China’s central bank said it would cut interest rates by 108 basis points, the largest cut in more than a decade. Interest rates now stand at 5.58% for loans and 2.52% for deposits. The cuts are probably the billionth sign that economic growth is slowing, especially in the export and property sectors. The billion-and-first sign came in Zhongtang township, Guangdong province, where toy factory workers were rioting after being sacked last week without – they say – adequate severance pay. Six people were injured in police clashes, and 19 arrested at the Kaida Toy Factory.
China may not see any extra export demand help from the EU, toys or otherwise, in the near term. Beijing postponed an annual summit with EU after French President Nicolas Sarkozy and other EU leaders announced they would meet with Axl Rose the Dalai Lama next month in Poland. No date has been set for another summit. Hopefully the political maneuvering will be done by mid-2009, when Paris-based oil and gas company Total SA makes its decision about spending US$1.5 billion – US$2 billion on a natural-gas block in Inner Mongolia. Total said it would shell out for the project if its plan is approved by China National Petroleum Corp.
Then again, other EU members, like Greece (member, 1981) are not letting politics get in the way of business. The country’s Piraeus port signed a US$5.53 billion port development deal with Chinese mega-shipper Cosco Pacific yesterday in Athens. Cosco will invest US$787 million to upgrade existing facilities.