China to cut rebates

BEIJING: China will cut rebates to exporters of steel, textiles and other basic goods to encourage sales of higher-technology products amid pressure to cut its bulging trade surplus. Export rebates for high-technology goods will increase. The policy was due to take effect in September or October, despite protests from Chinese exporters. A spokeswoman for the ministry of commerce who refused to give her name said she couldn’t confirm the report. China began granting exporters rebates on their taxes in 1985 in an effort to increase foreign trade. — AP

Japan’s debt burden

TOKYO: Rising interest rates will put increasing pressure on Japan’s public finances with debt set to hit the equivalent of 181 per cent of national economic output by the year end. Stronger GDP growth and the end of deflation have yet to transform Japan’s government debt dynamics. Japan’s government debt was the equivalent of 178.2 per cent of GDP in 2005, the highest of any sovereign assessed by Fitch. While higher interest rates are not necessarily a threat to sustained economic growth, they will raise push up the government’s interest payments, underscoring the need for further fiscal adjustment. — AFP

NZ inflation shoots up

WELLINGTON: Alarm bells rang in New Zealand when inflation hit a 16-year high due mostly to the impact of higher oil prices but economists see little prospect of a return of the 1970s oil shock turmoil. New Zealand is caught between the twin perils of a sharply slowing economy and rising inflation but Westpac bank economist Nick Tuffley says that there is no reason to expect a return to the bad old days of stagflation. — AFP