China

Factories in China and India joined much of Europe in slashing output and jobs at a record pace in December, another sign the biggest emerging markets were wilting under the recession gripping industrialized nations, Reuters reported. Economists and policymakers had seen China, Russia, India and Brazil, with their vast markets and rising wealth, as the engines of growth that could save the world from recession. Those hopes are fading fast and forecasts are getting gloomier.

China's Lenovo Group, the world's No.4 personal computer maker, is considering a restructuring because of tough economic conditions, China Business News reported on Wednesday. The influential business newspaper quoted unnamed sources as saying Lenovo might merge its Greater China and Russia operations with its Asia Pacific operations. David Miller, president for the Asia Pacific region, is expected to resign and Chen Shaopeng, now president of the Greater China region, would head the merged operations, the newspaper said.

Sanlu Group, which was at the center of China's melamine-tainted milk scandal, has leased its plants to a subsidiary of Beijing Sanyuan Foods Co. Ltd., officials said on Tuesday, the Xinhua News Agency reported. The two sides signed the lease on Monday, and the Hebei Sanyuan company will soon start production at the plants, which shut down on Sept. 12, according to the information office of the Shijiazhuang government, Hebei Province. The plants include four producing dairy products, one packing plant and milk cow farms.

Twenty-two Chinese dairy firms will pay $160 million into a compensation fund for families of babies that died or fell ill after drinking tainted milk, Agence France-Presse reported. At least six babies in China died this year and another 294,000 fell ill after drinking milk laced with the industrial chemical melamine, which is normally used to make plastic. According to the China Business News, the new fund will come into effect from January and pay for medical treatment and operations for diseases caused by the tainted milk.

U.S. car parts maker Delphi Corp. has suspended work at a factory in Suzhou due to shrinking demand amid the global economic slump, a media report and a staff member said Monday. The factory west of Shanghai in the city of Suzhou makes compressors for General Motors Corp. "Unfortunately our only customer in 2009 is GMNA, and this has placed the Suzhou compressor plant in a very dangerous position," the Hong Kong newspaper South China Morning Post quoted a Delphi internal document as saying.

The Financial Times reported that, as a symbol of the extraordinary boom of the past decade, the rise of the big emerging economies rivalled the soaring US housing market. China led the way, followed at a slower pace by the likes of India and Brazil. Though they tried to insulate themselves against the boom-bust cycle by building up foreign exchange reserves, no amount of inoculation could render them completely immune to the virulence of the financial contagion that swept the world in September and October.

Pawn shops, banned during more than three decades of Communist rule from 1956 to 1987, are making a comeback as China’s government tries to ease the credit crunch that is strangling small businesses, Bloomberg reported. In 1997, Beijing only had four pawn shops. This year, Beijing and Shanghai authorized a record 94 new outlets for 2009 in an effort to channel funds to the entrepreneurs who drove the nation’s biggest economic boom, according to the Beijing Pawn Trade Association and Shanghai Pawn Trade Association.

The International Monetary Fund approved a $7.6 billion loan for Pakistan on Tuesday to prevent it from defaulting on its debt and to help stabilize its economy, The New York Times reported. The loan, under discussion for more than a month, at first met strong resistance from the Pakistani government, which sought money on more generous terms from other countries. But Pakistan’s major allies--the United States, China and Saudi Arabia--insisted that it accept the loan and the IMF conditions before they offered assistance.

China's central bank slashed borrowing costs by the biggest margin in a decade, in a strong signal that government efforts to support the economy didn't end with the announcement of a massive stimulus plan just over two weeks ago, the Wall Street Journal reported today. The move, announced Wednesday, brings the benchmark one-year lending rate down by 1.08 percentage points to 5.58%, with the benchmark one-year deposit rate cut by the same margin to 2.52%, the People's Bank of China said in a statement.

Companies around the world are keen to redeploy labor resources and cut costs to cope with the global downturn, but those operating in China may find that laying off people there will not be as easy as previously, Forbes reported. For the ten-month period from January to October, those who lost their jobs numbered 10.2 million, topping Beijing's forecast for the entirety of 2008 by 2.0%, minister of human resources and social security Yin Weimin said at a press conference Thursday. In response, authorities are clamping down on the freedom to dismiss substantial numbers of workers.