink in 2013 for the second straight year. And February's survey of purchasing managers was downright weak.

"This increases the chances of a rate cut, but it's still not our baseline assumption," said Petr Zemcik, director of European economics at Moody's Analytics in London. "The ECB has done all it can at this stage."

His comments were in line with a Reuters poll of economists, which saw a 90 percent chance that the ECB, the European Central Bank, would keep its main short-term interest rate unchanged at 0.75 percent when it meets on Thursday.

However, a growing minority expects the ECB will cut rates at some point. Doing so now, right after Italy's election produced a big protest vote against austerity, would invite the suspicion that the bank was acting out of political panic.

But President Mario Draghi is sure to be quizzed about further easing and possible activation of the ECB's bond-buying program for euro zone strugglers, especially if the bank lowers its 2013 growth and inflation forecasts again.

Jeffrey Anderson with the Institute for International Economics in Washington, a financial-industry lobby group, said a rate cut would send a useful signal of the importance of growth to voters weary of austerity.

The Italian economy has shrunk for six quarters in a row. Euro zone unemployment hit a record 11.9 percent in January.

At the same time, euro zone finance ministers, who meet on Monday, should excuse Italy from further fiscal tightening as its budget is close to structural balance, Anderson argued.

"Ways must still be found to prod Italy to move on overdue labor market liberalization. But action to boost near-term growth would help Europe to sustain the popular backing necessary to advance the reforms needed for the longer term," he said in a note.

Bank of England Closer to Easing

In Britain, the government seems determined to stick to budget austerity despite a sharp drop in manufacturing in February and a stinging defeat for Prime Minister David Cameron's Conservative party in a parliamentary by-election.

This keeps the onus on the Bank of England, three of whose nine policymakers have already voted to expand the central bank's stock of asset purchases, now set at 375 billion pounds.

That could turn into a majority as soon as Thursday, when the BOE meets to set policy, if a survey two days earlier of the all-important services sector is weak, said Simon Hayes, an economist at Barclays Capital in London.

Further easing by the Federal Reserve is not on the cards. But job figures on Friday are likely to underscore that the U.S. central bank is in no hurry to withdraw its stimulus - the message Chairman Ben Bernanke relayed to Congress last week.

According to a Reuters poll, firms probably added 160,000 non-farm jobs last month, in line with January's 157,000 gain, while the unemployment rate held steady at 7.9 percent.

That is well above the Fed's goal of 6.5 percent. Moreover, federal spending cuts, if not reversed, will stiffen fiscal headwinds and could lop 0.5 percent off growth over the rest of this year, many economists estimate.

Nevertheless, Jim O'Sullivan, chief U.S. economist with High Frequency Economics in Valhalla, New York, is confident that it is just a matter of time before the Fed's ultra-easy policy starts to bear more fruit.

Job growth was already brisk enough to reduce the unemployment rate given a secular decline in the participation rate due to an ageing population, he argued.

"Based on what we're seeing in the labor market, in the battle between monetary stimulus and fiscal drag, the Fed is winning," O'Sullivan said. - Reuters

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Britain ready for war over Falkland Islands

Prime Minister David Cameron said Sunday Britain was prepared to fight militarily to keep the Falkland Islands if necessary, in the face of renewed Argentinian rhetoric over their future.

Cameron said Britain had "strong defences" in place on the islands and fast jets and troops were stationed there -- comments Buenos Aires rejected as "militaristic threats."

President Cristina Kirchner said this week that Argentina was forcibly stripped of the Falklands by Britain in "a blatant exercise of 19th-century colonialism" and demanded they be handed over to Argentina.

Cameron insisted he was "absolutely clear" that Britain would defend the islands with military force.

In an interview on BBC TV, he said: "I get regular reports on this entire issue because I want to know that our defences are strong, our resolve is extremely strong."

Asked whether Britain would fight to keep the islands, he replied: "Of course we would, and we have strong defences in place on the Falkland Islands, that is absolutely key, that we have fast jets stationed there, we have troops stationed on the Falklands."

In Argentina, the foreign ministry issued a strong rebuttal following Cameron's comments.

It hit out at what it called "the aggressiveness of the British prime minister's words" and reiterated its demand that London honour a UN General Assembly resolution that invites the two sides to hold talks on the dispute.

Cameron said this week that the 3,000 residents of the Falklands had a strong desire to remain British and would have a chance to express their views in a referendum on their political status to be held in March.

The islanders are expected to vote strongly in favour of continued union with Britain.

Census data released in September showed that 95 percent of residents considered themselves to be either Falkland islanders, British, or from Saint Helena, another British overseas territory in the South Atlantic.

Argentina invaded the Falklands in 1982, prompting Britain's then prime minister Margaret Thatcher to send a naval taskforce to successfully reclaim the islands in a war that claimed the lives of 255 British and 649 Argentinian soldiers. - AFP

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No education like British education?

I READ with dismay the report “Consider other countries instead of Britain for further studies” (The Star, Aug 22 - see below) suggesting that Malaysian students turn their backs on British institutions of education because of the adverse impact of the British Security Policy on some students.

Such a notion ignores Malaysia’s association with Britain for over 200 years.

Unlike some colonial powers, Britain has stood the test of time in being a strong ally of Malaysia.

They stood by us in one of the most challenging times of the nation by fighting alongside in defending the country against a formidable communist insurgency in which many of them lost their lives, including Sir Henry Gurney the British High Commissioner who was gunned down in 1951.

Jalan Templer in Petaling Jaya stands as a legacy of the contributions of this general to this cause.

It’s easy enough for those who did not live through those anguishing times to brush this aside as the sentimental musings of the past.

Following independence, instead of abandoning the country like some colonial powers, Britain continued to prepare Malaysians to fill the void by training Malaysians in every sphere of education and training to put the nation on its feet, such as the Colombo Plan and thousands of educational aid in the form of subsidies and sponsorships.

Britain has some of the oldest and highly reputable globally recognised institutions of higher learning that have not lost any quality over time despite present-day economic constraints that have put pressure on educational institutions the world over.

The world is a rapidly changing place, burgeoning populations, factional wars and economic pressures are seeing people movement both legally and illegally in unprecedented numbers.

Most seeking a better life and refuge in developed democracies, are going to desperate lengths to get in, by forged or stolen documents and destroying their identifications so as not be be returned to their country of origin.

Western democracies are in a particularly vulnerable position because of the committed values they hold, of freedom and human rights, against people who grossly abuse those values.

Hardened by defiant illegals, who often challenge immigration policies in court through legal aid funded by taxpayers in host countries, border security authorities who have no way of telling the genuine from the bogus, tend to take a hard line in implementing rules to the letter.

As it is the nature of things, well meaning people sometimes become indignant victims of regulations.

The offence felt by honest people who are affected by the application of these regulations is understandable.

But to suggest that Britain should be bypassed as a centre of learning for self-centred reasons, without understanding the reason for these policies, is to mislead prospective students from securing a time- tested quality of education.

PAT ABRAHAMS
Melbourne, Australia

Consider other countries instead of Britain for further studies

SOON, thousands of our youths will leave for Britain to further their studies either on scholarships or self-funded. A lot of money will be spent.

While the majority of the British educational establishments may give value for the money we are spending, there are other choices with the same or even better institutions where we can send our youngsters.

If we must have English as the medium of higher education, places like Australia, New Zealand, Canada or the United States should be considered instead of Britain.

I am advising Malaysian students to choose Britain last for further studies. I am not anti-British or trying to repeat the call of our fourth Prime Minister.

I am giving this advice simply because since the formation of the British Border Agency to deal with visa applications, things have really deteriorated to a very sad state for anyone trying to go for studies or are already studying in Britain.

The British Border Agency is treating Malaysians and any other non-European students as if we are asylum seekers. The inefficiency of the agency in dealing with visa applications makes one wonder if Britain is still a developed country.

Malaysians can now get our international passports within a couple of hours, but the British Border Agency can take a whole month just to let you know that your application is rejected because you missed out on some information.You then need to make a fresh application and pay new application fees.

While it may be a pain getting a student visa to Britain, one can get an Australian visa through online application. So if there is any doubt, just that alone should make one choose Australia instead of Britain.

For those already in Britain and hope to stay back to gain work experience, again you may be disappointed. Even if you manage to get a job, the Border Agency may make life quite difficult for you.

I know of a medical graduate who got a job for two intern years. The Border Agency gave her a work visa two weeks short of two years.

After working a few years there, the same doctor needed to renew her visa which was expiring. Due to technical error, the visa was denied, and this despite that her job contract was still valid. She had to get a lawyer to seek redress in the court just to stay back in Britain.

The worst and the most cruel case I know involves another student stranded in Britain during the long summer break. This poor girl lost her passport, which was replaced without much hassle.

However as her student visa was in the lost passport, she had to submit an application to have her visa in the new passport. She is there on a valid visa which should be in the system of the British Border Agency, yet her application which was submitted more than two months ago is still pending attention.

The Australian government from next year will allow foreign graduates to stay back up to four years after graduating to work. The immigration office is student-friendly.

So my advice to all those planning to go overseas to study is, please just exclude Britain.

GCK Ipoh

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Tesco faces £200,000 fine over illegal foreign workers

Tesco could be fined up to £200,000 after foreign students at one of its warehouses were found to be working illegally, The Daily Telegraph can disclose.

Tesco said it was "co-operating fully" with the UKBA, adding that it had tightened procedures to tackle illegal workers, which it did not condone employing. Photo: PA

Authorities found the students, of almost a dozen nationalities, were working significantly longer hours than their visas allowed at the warehouse operated by Britain’s biggest supermarket chain.

The breaches were discovered after immigration officials swooped on the Tesco.com building in Croydon, south London, last month.

UK Border Agency officials arrested 20 of the students for alleged breaches of visa terms that restricted the amount of hours they could work.

It is understood that at least seven of the students, none of whom has been identified, have been deported. It follows Home Office operations to put a stop to “visa abuse”.

Officials discovered the students, who were predominantly of Bangladeshi and Indian origin, had been working up to three-and-a-half times longer than their visas allowed.

By Andrew Hough
- The Telegraph

Olympics and business

The economic benefits of hosting the Olympic Games have been rather dubious at best

IF you were a hard-core sports fan, you would have woken up at 4am to watch the opening ceremony for the London Olympics this morning. In which case you probably won’t read this until afternoon as you regain some sleep.

Yes, the long-awaited games are upon us and we wait again to see if someone will bring a gold medal home finally. I think our only chance is Lee Chong Wei in badminton who lost the last Olympics final to Lin Dan of China in 2008 and returned with a silver.

What continues to boggle the mind is the cost of the games and how it keeps on going up and up. For Britain, the injection of money into the economy as well as a slew of business opportunities the games must have thrown up must offer some welcome respite from the bad times and even a chance to stem the downturn in the economy.

As former British Prime Tony Blair put it at an event publicising the Olympics: “If you were to pose the question to (fellow bidders) Paris or Madrid or New York ... ‘Would you prefer to be putting on the Olympics right now?’ I’m sure they would say ‘Yes’.”

Well that’s his take on it. The cost of hosting the games is £9.3bil or a massive RM46.5bil. But what is telling is that the original estimated cost was just £2.4bil (RM12bil).

Blair helped to deliver the Olympics to London for 2012 in 2005 over other competitors which included Paris and New York, with Paris being the hot favourite. Given the traditional rivalry between the French and the British, the unexpected victory must have been sweet.

But not so the near quadrupling of the costs in hosting the Olympic games. This has been heavily criticised with people questioning loudly whether London would benefit from hosting the games with costs having increased so much.

Besides, London through its mayor Ken Livingstone, signed off considerable rights to the International Olympic Committee (IOC) which requires cities bidding for the games to sign the contract ahead of the awarding of the games to a particular city.

A lengthy article in Vanity Fair gives a glimpse of such requirements revealed by activist groups. Below is an extract:

“To comply with its terms, London must designate 250 miles of dedicated traffic lanes for the exclusive use of athletes and ‘the Olympic Family,’ including IOC members, honorary members, and ‘such other persons as may be designated by the IOC.’ (These traffic lanes are sometimes called ‘Zil lanes,’ alluding to the Soviet-era express lanes in Moscow reserved for the politburo’s favourite limousines.)

“Members of the Olympic Family must also have at their disposal at least 500 air-conditioned limousines with chauffeurs wearing uniforms and caps. London must set aside and pay for 40,000 hotel rooms, including 1,800 four- and five-star rooms for the IOC and its associates, for the entire period of the games. London must cede to the IOC the rights to all intellectual property relating to the games, including the international trademark on the phrase ‘London 2012.’ Although mail service and the issuance of currency are among any nation’s sovereign rights, the contract requires the British government to obtain the IOC’s ‘prior written approval’ for virtually any symbolic commemoration of the games, including Olympic-themed postage stamps, coins, and banknotes.”

One would be forgiven for thinking that London has surrendered its sovereign rights to the IOC for the period of the games!

Back to business. Lloyds Banking Group chief economist Patrick Foley meantime estimates that the Olympic Games will give a boost of £16.5bil (RM82.5bil), mostly through construction, to the UK economy although how he arrives at that is not clear.

That’s not a lot simply because the direct spend on the Olympics is already £9.3bil and unless such spending has the recurrent ability to reproduce income over many years, it is not justifiable.

Foley points that the bigger impact will be the regeneration of a neglected area of East London which became the Queen Elizabeth Olympic Park. However, it is naïve to think that the area would continue to be as lively after the Olympics and there would be the question of what to do with all that excessive infrastructure post the games.

At best, the benefits of the Olympics for the host city is dubious. At worst, one can argue quite cogently that all that money could have been put for better use in infrastructure and regeneration that would have been more sustainable than for providing facilities for a large and temporary influx of athletes, even if they were world-class, and others.

Meantime, Britain is making the best out of the Olympics. Prime Minister David Cameron just two days before the opening ceremony for the Olympics launched a high-powered attempt to woo global business at a conference to showcase Britain to the world.

Among those for whom the red carpet will be rolled out is a 30-strong delegation from China. Britain is wooing foreign investors in a real big way and using the Olympics to the hilt to do that.

And read what Cameron’s predecessor Blair said to Vanity Fair earlier: “If you said to David Cameron, or anyone involved with this, ‘If you could click your fingers, and the Olympics would be held in Paris instead of London, what would you feel: (a) relieved, or (b) Oh, my God, what did we give that up for?’ it would be b. What you make of the Olympics is in a way up to you. For a country like Britain, it’s a great thing for us to have the Olympics here. We can afford to do the Olympics. We’re Britain. We’re not some Third World country.”

Really? That’s almost a desperate attempt to try and get foreign investments in to help soothe the troubled waters that is the British economy smacks of what many Third World countries would have done to boost their own economies.

A Question of Business by P.GUNASEGARAM

 l Independent consultant and writer P Gunasegaram (t.tp.guna@gmail.com) does not love the Olympics so much as to stay awake until 4am to watch the opening ceremony.

Fragile British economy enters double-dip recession

LONDON, April 25 (Xinhua) -- Britain's economy has fallen into double-dip recession after official figures showed its economy shrank in the first quarter this year.

The Office for National Statistics (ONS) said Britain's gross domestic product (GDP) contracted 0.2 percent in the first three months 2012, meaning the country has slipped back into recession.

Technically, a recession occurs after two consecutive quarters of negative growth. The ONS figures said Britain's GDP in the last quarter of 2011 dropped by 0.3 percent. Britain last experienced recession in 2009.

A HEAVY BLOW

The worse-than-expected economic growth figure has dealt a heavy blow for the ruling coalition led by Prime Minister David Cameron.

The prime minister and Finance Minister George Osborne were "very disappointed" at the figures.

Cameron said: "I don't seek to excuse them. I don't see to try to explain them away. There is no complacency at all in this government in dealing with what is a very tough situation that frankly has just got tougher."

Osborne in his March budget forecast growth of 0.8 percent this year and 2 percent next year. In 2014, 2.7 percent was forecast, followed by 3 percent growth the following years.

The current 0.2 percent contraction in GDP is bad for the coalition government as it desperately seek to grow the economy and eliminate the country's large budget deficit over the next five years.

The government is set to unveil new measures to further limit public spending as part of the government's efforts to meet its austerity targets. Under the new rules, government departments will have to set aside 5 percent of their annual budget to cover unexpected expenses in a bid to discourage them from asking for more money from the central government when emergencies arise.

Osborne said: "It's a very tough situation when you're recovering from these enormous debts that Britain built up in the good years."

Cameron added it was "painstaking, difficult" work, but the government world stick with its plans and do "everything we can" to generate growth.

Labor party leader Ed Milliband said the figures were catastrophic, blaming the government's economic policies for landing the country back in recession.

A GLOOMY OUTLOOK

The latest data from the ONS is consistent with a report released by the OECD predicting the British economy would shrink in the first quarter of 2012, taking it back into recession.

Meanwhile, economists and research institutes have warned that Britain's economy will continue to struggle with factors such as high inflation, rising unemployment and uncertainty in its exports market, which is strongly affected by eurozone debt.

According to the ONS, the recession was mainly driven by a sharp fall in construction sector, which contracted 3 percent and 0.2 percent in the last two quarters. At the same time, the manufacturing sector failed to return to growth.

The services sector, which accounts for a third of the economy, grew only 0.1 percent in the first quarter this year, after a decline of 0.1 percent in the previous quarter.

Production industries output also declined 0.4 percent in the first quarter of this year, and 1.3 percent in the previous quarter.

The latest report issued by the Ernst & Young Item Club said Britain's jobless rate is forecast to rise to 9.3 percent in the middle of next year from the current 8.4 percent, with the number of those seeking work rising to almost 3 million.

Britain's Consumer Price Index (CPI), a major gauge for inflation, will reach 2.8 percent this year and drop to 2.1 percent next year.

The country's consumer spending power continued to deteriorate in March, dropping by 1.1 percent compared to a year earlier, reaching the lowest level since February 2011. - Xinhua

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Britain universities in crisis

Universities in crisis as student numbers fall

Colleges that have offered most to poorer students will be biggest losers as impact of fees bites

London: More than 30 universities are facing a 10 per cent fall in student numbers this autumn, according to figures released Wednesday.

A breakdown of next year's university budgets shows that middle-ranking universities and former polytechnics will suffer as a result of the new funding system, which will see tuition fees rise to up to £9,000 a year.

Worst hit, according to the Higher Education Funding Council for England, will be the University of East London and the University of Bedfordshire, which are likely to suffer falls of 12 per cent.

In all, 34 universities in England will have their student numbers cut by at least 10 per cent.

HEFCE estimates there will be 10,900 fewer student places across the country. Academics said it was universities who had done the most to open themselves up to disadvantaged groups that appeared to be suffering the worst cuts.

By contrast, most of the members of the Russell Group – which represents most of the country's leading research institutions – are set to expand student numbers.

Michael Driscoll, chairman of the million+ university think tank and vice-chancellor of Middlesex University, said the overwhelming majority of institutions were losing student places.

"These allocations show the true extent of the Coalition's reform of fees and funding and the cutback in the overall number of university places being funded," he said.

Sally Hunt, general secretary of the University and College Union, added: "At a time when record numbers of people are out of work, the Government should be making it easier for people to access education."

Although overall student numbers have been cut, under the new system universities can recruit beyond their fixed target so long as they take in students with at least two As and a B at A-level.

In addition, 20,000 places have been set aside for higher education providers charging less than £7,500 a year.

As a result, elite universities with a higher percentage of AAB students tend to benefit, as do further education colleges charging lower fees. An extra 65 such colleges are receiving funding for higher education degrees for the first time.

According to HEFCE, just over 10,000 of the 20,000 places for low charging universities have gone to further education colleges. The shake-up appears to have created a "squeezed middle" among universities, which are unlikely to recruit large numbers of AAB students but are still charging higher fees.

Sir Alan Langlands, chief executive of HEFCE, said he did not believe the changes would see universities "going into substantial financial problems". "All of these can cope with this level of reduction," he added. He said they were all "confident they can ride it out". The Independent

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