TODAY'S BRIEFS Daily News Update - 27 November, 2008 6:46 AM

PBOC announces sharp rate cuts
China's central bank cut interest rates by 108 basis points, the largest cut in more than 10 years, in a bid to boost a cooling economy, the Financial Times reported. Interest rates now stand at 5.58% for loans and 2.52% for deposits. The People's Bank of China (PBOC) also announced cuts in reserve requirements, by 100 basis points for large banks and 200 basis points for small and mid-sized banks to encourage lending. The cuts are seen as a sign that China's economic growth is decelerating more quickly than expected due to weakness in the export and property sectors. By easing lending, the PBOC hopes to encourage banks to back Beijing's recently announced US$586 billion stimulus package. The rate cut announcement helped to boost crude oil prices on hopes of increased Chinese demand.

China to introduce deposit insurance scheme
A plan to insure about 98% of bank deposits in China has been submitted for State Council approval and is expected to be introduced next year, the South China Morning Post reported. The scheme would require financial institutions to buy deposit insurance from the Central Deposit Insurance Corp, which would have the right to borrow from the central bank and Ministry of Finance. The plan will be financed by participating banks. In the event of an insured institution failing, the insurance corporation would compensate depositors. China had US$6.7 trillion in yuan-denominated deposits at the end of October.

Total plans $2bn China gas project
A senior executive of Paris-based Total SA said the company plans to make a final investment decision on investing in a natural-gas block in Inner Mongolia in mid-2009, the Wall Street Journal reported. The company said it would initially invest US$1.5-2 billion in the South Sulige block if its development plan is approved by China National Petroleum Corp (CNPC). Total, which signed a contract with CNPC for the evaluation, development and production of the block in 2006, has already spent about US$130 million on South Sulige, which covers an area of 2,390 square kilometers and has more than 534 billion cubic meters of proven gas reserves. China aims to have gas make up 5.3% of its energy production by 2010, up from 2.8% in 2005.

China signs Greece port deal
China signed a US$5.53 billion deal in Athens to build a container at Greece's Piraeus port, a significantly bigger deal than initial estimates of US$1 billion, the Financial Times reported. As part of the deal, state-owned container operator Cosco Pacific, a Hong Kong-listed subsidiary of Cosco Group, will invest US$787 million to upgrade existing facilities at Piraeus and build a new facility capable of handling larger ships, to be completed in 2014. China hopes the deal will boost trade with emerging markets along the Black Sea and give it control of an eastern Mediterranean transshipment hub. Cosco Pacific had earlier outbid Hong Kong-based Hutchison Ports in an international tender launched in January.

China Southern parent first to receive capital injection
The parent of China Southern Airlines secured a US$439 million capital injection from the Ministry of Finance, Bloomberg reported. Earlier this month, it was reported that parents of both China Southern and China Eastern Airlines would receieve a capital injection before the end of the year. The injection could help the airline to hold a private share sale to help it repay its debts. China's airlines lost a combined US$615 million in the first 10 months of the year. Slower-than-expected air travel growth, rising fuel costs earlier in the year and natural disasters have all contributed to airlines' woes. China Eastern Airlines, which has forecast a full-year loss, is also seeking government funding, while Air China earlier this week announced a tripling of its losses on fuel hedging.

Riot at Guangdong toy factory injures 6
Workers in Zhongtang township, Guangdong province sacked at a toy factory, smashed buildings and clashed with police, after gathering to demand severance pay, AFP reported. Six people were injured and 19 arrested in the riot at the Kaida Toy Factory, a Hong Kong-owned company. Workers said the plant, which employed up to 6,500 people and had been operating for 20 years, had laid off 380 workers on Wednesday last week, allocating severance pay based on length of employment. More layoffs are expected this week. The riots came as China's export sector suffers from lower global demand amid an economic downturn.

China postpones EU summit over Dalai Lama meetings
China postponed an annual summit with the European Union after French President Nicolas Sarkozy announced that he would meet with the Dalai Lama next month in Poland, the Wall Street Journal reported. Other European leaders are also expected to meet with the Dalai Lama. Chinese officials did not comment on the postponement, and no date has been set for another summit. In a statement, the EU said it "regrets" China's decision. The annual summit was to begin on Monday in Lyon.