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UNCTAD: Wrong to blame China for US deficit
Geneva: In its annual trade and development report, the United Nations Conference on Trade and Development (Unctad) has said that Japan and Germany need to raise economic growth sharply if the world economy is to correct its growing imbalances, particularly the US current account deficit.

The report said it was wrong to blame surging Chinese exports for the big trade imbalances around the world and to call for a big revaluation of the yuan as a way to reduce them. Supachai Panitchpakdi, the former World Trade Organisation chief and Unctad's new secretary general, said China represented only 8% or so of the total global current account surplus in 2004 whereas Germany and Japan made up nearer 30%, or US$268bn.

"It should not be forgotten that much of the counterpart to the United States' external deficit is to be found in the surpluses of other developed countries. Asian countries are using their surpluses to import more but Europe and Japan are not doing much," he said.

Many economists say that if the US current account deficit is to be reduced, the US economy will have to grow more slowly, cutting down on imports. But Supachai said that a deflationary solution to the world's imbalances would be undesirable because it would mean slower growth. "It will not only jeopardise China's attempts to integrate a vast pool of rural workers and reduce poverty but will also adversely affect the efforts of other developing countries towards achieving the millennium development goals."

According to Supachai, it would be better if Europe, especially Germany and Japan, the world's second and third-largest economies, grew faster and took in more imports.

The report also notes that the past three years saw an almost unprecedented period of strong and steady growth for developing countries as a whole. This was thanks in part to the rapid growth in China and India as well as a rise in commodity prices - driven by surging Chinese and Indian demand - which had benefited many poor countries.
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Oil prices dip as international community pledges release of reserve stocks
New York: Oil prices experienced a sharp drop yesterday as the international community agreed to release stocks from reserves to help avert a fuel crisis threatening the US.

The promise of fresh supplies from International Energy Agency (IEA) countries, hit prices hard with US crude falling by around US$2 a barrel to $67.30, well down on the record high of $71.85 earlier in the week.

The pressure was also eased by the reopening of some of the pipelines and ports along the Louisiana coastline. Royal Dutch Shell said repairs were under way at its 225,000-barrel refinery, and the plant might reopen next week.

Petrol pumps have been running dry and prices soaring after Hurricane Katrina pummelled the Gulf of Mexico, the most important oil and gas-producing region in the US.

The Paris-based International Energy Agency, which coordinates emergency responses to energy crises among its 26 member states, said last night they had agreed to release 2m barrels a day of crude from reserves for an initial 30 days. That is roughly equivalent to the output lost in the Gulf of Mexico as oil platforms have been forced to close. The agency has only once before organised a release of oil, during the first Gulf war in 1991. President George Bush said on Thursday that the US would release oil from its own strategic reserves.

Economists fear that the rising price of oil could have a devastating impact on the American - and consequently the world - economy. It will take around 10 days for the fuel to reach the US from Europe.
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