Asia Pacific

China is more interested in investing directly in Europe than buying European Union debt with its colossal foreign currency reserves, a senior civil servant said Tuesday, The Wall Street Journal Real Time Brussels blog reported. Wang Yiming, a vice director at the National Development and Reform Commission’s macroeconomic research institute, said at the EU-China forum in Brussels that internal discussions about how to invest the country’s $3.2 trillion of reserves are leaning in this direction.

A consortium of 26 lenders to Air India Ltd. has broadly approved a plan to restructure 180 billion rupees ($3.45 billion) debt for the loss-making carrier, an aviation ministry official said Monday, The Wall Street Journal reported. The turnaround plan includes converting some loans into equity, restructuring some at lower interest rates and elongating the repayment tenure for the rest. It was prepared by the state-run carrier in consultation with the government and its consultant SBI Capital Markets Ltd. and recently got approval from the country's central bank.

Airplane-leasing companies are preparing to repossess planes from India's Kingfisher Airlines Ltd. if the troubled carrier's finances deteriorate further, said an executive at one of the companies, Dow Jones DBR Small Cap reported. The executive said that at least two lessors have agents at Kingfisher's offices copying documents relating to their planes. These agents also are monitoring the debt-laden airline's planes to ensure that parts aren't removed in ways that violate lease terms.

China's government said yesterday that it has increased scrutiny of trading houses, and that exchanges set up without Beijing's approval will be banned from trading derivatives and other financial products, the Wall Street Journal reported today. In the January-October period, 58 trading houses were established, the state-run China Daily newspaper said Thursday. "Currently, some trading houses are conducting stock futures trading without regulatory approval.

Data released by the Australian Securities and Investments Commission showed that Queensland's small business owners continue to bear the brunt of uneven economic conditions, making up more than 80 percent of the state's initial insolvency reports, the Courier-Mail reported today. Queensland's small business insolvency is higher than the national average of 78 percent. Of the 1468 initial external administration reports filed for Queensland businesses, 1192 involved companies that employed fewer than 20 people.

India's rupee fell to a record, prompting the central bank to say it is weighing action to stem the worst performance in Asia this year, Bloomberg News reported yesterday. The rupee weakened 0.3 percent to 52.3225 per dollar in Mumbai, bringing its decline in 2011 to 14.6 percent. The BSE India Sensitive Index (SENSEX) of shares tumbled 22 percent in the period as investors sold emerging market assets on concern the U.S. and Europe will struggle to curb deficits.

China and Hong Kong said yesterday that they have doubled the value of a bilateral currency swap to 400 billion yuan ($62.92 billion) as Beijing seeks to expand the pool of yuan set aside to ease any strain on foreign banks that may be under pressure to access the Chinese currency, the Wall Street Journal reported today. The expanded swap agreement allows the Hong Kong Monetary Authority, the territory's de facto central bank, to tap a yuan pool from the People's Bank of China.

Local governments in China are complaining that monetary tightening by the central bank is behind their problems with economic growth, revenue and debt, but if they are hoping that the top leadership in Beijing will alter monetary policy, they are going to have to wait, according to a Reuters analysis yesterday.

Thailand's economy may shrink 3.7 percent this quarter following the worst flooding in almost 70 years, the government said, adding to the case for an interest- rate cut as early as next week, Bloomberg News reported yesterday. Gross domestic product rose 3.5 percent in the three months through September from a year earlier, after climbing a revised 2.7 percent in the previous quarter, the National Economic and Social Development Board said in Bangkok today. It also forecast the contraction and lowered its estimate for 2011 growth to 1.5 percent, from as much as 4 percent earlier.

There is now evidence that the euro zone debt crisis is not only spreading to banks by undermining their ability to fund themselves, but to the major trading partners with the region. In this case, that is China, the Wall Street Journal reported Friday. And what is bad for China is definitely bad for the global economy. In fact, news of a slowdown in China will probably eclipse any of the good news coming out of the U.S. Any negative impact on the U.S. economy from the euro zone crisis may be slower in showing through, even though U.S.