Asia Pacific

Japanese industrial production and consumer spending dropped at their sharpest rates on record in March, the government said Thursday, underscoring the impact of the recent earthquake and tsunami and the continuing nuclear plant crisis on the nation's fragile economy, The Wall Street Journal reported. The latest data show how sharply the Japanese economy veered from its recovery track after the March 11 disaster disrupted the nation's supply chains, impaired nuclear power generation and darkened the mood among consumers.

The threat of a cut to Japan’s credit rating adds pressure on Prime Minister Naoto Kan to raise taxes as he wrestles with financing earthquake rebuilding without adding to the world’s biggest public debt burden, Bloomberg reported. Standard & Poor’s lowered its outlook yesterday to “negative” on Japan’s AA- local-currency rating, estimating that costs stemming from the earthquake, tsunami and nuclear crisis may boost budget deficits by 3.7 percent of gross domestic product through 2013.

A new report by the Organisation for Economic Cooperation and Development (OECD) argues New Zealand to favour a capital gains tax, and lift the retirement age, The New Zealand Herald reported. The OECD's latest economic survey of New Zealand, published today, said lacklustre growth reflected structural shortcomings of the economy. As the 2000s progressed, the main sources of rising prosperity had increasingly become commodity-based terms of trade improvements, credit-fuelled capital gains on property, and rising government spending, the OECD said.

The first yuan-denominated share to list on the Hong Kong stock exchange is laying the groundwork for a "seismic change" when China allows its citizens to invest abroad more freely, the exchange's head said. In an exclusive interview with The Wall Street Journal, Charles Li, chief executive of Hong Kong Exchanges & Clearing Ltd., said exchange officials are preparing for much greater outbound investment from China that would drive demand for yuan-linked products in Hong Kong.

Struggling insurer AMI says it does not yet know if any government bailout will be necessary and its boss says it will be weeks before that becomes clear, The New Zealand Herald reported. John Balmforth, chief executive of Christchurch-headquartered AMI Insurance, said the outlook remained uncertain. "The purpose of the Government support was to provide our customers with confidence in AMI and provide us with time to fully assess the situation, particularly that relating to overall claims from the Christchurch 22 February earthquake.

Collapsed insurer Western Pacific has had its policies cancelled by liquidators, The National Business Review reported. Western Pacific had 7000 policyholders, and entered liquidation on April 1 after receiving 78 claims following the Christchurch earthquake. Liquidators David Ruscoe and Simon Thorn of Grant Thornton said they were unable to sell, transfer or assign Western Pacific's business. "We disclaim the insurance policies as onerous property, the effect of which is the cancellation of all policies immediately," they said.

This week, the Government went to its bankers and asked to borrow a record $1 billion in one week—effectively re-mortgaging an already indebted house just as its retirement costs are about to surge and the ability of its taxpayers to support that cost is about to sag, The New Zealand Herald reported in an analysis. How will we repay that debt in 2019? By then many of the baby boomers making the decisions to borrow now and pay later will be retiring, asking for their "free" national superannuation and "free" health care.

With the property market becoming toxic, government officials are considering forcing big commercial banks to create and finance a new firm that would purchase soured construction loans, The Korea Times reported. But it’s debatable whether the so-called ``bad’’ bank would be enough to defuse the risks to financial stability posed by the decaying construction and real-estate market when a recovery seems unlikely in the foreseeable future.

As protests by truckers flared into a third day in China's biggest port city and shippers offered the first indications that trade is being slowed, idled trucks illustrated how inflation worries could gum up the world's No. 2 economy, The Wall Street Journal reported. The truckers' demonstrations and work stoppages, which began Wednesday, are perhaps the starkest sign yet of the widespread public frustration over inflation in China that has persisted despite six months of tightening moves by the government.

China could continue to invest some of its enormous reserves in European government debt, its ambassador to the European Union said Thursday, The Wall Street Journal reported. China has recently bought chunks of Spanish and Greek debt, and its companies are investing across broad sectors of the European economy, including in ports, chemical firms and car makers. Two weeks ago, when Spanish Prime Minister José Luis Rodríguez Zapatero traveled to China, Premier Wen Jiabao pledged his support for Spanish public finances and its banking sector.