Asia Pacific

China backed off its giant stimulus effort Tuesday by reducing the amount of cash banks have available to lend, in the clearest signal yet that the government is worried that the nation's credit binge now risks igniting inflation, The Wall Street Journal reported. China's stimulus program, led by a government order to banks in late 2008 to flood the economy with cash, helped to carry China through global financial turmoil. The economy is now poised to surge past Japan this year as the world's second-largest economy after the U.S.

Russian aluminum giant UC Rusal is "very comfortable" with its debt levels and confident about meeting its debt-restructuring obligations, the company's deputy chief executive said. The executive, Artem Volynets, also said the company has no intention to sell off its 25% stake in OAO Norilsk Nickel, the world's largest nickel company by production, The Wall Street Journal reported. Rusal, run by the oligarch Oleg Deripaska, is raising as much as US$2.59 billion through a share sale in Hong Kong marketed to professional and other select investors.

As much of the world struggles to clamber out of a serious recession, a gradual flow of economic power from West to East has turned into a flood, The New York Times reported. Beijing’s state-run news media, indulging in a moment of self-congratulation, have hailed China’s new economic prominence as proof of national superiority. The country’s economic miracle, the newspaper People’s Daily boasted last week, exists because its leaders — unlike those in other, unnamed nations — can make quick decisions and ensure underlings carry them out.

In a related story, the Associated Press reported that Japan Airlines Corp. is set to cut about 15,600 jobs, a third of its work force, and reject billion-dollar cash offers from Delta and American Airlines, as it files for bankruptcy and embarks on a government-led turnaround. Under a rehabilitation plan now being hammered out by a state-backed corporate turnaround body, JAL would make the job cuts during the three fiscal years through March 2013, Kyodo News reported.

With property prices soaring in key cities, many investors and bankers worry that China has the next great real estate bubble waiting to be popped, The Washington Post reported. The Chinese government is worried, too. On Sunday, the nation's cabinet, citing "excessively rising house prices" in some cities, said it will monitor capital flows to "stop overseas speculative funds from jeopardizing China's property market." It also said that any Chinese family buying a second home must make a down payment of at least 40 percent.

Two Australian Qantas executives have been held in Vietnam and the former boss of joint venture Jetstar Pacific arrested over losses at the budget carrier, The Australian reported. Qantas executives Daniela Marsilli and Tristan Freeman have not been formally charged but were forced to spend Christmas in Vietnam and are still prevented from leaving the country. The two are part of a team seconded to modernise Jetstar Pacific, 27 per cent owned by Qantas.

Japan Airlines Corp.'s biggest commercial creditor banks have proposed a debt-forgiveness package worth more than $3 billion in a major concession designed to coax a state turnaround agency out of placing the struggling carrier in court-led bankruptcy protection, people familiar with the matter said Thursday. The move by the banks to shield their lending comes as U.S. rival carriers, Delta Air Lines and AMR Corp.'s American Airlines, intensify overtures to take a small but strategic stake in Japan Airlines, or JAL, prized for its access to Asian regional air routes despite its financial woes.

AMR Corp's American Airlines raised its offer to invest in Japan Airlines Corp. by $300 million to $1.4 billion, according to people familiar with the situation, intensifying its battle with rival Delta Air Lines Inc. to forge a partnership with the cash-strapped carrier, The Wall Street Journal reported. American met with JAL executives Thursday morning and sweetened its offer, according to these people. Last month, American, along with members of the Oneworld airline alliance and private equity fund TPG, said it would invest $1.1 billion into JAL.

Shares of Japan Airlines fell more than 4 percent on Wednesday after the Nikkei business daily reported the Development Bank of Japan (DBJ) and the Ministry of Finance are seeking court-led bankruptcy proceedings. Sources told Reuters last week that a government-backed turnaround fund was leaning towards bankruptcy proceedings for JAL as part of its restructuring plan, and was in negotiations with creditors to push such a plan. The Nikkei reported on Wednesday the state-owned DBJ, JAL's largest creditor, favours a pre-packaged bankruptcy option. DBJ declined to comment on the report.

American Airlines is considering sweetening its $1.1 billion investment proposal for Japan Airlines and would be willing to invest in the carrier even if it goes into bankruptcy, an American Airlines executive said. Will Ris, in charge of government affairs at American Airlines told Reuters that American Airlines was ready to invest if it applies for bankruptcy protection or is restructured out of court.