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Intense haggling among the world's trade ministers has brought within grasp a lucrative deal to free the global information technology market, officials said Tuesday, and some said they saw movement on the contentious issue of labour standards.
Big powers, notably the United States and the European Union, said a flurry of talks during the second day of the World Trade Organisation ministerial conference had inched toward a global pact to eliminate tariffs on the $600 billion market for information technology.
Differences appeared to narrow on standards to regulate cheap labour and child workers.
WTO officials want a final declaration at the close of the first ministerial meeting of the fledgling trade body on Friday that would point the WTO down the free trade path into the 21st century.
The EU, along with the United States, Canada and Japan, was making progress to reach consensus on an Information Technology Agreement that would be the crowning achievement of the meeting, EU Trade Commissioner Sir Leon Brittan told reporters.
"We are making a lot of progress," Brittan said after a lunchtime meeting of the four major trading partners to discuss types of products to be covered and timing of tariff reductions.
Acting U.S. Trade Representative Charlene Barshefksy said she concurred with Brittan's comments, but declined to say anything more on the proposed pact to remove tariffs on computer products by 2000.
"There is no question that what the industrialised countries now hope for most here is a deal on information technology products and agreement to work hard for a basic telecommunications pact by February," said one key negotiator.
Signals from negotiators left little doubt the major traders were aiming for agreement as quickly as possible -- perhaps by Wednesday -- to convince Asian trading partners to sign on to the agreement by the end of the meeting on Friday.
Japan's Foreign Minister Yukihiko Ikeda told the conference he hoped "ardently .... that we will have an agreement as the most significant achievement of this ministerial conference in the area of trade liberalisation."
However, several Asian nations voiced reservations, with Malaysia saying the goal of free commerce in infotechnology by the turn of the century was too ambitious.
"We did not come here to discuss the Information Technology Agreement," International Trade and Industry Minister Rafidah Aziz said. "All negotiations should be done in Geneva."
The 128 full delegations from WTO member countries and ministers and officials from nearly 30 others waiting to be admitted heard ringing appeals for progress toward a telecommunications liberalisation pact with a deadline set for mid-February.
Another late-night meeting was called on the issue of labour standards, which has emerged as the most divisive at the meeting.
A Japanese foreign ministry official told reporters that some developing countries that had opposed any mention of the labour issue in the final declaration were taking a more positive position. "A possibility of an agreement has emerged," he said, but addded that some hard-core emerging economies were holding out.
India, Malaysia and Indonesia, for example, have been insisting on no mention at all, arguing that even a neutral phrasing would suggest work conditions were a subject for the WTO.
Aiming to counter lobbying by sceptical Western-based aid groups, the WTO insisted that the poorest nations stood to reap major benefit from the freeing of global commerce.
But WTO officials admitted that Director-General Renato Ruggiero had failed to convince richer members, both industrialised and emerging economies, to remove all tariffs and other barriers affecting goods from the laggard states.
The European Union made little headway in efforts to persuade its main trading partners to jump-start stalled talks on China's bid for WTO admission. But Russia, another major member-in-waiting, expected to win entry by the end of 1997, Russian Deputy Prime Minister Oleg Davydov said.
| 14 |
Officials in a central Chinese region have issued an action plan to stamp out worship by the underground Catholic church loyal to Rome, a U.S.-based church group said on Saturday.
The Communist Party document issued by officials of Chongren county in central Jiangxi province warns against infiltration by overseas religious forces and threats to political stability, said the Cardinal Kung Foundation, which obtained a copy of the document.
The seven-point plan, titled Procedures to Legally Implement the Eradication of Illegal Activities of the Underground Catholic Church, spells out action to be taken from November 25, 1996 to March 31, 1997 to wipe out underground congregations.
Measures include laying good public relations, registering and setting up a file for each religious believer for local and transient Catholics, forcing each undergound Catholic to write a letter denying their faith and to join the official church.
The document blames the growing number of illegal religious believers on "the intensified infiltration of overseas religious enemy and opposition forces, and due to the influence of the illegal activities of the undergound religious force".
Underground believers "used religion to commit criminal activities, seriously disturbing the social order and affecting political stability", it said.
It urges local authorities to employ "resolute, decisive and organised" measures to stamp out the underground church.
A local official reached by telephone in Chongren county refused to comment, saying the issue could arouse widespread international controversy.
China allows Catholics to worship under the auspices of the officially sanctioned, state-sponsored Patriotic Association but forbids allegiance to Rome or the Pope and maintains no diplomatic relations with the Vatican.
Authorities view underground congregations as a threat to party rule.
Aims of what the document called its "glorious assignment" include to "destroy the organisation of the Catholic underground forces" and to "destroy the Church's illegal assembly place".
Teachers engaged in illegal religious studies will be sacked and students are forbidden to carry any religious items.
The document called specifically for large-scale assemblies on Christmas Day to be stopped and exits of villages to be blocked to ensure no one leaves on December 25, 1996.
The plan defined the struggle against underground Catholics as a long-term political goal beyond April 1, 1997.
The Cardinal Kung Foundation is a Roman Catholic group that monitors religious persecution in China and wants recognition of those faithful to Rome.
It listed a string of recent examples of persecution of underground Catholics in China, including the disappearance of Bishop Su Zhimin of Baoding in northern Hebei province, and the jailing of two other bishops.
Bishop Su vanished after some 5,000 troops sealed off the Hebei village of Donglu in May, destroyed a shrine to the Virgin Mary that had drawn tens of thousands of underground Catholics in 1995, and detained two bishops and several priests and lay people, the foundation said.
Bishop Zeng Jingmu, 75, was ordered in March, 1995 to serve three years of re-education through labour after celebrating an undergound mass and a third bishop was jailed after he refused a bribe to join the Patriotic Association, it said.
About 80 underground Catholics were arrested in Chongren county on November 20, it said but gave no more details.
China's Catholic and Protestant churches, both tightly controlled by the state, claim several million believers but many more are believed to worship at underground churches.
| 14 |
China has jailed a Tibetan music expert touring the Himalayan region on a U.S. scholarship for 18 years for spying in one of the harshest sentences ever meted out in the restive region, local radio reported on Friday.
Ngawang Choephel, 30, who was travelling in Tibet as a Fulbright scholar to produce an amateur documentary about traditional music and dance, was detained by the authorities in Tibet in August, 1995, said the broadcast monitored by the British Broadcasting Corp.
The young scholar confessed to having been sent to Tibet by "the Dalai (Lama) clique" on behalf of an unnamed foreign country to conduct espionage activities, the report said in a thinly veiled reference to the United States.
U.S. officials had no immediate comment on the case.
He was visiting "under the pretext of collecting information on Tibetan folk songs and dances", the radio broadcast said.
"In accordance with the Criminal Law of the People's Republic of China... The Intermediate People's Court of Xigaze Prefecture sentenced Ngawang Choephel to an 18-year prison term for committing espionage crime," the radio said.
He was deprived of his political rights for four years.
China has been swift to crack down on any sign of anti-Chinese unrest in the Himalayan region.
Beijing has been especially nervous about anyone with possible links to the exiled Dalai Lama, Tibet's god-king, since he announced in 1995 his own candidate as the reincarnation of the region's second holiest monk, the Panchen Lama. China later presided over the discovery of an alternative reincarnation.
"The striking thing is the length of the sentence," Robbie Barnett of the London-based group Tibet Information Network said in a telephone interview. "It is quite extraordinary."
Ngawang Choephol's sentence was the most severe handed down in a political case since Tibetan monk Ngawang Phulchung was jailed for 19 years in 1989 for subversion after publishing political leaflets, including a manifesto for a democratic Tibet.
Another monk, Jampel Changchup, was also sentenced in 1989 to 19 years in prison for subversion and espionage.
"It does seem to be a provocative decision in political terms because it names three times 'a certain foreign government'," Barnett said.
"It appears to mean the end of any sense that China is susceptible to the international community on human rights issues," he said. "They now feel confident to use counter-espionage laws against political offenders."
Ngawang Choephol left Tibet as a child shortly after the Chinese takeover in 1950 and grew up in India before going to Middlebury College in Vermont in 1993 as a Fulbright scholar in ethnomusicology.
The young man, who once worked as a dance teacher in India, travelled to Tibet in 1995 to make his amateur documentary.
To gain permission to travel to his birthplace, Ngawang Choephol renounced his Indian refugee status and entered Tibet as a Chinese citizen, Barnett said.
He was last reported to have been seen in Nyari prison in Xigaze, Tibet's second largest city in the west of the Himalayan region, in September 1995, shortly after his arrest in the local market.
"It is very unlikely that he was a spy," said Barnett. "He was genuinely making the film he said he was making. No one wold have entrusted him to do this because he was not competent to carry out any hidden activities.
"He is a rather distracted, emotional artist," he said.
| 14 |
China charged on Thursday that politics was holding up its application for entry to the world trade body, the World Trade Organisation (WTO), and said it wanted to join as soon as possible,
"The accession of the applicants to the WTO has been slowed down due to political consideration and the excessive demand for immediate commercial benefits," China's Deputy Minister of Foreign Trade and Economic Cooperation Long Yongtu told the WTO ministerial meeting in Singapore.
In a thinly veiled attack on the United States, Long accused some members of taking advantage of the negotiation process to resolve bilateral trade disputes not relevant to WTO rules.
"As a result, some accession negotiations have encountered undue delay, which has slowed down the process of economic globalisation," he said.
China was bitterly disappointed when it failed in its decade-long bid to join the General Agreement on Tariffs and Trade by becoming a founding member of the WTO at its inception two years ago.
Beijing has met particularly stiff resistance from the United States, which disputes Beijing's demand it join as a developing country and says the size of China's economy means it should enter as a developed nation.
The United States also says Beijing must comply with a "road map" to open its markets and eliminate trade and non-trade barriers before it can win U.S. support for its entry.
Beijing maintains the price of the road map is too high, and talks continue at a snail's pace at WTO headquarters in Geneva.
"The Chinese government has consistently held a positive attitude towards joining the WTO not because we believe the membership will bring out miracles to our economy and foreign trade," he said.
He welcomed an initiative by the European Union to support phased accession for China.
"We...hope the positive attitude will be translated into actions in resolving specific actions in the negotation," Long said.
"On our part, we shall take a flexible, pragmatic and forward-looking attitude and in the hope that other members will do likewise," Long said.
Long said China was keen to join the world trade body as soon as possible and repeated Beijing's official stand that exclusion of the world's fastest-growing economy from the WTO would benefit no one.
Asked when Beijing hoped to see accesion, Long said Beijing had never specified a timetable, but added: "We hope it can be rather quickly."
Senior Chinese analyst Pei Changhong said in an interview last week that China was unlikely to concede on its demand to enter the WTO as a developing country and had the patience to hunker down for a long wait to win accession on its terms.
A goal of 1997 entry seemed an ambitious target given the distance between the United States and China on so many issues, but Pei said he hoped to see entry by 1999.
China's Foreign Minister Qian Qichen said last month that talks with the United States on entry could be wrapped up by mid-1997.
| 14 |
China has moved a step further from its recent radical past with a decision to scrap the crime of "counter-revolution" and replace it with the offence of jeopardising state security, officials said on Wednesday.
The maximum penalty of death for a charge that is most commonly used against political dissidents accused of subversion would remain unchanged.
The proposal to rename the crime of counter-revolution as jeopardising state security was tabled in a draft amendment to the Criminal Law submitted to the Standing Committee of the National People's Congress, or parliament, on Tuesday.
Following approval by the standing committee, the amendment that reduces the scope of the crime to 10 offences from 15 would be sent to the annual session of parliament next March for final ratification, a parliament official said by telephone.
The proposal to change the name of the crime "was made in consideration of changed circumstances and the overall interests of the country", the Xinhua news agency quoted Wang Hanbin, vice-chairman of the Standing Committee, as telling parliament.
The crime of counter-revolution was placed on China's books after Chairman Mao Zedong swept the communists to power in 1949 and launched three decades of radical rule when to be revolutionary were marks of a correct political attitude.
The crime of counter-revolution has for decades been a catch-all to imprison anyone of whose opinions the state disapproved or whose opinions disapproved of the state.
Its victims have ranged from writers condemned as rightists in the late 1950s and those who criticised Mao during the ultra-leftist 1966-76 Cultural Revolution, to teenage students who took to the streets in 1989 to demand more democracy.
Among the most prominent dissidents serving lengthy jail terms for counter-revolutionary crimes is Wei Jingsheng, regarded as the father of China's struggling pro-democracy movement and sentenced late last year to 14 years for plotting to subvert the state.
Wei was previously sentenced to 15 years in prison for counter-revolutionary crimes after he wrote an essay during the 1979 Democracy Wall movement calling for the Fourth Modernisation -- or democracy.
Parliament's Wang praised the use of counter-revolutionary crime to safeguard state security, but said times had changed.
"Political, economic and social development in recent years has given birth to a series of new problems," Wang said, referring to the shift away from revolution to define political correctness that has been generated by the pragmatic reform policies of paramount leader Deng Xiaoping.
Under the draft amendments, counter-revolutionary activities as now stipulated will remain a crime -- with the exception that offences such as murder, manufacturing firearms and stealing guns will be excluded and handled as ordinary criminal acts.
Activities that aim to overthrow the dictatorship of the proletariat -- or subversion -- remain covered by the new crime of jeopardising state security, the parliament official said.
Under other amendments to the criminal law, an act not specifically covered cannot lead to a criminal conviction. Currently, people can be convicted based on a similar crime.
New offences will be added including organised crime, computer crime and manipulating stock markets.
Police acting in the line of duty will no longer bear criminal responsibility for causing death or injury.
| 14 |
China's economic growth is likely to accelerate in 1997 as Beijing pumps up its economy before a crucial Communist Party congress that may tackle nagging reform problems, state media said.
Political factors were likely to be a significant factor in a possible renewed boom next year in one of the world's fastest growing economies, the China Daily Business Weekly quoted Xu Hongyuan of the State Information Centre as saying on Sunday.
However, Xu also warned that the higher growth could see the spin-off of a renewed burst of inflation and warned of rising joblessness, giving one of the most pessimistic unemployment forecasts to be published openly in China.
Gross Domestic Product (GDP) in 1997 could reach 8,178 billion yuan ($985 billion), growing by 10.5 percent compared with an anticipated 9.6-9.7 percent increase this year, the newspaper quoted Xu as saying.
GDP grew by 10.2 percent in 1995 and Beijing's communist rulers have been trying to cool the rate slightly amid signs the economy was threatening to overheat. China has set a goal of eight percent average growth for the 1996-2000 Ninth Five-Year Plan.
Xu linked his higher growth forecast to the five-yearly Communist Party congress, set for late in 1997, which he said was expected to take some difficult decisions to eradicate the low economic efficiency and operational losses plaguing thousands of lumbering state enterprises.
"These political factors, if the government makes use of them smoothly, will provide strong backing to national economic performance in 1997," the newspaper said, quoting Xu.
Diplomats and western economists have said Beijing may try to revive an economic boom in 1997 in the run-up to the party congress as part of a push to bolster the standing of the current leadership before a meeting when personnel reshuffles are a key issue.
Xu forecast retail price inflation to speed up slightly in 1997 to about eight percent from an expected seven percent this year. Inflation was 14.8 percent last year, down from a communist-era high of 21.7 percent in 1994.
Official media have been rife with speculation that China may again trim interest rates after two cuts already this year but central bank officials insist Beijing has no plans to do anything more than "appropriately" adjust a three-year-old tight monetary policy.
Xu said foreign trade was expected to make a strong recovery after exports slumped in the first few months of this year, especially as the government completes repayment of billions of dollars of export rebates to exporters.
He forecast exports to reach $171.5 billion in 1997, up 14.1 percent from 1996.
Xu urged a further cut in import tariffs next year, a move that Beijing has promised and which could lubricate China's bid to gain entry to the World Trade Organisation.
However, Xu forecast a sharp increase in unemployment.
In 1997, the number of people out of work in the urban area could be as many as eight million, including workers left idle because of suspension of factory production, he said.
The urban jobless rate could reach eight percent next year if both surplus workers at factories and registered unemployed were included, Xu said.
China's official registered urban jobless rate was 2.98 percent at the end of September.
| 14 |
Draft amendments to China's criminal law have sparked fierce debate among usually tame lawmakers, with controversy surrounding the scope of the death penalty and whether corrupt state managers should be executed.
The Workers Daily newspaper on Saturday published a rare insight into controversies troubling a string of amendments to the Criminal Law, currently under debate by the Standing Committee of the National People's Congress, or parliament, that meets behind closed doors.
"Looking at the last few days of debate by the standing committee of the draft criminal law amendments, argument on specific clauses has been very fierce," the newspaper said in an unusual expose of controversy in the usually rubber-stamp body.
The criminal law amendments along with a new anti-corruption law were two main items on the agenda of a week-long meeting of the standing committee that began on Tuesday to debate bills to be passed by the full annual session of parliament next March.
"Are there too many death penalties?" was one of the top controversies this week, the Workers Daily said.
"Some people think that, with the international tide moving toward eliminating or reducing the use of the death penalty, even though the current amendments do not increase the number of death penalty clauses, however the current criminal law with more than 30 capital crimes should be reduced," it said.
China executes several thousand people each year and international human rights group Amnesty International recorded 3,612 death sentences and 2,535 executions in China in 1995 compared with 2,496 death sentences and 1,791 executions in 1994. Hundreds, if not thousands more, go unreported.
From January 1, when a new criminal procedures law takes effect, China will add lethal injection as well as execution by firing squad as a new means of capital punishment.
The Workers Daily said another body of legislative opinion held that the death penalty should neither be reduced or eliminated because it served as a deterrent and answered a popular demand for harsher punishments to prevent crime.
Debate also swirled around amendments to combat corruption, including more than 60 clauses that would specifically define graft and dereliction of duty, while increasing to 32 from seven the types of officials subject to the law, the newspaper said.
Heated argument surrounded the designation of managers of state firms as government employees, who are subject to a maximum penalty of death for corruption, it said.
One body of opinion held that government factory managers be defined as public servants since 75 percent of all official cases of corruption involved state enterprise managers.
Others argued this was unfair since managers of non-state firms faced a maximum of only 15 years in jail for graft.
"On this issue, the Supreme People's Procuratorate and the Supreme People's Court hold very different opinions," the newspaper said.
All should be equal before the law, the newspaper quoted the criminal law as saying regarding the need to tackle corruption, which is regarded as the chief threat to Communist rule.
It made no mention of a former Beijing city party boss who was sacked in early 1995 after a vice-mayor committed suicide in a $37 million corruption scandal, but has yet to face charges.
Another source of contention among legislators was a proposal that police acting in the line of duty should bear no criminal responsibility for killing or injuring a suspect.
This proposal had won strong support from the Ministry of Public Security, especially after the deaths of 100 police in the first half of this year, it said.
"Those opposed believe that this regulation could be used as an excuse in cases when casualties result from improper use of weapons," the Workers Daily said.
| 14 |
China hopes for a breakthrough to launch manned space flights early next century and planns to land a spacecraft on the moon in the 21st century, the Xinhua news agency said on Thursday.
Senior Chinese space officials had unveiled an ambitious, multi-million dollar and wide-ranging programme that was aimed at giving the country a competitive edge in international space development, Xinhua said, quoting senior officials.
China is known to be eager to push ahead with its space programme to expand its role in the commercial satellite business while winning international prestige through trumpeting its technological advances, industry analysts have said.
Manned space flights were being given top priority in China's space programme, which includes building a heavy solar satellite in partnership with Germany as well as developing a new generation of lightweight spacecraft to 'bus' satellites into orbit, Xinhua said.
"The country is expected to make a breakthrough in manned space technology at the beginning of the next century," Xinhua said, quoting Wang Liheng, vice-administrator of the China National Space Administration.
Wang gave no more details of the manned space flight programme, which has been rumoured for some time.
However, Li Jianzhong, president of the China Academy of Launch Vehicle Technology, told Xinhua that China was pushing ahead with its goal to boost launch vehicle technology in the 21st century. He said the goal was to build rockets that could carry 20-tonne payloads -- more than twice the current capacity of the nation's most powerful launch vehicles.
China, which put its first satellite into orbit in 1970, has been trying to expand its role in the commercial space market, despite a series of recent setbacks.
In August a Long March 3 rocket, considered one of China's most reliable launch vehicles, failed to put a U.S.-built satellite into orbit. In February, technical flaws had even more disastrous results when a new generation Long March 3B rocket exploded shortly after take-off, killing six people.
Li said China also planned to develop a reuseable space transport system and vehicle re-entry and landing systems.
Cheng Fangyun of the Chinese Academy of Sciences (CAS) said a small spacecraft with low operating costs would be designed.
"China has reliable technology for space tracking, telemetry and control to do this," Xinhua quoted Cheng as saying.
In terms of moon exploration, China planned to provide cheap transport systems for lunar-landing spacecraft to explore the moon and developing lunar resources, Xinhua said.
Xu Fuxiang, president of the Chinese Academy of Space Technology, said items under development included a scientific satellite, the Shijian-5, which was light and cheap and would become a 'bus' for small satellites.
In solar observation, China and Germany were cooperating to produce a two-tonne lunar satellite equipped with a solar telescope. The $100 million satellite was expected to be sent into orbit around 2002, said CAS member Ai Guoxiang.
China has also decided to invest 170 million yuan to build the world's most advanced sky survey telescope that could observe at least 100 million galaxies, he said.
China was working on its own space station, Xinhua said.
It is cooperating with the United States and Russia to build a magnetic spectrograph aboard the Alfa station -- scheduled to be launched early next century -- that was expected to detect anti-matter and dark matter in the universe, Xinhua said.
| 14 |
Jailed, sentenced to labour camps, cowed or exiled, China's pro-democracy activists have virtually vanished.
The latest dissident to be swallowed by China's gulag was prominent literary critic Liu Xiaobo, sentenced on Tuesday to three years in a labour camp. Veteran democracy activist Wang Xizhe has simply disappeared.
Any hopes among Chinese dissidents of a revival of their beleaguered movement may lie with the Nobel Committee in Oslo and whether it decides on Friday to select Nobel Peace Prize nominee and veteran democracy activist Wei Jingsheng.
However, few in China expect Wei, regarded as the father of China's struggling democracy movement and serving the first year of a 14-year jail term, to win the Nobel Peace Prize and thus halt the slow demise of Chinese dissent.
Members of Wei's family said they did not consider him a serious contender because of the strength of competition from front runners such as Richard Holbrooke, the U.S. architect of Bosnia's peace treaty, and former U.S. president Jimmy Carter.
Chinese Foreign Ministry spokesman Shen Guofang voiced outrage at the suggestion on Thursday.
"I have already stressed many times that Wei Jingsheng is a criminal who has broken Chinese law. This kind of criminal basically has no qualifications to win any prize," he said.
Wei was jailed for 15 years for his role in the 1979 Democracy Wall movement when he wrote an article that called for democracy as China's "Fifth Modernisation" and attacked paramount leader Deng Xiaoping as a dictator.
He was released on parole in September 1993 after serving 14-1/2 years and re-arrested the following April. He was sentenced to 14 years last December for plotting to subvert the government.
"Would it make a great deal of difference?" said one Western diplomat when asked about the impact if Wei were to win the Nobel Peace Prize. "It wouldn't get him out any quicker. It would turn the international spotlight on China for a little while but that of itself would not be enough to get the (democracy) movement going again."
Diplomats have expressed surprise at the rash of arrests and convictions of dissidents -- many of them sentenced to the administrative punishment of "re-education through labour" that avoids a complicated trial process.
"My feeling had been that the whole business was under control," the diplomat said. "There are a few who pop up and engage in experiments to annoy the authorities but they are nothing serious or threatening to the regime."
He attributed the new crackdown to a secret plenum of the Communist Party, expected to finish later on Thursday with a statement on the importance of "spiritual civilisation" -- or conformity to orthodox Marxist values.
"Everyone will be expected to think properly and so they may need to tidy up a remaining few loose ends," the diplomat said.
Liu Xiaobo, who gained fame during the 1989 student-led pro-democracy movement, was ordered to serve three years in a labour camp, a term imposed just hours after police detained him during a raid on his Beijing home.
Veteran pro-democracy activist Wang Xizhe, who recently joined Liu in a statement calling for the impeachment of President and party chief Jiang Zemin, had disappeared from his home in southern Guangzhou, his wife said.
On Thursday court officials told the family of Wang Dan, a detained dissident and leader of the 1989 student protests, to hire a lawyer on his behalf, his mother said. The Beijing People's Intermediate Court informed her that she had until Friday to find a lawyer, in a sign that his trial was imminent.
"They have had so many crackdowns in the past that most figures are under lock and key or safely out of the way abroad, and in either case pretty harmless," the diplomat said.
| 14 |
China must tackle the thorny task of state enterprise reform this year, forcing through unpopular layoffs and bankruptcies to halt haemorrhaging losses, economic tsar Vice Premier Zhu Rongji said on Thursday.
Zhu hailed such achievements in 1996 as a high economic growth rate of 9.7 percent, a fall in inflation to 6.0 percent and the swelling of foreign exchange reserves to a record $105 billion at the year-end.
However, he cited two urgent tasks that must be tackled in 1997 -- increasing grain reserves and ensuring incentives to farmers and halting rapidly mounting losses among the state enterprises that form the backbone of China's economy.
About 75 percent of China's more than 100,000 state firms lost money last year and total losses in the government sector soared to 69 billion yuan ($8.3 billion) between January and October, a year-on-year rise of 45 percent.
Zhu blamed the losses on two increases in state prices for farm products, hikes in costs of transport and power, tighter accounting mechanisms, high interest rate payments despite two cuts last year and arbitrary fees by local governments.
However, these were secondary reasons, Zhu told a meeting in Beijing on re-employment in state enterprises.
The three main reasons were duplication of products, the impact of widespread smuggling and the burden of huge numbers of surplus workers employed in state firms, Zhu said.
Many state firms, accustomed to mass-production for a command economy, have struggled to adjust to China's new consumer-led markets and continue to churn out millions of yuan worth of unsaleable goods.
Tackling these problems must be a priority in 1997, he said, if China is to turn around inefficient state enterprises that recorded their first net loss in the first quarter of last year as they struggled in an economy racing to abandon the cushion of central planning in favour of a sink-or-swim marketplace.
Zhu called for reorganising management in state enterprises this year, citing bad management as a major factor in growing losses, and urged active promotion of re-employment projects to help surplus workers or those laid off through streamlining.
He also urged standardisation of the bankruptcy system, which has been used mainly on an experimental basis for the past few years, along with encouragement of mergers.
While proposing the use of mergers rather than bankruptcy to eliminate loss-making state firms, he advised against the sale of an entire company and favoured enterprises taking on a portion of the ailing firm's debt.
The government would write off up to 30 billion yuan ($3.6 billion) of bad debt this year, and this figure could rise gradually in the next few years, Zhu said.
On agriculture, Zhu revealed for the first time the size of China's state grain reserves, which totalled a record 148.5 million tonnes at the end of 1996. That marked an increase of 34.4 million tonnes compared with the end of 1995, he said.
China has estimated its 1996 grain harvest at a record 480 million tonnes, up from a record 466 million tonnes in 1995.
Market prices for grain would not fall and Zhu urged farmers not to sell their grain at low prices to private traders.
Beijing is anxious that farmers continue to grow grain and not turn to more lucrative cash crops and wants to insure that farm incomes do not drop with the record harvests.
| 14 |
Wang Dan's name cards describe him as "Free Man" and "World Citizen", but for the next 11 years the democracy activist's world will be a prison.
The disappearance of the 27-year-old into the Chinese gulag on Wednesday signalled a tightening of the Communist Party's grip on all aspects of life -- from religion to crime, from where people may speak to where they may spit.
The sentencing of the former leader of the 1989 Tiananmen Square pro-democracy demonstrations left only a handful of the country's dissidents free.
The Beijing Number One Intermediate People's Court took less than four hours to convict Wang Dan of plotting to subvert the government.
"What do they really think they have to be afraid of from people like me?" said one prominent dissident after learning that Wang Dan had been jailed.
"Of course, they don't really believe that a kid in his 20s poses a threat," said the dissident, who like others interviewed recently, declined to be identified.
"But by putting him in jail they create a hostage who they can release whenever they feel they need to make a gesture on human rights to the West," said the dissident, who spent the day of Wang's trial with a policeman posted in his living room.
The dissident is one of a rapidly dwindling band still at liberty in China.
Most are either sentenced to lengthy jail terms, serving in labour camps, living in voluntary exile or enforced banishment overseas or just keeping their heads down while the security apparatus seeks pretexts to lock them up and remove what it sees as a potential threat to party rule.
"Don't think for a moment that the aim of sending Wang Dan to jail is just to frighten people like me," said the dissident.
"This is a warning to the United States that says 'We can be tough to our own people and we can be tough to you, too'," he said.
This week, a U.S. State Department official underlined the tensions in the Sino-U.S. relationship by describing China's current leadership as the most difficult that Washington has had to deal with in 25 years.
When U.S. Secretary of State Warren Christopher comes to China in late November he will find few dissidents to add to his cocktail party guest list.
Historian Bao Zunxin, a veteran of the ill-fated 1989 pro-democracy demonstrations who wrote a letter to the government this year calling for a crackdown on corruption, lives quietly in Beijing.
Outspoken environmental champion and author Dai Qing -- who spent months in prison after the June 4, 1989, military crackdown in Tiananmen Square -- writes, campaigns against the huge Three Gorges dam on the Yangtze river and often gives interviews in Beijing to foreign reporters.
Veteran democracy activist Xu Wenli this year completed a 15-year prison term for subversion but has kept silent since a police ban on meeting foreigners and publishing his writings.
Ren Wanding, like Xu a veteran of the 1979 Democracy Wall movement, was released this year from a seven-year term for his role in the 1989 student movement and has kept a low profile, unable to meet foreigners or to vent his opinions.
| 14 |
For 36 years Tibet's biggest leather factory gushed pollution into one of the world's cleanest rivers and haemorrhaged losses.
But help was at hand when Tibet's scenic beauty and devout Buddhist people enchanted visiting German Chancellor Helmut Kohl in 1988.
German aid has since poured in, along with German technicians, transforming the plant into a rare model of environmental awareness on the roof of the world. It has also made its first net profit.
Manager Li Jishan glowed with pride as he described the modernisation wrought at his plant over the last few years.
"When I first came here in 1961 things were really backward. We lived in tents. Can you imagine?" he said in an interview with Reuters.
The leather factory was moved to Lhasa in 1959 from Golmud in neighbouring Qinghai province to provide footleather for thousands of soldiers sent to garrison Tibet after an abortive uprising by Tibetans seeking independence in 1958.
As a state-owned firm that processes yak skins into shoes and handbags it had little incentive to turn a profit. That is slowly changing.
Last year, the China-Germany Joint Venture Lhasa Leather Factory of Tibet reported a profit of 200,000 yuan ($24,000) -- a modest sum but the first in its history.
"We have a good future, our efficiency is good...and with German assistance we are placing great emphasis on environmental protection," said Li, adding that he expected another profit this year.
"The German side is very strict, especially on environmental protection," he noted. "But we get along with them very well."
One problem identified by the German side is one common to most of China's state-owned firms -- the huge surplus labour that is the legacy of jobs-for-life socialism.
"We have had arguments with the German experts who want to fire someone, for example," said Li. "But they have come to understand our point of view and our system."
However, German officials still warn that keeping on a couple of hundred extra staff is bound to affect profits.
German officials said the plant had been an environmental disaster when they arrived, with its tannery spouting stinking waste into the nearby rushing Tolungchu river.
"It was in really bad shape with terrible environmental problems," said Niels von Keyserlingk, director of the office of the German Development Corporation in Beijing that oversees aid to the plant.
"Before, the water was untreated and flowed into the river causing many problems," he said. "But things have been very nicely done. There is no pollution."
All chemicals are recycled now and a German-manufactured system cleans the water, separating waste that is dried for use by local farmers as fertiliser.
"The water that flows into the river is absolutely clean," said von Keyserlingk, who visited the plant last May.
A cement factory on the opposite bank belching dust into the clear mountain area could pose a new environmental hazard.
Germany has given 15 million deutschemarks ($9.8 million) in aid to the plant, which has been allowed to register as a joint venture and thus qualifies for the generous tax breaks and holidays that Tibet offers to foreign investors.
German money has helped to buy the latest in leather processing machinery as well as sewing machines, waste elimination plants and even new solar energy panels that are heating water for the factory.
Sales have soared. The factory held an eight percent share of the Tibet shoe market for years, but in 1994 that jumped to 20 percent and nearly doubled again in 1995 to a 36 percent market share.
"Our products are really popular because they are all leather, and people want that kind of quality," Li said.
The factory is trying to boost sales to the rest of China as well as overseas exports, particularly to neighbouring Nepal.
But it faces awesome transport handicaps in shipping goods from a city that has no rail links and must send merchandise more than 1,000 km (600 miles) over some of China's most difficult roads to the nearest railway station.
"We still need to raise quality and produce more different styles of shoes to compete in the market," said Li, who has clearly picked up some tips from his German market-savvy experts.
"Either you learn to swim in the market or you drown."
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The U.S. government's top Asia official, Winston Lord, was to hold talks with Chinese Deputy Foreign Minister Liu Huaqiu in Beijing on a range of issues including human rights, diplomats said on Wednesday.
Lord, Assistant Secretary of State for East Asian and Pacific Affairs, arrived on Tuesday for the unannounced visit and was keeping a low profile while in Beijing, a U.S. embassy official said.
However he was due to hold talks with Deputy Foreign Minister Liu and a possible meeting with Foreign Minister Qian Qichen was on the agenda before Lord left on Thursday for Japan, diplomats said.
In Washington, State Department spokesman Nicholas Burns said on Tuesday that Lord was preparing for a visit next month by Secretary of State Warren Christopher, but officials said a wide range of other issues would almost certainly be raised.
"Human rights will come up," one diplomat said.
Washington last week sharply criticised the sentencing of dissident Liu Xiaobo to three years in a labour camp, as well as apparent plans to try another pro-democracy activist, Wang Dan, on the capital charge of plotting to subvert the government.
U.S. officials say relations with China have generally improved in recent months, but there have been frictions in the past two weeks over its treatment of dissidents and over fresh reports of Chinese nuclear sales to Pakistan.
"I think all issues are on the table in (Lord's) discussions with the Chinese. It wouldn't surprise me at all if that issue of the alleged sale of items between China and Pakistan came up," Burns said.
Nevertheless, he said Washington continued to maintain that China had not violated past pledges with the sale, which the Washington Times said last week consisted of a special industrial furnace and high-tech diagnostic equipment.
Burns also said human rights issues were likely to be raised.
Diplomats said Beijing would almost certainly be angered by reports that Chinese dissident Wang Xizhe had arrived in San Francisco for asylum in the United States.
A row over human rights scarred Christopher's last visit to China in 1993.
Christopher is due to visit China on November 21-22 on a trip originally announced in July.
The visit would mark the highest point in relations since ties plunged after Taiwan's President Lee Teng-hui paid a private visit to the United States in June, 1995 -- a trip that enraged Beijing.
Both sides have said they are moving towards a possible exchange of presidential visits during 1997.
Among outstanding issues that could spark U.S. anger are the alleged nuclear sales and China's human rights record, while Beijing blames Washington for holding up its application for membership of the World Trade Organisation.
U.S. officials said Lord had considered the possibility of extending his trip beyond South Korea when he left Washington last week, but did not finally decide to do so until he was already in Asia.
Lord came to China after a visit to South Korea to discuss tensions over the beaching of a North Korean submarine on the South Korean coast last month.
"With more and more (listed) firms involving in such takeovers, regulation and supervision has become a tough task," said one analyst with China Guotai Securities.
"The central government should not wait until there are too many headaches before taking measures to sort things out," he said.
But the analyst said that despite the problems, takeovers would be a focus of the stock market over the next few years because of restrictions in other areas, including a ban on mergers between listed firms and unlisted firms.
In the six-year history of modern China's stock markets, there has been no case of a takeover of one listed firm by another.
| 14 |
China is unlikely to concede on its demand to enter the World Trade Organisation as a developing country and has the patience to hunker down for a long wait to win accession on its terms, a senior Chinese analyst said.
"Both sides need to make concessions, but there is one issue of principle on which China will not change," Pei Changhong, head of the department of Foreign Economy and Trade under the leading think-tank, the Chinese Academy of Social Sciences, told Reuters in an interview at the weekend.
"China will only enter as a developing country," Pei said, referring to one stumbling block -- that of Beijing's entry status. The United States insists that the size of China's economy ranks it as a developed country.
"This is a matter of principle," Pei said.
China was deeply disappointed when its application to join the world trade body as a founding member two years ago failed, and talks since in Geneva have proceeded at a snail's pace.
He said he expected little progress when ministers of the WTO's 125 member states meet in Singapore this week, with China attending under observer status, but said China would seize the opportunity to explain its stand in meetings on the sidelines.
"After we gain recognition of our status then the talks could more easily proceed," Pei said. "There may be the possibility of concessions (by China) on some concrete issues."
Pei declined to say where China might be prepared to offer concessions in line with a "road map" presented to Beijing by Washington outlining liberalisations it wants before it will support Chinese membership.
He said China's economy was already remarkably open compared with some of its neighbours such as Japan and South Korea.
"When you go shopping in Beijing you see goods from all over the world on every shelf," he said. "You don't see nearly so many Chinese products on foreign shelves."
Chinese President Jiang Zemin announced at the Asian-Pacific Economic Cooperation forum last month in the Philippines that China would slash average import tariffs to 15 percent by 2000 from the current 23 percent.
Pei said non-tariff barriers still existed in China, citing the service sector as one area to which foreign firms were eager to gain admittance, but insisted Beijing was gradualling pulling down these barriers.
"Opening up requires a process," he said. "It is a fact that China is a backward country and must protect some parts of its economy. The demands on us must not be too harsh."
Pei offered a less optimistic view than China's Foreign Minister Qian Qichen who has said talks with the United States on entry could be wrapped up by mid-1997 as well as WTO chief Renato Ruggiero who has said next year could see a solution to the exclusion of the world's most populous nation from the world trade body.
Pei said 1997 seemed a rather ambitious target given the distance between the United States and China on many issues, but said he hoped to see entry by 1999.
"There are both advantages and disadvantages to China from entry to the WTO," Pei said, setting off the access to worldwide markets for Chinese goods against the cost and competition its domestic industry would face.
"China's stand now is that it is up to the other side," Pei said.
"China actively wants membership but it can wait. It will be good for China to enter but it won't be a catastrophe if we have to wait," he said.
"It is in no one's interests to keep China out."
| 14 |
China's economic growth is likely to accelerate in 1997 as Beijing pumps up its economy before a crucial Communist Party congress that may tackle nagging reform problems, state media said on Sunday.
Political factors were likely to be a significant factor in a possible renewed boom next year in one of the world's fastest growing economies, the China Daily Business Weekly quoted Xu Hongyuan of the State Information Centre as saying.
However, Xu also warned that the higher growth could see the spin-off of a renewed burst of inflation and warned of rising joblessness, giving one of the most pessimistic unemployment forecasts to be published openly in China.
Gross Domestic Product (GDP) in 1997 could reach 8,178 billion yuan ($985.3 billion), growing by 10.5 percent compared with an anticipated 9.6-9.7 percent increase this year, the newspaper quoted Xu as saying.
GDP grew by 10.2 percent in 1995 and Beijing's communist rulers have been trying to cool the rate slightly amid signs the economy was threatening to overheat. China has set a goal of eight percent average growth for the 1996-2000 Ninth Five-Year Plan.
Xu linked his higher growth forecast to the five-yearly Communist Party congress, set for late in 1997, which he said was expected to take some difficult decisions to eradicate the low economic efficiency and operational losses plaguing thousands of lumbering state enterprises.
"These political factors, if the government makes use of them smoothly, will provide strong backing to national economic performance in 1997," the newspaper said, quoting Xu.
Diplomats and western economists have said Beijing may try to revive an economic boom in 1997 in the run-up to the party congress as part of a push to bolster the standing of the current leadership before a meeting when personnel reshuffles are a key issue.
Xu forecast retail price inflation to speed up slightly in 1997 to about eight percent from an expected seven percent this year. Inflation was 14.8 percent last year, down from a communist-era high of 21.7 percent in 1994.
Official media have been rife with speculation that China may again trim interest rates after two cuts already this year but central bank officials insist Beijing has no plans to do anything more than "appropriately" adjust a three-year-old tight monetary policy.
Xu said foreign trade was expected to make a strong recovery after exports slumped in the first few months of this year, especially as the government completes repayment of billions of dollars of export rebates to exporters.
He forecast exports to reach $171.5 billion in 1997, up 14.1 percent from 1996.
Xu urged a further cut in import tariffs next year, a move that Beijing has promised and which could lubricate China's bid to gain entry to the World Trade Organisation.
However, Xu forecast a sharp increase in unemployment.
In 1997, the number of people out of work in the urban area could be as many as eight million, including workers left idle because of suspension of factory production, he said.
The urban jobless rate could reach eight percent next year if both surplus workers at factories and registered unemployed were included, Xu said.
China's official registered urban jobless rate was 2.98 percent at the end of September.
| 14 |
China will accelerate listings of new firms on its two stock markets next year to meet demand and curb speculation, a senior securities official said.
His remarks, published on Sunday, came a week after an official statement warned investors away from excessive speculation, triggering a steep sell-off on the Shanghai and southern Shenzhen stock exchanges.
However, an official of the top securities watchdog, the China Securities Regulatory Commission, sounded another note of caution, saying that the markets needed even tighter regulation because of insider trading, excessive speculation and trading on margin.
"It will remain at the top of our work agenda for a fairly long period of time to further supervise the stock market, and curb over-speculation and irregularities ... to better protect the interests of the smaller investors," Xinhua quoted the unidentified official as saying.
Since the People's Daily editorial one week ago, Shanghai's domestic A share index has tumbled 20.07 percent, standing at 922.34 points last Friday compared with 1,163.05 at the close a week before.
The foreign currency B index fell 3.84 percent to 63.743 points from 66.291 points a week ago after a roller-coaster five days of trading.
China would move more swiftly to list additional firms on the markets, in line with the recent market upswings, Xinhua quoted Zhang Dongsheng, a deputy director of the Finance and Banking Department of the State Planning Commission, as saying.
"This is part of the nation's effort to balance supply and demand in the stock market and curb excessive speculation," Zhang said.
Last week China announced a share quota of 10 billion yuan ($1.2 billion) for 1996 and to be carried over into 1997, almost double the 5.5 billion yuan approved for the previous year.
Analysts said one aim of the decision to flood the fledgling stock markets with new issues was to soak up excess funds that have fuelled a flurry of speculation in recent months.
At its height just a few days ago, Shanghai's domestic A share index had surged more than 100 percent and its Shenzhen counterpart over 300 percent since April, when Beijing announced that it supported development of the stock markets.
In a sign of soaring interest in securities, official figures show 21 million Chinese have now opened trading accounts, up from just 12 million at the start of the year and rocketing from 14 million in September, Xinhua said.
The rapidly growing number of stock investors had caused the market to overheat on a shortage of supply, resulting in runaway price rises and excessive speculation, Xinhua said.
"The current market size allows some institutional investors to manipulate the stock prices and drive them up to ridiculous highs," it quoted Cao Fengqi, a financial expert at prestigious Beijing University, as saying.
"An accelerated expansion of the Chinese stock market will boost the capital market and help pool more funds for capital-strapped enterprises," he said.
Speculation could be curbed only if the market was big enough to handle demand, he added.
Beijing, which says its stock exchanges and futures markets are experiments, was committed to the markets, Xinhua said.
Current market capitalisation of more than 1.33 trillion yuan, almost triple the 1995 figure, accounts for 18 percent of China's gross domestic product, compared with six percent at the end of last year, Xinhua added. ($1 = 8.3 yuan)
| 14 |
Tibet's toilets offer some of the most spectacular views in the world -- if you can hold your nose long enough to enjoy the scenery.
Many tourists on the roof of the world are so overwhelmed by the breathtaking beauty of the Himalayan plateau that such niceties as stinking lavatories are the least of their concerns.
Given the altitude -- 3,680 metres (12,000 feet) in the Tibetan capital Lhasa -- many visitors stifled by the rarefied air scarcely have time to breathe the noxious odours from public toilets with unglazed windows that open on to views of mountains and temples. And most really don't care.
"It's pretty much indescribable. It's vast, overwhelming, awesome, beautiful, interesting," said U.S. tourist Mary Beth Cooper, visiting from Cleveland, Ohio, as she toured the Jokhang temple in Lhasa, holy of holies in a land dotted with Buddhist shrines and sacred sites.
Tourists say they are stunned by the beauty of Tibet's soaring Himalayas, the warmth of its nomadic and deeply devout people and the mysteries of its ancient Buddhist monasteries.
Officials are clearly almost as excited as the tourists as they reel off a list of their achievements in developing Tibet's major industry and the various recreational activities on offer to lure more dollars to one of China's poorest, most backward and inaccessible regions.
Tourism on the roof of the world is a growth sector, officials say. It is the most lucrative source of foreign exchange for this vast, sparsely populated land -- apart from trade -- and is an industry that officials eagerly nurture.
Tibet earned $22 million in tourist dollars last year and is hoping for $30 million this year. It hopes to increase earnings by 8-10 percent a year and to play host to 60,000 visitors a year by the turn of the century.
"We got off to a late start compared with the rest of China," Zhou Lizong, vice director of the Tibet Tourism Bureau, said in an interview.
Tibet inched open its doors to foreign tourism in 1980.
However, the route to 1996 when hundreds of awestruck tourists can be seen panting around Tibet's monasteries and mountains has been fraught with difficulties.
Riots by monks protesting against Chinese rule in 1987 -- a record year for tourism with 47,000 foreign visitors -- was followed by two years of unrest, several months of martial law and a tourism nadir.
"However, since 1990 tourism has gradually recovered," Zhou said. "And since 1992 things have really improved with between 30,000 and 40,000 foreign visitors a year."
Officials acknowledge that Tibet's infrastructure lags, there is a shortage of hotel rooms, especially higher-end accommodation, as well as of transport facilities. The cost of a holiday in Tibet far exceeds a vacation anywhere else in China.
The type of visitor has changed in recent years.
In 1987, only 10,000 foreign tourists came in high-spending organised groups. The rest were low-budget backpackers.
Now, backpackers are few and far between because of a policy imposed from Beijing that requires all visitors to the restive region to obtain a special permit -- and this can only be done through a travel agent and as part of a tour group.
Zhou insists the system has not hampered visitors.
"This does not make it more difficult to come to Tibet, you can, even in a group of just one person."
Backpackers spent little and damaged the natural resources, he said. Some individual foreign travellers were unfortunate enough to freeze to death on Tibet's wild and rugged plateau, said bureau vice Communist Party secretary Xiao Zhigang.
"We are not saying backpackers can't come," he said. "Everyone is welcome."
Beijing and Tibetan security officials may be less welcoming. They blame the huge 1987 influx of backpackers, many of them ex-hippies looking for a cause, for helping to stir up pro-independence unrest over the next two years.
Most tourists said they had few problems entering Tibet -- either because officials did not bother to require a permit or because of the efficiency of travel agencies.
"We have had absolutely no difficulties," said Cooper.
"The temples are magnificent... unlike anything I have seen anywhere," she said. "People are very friendly. Big, big smiles from people... from all sorts of ethnic backgrounds."
One American couple said they took three years to find an agent who could realise their dream of a holiday in the land fabled to be Shangri-La. They were not disappointed.
"Everything is as beautiful as we thought it would be. We are very glad we came," said the husband, who declined to be identified.
Officials say tourists are drawn by three main attractions -- Tibet's natural beauty and towering mountains, its monasteries and temples and its unique and mysterious culture.
That's not all. Tibet offers adventure tours to Everest, the world's highest mountain at 8,848 metres (29,028 ft), to the nature reserve at its foot, trekking with yaks and camping in yak-hair tents and mountain biking.
Not all tourists are bewitched, and several said the highly publicised campaign of Tibet's exiled god-king, the Dalai Lama, for autonomy for his homeland had sparked their curiosity.
"There are positive points such as better sanitation and roads, but the Tibetans have paid a high price," said one French woman tourist. "The Chinese could give them more autonomy.
"When we see the ugly Chinese buildings, the little Tibetan houses seem more beautiful."
Others said they were curious about the politics.
"Our impression is overwhelming," said Norwegian Bodil Borchgrevink Grindal.
"I do not want to say too much about the political situation for several reasons, but as Norwegians we gave the Nobel Peace Prize to (the) Dalai Lama and if we say we supported very much that decision I think we have said what we need to say."
Others just couldn't breathe.
"The altitude makes it very difficult for me," said one Austrian man. "But I am just so glad that I have been able to see something."
| 14 |
China has placed one of its largest investment trusts, stung by real estate losses, under administrative custody, and officials said on Thursday that more such financial firms may suffer a similar fate.
The People's Bank of China, the central bank, ordered the China Agribusiness Development Trust and Investment Corp (CADTIC) placed under the administration of two state banks in early January, local bank officials said.
CADTIC's domestic business had been taken over by the China Construction Bank while its overseas business had become the responsibility of the Bank of China, a construction bank official said.
Bankers said the financial firm that was China's biggest investment trust company after the China International Trust and Investment Corp (CITIC) had overextended itself due to serious mismanagement.
"CADTIC grew too big, it set up too many local branches and its scope of business was too wide," one banker said.
It had extended its business beyond its officially sanctioned scope -- agriculture -- and suffered large losses from real estate investments and had also invested in securities, a banker in Hong Kong said. The huge investment entity was owned by the Ministry of Agriculture.
"This underlines what we suspect -- that irregularities involving firms supposed to be engaged in agriculture business are fairly widespread," said a Hong Kong banker who declined to be identified.
"They are all fairly overexposed to property," he said.
Bank officials said there were no plans yet to close the trust company, but did not rule out that it might be sold off in the future.
A Construction Bank official declined to say whether the bank had plans to buy any or all of the trust company's assets.
The trust firm was still engaged in business as usual, said one CADTIC official who declined to be identified.
The Construction Bank had taken over management of CADTIC's domestic debts while the Bank of China was handling its overseas commitments.
Officials of the central bank declined to comment.
The ministries of Agriculture and Finance began an investigation into the financial situation of the company a year ago, an official of the investment company said earlier.
"It is not possible to shut down CADTIC immediately because the knock-on effects would be very large, there would be a series of problems," said one local banker. "It should be taken over by the banks."
Unlike China's state-owned banks, which can easily attract deposits but face tight restrictions on loans, the financial institutions can operate without any loan limitations, he said.
China was stepping up supervision of financial institutions, and new, tighter rules and more frequent checks were expected to result in several more such actions against firms engaged in irregular business, he said.
Financial institutions could be taken over, ordered to stop business or to merge, he said. Many that had little business, large debts and large losses were expected to close, he said, but declined to give details of the irregularities.
CADTIC has reported assets of about 30 billion yuan ($3.6 billion) and outstanding loans from such international financial institutions as the World Bank.
The Asian Development Bank just last month arranged a $70 million loan through CADTIC to a $185 million fish protection project in the Bohai and Yellow Seas.
| 14 |
Intense haggling among the world's trade ministers brought within grasp a lucrative deal to free the global information technology market and some officials saw movement on the contentious issue of labour standards.
Big powers, notably the United States and the European Union (EU), said on Tuesday a flurry of talks throughout the second day of the World Trade Organisation (WTO) ministerial conference had inched toward a global pact to eliminate tariffs on a $600 billion market for information technology.
Storm-clouds over whether to discuss monopolistic business practices began to disperse. Differences appeared to narrow between North and South as well as North and North on standards to regulate cheap labour and child workers.
WTO officials want a final declaration at the close of the first ministerial meeting of the fledgling trade body on Friday that would point the WTO down the free trade path into the 21st century.
The EU, along with the United States, Canada and Japan, were making progress to reach consensus on an Information Technology Agreement (ITA) that would be the crowning achievement of the meeting, EU Trade Commissioner Sir Leon Brittan told reporters.
"We are making a lot of progress," Brittan said after a lunchtime meeting of the four major trading partners to discuss types of products to be covered and timing of tariff reductions.
Acting U.S. Trade Representative Charlene Barshefksy said she concurred with Brittan's comments, but declined to say anything more on the proposed pact to remove tariffs on computer products by 2000.
Late night talks focused on details, officials said.
"There is no question that what the industrialised countries now hope for most here is a deal on information technology products and agreement to work hard for a basic telecommunications pact by February," said one key negotiator.
Signals from negotiators left little doubt the major traders were aiming for agreement as quickly as possible -- perhaps by Wednesday -- to convince Asian trading partners to sign on to the agreement by the end of the meeting on Friday.
Japan's Foreign Minister Yukihiko Ikeda told the conference he hoped "ardently....that we will have an agreement as the most significant achievement of this ministerial conference in the area of trade liberalisation."
However, several Asian nations voiced reservations, with Malaysia saying the goal of free commerce in infotech by the turn of the century was too ambitious.
"We did not come here to discuss the Information Technology Agreement," international trade and industry minister Rafidah Aziz said. "All negotiations should be done in Geneva."
The 128 full delegations from WTO member countries and ministers and officials from nearly 30 others waiting to be admitted heard ringing appeals for progress to a telecoms liberalisation pact with a deadline set for mid-February.
Another late night meeting was called on the "new issue" of labour standards that has emerged as the most divisive in Singapore.
A Japanese foreign ministry official told reporters that some developing countries who had opposed any mention of the labour issue in the final declaration were taking a more positive position.
"A possibility of an agreement has emerged," he said, but addded that some hard-core emerging economies were holding out.
India, Malaysia and Indonesia, for example, have been insisting on no mention at all, arguing that even a neutral phrasing would suggest work conditions were a subject for the WTO.
Accord was also closer on whether to study competition policy.
"No one was totally opposed to taking up the issue," a Japanese official sid. "We are moving towards a compromise."
Aiming to counter lobbying by sceptical Western-based aid groups, the WTO insisted that the poorest nations stood to reap major benefit from the freeing of global commerce.
But WTO officials admitted that Director-General Renato Ruggiero had failed to convince richer members, both industrialised and emerging economies, to remove all tariffs and other barriers affecting goods from the laggard states.
The European Union made little headway in efforts to persuade its main trading partners to jump-start stalled talks on China's bid for WTO admission.
But Russia, another major member-in-waiting, expected to win entry by the end of 1997, Russia's Deputy Prime Minister Oleg Davydov said.
| 14 |
The watchdogs of China's ruling Communist Party have ordered members to obey a call from party chief Jiang Zemin for ideological orthodoxy -- or face disciplinary punishment, state media said on Saturday.
"The work style of the ruling party is a matter of life and death," the People's Daily quoted a decision by the Central Commission for Discipline Inspection of the Communist Party of China as saying after a meeting this week.
The commission also issued a call for clean government, warning of the threat of corruption to continued party rule.
"Party organisations and members should conscientiously carry on the party's fine traditions and work style," it said.
The statement was issued two days after the party wound up its annual policy-making plenum with a pledge to boost orthodox socialist values that have been eroded by nearly two decades of economic reforms.
"Anyone who violates the sixth plenum's decisions, or who disobeys orders, or engages in harmful activities against socialist ethical and cultural progress, should be strictly disciplined," the discipline commission said.
The party plenum had said spiritual civilisation -- Chinese communist jargon for ideological orthodoxy and toeing the party line -- could not be sacrificed in the name of the economic reforms spearheaded by paramount leader Deng Xiaoping.
The commission echoed the plenum's call for a return to the communist puritanism espoused by the late Chairman Mao Zedong.
"The work style of close links to the masses, criticism and self-criticism, hard work, and building a clean and honest government should also be continued," the commission said.
The ruling party has seen its credibility undermined in recent years after the chaos of the ultra-leftist 1966-76 Cultural Revolution and as loopholes for corruption opened up by economic reform have tempted many senior party officials.
"The crackdown on corruption is one of the important tasks of improving the party's work style and clean government and for promoting ethical and cultural progress," the commission said.
It called on party committees throughout China to intensify their battle against corruption and to severely punish those found guilty of corruption.
Jiang, who is also state president, has warned repeatedly that corruption is a virus that threatens to topple the party.
Jiang had been expected to seize on the plenum as the last chance before a crucial congress in 1997 to underline his role as anointed heir to Deng Xiaoping, who has been fading gradually from the scene, diplomats and Chinese sources said.
He has made clear that he wants to place his stamp on ideology in China.
The party mouthpiece, the People's Daily, has filled its front page for several days with examples of model workers whose socialist values the populace at large should strive to emulate.
Among these is Beijing bus conductress Li Suli, who is said to rise at 4.00 a.m. to make sure she is familiar with major sites along the route so that she can help disoriented passengers. She then washes the bus windows.
Diplomats said Jiang was using the campaign -- coupled with a tough line on the media and ideology -- to boost his position.
| 14 |
Top Hollywood film stars, including screen idols Harrison Ford and Brad Pitt, have been placed on a blacklist of 50 people barred from visiting the restive region of Tibet, Chinese officials said on Friday.
News that some of Hollywood's biggest box office draws were on a blacklist comes just weeks after Beijing clashed with U.S. entertainment giant Walt Disney Co over its film on the life of Tibet's exiled god-king, the Dalai Lama.
Brad Pitt, Harrison Ford and his wife Melissa Mathison Ford as well as directors Martin Scorsese and Jean-Jaques Annaud were among a group of movie personalities on a blacklist held by the Tibet Tourism Bureau, a tourist official said by telephone from the regional capital, Lhasa.
"Last October, we were verbally informed by the Tibet state security office that those foreigners should not be given an entry permit if they applied to visit Tibet," he said.
"At the end of April or in early May, we received the formal documents," he said, when asked if the Hollywood stars were barred from the Himalayan region that has been rocked by sporadic anti-Chinese unrest in recent years.
"They are banned from coming here for any reason," the official said, adding that none of those named on the list had yet applied to visit.
Brad Pitt stars as an escaped Austrian prisoner of war, who fled India in World War Two and found refuge in Lhasa where he befriended the young Dalai Lama, in the film "Seven Years in Tibet" that is directed by Annaud. China has not formally objected to the film.
However, it has apparently tried to halt production by California-based Walt Disney of the film "Kundun" that tells of the Dalai Lama's early life and is directed by Scorsese. Mathison Ford is a scriptwriter for the movie.
Disney has said it will go ahead with the release of "Kundun" despite China's objections. Beijing has denied putting pressure on Disney to withdraw backing for the film.
Beijing has been reported to have warned Walt Disney last month that its ambitious business plans in China were at risk if it went ahead with the release of the movie.
A Foreign Ministry spokesman said Disney would be wrong to sing the praises of the exiled spiritual leader.
The Dalai Lama fled Tibet to India in 1959 after an abortive uprising against Chinese rule and has since waged a non-violent campaign for autonomy for his homeland.
However, the blacklist did not include actor Richard Gere, who has long backed the Tibetan spiritual movement and is an active supporter of the Dalai Lama, the tourism official said.
Gere was among a group of movie luminaries who this month wrote to China's ambassador in Washington protesting against what they called Beijing's "attempt to impose worldwide censorship".
Officials had begun to compile a blacklist of foreigners barred from visiting the restive area in 1993, and the list had now reached more than 50 names, he said.
All foreign visitors to Tibet are required first to obtain an entry permit issued by local authorities who are anxious to keep out Westerners who may support the underground pro-independence movement spearheaded by the region's monks.
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An inaccessible, romantic and mystic Shangri-la where Chinese police torture Buddhist monks is a common Western view of Tibet.
A mysterious, terrifying land where lanterns are made from human skin, skulls are used for goblets and slavery is a recent memory is a widespread Chinese view of this far-flung outpost of Beijing's rule.
Somewhere in between may lie the truth.
"Tibet is constantly used as a Cold War icon by anti-Chinese opportunists," said Robbie Barnett, who runs the London-based Tibet Information Network that specialises in providing data on the human rights situation in Tibet.
For Tibetans prostrating themselves before their beloved Buddhist shrines, buying chunks of yak meat in the Lhasa market or cycling to a disco in the evening, such issues seem far removed from their daily lives.
Tibet's capital Lhasa, one of the world's highest cities at 3,684 metres (12,087 ft), has the air almost of a Wild West town that is rushing to catch up with the rest of the world.
The tap of hammers and roar of drills signal a construction boom that is transforming meadows and wasteland on the edges of the ancient city into a Chinese town like any other.
Many Western human rights groups and pro-Tibet activists cry foul. They speak of the sinicisation, the Han Chinese invasion of a land that belongs to Tibetans. They say that wealth is being concentrated in the hands of a few Han Chinese at the expense of the indigenous people and Tibetan culture is being annihilated.
Beijing says Tibetans in the region number 2.3 million while Han Chinese total fewer than 100,000. No figure is given for the military presence in the strategic region that borders India, with which Chinese troops have fought numerous skirmishes in the past 40-odd years and last went to war in 1962.
Official figures show an economy growing by about 10 percent a year, with rural per capita incomes around 600 yuan ($72) while urban incomes are about 2,000 yuan ($240). Both are still about half the national average but are increasing rapidly.
China chooses to compare the present standard of living with the traditional feudal system of serfs, many now officials, that persisted until well after People's Liberation Army troops marched into Tibet in 1950.
One Tibetan bus driver boasted of earning 100 yuan ($12) a day, a princely sum even for a Beijing cab driver.
Western activists prefer to heed the cause of the exiled Dalai Lama, spiritual leader of Tibet and winner of the 1989 Nobel Peace Prize for his peaceful struggle for autonomy for his homeland since he fled after an abortive uprising in 1959.
"There are a lot of former hippies getting into something they think is an easy ride," Barnett said.
"I do think things are enormously oversimplified," he said. "But fundamental disdain in Tibet for Chinese rule is so prevalent and of such long standing that in many cases it constitutes the basic context or tone within which other events have to be placed."
Tibetan exiles report a revival of traditional Tibetan ways in rural areas, pilgrims come freely to worship in Lhasa and commerce involving Tibetans apparently thrives on almost every Lhasa street corner.
In the main square in front of Lhasa's Jokhang temple, the Tibetan holy of holies, ragged pilgrims with matted hair prostrate themselves in medieval religious fervour and warrior merchants from the eastern Chamdo region mingle easily and chat in the marketplace with plainclothes Tibetan police.
To the visitor, there is little immediate sense of the anti-Chinese tension that prompted angry monks to riot against Chinese rule in the late 1980s.
There is little doubt Beijing would move swiftly to crush political opposition, as it does elsewhere in China. Officials say they are determined not to permit any infringement of Chinese sovereignty and warn repeatedly of the threat from what they call the "Dalai Lama splittist clique".
"Tibetans are resigned to it and accept the way things are," said one foreign resident who declined to be identified.
"They put up with the situation," he said. "There's enough control here that it would cut off anything before it got started."
But any military presence is not overt. Few soldiers are visible in the streets, apparently keeping to their barracks on the city outskirts, as in other Chinese towns, where they can be seen planting trees and whitewashing walls.
While photographs of the exiled Dalai Lama are nowhere to be seen following a ban earlier this year, pictures of Tibet's second holiest monk, the late 10th Panchen Lama, and his seven-year-old official reincarnation are everywhere.
Rural Tibetan homes that in the late 1980s were required to fly the red Chinese national flag now appear free to fly just their own colourful prayer pennants.
Human rights groups say dissidents and monks languish in jail for demanding independence. Many Tibetans appear to have more immediate concerns, such as making enough money from new business opportunities to buy a colour television, build their own home or send their children to school.
Pro-Tibet activists in the West paint a much harsher picture of life in Shangri-la under Chinese rule, and a MiG fighter on display at the foot of the legendary Potala Palace, towering over the capital, could be seen as a symbol of what they would call Chinese occupation.
But shades of grey exist.
"One of the great misfortunes of the Tibetans has been that they have attracted a number of westerners or exiles who have simplified the issues and given the impression that Tibetans are averse to development," Barnett said.
"Most people in Tibet want modernisation but feel they are under foreign rule."
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China's usually rubber stamp parliament failed on Monday to pass an anti-corruption bill after the proposed law fell victim to fierce debate over whether it should specifically target government officials.
State media had reported heated discussion at the week-long session of the standing committee of the National People's Congress, or parliament, that closed on Monday.
Disputes among China's usually tame lawmakers ranged from controversy surrounding the scope of the death penalty as contained in proposed amendments of the criminal law to whether corrupt state managers should be executed.
The draft law on administrative supervision, which would target corruption and had been due to be adopted this week, was eventually withdrawn from voting, the Xinhua news agency said.
The law was withdrawn "because legislators sharply disagreed with the name of the law", it said, quoting parliament chairman Qiao Shi.
Some lawmakers believed the bill should be named the Law On Administrative Supervision in line with its regulation of the government.
However, they ran into opposition on constitutional grounds from legislators who argued it should be called simply the Law on Supervision, without reference to the administration, Xinhua said, but did not elaborate.
Qiao suggested the issue be put forward for a vote at the next standing committee session in February, 1997.
Beijing has launched repeated crackdowns on graft, which senior leaders have called a cancer that threatens the Communist Party's grip on power, but many Chinese say enforcement of anti-corruption measures at senior levels is patchy at best.
Debate had swirled around amendments to combat corruption, including more than 60 clauses that would specifically define draft and dereliction of duty, while increasing to 32 from seven the types of officials subject to the law, state media said.
One source of contention was the designation of managers of state firms as government employees, who are subject to a maximum penalty of death for corruption, it said.
One body of opinion held that government factory managers be defined as public servants since 75 percent of all official cases of corruption involved state enterprise managers.
Others argued this was unfair since managers of non-state firms faced a maximum of only 15 years in jail for graft.
All should be equal before the law, the newspaper quoted the criminal law as saying regarding the need to tackle corruption
The failure of the anti-corruption law to pass came as senior leaders considered whether to punish scandal-hit former Beijing Party boss Chen Xitong -- the highest-ranking victim of China's anti-corruption campaign -- for dereliction of duty.
Under the law, prosecutors would have the powers to investigate a suspect's bank account and ask the courts to freeze bank accounts of those suspected of graft, bribery and embezzlement.
In the first 11 months of 1996, Chinese prosecutors had begun action in 77,611 cases of corruption, bribery and economic crime and had dealt with 33,879 cases, up year-on-year 9.4 percent, the media said.
Corruption was virtually wiped out in the years after the communists took over in 1949 but has staged a comeback after economic reforms were introduced 17 years ago.
| 14 |
China announced a major reform of its huge agricultural system on Wednesday, saying it would take the ambitious step of unifying the price the state pays for grain with the market rate to boost output next year.
In a speech outlining some of Beijing's plans for reform in 1997 to drag China's economy away from Stalinist-style central planning and toward stronger market forces, Politburo member Li Tieying cited reform of lumbering state enterprises and agriculture as two primary objectives.
China would unify the grain purchasing price with market prices next year, Li, the minister in charge of the State Commission for Restructuring the Economy, told a national conference on reform in the southern city of Shenzhen.
The system of cotton purchasing would also be reformed.
He gave no more details of how prices would be unified, but the move appeared to herald the effective liberalisation of grain prices.
Since paramount leader Deng Xiaoping launched economic reform in 1978, Beijing's communist leaders have tried -- and failed -- to free grain prices, falling foul of fears that spiralling prices would make food unaffordable for many of China's 1.2 billion people and spark social unrest.
China's central authorities still buy a certain amount of grain from farmers at set prices below the market rates to ensure ample stores in state granaries.
With a record harvest of 480 million tonnes forecast for this year and with market prices falling closer to the state level, analysts said the time was ripe to unify the system.
Officials said last week grain supply was expected to exceed demand in 1997, with planting and weather conditions indicating a good summer crop next year.
Officials have said difficulties in selling grain would sap farmers' incentive to plant, placing in jeopardy China's ability to feed itself without resorting to huge imports.
Li said the state would separate national grain reserves from regional ones and would divide the responsibilities of the central government from local governments, but gave no details.
Next year the government would also separate losses incurred by state grain enterprises in 1996 from those expected next year and thereafter, he said. He did not give further details.
This year China raised by 20 percent the purchase price it pays to farmers for their grain after holding down increases in 1995 because soaring prices the year before had helped to push inflation to a communist-era high.
Li did not say whether the government would also take the opportunity to force urban consumers to pay market prices for grain, thus extricating state coffers from the burden of huge subsidies when plentiful supplies could curb price rises.
On state enterprises, Li said China would reorganise assets of ailing factories and establish a new system of supervision, while pushing social security and housing reforms.
In 1997, the number of pilot cities chosen for experimental reform of capital structure of state firms would be increased to 100 from 58, Li said. Enterprise groups selected as pilots of reform would almost double to 100 from 57.
The number of key enterprises linked with a sponsoring bank, and thus given easier access to loans during a continuing credit squeeze, would rise to 500 from 300, he added.
More than 45 percent of China's 68,800 state industrial firms registered losses in January-September, a rise of 17.6 percent from the same period last year, latest figures show.
The combined deficit of loss-making state firms hit 65.12 billion yuan ($7.8 billion) in the first nine months of this year, a rise of 45.7 percent from a year ago.
| 14 |
China on Sunday hailed a brief visit by Premier Li Peng to Russia as 43 hours packed with political and business achievements and trumpeted the growth of a power centre to offset the influence of the United States.
Diplomats said the rapid warming of ties between China and Russia was unlikely to signal a major strategic alliance or a return to the close political and military alliance that existed between Beijing and Moscow in the early 1950s.
China's effusive rhetoric to describe Li's Russia trip was meant as a gesture to the West that Beijing could turn to friends other than the United States, diplomats said.
It did not appear to signal a major new power axis between the former bitter rivals for leadership of the communist world, they said.
"The visit... was brief indeed. However, it scored fruitful achievements and had great significance," the People's Daily, mouthpiece of the Communist Party, said in a front-page editorial.
"It is bitingly cold in Moscow in late December, but Li and his entourage felt the warmth of the Russian leaders and people everywhere," the People's Daily purred.
The achievements of Li's 43-hour visit included an agreement for the prime ministers to meet twice a year to monitor progress on building trade and diplomatic relations and a decision that Chinese President Jiang Zemin visit Moscow in April for talks to set the seal on a new level of relations.
The two sides also signed several deals including the supply of Russian Sukhoi Su-27 warplanes and building a nuclear power plant in China's eastern Jiangsu province.
Officials gave no details of the fighter deal, but sources said it involved sale of a complete production line to be built in northeast China. The deal was held up by financing problems and complications from the break-up of the Soviet Union that left Su-27 engine manufacturing lines in Ukraine, they said.
However, the Chinese commentary focused on the political significance of the visit, and a joint communique on strategic cooperation into the 21st century, as important signs of the global importance of the Sino-Russian partnership.
"The world is moving towards multi-polarisation," the People's Daily said.
"Both Russia and China well deserve to be two important and independent poles in the multi-polar world. The establishment and development of strategic partnership between Russia and China is conducive to the multi-polarisation of the world," it said.
"Leaders of both countries made it clear that they do not favour a world dominated by one power," it said, in a scarcely veiled reference to the United States.
Russia's desire to develop close links with China has followed NATO's plans to expand eastwards by admitting Moscow's Cold War allies in Eastern Europe as members of the alliance.
Li, whose meeting with Boris Yeltsin was the Russian president's first with a foreign leader since returning to work after a heart bypass operation on November 5, stressed that China saw the partnership as long-term and not as expediency.
The strategic partnership was directed at no other parties, the People's Daily stressed.
"May Sino-Russian friendship be passed on from generation to generation," it said.
Moscow and Beijing, once bitter rivals for leadership of the communist world, have been building steadily warmer and closer ties since Soviet communism began to unravel a decade ago.
For Russia, democracy has been accompanied by poverty and Moscow sees China as a huge market for its struggling industry.
| 14 |
Days and nights of intense talks on ways to liberalise global trade brought ministers to the brink of agreement on Wednesday although the stormy issue of labour rights cast a shadow on a final deal.
Despite sleepless nights and three days of intense negotiations, World Trade Organisation (WTO) Director-General Renato Ruggiero was buoyant at the inaugural Ministerial Conference of the two-year-old watchdog body.
"I am very encouraged. The sense of achievement is very clear," he told Reuters as he emerged at the half-way stage of the gathering from the latest of several sessions aimed at finalising a declaration for the ministers to sign.
"The road is open to something important, something big," declared Ruggiero, whose horizon has been set on the Singapore meeting since he took up the post 18 months ago just after the body was launched.
"We are deep in negotiation, and I do not want to prejudice anything," he said. "But there have been some very interesting proposals to get over some of the differences. People are ready for compromise to reach agreement."
Haggling in Singapore focuses on a multi-billion dollar Information Technology Agreement (ITA) and wording of the last few contentious clauses in a final declaration to try to include the concerns of all of the organisation's 128 members.
The document is intended as a blueprint consolidating agreements already reached in the 1986-93 Uruguay Round of world trade talks -- in areas ranging from goods tariffs and services to farm produce and textiles.
It will also set the course and the tone for discussions between now and the end of the century on topics not yet fully under the WTO purview such as basic telecommunications, financial and maritime services, and many others.
The big battle has been over whether to include a reference to core labour standards in the document and whether it should include provision for some discussion in the WTO on investment rules, competition policies and the way national authorities award contracts -- or government procurement.
Several countries, mostly Asian, are resisting what they see as a U.S.-driven push to get labour rights on to the WTO agenda and to use the organisation's disputes court to erode the developing world's low-cost labour edge.
When asked if Malaysia would permit a WTO study on labour rights, International Trade and Industry Minister Rafidah Aziz told reporters: "No, no, no way. There is no place for labour issues at the WTO."
The United States, backed by France, Norway and the International Confederation of Free Trades Unions (ICFTU), has been pressing hard for inclusion of the issue in the final text.
Delegates say Washington has insisted the issue be included if it is to back the declaration when the conference ends.
The United States, digging in its heels, says the labour issue involves human rights, eliminating developing world sweat shops, child and forced labour and other forms of worker abuse.
Faster progress was expected on ITA, with delegates scrambling for an accord to free trade in the $600 billion market for computers, software chips and other high-technology products by the year 2000.
Negotiators from the Big Four powers, the United States, Japan, the European Union and Canada haggled in meetings on the sidelines to try to settle differences as early as late on Wednesday on such touchy questions as what products would be covered and the extent of tariff reductions.
"There is not an agreement yet," European Union Trade Commissioner Sir Leon Brittan said after meeting Acting U.S. Trade Representative Charlene Barshefsky.
"There is agreement on many points. There are some outstanding ones. We are trying to resolve those."
A Japanese government source told Reuters earlier that gaps still remained among the Big Four powers, particularly over which products to include.
"We are continuing to work with our Quad (Big Four) partners and with many other delegates to find a formula that will succeed," a U.S. official told reporters.
Washington hopes that in addition to a broad infotech pact by as many countries as possible, the WTO will endorse the ITA deal in its Ministerial Declaration on Friday.
That would allow WTO members unable to sign on now to do so at a later date by presenting revised tariff schedules at the WTO in Geneva, the U.S. official said.
| 14 |
A bomb exploded outside a government office in the Tibetan capital, Lhasa, and Chinese authorities on Sunday described the blast that shattered windows for 100 metres as "an appalling act of terrorism".
The Christmas Day bomb, the largest so far set off by anti-Chinese activists in the restive Himalayan region of Tibet, resulted in no casualties but caused widespread damage, local officials said by telephone from Lhasa.
"It was a huge explosion that could be heard a long way off," said a government official, who refused to be identified.
"This was the biggest bomb blast by counterrevolutionary elements in Lhasa," a party official said. "None of the terrorists has been arrested, but one thing is certain -- this was done by plotters of the Dalai (Lama) clique."
The bomb exploded on the doorstep of the Lhasa City Chengguan District Government Office in the early hours of December 25, ripping apart the gateway to the buildings that house the main city government offices, the government official said.
"Windows for at least 100 metres (yards) around suffered some degree of damage," he said. "But because the explosion was in the middle of the night, no one was wounded."
He declined to give further details.
"The bombing... was an organised, planned, and targeted counterrevolutionary bombing incident staged by the Dalai (Lama) clique," local radio said on Friday quoting a circular issued by the regional Communist Party committee and government.
It was "a serious counterrevolutionary political incident and an appalling act of terrorism", the circular said according to the radio report monitored by the British Broadcasting Corp and made available on Sunday.
The London-based Tibet Information Network (TIN) said five people were wounded, some seriously. They included two nightwatchmen at the office and shopkeepers living nearby.
A nearby branch of the Bank of China was also reported to have been damaged along with two hotels, TIN said.
"The act of terrorism staged by the Dalai (Lama) clique is opposed by the people of Lhasa City, as well as by people all over the world," the party broadcast said.
"It fully demonstrates that the Dalai clique has cast off its previously so-called peaceful disguise to openly oppose the people of Tibet and has reached a point when it puts up a last-ditch struggle," it said.
China regularly blames followers of Tibet's exiled god-king, the Dalai Lama, for anti-Chinese unrest that erupts sporadically in the strategic mountainous region that straddles the Himalayas and runs along China's sensitive border with India.
The Dalai Lama, who won the Nobel Peace Prize in 1989 for this non-violent campaign to win autonomy for his homeland, says he wants self-government and freedom of worship in the deeply religious Buddhist region. He fled China in 1959 after an abortive uprising against Beijing rule.
Speaking at a meeting of party officials in Lhasa on Friday, the vice chairman of the autonomous regional government, Gyamco, called for a campaign of retaliation.
"We should wage a tit-for-tat struggle against the Dalai clique's sabotage," he said.
"We should, once again, stage another campaign across Tibet to thoroughly expose and criticise the Dalai clique, heighten our alertness and strengthen preventive measures so as to keep the situation stable," the radio quoted him as saying.
Several much smaller bombs have been been set off in Lhasa over the last two years, including one in 1995 that caused slight damage to a plaque donated by Beijing and another last March outside the headquarters of the Tibet regional government.
| 14 |
China defended on Saturday its decision to exercise its veto at the United Nations for the first time in nearly a quarter of a century, killing a U.N. plan to monitor disarmament and a ceasefire in Guatemala.
"We had no choice but to vote against the draft decision on peacekeeping," the Xinhua news agency quoted Foreign Ministry spokesman Shen Guofang as saying.
"Clearly, the government of Guatemala must be wholly responsible," he said and made clear that China had no objection to the dispatch of U.N. peacekeepers to oversee a peace that ended a brutal 36-year-old civil war.
Shen accused Guatemala of forcing China to exercise its veto because the Central American country had maintained ties with Taiwan, which Beijing regards as a renegade province not entitled to international diplomatic links.
At a late Friday night meeting, all Security Council members except China voted in favour of a resolution that would have sent 155 peacekeepers to Guatemala for three months under a U.N.-brokered peace accord signed on December 29 between the government and leftist rebels.
In Beijing, the Foreign Ministry spokesman said Guatemala was to blame not only for recognising Taiwan but for joining a number of other small countries since 1993 to sponsor a General Assembly resolution aimed at securing U.N. membership for the Asian economic powerhouse.
Shen also lashed out at Guatemala's decision to invite Taiwan Foreign Minister John Chang to last month's peace signing ceremony in Guatemala City.
China had offered solutions to the impasse but Guatemala had remained resolute, Shen charged.
"Guatemala cannot expect on the one hand to do something that harms the sovereignty and territorial integrity of China while on the other hand requesting China to cooperate on peacekeeping," Shen said.
The negative vote on Friday by China, which along with the United States, Britain, France and Russia, has veto power in the 15-member council, meant that Council President Hisashi Owada of Japan had to announce that the resolution had failed.
It was China's first U.N. Security Council veto in nearly 24 years.
Taiwan has given generous economic aid to several small, impoverished states around the world in its bid to break out of a diplomatic isolation imposed by China. Taiwan was expelled from the U.N. in 1971 and replaced by Beijing as the rightful representative of China.
Under the peace accord, Guatemala's army would redeploy units to specified locations, after which troops from the rebel Guatemalan National Revolutionary Unit (URNG) would move to eight assembly points and disarm. The U.N. observers were to verify the process.
The drafters of the resolution -- the United States, Mexico, Colombia, Venezuela, Spain and Norway -- decided to push ahead with the vote, despite China's threat of a veto, saying that further talks could not overcome the differences.
China had never spelled out publicly what Guatemala was expected to do. But diplomats said it sought a pledge to refrain from sponsoring further pro-Taiwan U.N. resolutions and to stop receiving high-ranking Taiwanese visitors.
| 14 |
China's restive Tibet region appeared certain on Sunday to fall under the shadow of a renewed campaign of intimidation after a music student was jailed for 18 years for spying and a bomb rocked the capital.
"The bomb attack, especially such a big explosion, is a real slap in the face," said one Tibet observer who declined to be identified. "The authorities really don't know any other way but the knee-jerk crackdown response."
A senior local government leader signalled that a new round of intimidation in the deeply Buddhist Himalayan region was essential to tackle such challenges to Beijing's sovereignty.
"We should wage a tit-for-tat struggle against the Dalai (Lama) clique's sabotage," Gyamco, vice chairman of the regional government, was quoted by local radio as telling a Friday meeting of party government officials in Lhasa after the December 25 blast.
"We should, once again, stage another campaign across Tibet to thoroughly expose and criticise the Dalai clique, heighten our alertness and strengthen preventive measures so as to keep the situation stable," the radio quoted him as saying.
The explosion was certain to trigger further official rhetoric against the Dalai Lama, Tibet's exiled god-king, whom Beijing accuses of fomenting anti-Chinese unrest in the strategic mountainous region that borders India, analysts said.
The Dalai Lama, who won the Nobel Peace Prize in 1989 for his non-violent campaign to win autonomy for Tibet, says he wants self-government and freedom of worship in the region.
He fled China in 1959 after an abortive uprising against Beijing rule.
Police had set up new checkpoints on the road west from Lhasa, visited hotels to question Tibetan guests, particularly exiles from India, and begun house-to-house questioning of young Tibetan men, the London-based Tibet Information Network said.
Diplomats said the extraordinarily harsh prison sentence meted out to music scholar Ngawang Choephol underlined the determination of authorities in the region to stamp out even the smallest activity that lacked an official sanction.
Ngawang Choephel, 30, was jailed last Friday by a court in Tibet's second city, Xigaze, for 18 years for spying, in one of the harshest sentences ever meted out in the region.
The student, a former Fulbright scholar in the United States, disappeared into China's security limbo in August 1995 while travelling in Tibet to produce an amateur documentary film about traditional music and dance.
The young scholar confessed to having been sent to Tibet by "the Dalai (Lama) clique" on behalf of an unnamed foreign country to conduct espionage, local radio said in a thinly veiled reference to the United States.
Washington voiced concern at the sentence, and said it knew nothing of his activities other than making a documentary.
"It appears to mean the end of any sense that China is susceptible to the international community on human rights issues," Robbie Barnett of the Tibet Information Network said after hearing of the sentence.
"They now feel confident to use counterespionage laws against political offenders," he said late on Friday.
But with the largest bomb explosion yet reported in Tibet rocking Lhasa before dawn on December 25, a renewed crackdown on anti-Chinese unrest appeared inevitable.
One Tibetan government official reached by telephone in Lhasa on Sunday said he could not comment on the bomb blast because he was too busy conducting a rectification and discipline drive in Lhasa's temples and monasteries.
The bomb exploded outside the main city government office in Lhasa, shattering windows in a 100-metre (yard) radius and prompting officials to condemn the blast as "an appalling act of terrorism". They said no one was wounded in the explosion.
"The act of terrorism...fully demonstrates that the Dalai (Lama) clique has cast off its previously so-called peaceful disguise to openly oppose the people of Tibet and has reached a point when it puts up a last-ditch struggle," local radio said.
| 14 |
China is unlikely to concede on its demand to enter the World Trade Organisation as a developing country and has the patience to hunker down for a long wait to win agreement to its terms, a senior Chinese analyst said.
"Both sides need to make concessions, but there is one issue of principle on which China will not change," Pei Changhong, head of the department of Foreign Economy and Trade under the leading think tank, the Chinese Academy of Social Sciences, told Reuters in an interview over the weekend.
"China will only enter as a developing country," Pei said, referring to one stumbling block -- that of Beijing's entry status. The United States insists that the size of China's economy ranks it as a developed country.
"This is a matter of principle," Pei said.
China was deeply disappointed when its application to join the world trade body as a founding member two years ago failed, and talks since in Geneva have proceeded at a snail's pace.
Pei said he expected little progress when ministers of the WTO's 125 member states meet in Singapore this week, with China attending under observer status, but said China would seize the opportunity to explain its stand in meetings on the sidelines.
"After we gain recognition of our status then the talks could more easily proceed," Pei said. "There may be the possibility of concessions (by China) on some concrete issues."
Pei declined to say where China might be prepared to offer concessions in line with a "road map" presented to Beijing by Washington outlining liberalisations it wants before it will support Chinese membership.
He said China's economy was already remarkably open compared with some of its neighbours, such as Japan and South Korea.
"When you go shopping in Beijing, you see goods from all over the world on every shelf," he said. "You don't see nearly so many Chinese products on foreign shelves."
Chinese President Jiang Zemin announced at the Asian-Pacific Economic Cooperation forum last month in the Philippines that China would slash average import tariffs to 15 percent by the year 2000 from the current 23 percent.
Pei said non-tariff barriers still existed in China, citing the service sector as one area to which foreign firms were eager to gain admittance, but insisted Beijing was gradually pulling down these barriers.
"Opening up requires a process," he said. "It is a fact that China is a backward country and must protect some parts of its economy. The demands on us must not be too harsh."
Pei offered a less optimistic view than China's Foreign Minister Qian Qichen, who has said talks with the United States on entry could be wrapped up by mid-1997 as well as WTO chief Renato Ruggiero, who has said next year could see a solution to the exclusion of the world's most populous nation from the world trade body.
Pei said 1997 seemed a rather ambitious target given the distance between the United States and China on many issues, but said he hoped to see entry by 1999.
"There are both advantages and disadvantages to China from entry to the WTO," Pei said, setting off the access to worldwide markets for Chinese goods against the cost and competition its domestic industry would face.
"China's stand now is that it is up to the other side," Pei said.
"China actively wants membership but it can wait. It will be good for China to enter but it won't be a catastrophe if we have to wait," he said.
"It is in no one's interests to keep China out."
| 14 |
Leading Chinese dissident Liu Xiaobo has been ordered to serve three years in a labour camp in a term imposed just hours after police detained him and a second pro-democracy activist was missing, relatives said on Wednesday.
Veteran pro-democracy activist Wang Xizhe, who recently issued a joint statement with Liu, appeared to be missing from his home in southern Guangzhou, his wife said by telephone.
Police had notified Liu Xiaobo's wife early on Wednesday of the administrative three-year sentence, which does not need a court trial, but gave her no reason for the punishment.
"They have still had no formal contact with me or given me a reason," Liu Xia said in a telephone interview late in the day.
"I am very angry. How can they do this?," she said. "He did not do anything illegal. All he did was exercise his freedom of speech... Citizens have freedom of speech..."
She said she had not yet decided whether to appeal on his behalf.
The administrative punishment was passed against Liu just hours after he was taken from his Beijing home early on Tuesday by a group of uniformed and plainclothes police, with a search warrant, who also confiscated books, papers and photographs.
"Re-education through labour is the personal power of the public security bureau, it doesn't have to go through judicial departments," Liu Xia said. "The public security can just do as they wish."
Police officials declined to comment.
The administrative punishment of re-education through labour has been increasingly used against dissidents in recent months as a means of removing activists from circulation while avoiding the more complicated trial process, diplomats say.
Police gave no reason for the detention of Liu, a renowned literary critic who gained fame as a dissident in the 1989 student-led pro-democracy movement that was crushed by the military with heavy loss of life.
Liu has been active in recent months, sending several daring, open letters to the government.
On September 30, Liu and Wang issued a statement urging China's communist authorities to honour a promise in 1945 to give people freedom of the press and speech and to form political parties and stage demonstrations.
In a bold move, the two demanded Communist Party chief Jiang Zemin be indicted, impeached and step down for violating the constitution for saying the People's Liberation Army was under the "absolute leadership" of the party instead of the state.
Wang did not return home on Tuesday and his wife said she was very worried because he had not responded to his pager.
Wang was paroled in 1993 after serving 12 years of a 14-year term for sedition and remains deprived of his political rights. He is one of China's most outspoken proponents of democracy.
Liu was last detained by police in 1995 after orchestrating several daring petitions to parliament by dissidents and intellectuals in the early months of the year. He was held for seven months without charges until being released in January.
His sentence comes shortly after Chinese sources said dissident and former student leader Wang Dan faced a second jail term after prosecutors charged him recently with subversion.
Wang, 26, faces up to seven years in jail on charges of counter-revolutionary incitement -- or subversion.
Wang, who is believed to have worked with Liu on several daring petitions, was detained in May, 1995 in the run-up to the sixth anniversary of the June 1989 military crackdown.
| 14 |
If foreign governments thought Beijing listened to pleas on human rights, they may have to think of new means of persuasion after a Beijing court jailed one of China's few dissidents still at liberty for 11 years on Wednesday.
In a trial lasting less than four hours, the Beijing Number One Intermediate People's Court ensured that Wang Dan, the pale, thin student leader who topped China's most wanted list after the 1989 demonstrations for more democracy, would spend most of his young adult life behind bars.
The conviction of the 27-year-old democracy activist on the capital charge of plotting to overthrow the government marked the disappearance of one China's few remaining dissidents into the Chinese gulag.
"It's really a slap in the face to those Western governments that have repeatedly asked China to improve its human rights record," said one Western diplomat.
He noted that the sentencing came just a week after a visit by German Foreign Minister Klaus Kinkel and amid preparations for a trip by U.S. Secretary of State Warren Christopher in late November.
Another Western diplomat said China was not impervious to concerns about its human rights record raised by foreign governments, adding that it was possible that without foreign pressure such jail terms could be even longer.
Western diplomats said the swiftness of the trial and the severity of the sentence were part of a nationwide tightening of controls by the Communist Party.
"They may see deterrent value in a stiff sentence," said one Asian diplomat. "It dissuades other would-be Wang Dans from taking a similar course of action."
Diplomats said the sentence was remarkably light given the severity of the charges, which carried a maximum punishment of death and a minimum of 10 years in jail -- although the penalty was tough if the evidence was taken into consideration.
"This is not seriously heavy by the standards of the charges and the potential that existed," the second Western diplomat said. "But in the light of what we understand him to have done, yes, it's heavy... A sledgehammer to crack a walnut."
The verdict against the former most-wanted leader of the 1989 demonstrations for more democracy charged he received funds from overseas hostile forces, gave financial aid to families of jailed dissidents and tried to set up an "opposition force" by uniting illegal organisations.
"It's sort of difficult to see why they should be so frightened of this," the second Western diplomat said in a reference to China's communist rulers.
However, he said that in recent months Beijing had moved to virtually eradicate any remnants of China's struggling democracy movement.
"In the last few weeks the few remaining (dissidents) have either run away or been dealt with," he said referring to the sentencing of dissident Liu Xiaobo to three years in a labour camp and the escape to the United States of Wang Xizhe, his co-author of a call to impeach President Jiang Zemin.
"There is not very much left. The Chinese do have pretty tight control and they are making sure that they maintain it that way," he said.
"You can see a general sort of tightening up -- dissidents, religion, the Dalai Lama, crime, ideology -- you can just tick them off."
| 14 |
The family of detained Chinese dissident Wang Dan said on Sunday the former student leader could stand trial this week for the capital offence of plotting to overthrow the government. They said the charge was unfounded.
"Not one point in the bill of indictment broke the law, even less to speak of plotting to overthrow the government," his mother Wang Lingyun said in a telephone interview.
The 26-year-old former leader of the 1989 pro-democracy demonstrations has been charged with the capital offence of plotting to subvert the government, based on evidence such as writings critical of the state and accepting funds from abroad.
"All he did was to say a few things," Wang Lingyun said. "He is unjustly accused."
"He has always advocated peace and non-violence," she said. "There must be action or plans to constitute "overthrowing the government'."
She said the family had yet to be notified of when her son's trial would take place, but she said it could come this week.
Relatives said on Friday they had found a lawyer willing to defend Wang. The lawyer had already visited the court dealing with Wang's case to begin legal formalities, they said.
The Beijing People's Intermediate Court had informed Wang Lingyun on Thursday that she had one day in which to find her son a lawyer, a signal that a trial was imminent.
Wang was detained by police in a raid on his home in May 1995 but was not formally arrested or charged until last week.
On Friday the family obtained a copy of the court indictment, which accused Wang Dan of plotting to subvert the government, a crime that carries a maximum penalty of death. The minimum sentence is 10 years, although the court can show leniency if it finds extenuating circumstances.
Wang has already served four years in prison for counter-revolutionary crimes, or subversion, for his role in the 1989 demonstrations centred in Beijing's Tiananmen Square, which were crushed by the army with heavy loss of life..
The indictment cited four major areas of evidence against Wang, the New York-based Human Rights in China said.
The first was the writing of articles published in overseas magazines and newspapers, including some that criticised the government, in the three years since his release from jail.
Other evidence against the former Beijing University student included taking part in studies at home organised by the University of California, Berkeley, in the United States, Human Rights in China said.
The charges accused Wang and other dissidents of joining forces to collect funds and donations to help other dissidents facing difficulties and failure to find work after their release from prison, the group said.
Wang was also accused of accepting donations and economic aid from overseas organisations, it said.
Wang had been expected to face new charges since last December, when the court that convicted veteran democracy activist Wei Jingsheng -- a nominee for this year's Nobel Peace Prize -- of plotting to overthrow the government also implicated the former student leader.
The court's verdict said Wei, who was jailed for 14 years, had links with people "convicted of counter-revolutionary crimes, including Wang Dan". It also referred to a tape-recorded conversation between Wang and Wei, but gave no details.
Wang had been active since his release from jail, defying persistent police surveillance and harassment to join in a daring appeal to communist leaders for the release of all those still in prison for their part in the 1989 protests.
| 14 |
Detained Chinese dissident Wang Dan faces the capital charge of plotting to subvert the government based on evidence such as writings critical of the state and accepting funds from abroad, a human rights group said on Saturday.
Wang Dan's case was expected to come to trial next week, the New York-based Human Rights in China said in a statement.
Relatives said on Friday they had succeeded in finding a lawyer willing to defend Wang, the former leader of the 1989 student demonstrations for more democracy centred in Beijing's Tiananmen Square.
The Beijing People's Intermediate Court on Thursday informed Wang's mother, Wang Lingyun, that she had one day to find her son a lawyer, a signal that the dissident had been indicted and a trial was imminent.
The family on Friday obtained a copy of the court chargesheet, which formally accused the 26-year-old of plotting to subvert the government, a crime that carries a maximum penalty of death.
The indictment cited four major areas of evidence against Wang, Human Rights in China said.
The first was the writing of articles published in overseas magazines and newspapers, including some that criticised the government, in the three years since his release from jail.
Wang served four years in prison for counter-revolutionary crimes, or subversion, for his role in the 1989 demonstrations, which were crushed by the army on June 3-4 with heavy loss of life.
Other evidence against the former student at prestigious Beijing University included taking part in studies at home organised by the University of California, Berkeley, in the United States, Human Rights in China said.
The charges accused Wang and other dissidents of joining forces to collect funds and donations to help other dissidents facing difficulties and the lack of work after their release from prison, the group said.
Wang was also accused of accepting donations and economic aid from overseas organisations, it said.
Wang's lawyer had already visited the court dealing with Wang's case to begin legal formalities, but there was still no news of when the trial of the former student leader, who has been in detention since May 1995, would begin, a close relative said.
"We feel pretty anxious. We are just waiting for new developments," the relative told Reuters.
The outspoken activist attracted the ire of China's communist authorities in 1989 when he shot to prominence as a leader of student protests for more democracy centred on Tiananmen Square in the heart of the Chinese capital.
Wang had been expected to face new charges since last December, when the court that convicted veteran democracy activist Wei Jingsheng -- a nominee for this year's Nobel Peace Prize -- of plotting to overthrow the government also implicated the former student leader.
The court's verdict said Wei, who was jailed for 14 years, had links with people "convicted of counter-revolutionary crimes, including Wang Dan". It also referred to a tape-recorded conversation between Wang and Wei, but gave no details.
Wang had been active since his release from jail, defying persistent police surveillance and harassment to join in a daring appeal to communist leaders for the release of those still in prison for their part in the 1989 protests.
| 14 |
China has launched a manhunt across the restive region of Tibet, tightened airport security and offered a reward of $120,000 for the arrest of culprits who exploded a bomb in Lhasa last week, officials said on Monday.
The government had announced a reward of one million yuan ($120,000) for information leading to the arrest of those responsible for the bomb that exploded in the early hours of Christmas Day outside city government offices in the Tibetan capital, Lhasa, a senior official said.
"No one has yet been arrested and we are now mobilising and deploying our forces," Lhasa Vice Mayor Ou Yangxiang said in a telephone interview.
Notice of the reward had been published in the Lhasa Evening News on December 27 and it was being issued in other newspapers in the strategic Himalayan region, government officials said.
The Christmas Day bomb, the largest so far set off by anti-Chinese activists in restive Tibet, had resulted in no casualties but caused widespread damage, shattering windows for a radius of 100 metres (yards), officials said.
"Almost the whole of Lhasa heard it," said one Lhasa government official. "It was a muffled sound, like -- whoong."
Officials insisted there was little doubt that the blast was politically motivated and carried out by followers of the region's exiled god-king, the Dalai Lama.
"This was done by the Dalai separatist camp," the government official said, adding that the attack bore the hallmarks of previous similar "terrorist acts". He declined to give details although several smaller bombings have been reported in Lhasa.
"This is a terrorist act, aimed at destroying peace in our area," he said. "This was a brazen act."
Police had set up a special task force to search for the culprits and customs and immigration officials had stepped up security searches at Tibet's airport, he said.
A senior Tibet police official said the bomb was a home-made device made from ammonium nitrate, a fertiliser.
"We are targeting Tibetan exiles returning from abroad and who have political connections," he said when asked about the focus of the manhunt.
China regularly blames followers of Tibet's exiled god-king, the Dalai Lama, for anti-Chinese unrest that erupts sporadically in the strategic mountainous region that straddles the Himalayas and runs along China's sensitive border with India.
The Dalai Lama, who won the Nobel Peace Prize in 1989 for his non-violent campaign to win autonomy for his homeland, says he wants self-government and freedom of worship in the deeply religious Buddhist region. He fled China in 1959 after an abortive uprising against Beijing rule.
Monks in the deeply devout Buddhist region who have spearheaded anti-Chinese demonstrations and riots in the past were not regarded as suspects, the police official said.
Officials have vowed to retaliate, signalling a possible renewed crackdown on anti-Chinese unrest in the region.
"We should wage a tit-for-tat struggle against the Dalai clique's sabotage," local radio quoted Gyamco, vice chairman of the regional government as saying last week.
"We should, once again, stage another campaign across Tibet to thoroughly expose and criticise the Dalai clique, heighten our alertness and strengthen preventive measures so as to keep the situation stable," the radio quoted him as saying.
Several much smaller bombs have been been set off in Lhasa over the last two years, including one in 1995 that caused slight damage to a plaque donated by Beijing and another last March outside the headquarters of the Tibet regional government.
| 14 |
Chinese police detained leading dissident Liu Xiaobo on Tuesday after searching his home and confiscating documents in the latest sign of a hardening attitude to the few dissidents still at liberty.
About seven or eight plainclothes and uniformed police, equipped with a search warrant, entered Liu's Beijing home at about 8.00 a.m. (0000 GMT), a relative said.
"They turned the whole place upside-down," she said.
After searching the house and taking books, photographs and documents and articles that Liu had written, police took him away, the relative said. "They took everything."
They gave no reason for the detention of Liu, a renowned literary critic who gained fame as a dissident during the 1989 student-led pro-democracy movement that was crushed by the military with heavy loss of life.
Police did not say when Liu might be released. "They gave no reason," the relative said. "They said to wait for notification."
Liu has been active in recent months, sending open letters to the government to demand press freedom and talks with the Dalai Lama on Tibet.
On September 30, Liu and veteran pro-democracy activist Wang Xizhe issued a statement urging China's communist authorities to honour a promise in 1945 to give people religious freedom, freedom of the press and speech and to form political parties and stage demonstrations.
In a bold move, the two demanded Communist Party chief Jiang Zemin be indicted, impeached and step down for violating the constitution for saying the People's Liberation Army was under the "absolute leadership" of the party instead of the state.
Wang Xizhe was still at liberty in southern Guangzhou on Tuesday.
Liu was last detained by police in 1995 after orchestrating several daring petitions to parliament by groups of dissidents and intellectuals in the early months of the year. He was held for more than seven months without formal charges until being released last January.
His detention comes a day after Chinese sources said another dissident, former student leader Wang Dan, faced a second jail term after prosecutors charged him recently with subversion.
Wang, 26, faces up to seven years in jail on charges of counter-revolutionary incitement -- or subversion. A court in Beijing was expected to deliver a verdict on Wang's case as early as this week, said one source.
Wang, who is believed to have worked with Liu on several daring petitions, was detained in May 1995 in the run-up to the sixth anniversary of the June 1989 military crackdown.
A former student of Beijing University, Wang served four years in jail for counter-revolutionary activities for his role as a leader of the 1989 demonstrations.
He had been expected to face charges since the court that sentenced veteran democracy activist Wei Jingsheng last December to 14 years for plotting to overthrow the government also implicated Wang in its verdict.
Liu and Wang are among a very few dissidents who are not serving jail terms or re-education through labour penalties.
A court in central Henan province last month sentenced student leader-turned-dissident Guo Haifeng to seven years in prison for hooliganism. Police had initially accused Guo of fraud but the prosecutor did not file charges against him, a human rights group said.
| 14 |
China's senior leader Deng Xiaoping is spending his twilight years as an effective recluse, leaving an opportunity for power-hungry, would-be heirs fighting for his title to use his name to strengthen their hand, analysts said on Thursday.
The most blatant sign of the exploitation of the reputation of the 92-year-old elder statesman was the New Year's Day launch of a 12-hour documentary on Deng's life that showed him larger than life, glowing against a background of golden clouds radiating across the sky.
"This was done, written and arranged by those around him who would benefit from having his image... burnished up a bit," said one Western diplomat.
"All those who owe their fortunes to him want to make him appear in as good a light as possible," he said. "The fact that they are starting the year with this shows that the pro-Deng camp seems to have the upper hand."
The clearest immediate beneficiary was the narrator of the introduction to Wednesday's inaugural episode of the 12-part series -- Deng's own anointed heir-apparent President, Communist Party chief and army commander-in-chief Jiang Zemin.
"Jiang will be better off if Deng is able to linger for about another year and a half -- until about mid-1998," the diplomat said.
"It would be inconvenient for (Jiang) if Deng went now," he said, adding that Jiang needed the clout of the man who succeeded Chairman Mao Zedong as China's most powerful man to consolidate his position at a crucial party meeting this year.
Deng has not been seen in public for nearly three years -- a result of his own desire to retire to a behind-the-scenes role as well as his failing health, analysts say. In his last appearance he looked weak and faltering.
Speculation abounds of Deng's fragility, ranging from rumours of his sudden admission to hospital in recent days to reports that he remains at home with little change in his health but with fading lucidity.
"There is no doubt that the perception is... that he is to all intents and purposes no longer consistently lucid," the diplomat said, adding that the adulatory documentary was proof of Deng's waning control.
"This is the kind of thing he always avoided," he said, quoting from Deng himself who always openly abhorred the cult of personality that deified Mao.
Chinese analysts said the series was reminiscent of the power struggles that gripped the inner ranks of the party in Mao's last years.
"You can see that people are now using Deng just as (Mao's wife) Jiang Qing and the Gang of Four used Mao to boost their position in the years before he died," said one Chinese writer.
Jiang and his opponents were already lining up their pieces in the months before the high-profile handover of Hong Kong to Beijing on July 1 this year and the crucial 15th Party Congress late in the year, diplomats and analysts said.
"The transition is pretty much done now, but Jiang still needs Deng's clout behind him until everything is wrapped up with the congress and the change of government at the 1998 National People's Congress (parliament)," the diplomat said.
The primetime documentary, carefully timed to start the year, is expected to define Deng's legacy to the current party leadership and thus future policies, political analysts said.
The main theme of the first one-hour show was reform, underlining China's commitment to Deng's pragmatic market policies that turned a backward Stalinist state into an economic powerhouse.
| 14 |
One of China's most prominent dissidents, Wang Dan, is expected to receive a harsh sentence on the charge of plotting to overthrow the government, his mother said on Tuesday.
Wang, 27, would plead not guilty to the capital charge when his trial at the Beijing Intermediate People's Court begins on Wednesday, said the dissident's mother, Wang Lingyun.
"The court...giving my son a harsh sentence even though he is innocent is very likely to happen," Wang Lingyun told Reuters. "I dare not rule it out."
She said court officials told her the verdict could be delivered as early as Wednesday or in two days. Family members had been under surveillance for several weeks, she added.
The former student leader, who vanished into detention in May 1995, faces a minimum 10-year sentence and a maximum penalty of death.
The court has refused to give details of Wang's trial except to say he has been charged with plotting to overthrow the government.
The New York-based Human Rights Watch said last week the chances of acquittal were slim because Wang has not had adequate time to prepare a defence.
His family found a lawyer willing to defend the dissident after being given just one day in which to do so.
Wang's mother, a 61-year old museum researcher who has no background in law, would attend the trial as one of two defence lawyers. His father and a sister would be allowed to sit in.
The mother has said the dissident was calm and mentally prepared for a harsh sentence, although she has said his health had deteriorated during his detention.
Human Rights Watch attacked the trial on Tuesday as a sign of the Chinese leadership's increasing intolerance of dissent.
"The fact is that China's urban dissident movement... has in effect been comprehensively smashed," it said in a statement.
"At least where political dissidents are concerned, all the judicial signs thus far point... to intensified repression by the country's state security forces," it said, calling for a freeze on trade missions from the United States, Europe, Japan and Australia.
The human rights group said Chinese criminal trials seldom respect the presumption of innocence, and defence lawyers were generally restricted to arguing mitigating circumstances for a reduced sentence.
Wang's court appearance would likely be held out of the public eye, as was last year's trial of Wei Jingsheng, regarded as the father of China's tiny, struggling democracy movement.
Officials have been silent on a request by the U.S. embassy in Beijing to send observers to Wang's trial, diplomats said.
French senator Robert Badinter, former U.S. attorneys general Nicholas Katzenback and Richard Thornburgh, and former Canadian solicitor-general Warren Allmand have also said they want to observe Wang's trial.
Foreign Ministry spokesman Shen Guofang on Tuesday shrugged off questions from reporters about the status of the requests, saying Wang's trial was China's internal affair.
Beijing has repeatedly come under fire from the West for human rights abuses. It says foreign intervention in China's internal affairs is not welcome.
Wang has already served four years in prison for counter-revolutionary crimes, or subversion, for his role in pro-democracy demonstrations in Beijing's Tiananmen Square that were crushed by the army in June 1989 with heavy loss of life.
He was politically active again after his parole in 1993, defying police surveillance to join a daring appeal to communist leaders for the release of those still jailed for their part in the 1989 protests.
China has recently cracked down on the few remaining dissidents who have not fled into exile or been jailed.
| 14 |
China's new hardline dictum to its people to battle hostile Western influences with puritan Marxist values underlines a poverty of ideas among an ageing leadership with declining credibility in a fast-changing society, analysts said on Monday.
"They don't seem to grasp that people have changed since the days when they had nothing else to do but to listen to lengthy party documents being broadcast on the radio," said one China analyst.
"Nowadays people have so many other activities they may just skim over the headlines and not bother to read something like this," he said, referring to a 15,000-character Communist Party document issued in official newspapers on Monday.
"Do the leaders not realise people can channelsurf because it's not just one television station any more?" he said.
China's ruling Communist Party, in what it hailed as one of its greatest documents ever, warned against hostile Western ideas such as capitalism and parliamentary democracy, urged vigilance against pornography and profit and vowed to fight back with puritan Marxist values.
"If they are seeking to change the average Chinese in the street then this is not the answer," said one Western diplomat, describing the newest demand for ideological conformity as a rehash of communist methods practiced for years.
Chinese political analysts have warned that the inability of the communist leadership to move with the times and experiment with new ideas and methods to stir up popular support in a society rapidly being transformed by market-oriented economic reforms could have dangerous repercussions.
"A lot of people just aren't listening any more," one analyst said, adding that a consequence of this breakdown of communication would create even more distance between the populace and a leadership that is already remote and secretive.
To recapture popular attention, China's leaders might try to use more extreme propaganda tools, such as whipping up a potentially destabilising nationalist and anti-Western campaign, analysts said.
"We are looking at an ageing leadership -- many of the Politburo are in their 70s -- who are set in their ways and don't seem able to accept younger advisers trying to package acceptable ideology in new wrapping paper," one diplomat said.
Paramount leader Deng Xiaoping had missed an opportunity to appoint a younger leadership when he purged the upper echelons after the 1989 student demonstrations for more democracy, analysts and diplomats said.
Analysts said that while the latest communist creed tried to present itself as a balanced dictum, it was clearly intended to achieve the goal of conformity of thought.
"It's pretty much a blueprint for censors to do what they want," said one diplomat.
Even conservative newspaper editors appointed in recent years as replacements to more liberal writers have been purged in recent weeks, a succession of books have been ordered off the shelves and popular author Wang Shuo has been effectively banned.
"Things are only going to get worse," said one analyst.
However, some doubted how effective a new purge would be.
"It's part and parcel of an attempt to take control of the way people think and the kind of cultural afairs that are conducted," the western diplomat said.
"But people don't always take as much notice as they once did," he said. "It may not last much longer than the time it takes to read the thing."
| 14 |
China's Communist Party, in what it called one of its greatest ever documents, warned on Sunday against hostile Western ideas such as parliamentary democracy and capitalism and vowed to fight back with puritan Marxist values.
The 15,000-character document -- adopted at last week's annual secret plenum of the ruling party elite -- marked the latest volley by party chief Jiang Zemin to boost his position by battling corruption, pornography and worship of money while promoting nationalism and hardline communist ideology.
Diplomats said a strong tone of opposition to the West and particularly the United States, which Beijing fears is pursuing a policy of containment toward China, also suffused the document, unveiled by the official Xinhua news agency.
They said Jiang was striving to placate leftwing party hardliners angered by what they see as an erosion of puritan communist values by nearly two decades of profit-based economic reform.
"The standard of moral conduct has been lowered in some spheres, and the practice of worshipping money, seeking pleasure and individualism has grown," the document said.
It railed against corruption, warning senior party officials not to be tempted by the lures of power, profit and sex.
Jiang has warned repeatedly that corruption is a virus that could topple the party which has ruled China since 1949, and public opinion surveys show graft as the top popular gripe.
In a sign that Jiang needs to consolidate his power base even after amassing China's three most important posts -- general secretary of the party, state president and chairman of the party's powerful Central Military Commission -- the document paid extravagant homage to paramount leader Deng Xiaoping, 92.
The text was littered with 14 mentions of Deng's name, against just three for Jiang and four for the late Chairman Mao Zedong.
Analysts say Jiang remains overshadowed by Deng, architect of the market-oriented reforms and influential even without an official post and despite increasingly fragile health.
However, a recurring theme of the document was a warning to the nation to be on guard against the West, taking up one of the main platforms of Jiang's rule -- the importance of patriotism.
It urged self-sufficiency, saying people should "fear no pressure, safeguard national sovereignty and surmount sanctions imposed by Western countries" -- a clear reference to the United States.
"Because socialism has suffered serious setbacks on a worldwide scale, pressure from the superiority of developed capitalist countries in economy...as well as the infiltrations of Western ideology will remain for a long time," it warned.
It advocated "how to...prevent and eliminate the spread of cultural garbage, resist the conspiracy by hostile forces to westernise and split our country," -- and suggested more flag-raising ceremonies and singing of the national anthem.
However, despite the lip-service to Deng Xiaoping, the document cast doubt over one of his most far-reaching reforms -- the lifting of a ban on private enterprise -- while repeating his opposition to western-style democracy.
"It is necessary to distinguish right from wrong on such major issues as...common development of various economic sectors with socialist public ownership as the mainstay versus privatisation...socialist democracy versus parliamentary democracy practised in Western countries," it said.
"Liberalism will precisely lead China to the capitalist road and undermine the political situation," the document thundered.
| 14 |
China hailed on Tuesday its war on bourgeois decadence as the top news event of 1996 along with missile tests off Taiwan, but ignored improved ties with the United States and the jailing of a dozen dissidents.
The line-up of the top 10 news events in China in 1996 as selected by senior editors of the major Communist Party-linked newspapers closely reflected the party line on news -- or propaganda.
The list issued by the Xinhua news agency differed sharply from events in China that have focused international eyes on the world's most populous country in the last 12 months.
Heading the list selected by 12 Beijing editors was the annual plenum of China's ruling Communist Party in October that adopted a 15,000-word document exhorting China's 1.2 billion people to adhere to socialist ethics and abhor bourgeois Western liberalism.
On Christmas Eve, it was unclear how far socialist values extended, but Santa Claus appeared to be exempt as he smiled and waved from dozens of Beijing and Shanghai department stores.
Politics, not only news value, may have coloured the views of many of the editors, who would have remembered that the plenum was trumpeted as one of the major achievements of Communist Party chief, state President and army boss Jiang Zemin -- anointed heir to paramount leader Deng Xiaoping.
Newspaper editors elsewhere in the world would probably have chosen Beijing's campaign to intimidate Taiwan in the run-up the island's first popular elections of a Chinese president on Chinese soil as the top story of 1996.
However, for Chinese editors the decision to conduct missile tests and live-fire war games in waters near the island last March, and which sent U.S. aircraft carriers steaming into neighbouring seas, ranked only fourth in their top 10.
The news item in second place related to China's resumption of sovereignty over the British colony of Hong Kong in mid-1997, or Premier Li Peng's decision to sign off on the appointment of shipping tycoon Tung Chee-hwa as Hong Kong's first post-colonial chief executive.
Other editors might have focused less on the role of a single Chinese leader in Tung's elevation and more on his selection by a Beijing-sponsored committee of his peers.
Four of the top 10 Chinese news stories were linked to economic achievements and one to sports -- the Atlanta Olympic Games in which China ranked fourth overall in the medals' tally. Just two involved international affairs.
President Jiang's visit to the Asia-Pacific Economic Cooperation (APEC) forum in the Philippines last month edged into fifth place.
Jiang's APEC meeting with U.S. President Bill Clinton set the seal on a warming of frosty Sino-U.S. ties and resulted in a decision on an exchange of the first presidential state visits in nearly eight years. But for China's news commissars, that merited only a brief aside.
"Chinese President Jiang Zemin... met with leaders of other APEC members, including U.S. President Clinton," Xinhua said.
China's renewed crackdown on dissent, such as its decision to sentence Wang Dan, a former leader of the 1989 student demonstrations for more democracy, to 11 years in jail for conspiring to subvert the government, went unmentioned.
| 14 |
The U.S. government's top Asian official, Winston Lord, left China on Thursday, wrapping up a low-profile visit after talks that focused on human rights in China and problems on the Korean peninsula.
Diplomats described the meetings as frank and cordial overall, even though Lord raised the thorny issue of China's treatment of its dissidents amid signs of a renewed crackdown by Beijing's communist rulers on their critics.
Lord, Assistant Secretary of State for East Asian and Pacific Affairs, arrived on Tuesday for the previously unannounced visit and kept a low-profile while in Beijing, a U.S. embassy official said. He left for Japan on Thursday.
Lord held substantive discussions with Deputy Foreign Minister Liu Huaqiu on Wednesday and also had a brief meeting with Foreign Minister Qian Qichen, diplomats said.
"They discussed a wide range of issues," one Western diplomat said.
The issue of Korea was one focus of the talks and although diplomats said there was little sign of concrete progress, the tone of discussion was positive.
"Both sides want to maintain stability on the peninsula," one diplomat said.
South Korea and the United States in April called for four-nation peace talks with North Korea and China to replace a truce that ended the Korean conflict but left Seoul and Pyongyang technically still at war.
Pyongyang has insisted on bilateral talks with Washington to seek an accord, saying Seoul was not a party to the 1953 truce. China has yet to take a clear stance on the four-way talks.
Frosty relations between Seoul and Pyongyang have been in crisis since last month, when 26 North Koreans landed in the South from a stranded submarine.
Diplomats said Lord's talks did not focus on any single issue, and a major aim of his trip was to prepare for a visit next month by Secretary of State Warren Christopher.
"Generally speaking relations are on the upturn," said one diplomat. Christopher is due to visit Beijing on November 21-22 on a trip originally announced in July.
A row over human rights scarred Christopher's last visit to China in 1993.
The visit would mark the highest point in relations since ties plunged after Taiwan President Lee Teng-hui paid a private visit to the United States in June 1995, a trip that enraged Beijing.
In Washington, State Department spokesman Nicholas Burns said Lord had raised Chinese treatment of dissidents.
"Human rights have been on our agenda quite importantly over the last couple of days, because of recent arrests of some of the political dissidents, and the recent travel to the United States of a noted champion of human rights. So, that issue for us is front and centre on our agenda with them."
Washington last week sharply criticised the sentencing of dissident Liu Xiaobo to three years in a labour camp, as well as apparent plans to try another pro-democracy activist, Wang Dan, on the capital charge of plotting to subvert the government.
Diplomats in Beijing said China would almost certainly be angered by the arrival of a third dissident, Wang Xizhe, in San Francisco this week after escaping from China.
Both sides have said they were moving toward a possible exchange of presidential visits during 1997.
Among outstanding issues that could spark U.S. anger are China's alleged nuclear sales and human rights record while Beijing blames Washington for holding up its application for membership in the World Trade Organisation.
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Are you a businessman looking for generous tax breaks, lengthy tax holidays, easy loans, clean air and spectacular scenery?
Then Tibet may be your answer -- that is, if you don't mind high transport costs, frequent power outages and temperamental telephone lines.
Beijing has given unparalleled privileges to try to attract foreign investors to this remote, rugged, restive and poverty-stricken region. Those policies are starting to pay off, albeit slowly, officials said.
"This year circumstances are rather improved as a result of our new policies to foreign investors," Wang Yaju, vice director of the Department of Foreign Trade and Economic Cooperation of the Tibet Autonomous Region, said in an interview.
He said the new, preferential policies unveiled last year had already paid off with 14 new foreign investment projects approved this year. That compared with the establishment of just 61 joint ventures between 1988 and 1995.
Wang said he was optimistic that a planned $48 million 50-50 venture between Taiwan's Kwang Yang Motors and Tibet's Summit Motor to produce motorcycle engines in neighbouring Sichuan province would be successful.
The plant would be registered in Tibet, pay taxes to that region and enjoy its tax breaks.
Most members of Tibet's tiny community of foreign investors seem attracted both by the tax holidays and the scenic beauty.
For example, John McKay of Santa Cruz, Calif., set up the Tibet Plateau Cashmere Co. with a U.S. company and a private Tibetan partner. The three-way partnership will process cashmere with the goal of producing finished knitwear.
The joint venture is exempt from income tax for the first five years after it makes a profit, and then pays only half the national rate of tax for the following five years.
Wading through the Chinese bureaucracy for the necessary permits was a frustrating and time-consuming process, McKay said, echoing the experiences of other investors in the region as well as throughout much of China.
Red tape appeared to be less entangling than in other regions, however.
Also, investors said they had considered the risks from possible anti-Chinese violence, but believed the profits outweighed potential losses.
"I don't think this (unrest) is very likely," said McKay.
"There's enough control here that it would cut off anything before it got started," said another businessman who declined to be identified. "Tibetans are resigned to it and accept the way things are."
Kesang Rigdol, a Nepali Tibetan who set up his Tibet Snowland Restaurant in the centre of Lhasa last year, did not dodge the difficulties of setting up a business in a land supposed to be the fabled Shangri-La.
Rigdol owns 63 percent and invested $40,000 in the restaurant, which many say is the best eatery in Lhasa, while his Tibetan partner, who provided the site, holds 37 percent.
"Everything we were able to do was because of the policy on joint ventures," he said.
Despite the long, bitter winter that keeps away most of the tourists who are his main customers, Rigdol is already considering setting up a second joint venture, a dairy farm.
"We can't get good quality milk and cream here," he said, adding that skilled labour was also a serious problem.
Rigdol employs Nepali cooks and had hoped to teach Tibetans culinary skills. "But Tibetans don't seem to want to learn," he said. "They are not interested at all."
Foreign trade officials said they welcomed such small ventures, but were also eager to lure bigger investments, while recognising that the lack of a railroad, power shortages and limited flights hampered their bargaining power.
As part of a move to publicise opportunities in the vast, resource-rich but inaccessible region and escape their communications difficulties, Tibet authorities are preparing to launch a site on the Internet, the worldwide computer network.
Wang said investors in power plants, mineral resources and infrastructure were more than welcome.
Officials of the Tibet Department of Geology and Minerals said they were hoping the regional government would soon issue special regulations covering foreign investment in the region's underground resources.
Tibet wanted foreign firms to join forces in exploration for mineral resources, particularly copper, chromite, antimony and borax, said Wang Baosheng of the Department of Foreign Trade.
"This could lead to good opportunities for them to take part in exploitation of these resources," he said. "This place has great potential, if you invest here you will have very good returns."
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China has launched a manhunt across the restive region of Tibet, tightened airport security and offered a reward of $120,000 for the arrest of culprits who exploded a bomb in Lhasa last week, officials said on Monday.
The government had announced a reward of one million yuan ($120,000) for information leading to the arrest of those responsible for the bomb blast early on Christmas Day outside city government offices in the Tibetan capital, Lhasa, a senior official said.
"No one has yet been arrested and we are now mobilising and deploying our forces," Lhasa Vice Mayor Ou Yangxiang said in a telephone interview.
Notice of the reward had been published in the Lhasa Evening News on December 27 and it was being issued in other newspapers in the strategic Himalayan region, government officials said.
The Christmas Day bomb, the largest so far set off by anti-Chinese activists in restive Tibet, had resulted in no casualties but caused widespread damage, shattering windows within a radius of 100 metres (yards), officials said.
"Almost the whole of Lhasa heard it," said one Lhasa government official. "It was a muffled sound, like -- whoong."
Officials insisted there was little doubt that the blast was politically motivated and carried out by followers of the region's exiled god-king, the Dalai Lama.
The bomb exploded at night outside a government building and was therefore clearly political, said Zhou Kaifu, deputy director of the Tibet Public Security Bureau.
"This was done by the Dalai separatist camp," the government official said, adding that the attack bore the hallmarks of previous similar "terrorist acts". He declined to give details although several smaller bombings have been reported in Lhasa.
"This is a terrorist act, aimed at destroying peace in our area," he said. "This was a brazen act."
Police had set up a special task force to search for the culprits and customs and immigration officials had stepped up security searches at Tibet's airport, he said.
The senior police official said the bomb was a home-made device made mainly from ammonium nitrate, a fertiliser.
"We are targeting Tibetan exiles returning from abroad and who have political connections," he said when asked about the focus of the manhunt.
"The bomb was made at a farm," he said. "We are searching mainly in Lhasa, but are cooperating with other areas."
China regularly blames followers of Tibet's exiled god-king, the Dalai Lama, for anti-Chinese unrest that erupts sporadically in the strategic Himalayan region that borders India.
The Dalai Lama, who won the Nobel Peace Prize in 1989 for his non-violent campaign to win autonomy for his homeland, says he wants self-government and freedom of worship in the deeply religious Buddhist region. He fled China in 1959 after an abortive uprising against Beijing rule.
Monks in the devout Buddhist region who have spearheaded anti-Chinese demonstrations and riots in the past were not regarded as suspects, the police official said.
Officials have vowed to retaliate, signalling a possible renewed crackdown on anti-Chinese unrest in the region.
"We should wage a tit-for-tat struggle against the Dalai clique's sabotage," local radio quoted Gyamco, vice chairman of the regional government as saying last week.
Several much smaller bombs have been been set off in Lhasa in the last two years, including one in 1995 that caused slight damage to a plaque donated by Beijing and another last March outside the headquarters of the Tibet regional government.
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Leading Chinese dissident Liu Xiaobo has been ordered to serve three years in a labour camp just hours after police detained him in an early morning raid on his Beijing home, his wife said on Wednesday.
Police had notified her early on Wednesday of the administrative sentence, which does not need a court trial, but gave her no reason for the punishment.
"I am very angry. How can they do this?," Liu Xia said in a telephone interview.
"I feel he hasn't done anything (illegal). Citizens have freedom of speech, to write articles and say things."
She said she had not decided whether to appeal.
The administrative punishment was passed against Liu after he was taken from his Beijing home early on Tuesday by a group of uniformed and plainclothes police who also confiscated books, papers and photographs.
"Re-education through labour is the personal power of the public security bureau, it doesn't have to go through judicial departments," Liu Xia said. "The public security can just do as they wish."
Liu Xiaobo might be sent to a labour camp near his hometown of Dalian in the northeast, she said.
Police officials declined to comment.
The administrative punishment of re-education through labour has been increasingly used against dissidents in recent months as a means of removing activists from circulation while avoiding the more complicated trial process, diplomats say.
Police gave no reason for the detention of Liu, a renowned literary critic who gained fame as a dissident in the 1989 student-led pro-democracy movement that was crushed by the military with heavy loss of life.
Liu has been active in recent months, sending several daring, open letters to the government.
On September 30, Liu and veteran pro-democracy activist Wang Xizhe issued a statement urging China's communist authorities to honour a promise in 1945 to give people freedom of the press and speech and to form political parties and stage demonstrations.
In a bold move, the two demanded Communist Party chief Jiang Zemin be indicted, impeached and step down for violating the constitution for saying the People's Liberation Army was under the "absolute leadership" of the party instead of the state.
Wang could not be reached in southern Guangzhou and a human rights group said he did not return home on Tuesday.
Liu was last detained by police in 1995 after orchestrating several petitions to parliament by groups of dissidents and intellectuals in the early months of the year.
He was held for more than seven months without formal charges until being released last January.
His sentence comes shortly after Chinese sources said dissident and former student leader Wang Dan faced a second jail term after prosecutors charged him recently with subversion.
Wang, 26, faces up to seven years in jail on charges of counter-revolutionary incitement -- or subversion.
Wang, who is believed to have worked with Liu on several petitions, was detained in May 1995 in the run-up to the sixth anniversary of the June 1989 military crackdown.
A former student of Beijing University, Wang served four years in jail for counter-revolutionary activities for his role as a leader of the 1989 demonstrations that centred on Beijing's Tiananmen Square.
He had been expected to face charges since the court that sentenced veteran democracy activist Wei Jingsheng last December to 14 years for plotting to overthrow the government also implicated Wang in its verdict.
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China's long-delayed bid to enter the World Trade Organisation will fall under the spotlight when the world's richest nations meet to discuss its application this week, European and U.S. officials said on Monday.
Delegates of the Quad -- the United States, Japan, Canada and the European Union -- will meet for lunch on Tuesday on the sidelines of the first ministerial conference of the World Trade Organisation (WTO) in Singapore, the officials said.
The European Union (EU) was trying to bring the United States on board regarding its proposal that China enter the world trade body through a phased accession process, one EU official said.
The United States says Beijing must comply with a "road map" to open its markets and eliminate trade and non-trade barriers before it can win U.S. support for its entry.
China had hoped to culminate its decade-long bid to join the General Agreement on Tariffs and Trade by becoming a founding member of the WTO at its inception two years ago.
Its application foundered on opposition over entry terms, with Beijing maintaining that the price of the road map was too high. Talks continue at a snail's pace in Geneva.
One aim of Tuesday's Quad meeting would be to try to narrow differences between the United States and Europe over terms for China's entry, terms used by Beijing to play one side off against the other, one EU source said.
Outlining his key objectives for the week-long ministerial conference in Singapore, EU Commissioner for Trade Sir Leon Brittan, stressed the need to relaunch in earnest negotiations toward Chinese membership.
"We have the remarkable changes going on in China, as well as a continuing process of economic renewal elsewhere in Asia and in Latin America...Hence the urgent need for WTO enlargement," Brittan told the conference opening session.
Brittan has visited China several times in recent months and has said he received a warm response from Beijing to the phased accession proposal.
In his opening address to the conference, Singapore Prime Minister Goh Chok Tong also backed China's entry in a reference to pending memberships, although he repeated the United States stand that new applicants must meet the necessary criteria.
"Some of these new entrants are significant economic players, like China and Russia, their entry into the WTO would have a positive impact on the rules-based multilateral trading system," Goh said.
Senior Chinese analyst Pei Changhong said last week China was unlikely to concede on its demand to enter the WTO as a developing country and has the patience to hunker down for a long wait to win accession on its terms.
The United States insists that the size of China's economy ranks it as a developed country.
A goal of 1997 entry seemed an ambitious target given the distance between the United States and China on so many issues, but Pei said he hoped to see entry by 1999.
China's Foreign Minister Qian Qichen said last month that talks with the United States on entry could be wrapped up by mid-1997.
| 14 |
China's private sector has become an important source of jobs for workers laid off by loss-making state enterprises and officials said on Thursday the jobless were able to find work despite fears of rising unemployment.
In 1995, the private sector hired 1.5 million workers made redundant from state- and collectively owned enterprises, an official of the State Administration for Industry and Commerce said in a telephone interview.
The official also noted a shift in the type of staff being employed by private enterprise as China's fastest growing sector expands and modernises.
"Before, employees were mainly peasants and young jobless," the administration official said.
"But in the last two years, the number of those employed after leaving state enterprises has increased," he said. "And there will be a bigger increase in employment of this type of worker in the next couple of years."
The main reason that workers were attracted to the sink-or-swim world of private enterprise from the jobs-for-life system in state firms was high wages, he said.
China's private companies and self-employed accounted for a total of 56 million jobs, or six percent of China's employed workers, at the end of 1995, he said.
China had 654,500 private companies and 25.28 million self-employed workers at the end of 1995 compared with none in 1979, when paramount leader Deng Xiaoping launched his market-oriented economic reforms.
Many had found jobs in Shenyang, at the heart of China's rust-belt and a city groaning with money-losing state firms, the official said. The city had found jobs for 800,000 laid-off workers in the last two years.
In Shanghai, more than 85,000 redundant state workers had created their own businesses or found jobs in private firms.
The administration official said private enterprise had averaged growth of 50 percent to 60 percent a year over the past three years, although that was expected to slow to about 30 percent over the next few years.
An official of the Ministry of Personnel said state enterprises had shed more than 2.0 million workers in recent years, many of them helped to find work by their former employers or through fledgling labour markets.
China's urban unemployment rate was 2.9 percent at the end of June, up by 0.01 percent from the same time last year, official figures show.
However, official media have warned that the actual rate could soar to 7.4 percent by 2000.
Nine out of 10 people entering the job market have found jobs through the new labour markets since 1995, the Xinhua news agency quoted an official of the Ministry of Personnel as saying.
The few who still enjoy the state's "iron rice bowl" in terms of assigning jobs include demobilised soldiers and college graduates.
At the start of 1995, China had more than 29,000 employment service organisations, which offered jobs to more than 12 million people last year, the official said.
| 14 |
The largest bomb blast reported in Tibet marks a new desperation in anti-Chinese sentiment in the restive region and offers a longed-for opportunity to officials to launch a new crackdown, analysts said on Monday.
"I think what we are seeing here is people who tend to say that the path of non-violence is not working and they will now use violence," Robbie Barnett of the London-based Tibet Information Network said in a telephone interview.
The Himalayan region that is peopled mainly by deeply devout Buddhists has been rocked in recent years by sporadic, sometimes violent, anti-Chinese unrest, with monks and nuns often at the forefront of demonstrations for independence.
The home-made ammonium nitrate blast early on Christmas Day outside a city government office in Lhasa shattered windows in a radius of 100 metres (yards) and was the largest such explosion reported in the region. No casualties were reported.
Barnett described the attack as an act of desperation.
"These people are Buddhists," Barnett said. "But they are Buddhists who do not see anything being achieved by what the Dalai Lama is doing and they are very worried about it."
Officials said there was little doubt that the Christmas Day blast in Lhasa was politically motivated and carried out by followers of the region's exiled god-king, the Dalai Lama.
"There have been increasing hints that some groups could turn to violence if China did not relax its repression in Tibet," Barnett said. "But this movement seems to have attracted only a very few."
The Dalai Lama, who won the Nobel Peace Prize in 1989 for his non-violent campaign to win autonomy for his homeland, says he wants self-government and freedom of worship in Tibet.
He fled China in 1959 after an abortive uprising against Beijing rule and has since lived in India with many followers.
As part of his peaceful campaign, the Dalai has proposed talks with Beijing, suggesting China shoulder defence and foreign policy but allow Tibetans self-rule in internal matters such as religion. His spokesmen say China has not responded.
Beijing has said it cannot negotiate unless the Dalai Lama recognises Chinese sovereignty.
Analysts said the latest bombing had played into the hands of local authorities eager for evidence that would demonstrate to Beijing the need for a stricter crackdown in Tibet.
"This is just the kind of thing the authorities in Tibet have been hoping for," Barnett said.
"They have been exaggerating hugely the extent of unrest to justify the need for a crackdown," he said, referring to a string of Tibet newspaper articles warning against anti-Chinese forces. "This can only help them."
Officials interviewed recently in Tibet played down the extent of anti-Chinese feeling in the region, saying those opposed to Beijing were a tiny minority. Witnesses saw little sign of tight security in the capital, Lhasa.
However, a senior police official in Lhasa hinted on Monday that a stable security situation in Tibet and its temples was a result of careful planning. "The order in monasteries is good because we have recently regulated them," he said.
An ideological campaign in Tibet, as elsewhere in China, to promote socialist ethics and allegiance to the Communist Party could have ignited the new violence in a region where many ordinary Tibetans pledge their first loyalty to religion, Barnett said.
| 14 |
China is dipping its toe into the freedoms of Hong Kong but is finding the water chilly -- and Beijing's latest pronouncement on freedom of expression under Chinese rule may be giving it cold feet, analysts said on Friday.
China's communist rulers are so accustomed to exercising power that is scarcely checked by law, they may be having difficulty curbing their tongues when it comes to the delicate handover of Hong Kong, diplomats said on Friday.
One example came on Thursday when China tried to backtrack from a warning by Foreign Minister Qian Qichen to Hong Kong people on limits to their freedom of expression after the territory reverts to Beijing rule on July 1, 1997.
"Chinese officials seem to be speaking from the heart when it comes to Hong Kong and then realise that they have put their foot in their mouth where the law is concerned," said one Western analyst.
Foreign Ministry spokesman Shen Guofang raced on Thursday to repair damage from his boss's remarks, saying: "Hong Kong people will have full freedom of expression, but all freedoms must be within the limits allowed by law."
His statement followed an interview with Foreign Minister Qian by the Asian Wall Street Journal,in which Qian hinted that Hong Kong would no longer be able to mark the anniversary of Beijing's June 4, 1989, crackdown on student-led protests.
Qian's interview stirred an outcry in Hong Kong, where China has pledged a high degree of political freedoms for 50 years after the handover on July 1, 1997, and not to change its capitalist system.
But Shen's damage control may have been too late.
Western diplomats said Qian's remarks gave great cause for concern and were almost certain to stir anxiety in Hong Kong.
"Ordinary Hong Kong people have fairly mixed feelings," said one Western diplomat. "There is an element of patriotism about their return to the mainland but they don't want their basic freedoms to be put in question."
Chinese officials said Foreign Minister Qian was believed to have shown great interest in the response in Hong Kong to his remarks on the limits on what Hong Kong's people could do after the 1997 handover.
Qian was reported to have showed little surprise at the reaction in Hong Kong, and had paid close attention to the stir in the territory, one official said.
"It looks as if he may have gone a little beyond what he should have said," said another Western diplomat. "But he clearly thought he was safe in saying that and now they are trying to smooth over the rough edges."
Hong Kong newspaper reports that interpreted Qian's remarks as a ban on activities in the territory to commemorate the 1989 crackdown were wrong, Shen said, adding that Beijing had not altered its pledge to maintain Hong Kong's current political and economic system under Chinese sovereignty.
A transcript of Qian's interview showed he was specifically asked what activities would not be allowed and whether the 1989 commemoration was among them. Qian replied that he was referring to just such activities.
"This isn't the first time this kind of faux pas has happened," one diplomat said, referring to similar remarks this year on post-1997 freedom limitations by Lu Ping, director of the Hong Kong and Macau Affairs Office under China's State Council, or cabinet.
"I don't expect that it will be the last."
| 14 |
Time in Tibet is a moveable feast.
In this far-flung outpost of Chinese rule, the clocks are synchronised with Beijing more than 2,560 km (1,590 miles) to the northeast, but dawn is two hours behind and everyone goes to work about two hours later than in Beijing.
It is not only Tibetan time that lags the rest of China. The economy in this Himalayan region, still based largely on yaks, goats and Buddhism, also trails.
Beijing says it is doing its utmost to narrow the gap and to make up for destruction wrought on Tibet's monasteries and temples in China's ultra-leftist 1966-76 Cultural Revolution.
It has pumped more than 35 billion yuan (US$4.2 billion) into the inaccessible, remote and backward region long peopled by nomadic herders and barter traders, officials say.
The funds are also useful to buttress control of the restive and strategically important region that borders India.
The investment is slowly paying off.
Economic growth in 1995 reached 10.6 percent, up from 8.6 percent the year before. Rural per capita incomes were about 600 yuan ($72) a year while urban incomes neared 2,000 yuan ($240) -- both still about half the national average but increasing rapidly.
In the capital Lhasa, the swift growth of commerce has taken even local leaders by surprise.
"I thought it would take several years before we could attract any real interest," said Chen Ciduan, president of the Tibet Investment and Trust Corporation that in 1994 set up a stocks trading centre in Lhasa.
"But we had to double our space last year and we are already overcrowded and making plans for another expansion," he said.
That's the high flying end of economic development in Tibet.
For those at the other end of the scale, Beijing is trying to make things easier with preferential policies to help a people struggling into the late 20th century from a lifestyle that more closely resembles the middle ages.
Income tax holidays, tax breaks and easy loans are just some of the incentives available to businessman in Tibet. The concessions are also attracting numerous entrepreneurs from elsewhere in China where such favourable policies are not available.
In Lhasa, one street specialises in selling the highly-decorated, colourfully-painted furniture favoured by Tibetans. Another sells fake leather sofas that appeal to Han Chinese residents.
Chinese restaurants abound, cheek by jowl with Tibetan-managed shops selling yak butter, computer parts and bolts of brocade and wool.
Tibet offers some of China's oddest employment opportunities.
In a tiny one-room workshop leased from a struggling state-owned factory processing yak horns, seven artisans from neighbouring Yunnan province hammer traditional silver bowls embossed with Buddhist symbols.
"We were already making these Buddhist artifacts in Yunnan anyway," said workshop owner Li Wenhan, 26. "It's only because there is so much demand here that we came. We could easily sell these in Yunnan, but here they need them."
Li said 40 percent of the goods they make are for export, 20-30 percent are sold to Tibetans and the rest distributed elsewhere in China.
The success of Li's business underscores a problem in Tibet that must be as frustrating for its Chinese masters seeking to lead the region into prosperity as for many educated Tibetans.
"The Tibetans lack education and a mentality of work," said one Tibetan-Nepali businessman who was born in Lhasa.
"They don't appreciate the need to work, they just want to make a profit straight away," he said. "It's very sad. They are too impatient to understand that you have to earn a living through steady work."
While some might dispute that view, no one questions that Tibet is among China's poorest and most inaccessible regions. Out of Tibet's 2.3 million people, about 400,000 live below the official poverty line.
Officials oversee one of China's most innovative anti-poverty policies in the deeply devout Buddhist area where many still donate much of what they earn to monasteries and temples and where education is costly.
"We are determined to bring all Tibetans out of poverty by the end of the century," said an official who declined to be identified.
Almost all Tibetan government officials are involved in anti-poverty programmes. Each government department in the Tibet Autonomous Region sends officials into rural areas each year -- both to see where government money and aid are most needed and to teach poverty-stricken nomads how to boost their incomes.
Many of Tibet's worst off are nomads living in remote mountain areas, many with large flocks of yaks, goats and sheep, but with little idea of how to exploit their resources.
The nomads either use their animals to feed themselves or, when their numbers climb, set them free as an offering to Buddha to try to win merit for their next reincarnation, believing that their station in each life is dependent on their behaviour in the previous one.
"Many of these people have assets but they are still poor because they don't know how to use them," the official said.
Tibet does not rely on handouts alone. Since last year it has worked at setting up sister relationships with 14 of China's booming eastern cities and provinces.
These wealthy cousins each send between 10 to 20 officials to work for three years in the region over a 10-year period and also provide financial resources.
The provinces are helping Tibet with 43 projects, mostly in infrastructure. Initial investment was 2.3 billion yuan ($277.1 million) but now totals more than 3.0 billion yuan ($361 million).
"Tibet's capacity to develop itself is very low," the official said. "It's hampered by its geological conditions such as lack of infrastructure and its remoteness. And it takes a long time to move away from the previous feudal serf system.
"This is a very beautiful place but we have a very arduous task ahead."
($1.0=8.3 yuan)
| 14 |
Chrysler Corp. Wednesday introduced all-new versions of its Chrysler Concorde and Dodge Intrepid family sedans, part of a $2.1 billion revamp of the car line that helped rescue the automaker five years ago.
Detroit's third-largest automaker said the cars, which will reach showrooms in the fall, will stay in the same price range as the cars they replace -- about $20,000-$26,000.
The strategy contrasts with that of Ford Motor Co., which in 1995 introduced a redesigned Taurus sedan with more upscale features that resulted in higher prices. Ford later brought out a lower-priced Taurus when sales failed to meet expectations.
"Our concept is to keep them as affordable as possible and keep them in the same price range of today's" models, Chrysler Vice Chairman Robert Lutz told reporters following the introduction of the new model at the North American International Auto Show here.
Chrysler introduced the original "LH" car line in 1992 at a time when the automaker was emerging from its second brush with bankruptcy in a decade. Dubbed by some analysts as the company's "Last Hope," the cars' acceptance by consumers brought badly needed cash and confidence to the company.
Chrysler did not introduce other LH variants, which include replacements for the Chrysler LHS luxury car and the Eagle Vision.
Improved production processes will help keep prices down, though the cars' features include all new engine technology, Lutz said.
The cars, as well as two other models to be introduced in the fall, were the result of a 31-month development programme that cost Chrysler about $2.1 billion, including two new overhead-cam V-6 engines, Chrysler said.
The automaker expects to sell 250,000 to 260,000 of the cars annually, with the Intrepid accounting for about 50 percent of the sales and the other three models making up the rest.
To follow up on its launch Tuesday of the new Durango sport/utility vehicle, which broke through the floor of a mock-up of Chrysler's new corporate headquarters, Chrysler unveiled the new sedans in a fake thunderstorm, complete with water falling on the Cobo Hall stage. The theme of the presentation was "Lightning Strikes Twice."
The programme marks the launch of a new family of V-6 engines for Chrysler, part of a significant revamping of the company's engine line.
The base models of both cars will be powered by an all- aluminum, 2.7-litre 24-valve V-6 engine rated at 200 horsepower. The Concorde LXi and Intrepid ES will have 3.2-litre, 24-valve V-6 engines rated at 220 horsepower.
Chrysler said it engineered the cars to offer a quieter ride and better handling than current models.
The cars also include larger headlights and larger brakes, increased usable cargo room, platinum tipped spark plugs and a "coil-on-plug" ignition system to eliminate tuneups before 100,000 miles, Chrysler said.
Chrysler stressed that the two sedans are designed to appeal to different consumers, with Intrepid geared toward slightly younger, less affluent buyers.
The cars will be assembled at Chrysler's Bramalea, Ontario plant.
Lutz admitted that Chrysler was introducing the cars into a declining market for sedans, with typical sedan buyers now opting for other choices, including sport/utility vehicles.
But he said the decline was cyclical and could change with the next generation of car buyers.
"We know each generation rejects what its parents had," said Lutz.
| 5 |
'Twas the day before Christmas and all through the malls, retailers were looking for a last minute push for a merry holiday sales season.
Industry analysts said sales were hovering near or a shade below expectations for the holiday shopping season so far.
After a strong start, sales came in below retailers' own expectations last week, according to a weekly survey of chain store sales by BTM/Schroders, a venture of two investment houses.
Analyst Michael Niemira at Bank of Tokyo-Mitsubishi, which compiles the index with Schroder/Wertheim, said he expected December sales to rise 4 percent to 4.5 percent, compared with earlier expectations for a 4.5 percent to 5.0 percent rise.
But activity picked up Monday and Tuesday as shoppers, pinched by five fewer shopping days between Christmas and Thanksgiving this year or just old-fashioned procrastination, rushed to find gifts at the last minute, retailers said.
"It definitely feels active," said Karen Farnham, assistant manager at an Abercrombie & Fitch Co. in Manhattan. "Yesterday (Monday, I'd say, was probably the busiest," she said, noting that Abercrombie customers spend hundreds of dollars apiece, on average.
At the Limited Inc., last-minute shopping has been hectic, store manager Christina Vigo said in Manhattan.
"It's out of control. Yesterday was the busiest day all season. We started sales extremely early to draw business, but everyone's shopping last minute," she said, noting the average sale has been about $50.
In New York, lone men, coursing through stores with a clear purpose, accounted for a good portion of store traffic on Christmas Eve. "I'm just not finished yet. I get lazy, I guess," said Eric Gotthard.
Tom Kurpiewski said he, too, fell behind in his holiday shopping, adding that he's spending about the same as he did in 1995.
Saul Yaari, senior retailing analyst at Piper Jaffray Inc., said sales should be about 5 percent above last year's results, measuring on a store-for-store basis.
Yaari said sales at department stores have slowed in the last week after a strong holiday start while discounters have done well.
But people were still spending freely last weekend, reflecting a trend toward later shopping during the season, Yaari said.
Clothing, shoes, jewelry and certain toys, such as Nintendo's new video game system and Tyco Toys Inc.'s Tickle Me Elmo, sold very well, Yaari said.
"Consumer electronics was a very poor category," he added, noting retailers were offering free computer accessories and generous financing terms to stir up interest.
Analysts said the holiday shopping season and fourth quarter as a whole should be strong for retailers, boosted by tighter inventories and fewer unplanned promotions, as well as comparisons with a dismal season last year.
Clothing continues to lead the stronger sales.
"My read so far is I don't think it was as promotional as last year in apparel," said Harry Ikenson, retailing analyst at Rodman & Renshaw Inc.. He added that electronics sales appeared to be under much more pressure than apparel.
Peter Schaeffer at Dillon Read & Co. Inc., said he expected sales to rise 4 percent to 5 percent overall but only 2 percent to 3 percent at comparable stores open at least a year.
Discounters and off-price retailers such as TJX Cos. Inc. and Ross Stores Inc., as well as some of the big chains, notably J.C. Penney Co. Inc. and Sears, Roebuck and Co., should do better than average, he said.
| 5 |
Mercury Finance Co is likely to spend a tense weekend with its bankers trying to work out arrangments to solve its liquity crisis, the failure of which could force the company to file for bankrupcty protection, analysts and attorney's said.
The Lake Forest, Illinois-based auto finance company said Friday it could not raise new commercial paper to repay maturing debt and could not pay $17 million in commercial paper due Friday.
A finance company like Mercury makes money on the difference, or spread, between what it pays to borrow money and the higher rates it charges its customers. A finance company without a source of funds is like a retailer without a source of merchandise, analysts noted.
"If you can't fund, you're out of business," one equity analyst that follows the company said, requesting anonymity.
Some rating agencies, including Standard & Poor's Corp, lowered Mercury's commercial paper to a default rating Friday.
"They're very close to some reorganization, bankruptcy filing, probably a voluntary reorganization," said Thomas Kmiotek, analyst at Duff & Phelps Credit Rating Co.
He and other analysts noted the company has another $100 million in commercial paper due Thursday, February 6.
A Mercury spokesman did not return repeated calls seeking comment on the company's financing Friday afternoon.
Aside from the company's current inability to sell debt, Mercury is also facing a host of shareholder lawsuits, filed after the company said it had to restate its net income over the past four years by a total of about $90 million because of accounting irregularities.
Lawsuits do not become a financial liability for the company unless there is a judgment in favor of the shareholders. However, the company's admission of misstatements makes it easier for the sharheolders to prove their case, leaving only the questions of who would have to pay how much, one securities lawyer said.
"Securities laws are very, very simple," said Ted Koenig, a partner with Chicago-based lawfirm Holleb & Coff "If there is an ommission or misstatement of a material fact... there's liabiltiy."
Also, the company's market capitalization plunged by about $2.2 billion Friday, based on the 13 point fall of Mercury's shares and the 172 million shares the company said it had outstanding late last year. That reduces the equity cushion the company has available to show its creditors, Koenig said.
But analysts also said the company had about $1 billion in loans receivable on its books at the end of October, 1996 -- an asset to show creditors.
"No one has questioned the validity of the amount of receivables they have on their books or the quality of those receivables," Kmiotek said.
Also, Mercury has generally been well regarded in the sub-prime credit quality loan business, which could help it negotiate with its banks and continue as a going concern, said analysts and lawyers familiar with the company.
Mercury said in a statement it is in discussions with its lenders to satisfy working capital needs, but that it could not predict the outcome of those discussions.
((Chicago newsdesk 312 408 8787))
| 5 |
Dutch bank ABN AMRO Holding NV said Friday it agreed to pay $1.9 billion to acquire Standard Federal Bancorp, which owns the seventh-largest savings bank in the United States and the biggest in Michigan.
ABN AMRO, which already has a U.S. banking arm, the LaSalle group, said it was offering $59 a share for Standard Federal, a bank holding company with $15.5 billion in assets based in Troy, Mich.
SFB owns Standard Federal Bank, a large home mortgage lender in Michigan that operates about 180 bank branches and 11 home lending centres. It also operates a wholesale mortgage banking business.
Despite the offer, SFB stock fell after running up sharply in recent days on takeover speculation. Some investors were disappointed the price was not higher, analysts said.
"All the people were really speculating yesterday that it was a lot higher are selling today because they're disappointed," said Tony Howard, analyst at Olde Discount Corp.
SFB stock lost $1.625 to $56.375 in active trading on the New York Stock Exchange.
Standard Federal chief lending officer Garry Carley said at a news conference that ABN AMRO had made the highest bid for the bank among several serious suitors.
"We had others who expressed strong interest in the bank," Carley told reporters.
ABN AMRO, the Netherlands' leading bank, said it would issue $750 million in preferred stock to help fund the acquisition, its biggest to date. It said it would issue the shares through a U.S. subsidiary, ABN AMRO North America Inc.
Formed in a 1990 merger, ABN AMRO already is the biggest foreign bank in the United States. Its LaSalle group has 130 branches and 7,750 staff members, mainly in the Chicago area.
The agreement marks ABN AMRO North America Inc.'s sixth acquisition in three years and is likely to be the last for a while, ABN AMRO North America Chief Executive Officer Harrison Tempest said at a news conference.
"We're out of the acquisition business for some time now," Tempest said. When asked how long before it might make another deal, he said, "probably two years."
The combined banks will also be the eighth largest mortgage originator in the United States, ABN AMRO said.
"It gets us into the league we want to be in mortgage servicing and mortgage origination," Tempest said.
SFB employs about 4,000 people and serves 1 million clients in Michigan, Ohio, Illinois and Indiana.
ABN AMRO said Standard Federal's banks will continue to operate under the Standard Federal name and there would be "significant cost savings" following the deal.
While saying no jobs would be cut initially, both companies said some job cuts were likely eventually as administrative functions and some branches were consolidated.
With Standard Federal, ABN AMRO North America will have the second largest deposit base in the Chicago market.
Analysts said recent changes in U.S. banking law that will level the playing field between thrifts and banks should help speed other acquisitions of savings and loans.
"I think you're going to see an increased level of activity, both in banks acquiring thrifts and thrifts acquiring thrifts," said Jonathon gray, analyst at Sanford Bernstein & Co.
ABN AMRO said it had reached agreement with Standard Federal's board, but the deal still needed the approval of its shareholders and supervisory authorities.
The acquisition was expected to be completed by mid-1997, ABN said, adding that the deal would contribute to its earnings.
| 5 |
McDonnell Douglas Corp. said Monday it would consider mergers and acquisitions, but not a restructuring, after the Defence Department eliminated the company from the race to build a new generation fighter jet that eventually could be worth $200 billion or more.
"We've always been interested in mergers and acquisitions and we continue to look at them," Chief Executive Officer Harry Stonecipher said in an interview with CNBC financial television network.
The Pentagon on Saturday awarded four-year contracts to Boeing and Lockheed Martin Corp. to develop prototype fighter jets for the early 21st century for the U.S. Air Force, Navy, Marine Corps and the British Royal Navy.
The decision was a blow to St. Louis-based McDonnell Douglas, the nation's second-largest defence contractor and a long-time leader in fighter jets, and could force it to restructure, seek a merger or become more acquisition-minded, industry analysts said.
McDonnell Douglas had reportedly had preliminary merger discussions with Boeing Co. earlier this year. Stonecipher would not comment on any specific mergers or acquisitions.
"I don't think Boeing would be on our radar screen," he said regarding a possible acquisition. "We may be on theirs."
Stonecipher also said he would be interested in trading McDonnell Douglas commercial aircraft assets for Boeing's military aircraft business, but noted there have been no talks in that area. Boeing said it did not comment on rumours or speculation about mergers and acquisitions.
Already the smallest of the three major commercial jet makers, McDonnell said last month it would not continue to compete against Boeing and Europe's Airbus Industrie in the market for the biggest commercial jetliners.
British and U.S. forces have announced plans to buy 3,000 of the new generation fighter jets, with initial delivery scheduled for 2008.
With potential export sales of another 2,000 jets and additional funding for development and support, the programme could be worth $200 billion to $500 billion over the coming decades, industry executives said.
McDonnell Douglas stock lost $4.25 to $51.50 on the New York Stock Exchange, where it was one of the biggest losers of the day. Boeing rose $1.50 to $93.25 and Lockheed Martin rose $1.875 to $95.625, also on the NYSE.
John Modzelewski, an analyst at PaineWebber, said the decision could force St. Louis-based McDonnell Douglas to seek acquisitions more aggressively to help build its business, or into a merger with another defence or aerospace company.
"Everything's back on the table," Modzelewski said.
In the past year, McDonnell Douglas has been the subject of rumoured talks with Boeing, Rockwell International Corp. and Raytheon Co.
"This will be something of a wakeup call," CS First Boston analyst Peter Aseritis said. "It's a fairly sharp and dramatic blow to McDonnell Douglas and I would venture to guess one they probably didn't see coming."
PaineWebber's Modzelewski said, "Without having the internal growth such as joint strike fighter would give them, they're going to have to grow through acquisition." That could include Texas Instruments Inc.'s defence electronics business, which is for sale, according to published reports.
"Texas Instruments is a very interesting property if in fact it is for sale," Stonecipher said in repsonse to a question about the defence electronics business.
In a statement to employees Monday, Stonecipher noted the company's backlog of aircraft orders to the military at home and abroad and said it was pursuing other orders. The company has a $46 billion order backlog, a spokesman said.
"This decision does not mean we are out of the military aircraft business," Stonecipher said.
McDonnell currently builds the Air Force F-15 fighter and the Navy-Marine F-18E/F as well as the C-17 military cargo plane. Both the F-15 and the F-18 are to be replaced by the joint strike fighter in the next century.
| 5 |
Intuit Inc Wednesday launched its new, streamlined banking system on America Online Inc's online computer system, with some of the largest banks in the United States agreeing to use the product.
Intuit's BankNOW will be offered as part of America Online's Banking Center, along with products by CheckFree Corp, Online Resources and Visa Interactive.
BankNOW is geared to customers who wish to conduct banking transactions such as bill paying and fund transfers online, but do not use the personal finance software that is part of Intuit's Quicken banking package, Mountain View, California-based Intuit said in a news release.
So far, 14 U.S. financial institutions, including First Chicago NBD Corp and CoreStates Financial Corp are using BankNOW, with an additional eight committed to use the product, Intuit said.
Dulles, Virginia-based America Online, said 19 financial institutions provide banking services on the system.
The BankNOW software can be downloaded for free from America Online. Financial institutions charge their customers for using the product.
For example, First Chicago said it will charge $3.95 a month for customers using online-banking and $9.95 a month for online banking and bill paying, though some premium checking account users will be able to do online banking for free.
First Chicago looks at BankNOW as a premium service it can offer customers.
"We think there is a large market for this," First Chicago spokesman Thomas Kelly said. "We also think this is a point of differention in our markets."
But to some, the scope of online banking still remains in doubt.
"I don't know whether its the wave of the future," said James Schutz, banking analyst at Chicago Corp. "I don't think they (the banks) know either. I just think they're keeping their options open."
--Reuters Chicago newsdesk, 312-408-8787
| 5 |
Retailers looking for a post-Christmas rush to boost lukewarm holiday sales may be disappointed as snow in some areas and holiday exhaustion kept many shoppers from bargain-hunting Thursday.
"I think people did their shopping" before Christmas, said John Konarski, vice president at the International Council of Shopping Centers, a group of retail mall operators that surveys 85 large regional malls across the country.
"You're going to have some people out today (but) you're not going to see the massive crowds some people expected."
Konarski said he expected that holiday season sales would be up 4 percent to 6 percent from a year ago, which is about what he expected before the season began.
But after strong activity in the weekend following Thanksgiving, retailers' hopes for even better sales ended up being dashed by a slowdown in the week before Christmas.
"I think generally, the overall picture appears to be we had a good, solid holiday sales period, but not a spectacular one," said Tracy Mullin, president of the National Retail Federation, which represents major store chains.
She said she expects holiday sales rose about 5 percent from last year, when gains were a weak 2.5 percent to 3 percent.
Store officials and analysts said that while sales were coming in at or just below retailers' expectations, that still beats the dismal results last year.
"They slowed up very moderately, actually, from the input we're getting," said Jay Meltzer, managing director of LJR Redbook Research. "You know, we didn't go over a cliff and a year ago we did go over a cliff."
In Chicago, snow and cold weather appeared to be keeping crowds down in the Michigan Avenue shopping district the day after Christmas.
"Sales today are relatively slow compared to before Christmas," said Julie Towson, manager of the Knot Crazy tie store in Water Tower Place. "I think a lot of people spent all of their money before the holiday. Also, who wants to come out in this kind of weather?"
In central New York State, where it was also snowing, Konarski said there were lines at malls before stores opened at 7 a.m. EST (1200 GMT), but most shoppers were looking for markdowns on holiday accessories and to return merchandise.
In Cleveland, many workers were on vacation and some offices were closed, and shopper traffic at the Tower City Center mall complex was moderate.
"We've had a good, strong season," said the manager of a women's clothing store who has worked in retailing 11 years. "Business today is pretty good. Volume is moderate."
At Tower City's AnnTaylor store, sales associate Mary Rogonjich said Thursday morning traffic was slow but she expected things to pick up during lunch hour.
"Things have been steady this morning, and we have not had that many returns," she said. "We've had a very good season -- above plan." The store was offering up to 50 percent off on silk blouses, pants, jackets, shoes and other items on Thursday.
In Miami, some shops were seeing more traffic.
"The store is very busy. Really everything is marked down," said a spokeswoman at Federated Department Stores Inc.'s Macy's store in Miami's Falls mall.
But analysts said that while promotions picked up before Christmas and would accelerate this week, special discounts were fewer and less steep than last year, which should help retailer profits.
"Some retailers did get promotional in the last few days," Mullin said. "I think you'll see it really starting today."
Wal-Mart Stores Inc., the nation's largest retailer, said in a telephone message for investors on Monday that discount and warehouse sales were at the low end of plan for the holidays in the third week of December.
The company is in line for sales increases of 4 percent to 5 percent for November and December, the company said.
Dayton Hudson Corp. said on Tuesday sales were meeting expectations and that the company had planned its inventories well.
Sears, Roebuck and Co. said overall sales and sales at stores open at least a year were showing upper-single digit increases.
"Overall sales were strong the last three days before Christmas," Vice President of Marketing John Costello said, noting that clothing, tools, jewelry, multimedia computers and tires sold well.
| 5 |
U.S. retailers reported overall sales near plan for the key December holiday shopping month Thursday, but results varied widely by store and sector with department stores appearing to take some market share from specialty stores.
"The major retailers continue to gain market share," said Michael Niemira, analyst with Bank of Tokyo/Mitsubishi Ltd. "Even within the Sears report, they talk about the electronics area being one of the stronger areas" while that area was weak for retailers overall."
Sears, Roebuck and Co was one of the better performers, analysts said. The Hoffman Estates, Ill.-based retailer said domestic same-store sales rose 9.5 percent.
Sears chairman Arthur Martinez told CNBC that gross margins are very favorable for December and the fourth quarter.
Sears stock was up 1-1/8 at 46-3/8 Thursday. Other gainers included Paul Harris Stores Inc, up 1-7/8 at 20-1/2, Kohl's Corp, up 1-1/4 at 37-3/4, Dayton Hudson Corp up one at 37-3/8 and Saks Holdings Inc up 5/8 at 39-5/8.
| 5 |
Firstar Corp's announcement on Thursday that it expected to fall short of analysts' fourth-quarter earnings estimates for what it believes are temporary factors includes one element -- a continued modest decline in commercial loans outstanding -- that could be a more lasting concern, analysts said.
The Milwaukee-based bank holding company, which has $19.9 billion in assets, said it expects fourth quarter earnings of about $0.95 a share excluding any one-time gains, $0.08 short of the consensus and unchanged from a year ago.
Firstar is in the midst of a program to trim costs and enhance revenues and said factors including the implementation of that program and assimilation of recent acquisitions would hurt earnings. But the bank also said continued declines in its commercial loans outstanding would also hinder earnings, and was a temporary factor.
"I think while that sounds plausible, it also remains to be proven," said Ben Crabtree, banking analyst at Dain Bosworth. Crabtree had forecast earnings of $1.08 a share for the quarter.
While expenses from the restructuring and acquisitions should eventually be eliminated, analysts were not as sure that the loss of loans would be reversed.
"The question going forward, and that's an unanswerable question, is the long-term impact on the revenue side," said Thomas Maier, banking analyst at EVEREN Securities.
Firstar investor relations spokesman Joe Messinger said the decline in loans outstanding is due mostly to the focus on the restructuring during the first two quarters of the year.
Firstar also said credit card charge-offs will remain higher than the company's historic levels in the quarter, though they will be in line with the industry overall.
"It's something they've indicated in the past," Maier said, adding that higher charge-offs were already built into his previous $1.05 a share estimate on fourth quarter earnings and outperform rating on the stock.
In the 10-Q filing with the SEC for the third quarter, Firstar said it expected credit card charge-offs to rise to 4.5-5.0 percent in the fourth and first quarters, before declining to 4-4.5 percent. Charge-offs were 4.06 percent in the third quarter.
If Firstar meets its $0.95 a share estimate for the quarter, 1996 earnings would be $3.34 a share, compared to $3.00 a share a year ago.
Firstar shares fell one to 51 Thursday amid a downturn in banking stocks.
((--Chicago newsdesk 312 408 8787))
| 5 |
As the world's first Internet bank, Atlanta-based Security First Network Bank has had somewhat of an identity problem with potential customers.
"We get a lot of questions," Chief Executive Officer James Mahan III said. "Are you real? Are you virtual? Where are you really?"
Part consumer bank, part software testing site, Security First opened its virtual doors a year ago this month.
But now Security First plans to add actual doors, opening small offices in Atlanta, Cambridge, Mass., and Silicon Valley in California.
"I think we can more effectively market if we have a physical presence," Mahan said in an interview.
Comparing his bank to discount brokerage firm Charles Schwab & Co., Mahan said having the offices may give customers a sense of security, even if they never use an office.
Security First's current location is on the Internet. The bank is one of five in the United States that operates directly on the Internet, according to the Bank Administration Institute.
Federally insured Security First can be accessed at Website (www.sfnb.com), which brings consumers to a home page that looks like a bank lobby.
Customers can reach their account anywhere they have access to the Internet, rather than being tied to a single terminal where they have finance software, like other computer banks.
"Our goal was to have a bank that was fully interactive, where an individual could see all his information," Mahan said.
Most Security First customers have a money market account and a demand deposit account. Customers can open a checking account with as little as $100, an amount most choose to start to make sure the bank works, Mahan said.
Customers can pay bills electronically, purchase certificates of deposits or acquire a Visa card. Security First is also hoping to offer brokerage products and first and second mortgage products by the end of the year. Funds can be accessed by automatic teller machine, and Security First absorbs interbank fees for using the machines.
With limited infrastructure, Security First can offer higher yields, Mahan said. The bank was offering a six-month CD with an annaul percentage yield of 5.9 percent.
Security First was spawned as an idea of Mahan, who was chief executive officer at Kentucky-based Cardinal Bancshares Inc., and his sister-in-law's husband, Michael McChesney, who was starting a security software firm.
"He educated me on the Internet for years and years and years," Mahan said. Mahan used the charter of one of Cardinal's thrifts, changed its name to Security First and used it to start the Internet bank.
McChesney's, firm, SecureWare Inc. developed software that Mahan said has military-grade security. So far, the bank has not had its security breached, Mahan said.
"That doesn't mean that there haven't been a number of sophisticated attempts," he said. "If you have enough money and enough time you can break into anything."
Outsiders agree that Security First has shown a record of being secure, avoiding viruses, data theft and other potential dangers of Internet commerce.
"They do use a level of security that the Pentagon reserves for its most secure and sensistive systems," said Paul Schmeltzer, executive vice president for network services at Southeast Switch Inc., the corporate organisation for the Honour Network, the fourth largest ATM network in the country. "Is any security design totally foolproof or totally secure? Probably not."
That software and others developed for the bank is likely to be the prime money maker for Security First. Mahan admits that Five Paces Inc., Security First's software unit, will be the prime contributor to the company's net income.
"The bank is really a test site to use as a demonstration for potential customers of the software business," said Gary Craft, an analyst who follows the bank for Alexandria, Va..-based Friedman, Billings, Ramsey & Co.
Security First's stock is traded on Nasdaq.
Security First has opened about 5,600 accounts. Most of its customers are male, between the ages of 25 and 45, with average income above $63,000 a year. More than 80 percent own their own home, attractive demographics for marketing.
Security First has also attracted competition. This month, Atlanta Internet Bank opened for business.
Unlike Security First, Don Shapleigh, chief executive of Atlanta Internet, says he does not plan to open any customer offices. "I have the WorldNet. I have other ways to get out." Federally insured Atlanta Internet currently offers its services to subscribers of AT & T's WorldNet Services.
Shapleigh also argues that Atlanta Internet is the first true Internet only bank, saying that Security First is really a software company.
"I'm not selling software," he said. "I'm a banker."
Atlanta Internet, which is a service provided by a unit of Carolina First Corp. can be reached on the Internet at (www.atlantabank.com).
| 5 |
The newly appointed chief executive officer of Meredith Corp said Monday that the company was beginning to see prices for television stations peak and come down.
That could lead to Meredith making an acqusiiton sometime in 1997, said William Kerr, who is currently president and chief operating officer of the media company.
"We are hopeful that certainly in the course of the next calendar year that we would see some action," said Kerr, who will become chief executive January 1.
In the next few years, Meredith, which owns seven television stations could acquire about five more, he said in an interview.
"I think it may be easier in calendar 1997 than in calendar 1996 to make an attractive acquisition," he said, describing attractive as a VHF network affiliate in the 10th to 40th largest U.S. markets. "We'd like a larger market, but we think it's unlikely one will become available," he said.
The Des Moines, Iowa-based company also publishes magazines including Better Homes and Gardens and Ladies' Home Journal.
He said Meredith will not seek publishing acqusitions, he said. Instead, the company plans to launch new titles, including Family Money magazine, which is expected to be launched in the first half of 1997.
Due to consolidation in the magazine business in the 1980s and early 1990s, "we do not think there are many acquisitions" to be made on the publishing side, he said.
Kerr said he did not see another major magazine launch by the time the company's fiscal year ends next June, but said one could be launched later in the calendar year.
He would not say what the next title would be, but said it would be compatable with the publisher's family focus.
Publishing currently makes up about 54 percent of Merideth's earnings, broadcasting about 43 percent, with the rest coming from licensing, Kerr said.
The company currently has two licensing agreements with Wal-Mart Stores Inc, and Kerr said other agreements are possible, both with Wal-Mart and other companies.
But he also said a new deal is not likely to happen for 12 to 18 months.
"I think it is unlikely that we would have a major new deal to announce in this fiscal year," Kerr said.
On Monday, Meredith said its board of directors appointed Kerr chief exectuive officer. He had been president and chief operating officer. Kerr, 55, will replace Jack Rehm January 1, though Rehm will remain chairman until December 31, 1997, when he plans to retire, Kerr said.
--Reuters Chicago newsdesk, 312-408-8787
| 5 |
Mercantile Bancorp Inc's planned $1.07 billion purchase price for Roosevelt Financial Group Inc and an expected merger-related charge of $25-$30 million after tax both appear reasonable for an in-market deal, analysts said Monday.
The St. Louis-based bank holding company said it expects to take the charge in the quarter the deal closes.
"For a deal this size, I think, it's probably relatively modest," analyst Steve Schroll at Piper Jaffray said.
Roosevelt, a $9 billion thrift holding company also located in St. Louis, has 83 branches, 73 of which overlap with Mercantile, Schroll said.
The banks told analysts they expect to eliminate 50 of the overlapping branches by the middle of 1998, he said, adding that Mercantile also expects to cut 37 percent of Roosevelt's pre-tax cost base by 1999.
In a news conference, Mercantile would not specifically say how many branches would be shut.
The cost reductions help justify the $1.07 billion price tag, which is about 11 times 1997 earnings estimates for Roosevelt, Schroll said.
"It's reasonable," Schroll said. "For an in-market deal, because of the opportunities to save costs, it's reasonable."
With its recently announced plan to acquire Mark Twain Bancshares Inc for $855 million, Mercantile will be the largest financial institution in Missouri, with $30 billion in assets once both deals close.
That could make Mercantile, often mentioned as a takeover candidate, even more attractive.
"I'd say Merc was already attractive anyway," said Joseph Stieven, a banking analyst at Stifel Nicolaus, which advised Roosevelt on the deal. "This makes them no less attractive."
Joseph Roberto, a banking analyst at Keefe Bruyette & Woods, said, "I think it makes Mercantile more attractive. It gives them the number one market share across the state."
But the process of closing the two deals, expected in the second quarter, and absorbing the acquisitions could take Mercantile out of play as an acquisition target in the short term, analysts said.
"I would think in the short term, an acquisition of this size, when combined with the acquisition of Mark Twain, probably delays the likelihood of somebody from outside coming in to buy Mercantile," Schroll said.
Meanwhile, St. Louis-based Magna Group Inc and Kansas City, Missouri-based Commerce Bancshares Inc could become more attractive for suitors looking to buy in the Missouri market, analysts said.
((--Chicago newsdesk 312 408 8787)).
| 5 |
The U.S. economy should provide a repeat in 1997 of the steady growth seen in 1996, which should also lead to car and truck sales near 1996 levels, according to economists who work for the Big Three automakers.
Economists for Ford Motor Co and General Motors Corp both forecast vehicle sales between 15 million and 15.5 million in 1997, while Chrysler Corp's economist predicted sales of 15.2 million. Sales were about 15.4 million in 1996. The forecasts were made in a presentation to the Society of Automotive Analysts.
"We are likely to see more of the same," Chrysler's W. Van Bussmann said, echoing the view of the other two analysts.
"We see no significant changes in either direction on fiscal or monetary policy," said G. Mustafa Mohatarem of General Motors.
Ford's Martin Zimmerman was even more optimistic. "I frankly don't see why this growth can't continue into 1998," he said.
But that does not mean the auto industry has no concerns. The one short-term worry all three economists voiced was the weakening of the yen, which fell to about 117 to the dollar Monday from about 106 a year ago. A weaker yen makes Japanese imports, including automobiles, less expensive in the United States.
That, in turn, makes Japanese cars more competitive in the U.S. market, giving Japanese automakers more flexibility in pricing, analysts said.
But the analysts all expected political or market pressures to cause the yen to stabilize and then strengthen somewhat against the dollar this year.
"We should see the yen start to strengthen," Zimmerman said.
Bussmann forecast the yen at 106 to the dollar by the end of 1997.
In western Europe, analysts see continued economic pressure associated with the move to European union in 1999 continuing to weigh on the economy there and keep vehicle sales about flat.
But Mohatarem argued that there is a possibility for a positive surprise in central Europe, saying Russia could achieve three percent economic growth by 1998.
Mexico was also seen as an area for growth, with that economy recoverying quicker than expected from the recent peso crisis, analysts said.
Meanwhile, Bussmann argued that capacity usage for truck production will remain at about 80 percent through the year 2000 and that truck demand as a percentage of total vehicle market share will continue to rise.
"We see the light truck demand reaching 50 percent (of total vehicle demand) by just past the turn of the century," he said.
But other analysts were not as optimistic about demand for light trucks, which generally have higher profit margins than cars.
"I don't think it will reach 50 percent of demand," said Thomas Webb, chief economist with the National Automobile Dealers Association.
During his presentation, Webb also said his forecast for 1997 auto sales was on the low end of a range he defined between 14.7 million and 15.1 million autos.
((Chicago newsdesk 312 408-8787))
| 5 |
Freight hauler Yellow Corp. said Wednesday it could cut 1 percent to 2 percent of its workforce as part of a restructuring of its largest operating unit, Yellow Freight System.
Overland Park, Kan.-based Yellow Corp. said it has offered early retirement to 153 employees who are 55 and older and that it will announce layoffs in the first quarter.
The company also said it will take an unspecified charge to fourth quarter earnings to cover expenses resulting from early retirement, severance and other costs related to a reorganization of Yellow Freight along geographic lines.
Each geographic unit will have a group vice president who reports to Yellow Freight President Bill Zollars, while five officers at the central office will also report to Zollars, the company said.
"We are decentralizing responsibility for the business processes that touch the customer in an effort to be more responsive to their LTL needs," Zollars said of the less-than-truckload freight hauling business.
"All members of the leadership and management teams will be focused and incentive-based on four priorities," said Zollars. "Those areas are customer satisfaction, improved profitability, revenue growth and operating safely."
Employees will have until Jan. 15 to make their decisions on whether to take early retirement, Yellow said.
The number of layoffs will be determined, in part, based on the early retirement decisions, as well as the needs of the company as it reorganizes, a spokesman said. He estimated about 1 percent to 2 percent of Yellow's 24,700 employees could be affected.
Analysts said the moves announced Wednesday were part of a strategy to improve performance at Yellow and help it regain market share.
"I think they need to focus on some labour productivity," said Corina Bergschneider, analyst at George K. Baum & Co. "Obviously, that needs to be done in line with their union contract and what can be allowed."
Yellow shares fell 12.5 cents to $14.50 on the Nasdaq system.
| 5 |
Struggling to stay on course away from its troubled past, Trans World Airlines Inc. now must find a new chief executive to take the helm of the troubled carrier.
How quickly it can find an experienced airline executive for the job will determine whether it stays on course or runs into more financial trouble, industry analysts said.
The St. Louis-based airline said on Thursday that Chief Executive Officer Jeffrey Erickson, who has headed the company for the past two years, will leave in January.
"The last thing that the company needs now is more management turmoil," said one analyst, who declined to be identified. "It doesn't have a strong or stable enough footing to deal with this kind of stuff."
Erickson's departure comes just four months after Chief Financial Officer Robert Peiser left the company. At the time, TWA said Peiser's decision to leave was over differences in management direction.
"They're going to have to regain the confidence of Wall Street," said William Fiala, who follows the airline industry for Edward D. Jones & Co., which is based in TWA's hometown. "The only way they're going to do that is by coming up with a leader that's a proven turnaround (manager), or well-respected in the industry."
Erickson, who became chief executive officer in August 1994, brought the airline through its second bankruptcy reorganization and back to where it was buying new aircraft. But the turnaround is not finished, and higher fuel costs and the July 17 crash of Paris-bound Flight 800, which hurt confidence in the carrier and therefore its sales, have stalled the company's improvement.
"Erickson was the one who really steered them through the first half of the turnaround, but they still have a way to go," Fiala said.
The company on Thursday reported a $14.3 million third-quarter loss and said its yield, a measure of fares, fell in the quarter.
"I don't know specifically the reason he chose to depart now," said Don Jacobs, chairman of the TWA Master Executive Council of the Airline Pilots Associaition. "I think it's probably an impact of the third quarter financials and Flight 800."
TWA's unions have four seats on the company's board of directors and will play a part in choosing a successor for Erickson, Jacobs said, though he could not suggest possible replacements.
"We would expect that the board would replace Jeff with a top-notch airline manager," he said. "As both employees and the stockholders in the company, we will be concerned and involved in that."
Industry experts said TWA's board of directors might have become impatient with the pace of the turnaround after seeing the third-quarter results. But they also quickly defended Erickson's record at the company.
"When you see what TWA was three years ago and what it is now, it's a world of difference," said Michael Boyd, president of Aviation Systems Research Corp., a research and consulting firm in Golden, Colo.
Calls to Erickson at TWA's offices Friday were transferred to a public relations office, which said he was unavailable for comment. TWA Chairman Thomas Meagher did not return calls.
Analysts said TWA's board would need to move quickly and that the next chief executive would need a good degree of independence from the board.
"Whatever they do to replace Erickson, they need a hands-on manager, not a messiah," Boyd said. "In a situation like this, you have to have free reign. You can't have people behind you second-guessing every one of your moves."
Boyd said several managers at United Airlines might be interested in the job. He also suggested that former Alaska Air Group Chief Executive Raymond Vecci could be a candidate.
Earlier this year, Erickson, who was criticized by families of the Flight 800 victims for the company's response to the crash, told students at Washington University in St. Louis that the aftermath of the crash was draining, said Stuart Greenbaum, dean of the university's business school.
"I can't help believing the crash just took a lot out of Jeff," said Greenbaum, who said he is a friend of Erickson's. "That was so difficult for him, as it would be for any human being, to try to represent the company to the world" after the tragedy, in which 230 died.
| 5 |
Corporate financing for a downtown Detroit sports stadium complex is in place and land acquisition nearly complete, Mayor Dennis Archer said Friday.
"We believe that we are very, very close in making it happen," Archer said at a news conference. "If property has to be taken, by condemnation or eminent domain, we will move in a timely manner in the manner in which it will be needed."
Legislation pending in the Michigan Legislature could help facilitate the condemnation process, Archer said.
Archer also said a deadline of 1700 EST Friday for the Detroit Tigers baseball team and Detroit Lions football team to make a commitment to the $505 million stadium complex was flexible.
Lions President William Clay Ford Jr. said after the news conference that Monday was the true deadline, as Wayne County voters will have to decide Tuesday whether to approve a tax on hotels and rental cars geared at raising $80 million for the complex.
"We can't go to the voters without this," Ford said after the news conference, referring to a complete accounting of land on which the complex would be built.
The owner of a parcel that houses the Gem Theatre appears to be the major holdout, officials indicated.
"The one owner is a big problem at this point," said June West, press secretary to the Wayne County executive's office. "There's a price issue."
The owner of the parcel, Chuck Forbes, could not be reached for comment Friday. West said stadium negotiators and Forbes were meeting Friday.
| 5 |
Struggling to stay on course away from its troubled past, Trans World Airlines Inc. now must find a new chief executive to take the helm of the troubled carrier.
How quickly it can find an experienced airline executive for the job will determine whether it stays on course or runs into more financial trouble, industry analysts said.
The St. Louis-based airline said on Thursday that Chief Executive Officer Jeffrey Erickson, who has headed the company for the past two years, will leave in January.
"The last thing that the company needs now is more management turmoil," said one analyst, who declined to be identified. "It doesn't have a strong or stable enough footing to deal with this kind of stuff."
Erickson's departure comes just four months after Chief Financial Officer Robert Peiser left the company. At the time, TWA said Peiser's decision to leave was over differences in management direction.
"They're going to have to regain the confidence of Wall Street," said William Fiala, who follows the airline industry for Edward D. Jones & Co., which is based in TWA's hometown. "The only way they're going to do that is by coming up with a leader that's a proven turnaround (manager), or well-respected in the industry."
Erickson, who became chief executive officer in August 1994, brought the airline through a bankruptcy reorganization and back to where it was buying new aircraft. But the turnaround is not finished, and higher fuel costs and the July 17 crash of flight 800, which hurt confidence in the carrier and therefore its sales, have stalled the company's improvement.
"Erickson was the one who really steered them through the first half of the turnaround, but they still have a way to go," Fiala said.
The company on Thursday reported a $14.3 million third-quarter loss and said its yield, a measure of fares, fell in the quarter.
Industry experts said TWA's board of directors might have become impatient with the pace of the turnaround after seeing the third-quarter results. But they also quickly defended Erickson's record at the company.
"When you see what TWA was three years ago and what it is now, it's a world of difference," said Michael Boyd, president of Aviation Systems Research Corp., a research and consulting firm in Golden, Colo.
"I do not see anything you can ascribe to Jeffrey Erickson that occurred in the third quarter. I don't see any decision made by Jeffrey Erickson that messed up the airline."
Calls to Erickson at TWA's offices Friday were transferred to a public relations office, which said he was unavailable for comment. TWA Chairman Thomas Meagher did not return telephone calls.
Analysts said TWA's board would need to move quickly and that the next chief executive would need a good degree of independence from the board.
"Whatever they do to replace Erickson, they need a hands-on manager, not a messiah," the consultant Boyd said. "In a situation like this, you have to have free reign. You can't have people behind you second-guessing every one of your moves."
Boyd said several managers at United Airlines might be interested in the job. He also suggested that former Alaska Air Group Chief Executive Raymond Vecci could be a candidate.
Earlier this year, Erickson, who was criticised by families of the flight 800 victims for the company's response to the crash, told students at Washington University in St. Louis that the aftermath of the crash was draining, said Stuart Greenbaum, dean of the university's business school.
"I can't help believing the crash just took a lot out of Jeff," said Greenbaum, who said he is a friend of Erickson's. "That was so difficult for him, as it would be for any human being, to try to represent the company to the world" after the tragedy, in which 230 died.
| 5 |
Olympic Financial Ltd said Tuesday it could reach a deal to sell the company by October.
"I would expect that the time frame hopefully would be sometime in October," said Warren Kantor, chairman of Olympic's executive committee, in an interview. He was referring to the process of its investment banker Donaldson, Lufkin and Jenrette considering strategic alternatives for the Minneapolis-based automobile finance company.
Olympic said Monday it has received an indication of interest from a potential buyer. Kantor said others have also expressed interest in the company since Monday's announcement.
"Effectively, what I believe is happening is due to the public announcement, those people who would go through a longer time frame... want to be sure (they are) not left out," Kantor said.
He would not comment on the identity of any potential suitors, but said the first contact came from a company with investment grade credit.
A combination with an investment grade company could allow Olympic greater access to capital to expand its business, Kantor said. Olympic's credit is not investment grade.
Olympic needs capital to expand technology as its business expands, Kantor said.
"We think that the circumstances of the company are such that it makes sense to consider offers in order to take advantage of our rapid growth and opportunities," he said, noting that access to capital could especially become an issue in the event of a recession.
While capital may be harder to come by in a recession, demand for loans from Olympic's customers, who essentially need their cars to get to work, would not wane much, Kantor said.
Kantor would not rule out the option of remaining independent and slowing down its growth plans, but added that it was likely the company would receive an acceptable buyout offer. "While we think it is likely that we will get offers that are acceptable, we're not going to accept (just) anything," he said.
Olympic's loans serviced have jumped to $3 billion at the end of June from $1.5 billion a year ago and the company is looking to further expand into a somewhat higher risk loan category it refers to as Classic, Kantor said.
Those loans net 16-18 percent rates, while 80 percent of its portfolio is made up of loans at about a 12 percent rate, Kantor said, adding that Olympic wants Classic loans to make up 50 percent of the portfolio by the end of the year.
Kantor would not comment on analysts' estimates ranging from $25 a share to more than $30 a share as a sale price for the company. Olympic rose 2-1/2 to 26-1/2 Tuesday.
--Reuters Chicago newsdesk, 312-408-8787
| 5 |
The $9.5 billion proposed acquisition of Boatmen's Bancshares Inc. by NationsBank Corp. could spark a flurry of other mergers involving Missouri banks, which until last year were protected from outside buyers by state regulations.
"NationsBank just strolled into the Midwest and bagged the biggest banking trophy in the landscape," said Michael Ancell, banking industry analyst at Edward D. Jones & Co. "Whoever wants a big market position in the Midwest has to come in and grab Mercantile or Commerce."
St. Louis-based Mercantile Bancorp Inc., a bank holding company with $18.04 billion in assets, was seen by many analysts as the most attractive Missouri franchise in size after Boatmen's. Kansas City, Mo.-based Commerce Bancshares Inc., with $9.32 billion in assets, also could help a regional bank establish a strong presence in the lower Midwest, analysts added.
"It focuses more attention on Mercantile, Commerce and Roosevelt," said James Weber, analyst at A.G. Edwards & Sons. Roosevelt Financial Group Inc is a $9.33 billion asset-St. Louis based thrift.
"Now ... the most coveted bank out there is Mercantile," Weber said.
Mercantile and Commerce did not return phone calls seeking comment.
Among those seen as having an interest in buying in Missouri are Minneapolis-based First Bank System Inc. and Norwest Corp., Ohio-based KeyCorp and Banc One Corp., and First Chicago NBD Corp. in Illinois.
Representatives of First Bank, Norwest, Banc One and First Chicago said the banks do not comment on rumors of possible mergers or acquisitions. KeyCorp, contacted by phone, would not comment. With a presence in nine states and $41 billion in assets,
Boatmen's was the prize in Missouri, where barriers to outside acquirers were brought down last year by a federal banking statute.
"Boatmen's was the plum of Missouri and was the plum of the central Midwest," Weber said.
Talk that the Missouri banks were seeking inflated prices from buyers was seen as a reason a deal has not occurred sooner. But NationsBank's bid, representing a premium of 40 percent for Boatmen's stock, was large enough to get the deal done.
"I think Boatmen's was shopping itself, and everybody knew if you wanted to be the winning buyer here, you had to make the bid nobody would beat," Ancell said.
But some analysts cautioned that other targets should not expect as large a premium. They also questioned whether NationsBank can recoup shareholder value with such a large bid for Boatmen's.
"I think initially some stocks will trade up on sympathy, but the wild premium NationsBank put on this deal here, I don't see a lot of other deals being done at this premium," said Michael Durante, analyst at McDonald & Co.
| 5 |
A brisk start to holiday shopping should help retailers post solid sales gains for November and make this season merrier than last year for the nation's store chains, industry analysts said Tuesday.
But quirks in the calendar, with a later Thanksgiving this year, and some retailers tallying sales differently than others, could obscure overall results for November.
Industry analysts said they expect sales at stores open at least a year to rise 2.5 percent to 4.0 percent overall in November, with clothing continuing to be a strong contributor, as it was in October.
Most retailers report November sales on Thursday, though Paul Harris Stores Inc., a speciality women's apparel chain, reported November same-store sales up 26 percent from a year ago on Tuesday.
"We think the majority of companies are going to be on or above plan for the month of November, with good inventory levels," said Harry Ikenson, retail analyst at Rodman & Renshaw Inc. "We think the promotional level for Thanksgiving was high, but probably no higher than last year."
With discounts and markdowns no higher and in some cases lower than last year, and inventories being managed tightly, profit margins should improve, helping to lift fourth quarter earnings, analysts said.
"On balance, good business now is going to translate into decent earnings," said Dean Ramos at Dain Bosworth Inc. Ramos said his index of sales could be one to two points higher than the 3.1 percent rise reported last year and that the trend should continue through December.
"Absent some sort of event that shakes the consumer you should see good retail sales" in December, he said.
Holiday sales are crucial to retailers who typically earn a quarter or more of the year's profits during the season, analysts said. Steady economic growth and low unemployment have helped boost sales so far, and store chains should also benefit from easy comparisons with weak results a year ago.
Consumers got off to a fast start on their holiday shopping after Thanksgiving, analysts said.
Retail consumer spending in the post-Thanksgiving weekend rose 4.3 percent from a year ago, according to TeleCheck Services, which tracks check-writing volume. Overall, same-store sales rose 2.1 percent, TeleCheck said.
Several department store operators were expcted to be among the winners when sales are reported on Thursday.
Rodman & Renshaw's Ikenson said he expected J.C. Penney Co. Inc. and May Department Stores Co. to be above expectations, with Penney's same-store sales up 7.5 percent to 8 percent and May's up 6 percent to 7 percent. Federated Department Stores Inc. should be up 7 percent to 9 percent, with gains in all its segments, he said.
Ikenson said he sees Charming Shoppes Inc. slightly below expectations with a gain of 5 percent.
Dean Witter analyst Patrick McCormack said in a research report he expected sames store sales to be up 3 percent in the month for the firm's index of 44 companies.
He also saw JC Penney, May, and Federated above expectations, as well as Sears, Roebuck and Co.
Sears was forecast by analysts to post a smaller-than-expected decline of 1 percent to 2 percent, which is due to a quirk in the company's sales reporting calendar that should help boost results in December.
Sears Senior Executive Vice President John Costello said on Sunday that post-Thanskgiving sales appeared to be up across the board, from men's and children's clothing to Craftsman tools to fine jewelry.
"Optimism is up and it looks like consumers are responding to the short season by getting an earlier start," he said.
Most analyts expect big-ticket consumer electronics to continue to be weak, though one saw some signs of a pickup in sales at the end of the month.
"Sears and Wal-Mart over the last week talked about a pickup in the computer area," said Michael Niemira, analyst at Bank of Tokyo-Mitsubishi. He forecast sales overall up 2.5 percent for November at a comparable number of stores.
| 5 |
Shoppers lined up outside stores Friday, some arriving before dawn to get an early start on the holiday shopping season.
The day after Thanksgiving is traditionally one of the busiest days of the year for retailers and the unofficial start of the holiday shopping season, the make-or-break time for many retailers.
With consumer confidence high and employment strong, analysts are generally expecting sales gains of about 5 percent over last year's weak sales growth. The crunch is especially tight this year, since there are five fewer days between Thanksgiving and Christmas.
"The money's there. The confidence is there. The jobs are there. The goods are there and the pent-up demand is there," said Allen Sinai, chief economist at Primark Decision Economics. Sinai forecast sales growth of 4.5 percent for November and December, compared with 2.9 percent gains a year ago.
Shoppers also were there, with many retailers offering early bird sales to entice them.
Roni Campos lined up outside the door of the Wal-Mart at first Colony Mall in Sugarland, Texas, a suburb of Houston, at 6:30 a.m.
"You should have seen Wal-Mart. They had a 13-inch television on sale for $99, and people were fighting for those TVs. Arms were flying, and people were just pulling those things off the shelf," she said.
Stephanie Foster, of Richmond, Texas, was shopping for baby gifts in Mervyns California, a Dayton Hudson Corp. store chain.
"They had a line outside Target of at least 200 people," said Foster, who began her shop-a-thon this year at 5 a.m., shopping list in hand. "I started out with a list of what everybody wanted and what time every store opened."
As one of the first customers through the door at Target, she was handed a bag with treats, juice, coupons and mints.
"I came here for a 64 bit Nintendo (for my granddaughters) and they had 40 in stock, but I ended up with two bags of Christmas presents," Rosalee DiGregorio said at the Menlo Park Mall in Edison, N.J.
Other items that were expected to be hot this year are those related to the movies "101 Dalmatians" and "Space Jam," said Tracy Mullin, president of the National Retail Federation. Barbie dolls from Mattel Inc. are also expected to be hot sellers, especially Holiday Barbie.
"Believe it or not, Barbie still has legs," Mullin said.
The federation is forecasting holiday sales will rise about 6 percent over last year, reaching about $460 billion.
While the the day after Thanksgiving attracts traffic and media attention, actual sales for retailers tend to come later in the holiday season.
"This whole weekend only accounts for 8 percent of purchasing," said John Konarski, vice president of research for the International Council of Shopping Centers.
Susan Eich, a spokeswoman for Dayton Hudson, said sales volume the day after Thanksgiving is typically three times the retailer's normal sales. That day and the Saturday before Christmas are typically the company's busiest days.
Filene's Basement Corp.'s flagship store in downtown Boston opened at 7 a.m. and was packed with shoppers by 7:30. Filene's Basement Chief Executive Samuel Gerson said the cold weather and a late Thanksgiving were making for a busy season.
At the Falls, a mall near Miami, a small fire on a utility pole nearby cut off power to the complex for about an hour Friday morning.
"We actually ran registers, but off power. Everyone was doing it by hand, doing it by candle light," said a spokeswoman for the Bloomingdale's store at the mall. Bloomingdale's is owned by Federated Department Stores Inc..
Norm Allen, head of customer services at the Glendale Galleria in suburban Los Angeles, said the 280-store complex opened at 8 a.m. with about 100 shoppers in line to enter.
"This is going to be a good year. Our volume sales are already up 8 to 10 percent over last year at this time," he said.
Apparel and soft goods were expected to lead sales nationwide, while analysts and retailers expect tough competition and a lack of major new items to pressure sales at elctronics stores.
"We'll provide an array of holiday sales," said John Costello senior executive vice president of marketing for Chicago-based Sears, Roebuck and Co.. "Our sales are comparable to last year."
| 5 |
A conservative forecast for 1997, calling for profits near 1996 levels, helped push Caterpillar Inc stock lower despite record earnings reported for 1996 Tuesday.
But the outlook was also causing some analysts to question the conservatism of the Peoria-based heavy equipment maker.
"Caterpillar always looks at the glass being half empty," said Thomas Burns Jr., an analyst at NatWest Securities Corp. "We think it's half full."
"We expect a better U.S. economy," Burns said. "We don't expect housing starts to be off." He noted that Federal Reserve Board Chairman Alan Greenspan made positive comments about the economy Tuesday.
But Caterpillar said in its earnings statement that it expects U.S. gross domestic product growth of about two percent in 1997, slower than in 1996.
Burns is also more optimistic about European growth than Caterpillar.
"Clearly, as far as we're concerned, there's a turn up on the way in Europe," he said.
But in Caterpillar's view, bullish factors will be offset by delays of infrastructure products as countries impose fiscal restraint to meet the entry criteria for the European Monetary Union.
Caterpillar reported earnings of $381 million, or $1.99 a share for the fourth quarter of 1996, above the $1.53 a share reported in 1995 and the consensus estimate of $1.88 a share reported by First Call Corp.
But the stock was down 1-1/8 at 77-3/8 Tuesday, mostly because of the outlook.
"It's basically '97," Lisa Shalett, an analyst at Sanford C. Bernstein, said of the stock's downturn. But she noted that one-time currency factors helped boost the earnings above estimates.
"It comes across as a surprise, but it's not necessarily a surprise from operations," Shalett said.
Still, despite Caterpillar's guidance on profits in 1997, Burns and other analysts are sticking by estimates showing earnings per share climbing from the $7.07 reported in 1996.
Burns estimates earnings of $7.70 a share for 1997.
Blair Brumley, an analyst at Dain Bosworth Inc, is even more bullish, forecasting earnings of $8.00 a share.
"It doesn't look like there's anything in the outlook statement that would cause us to be concerned with this year," Brumley said, noting that share repurchases, gains in the engine business from a recent acquisition and price gains from new products should boost earnings.
"Even assuming flat unit sales, you're not going to see a flat bottom line," he said.
((Chicago newsdesk 312 408 8787))
| 5 |
First Chicago NBD Corp chief executive Verne Istock expects to see more job cuts at the corporate banking unit as the bank tries to turn around a business that has far underperformed the rest of the company.
"I suspect as part of our restructuring of the corporate bank there'll probably be reduced head count in the corporate bank, and there will be reduced capital allocated to the corporate bank," Istock said in an interview.
He would not say how many jobs would be cut.
The corporate banking unit posted a dismal return on equity of eight percent in the first nine months of the year, compared with nine percent a year ago, with results this year weighed down by a $12 million trading loss. Overall, the bank reported return on equity of 16.9 percent in the first nine months of 1996.
Now the corporate and institutional banking unit is being reshaped, paring back business lines to focus on those central to customer relationships.
"I firmly believe that something that's chugging along at eight or nine percent can in fact be improved and we fully expect to get it up to that 15 percent or better return" on equity, Istock said.
Stockholders and analysts appear to accept Istock's argument that the corporate bank's results can only go up.
"You can criticize them, but frankly, it can only improve," said Joseph Duwan, analyst at Keefe Bruette & Woods. "I think they're taking a hard look at the businesses they're in in corproate banking."
Istock stressed that increased revenue will come from the corporate bank by focusing on areas that will grow and cutting unprofitable areas.
Already this year, the bank has said it will exit the institutional custody and master trust businesses, two paperwork-intensive lines that would have required major investment to gain significant market share.
Istock also said the bank was trimming its trading operations, again focusing on instruments customers need.
"I don't think we will have to have the entire (trading) product line or be on the edge of the envelope," Istock said. But he added that the types of trading vehicles customers need change.
Istock said he was aware of the corporate bank's troubled performance before First Chicago Corp and NBD Bancorp merged a year ago, forming what is now the ninth largest bank holding company in the United States with assets of $106.7 billion.
Meanwhile, First Chicago's stock hit a post merger high last week, before sliding in a sell off of most bank stocks this week. An aggressive 40 million share stock repurchase plan announced in October has helped boost the stock.
But another area of concern to analysts is credit card chargeoffs, which jumped earlier this year.
Istock said while chargeoffs will likely rise more as the economy slows, the business will continue to be a strong earner for First Chicago.
"It's a business we know, we understand and we plan to stay in," Istock said. He added that the bank is beginning to use its 13-million-customer credit card database to sell other products to credit card holders.
First Chicago shares were up 1/8 at 55 Friday.
((--Chicago newsdesk 312 408 8787))
| 5 |
Wallace Computer Services Inc. said Thursday its directors will unanimously recommend that shareholders reject a bid by Wyser-Pratte & Co. Inc. to gain control of the computer services company's board.
Wyser-Pratte, which holds 2.3 percent of Wallace's outstanding shares, has proposed three candidates as directors for the Lisle, Ill.-based company, as well as a special committee to explore ways to maximize shareholder value.
It seeks to remove Wallace's poison pill takeover defence, which requires an 80 percent vote to approve certain mergers.
Wyser-Pratte filed the proposals with the Securities and Exchange Commission after Moore Corp. Ltd., a huge Canadian business forms manufacturer, abandoned a 13-month campaign to acquire Wallace in a $1.3 billion deal in early August.
Wallace's board said in a letter to Wyser-Pratte that it will recommend that its shareholders vote against the proposals at their annual meeting on Nov. 6, as they are not in the best interests of them or the company.
Wallace said it was aware that Wyser-Pratte tried to contact the three Wallace directors who were nominated by former suitor Moore at last year's annual meeting.
"You should be under no illusion that you or your purported director nominees have three allies on the Wallace board. We want to emphasise that we are unanimous in opposing your actions," the letter said.
Guy Wyser-Pratte, president of Wyser-Pratte, responded that he would continue to push his proposals.
He said although Wallace had increased its dividend substantially and reported higher-than-expected earnings Wednesday, the stock was only up slightly. Wallace rose 12.5 cents to close at $27.375 on the New York Stock Exchange.
"They're not delivering value to shareholders," he said.
Wallace said its profits jumped to $19.2 million, or 42 cents a share, in the fourth quarter ended July 31, from $15.8 million, or 35 cents a share, in the year-ago period. Sales rose 8.2 percent to $214.5 million from $198.2 million.
Factoring in the company's stock split, the stock is trading at just over $54, compared with Moore's offer last year of $60, Wyser-Pratte said.
"It's been a year and nothing has happened with the stock," he said.
However, analysts said that strong business fundamentals and a presumed change in Wallace's shareholder profile should protect it from Wyser-Pratte's proposals.
Many arbitrageurs likely sold their Wallace stock after Moore abandoned its 13-month takeover campaign, resulting in more shareholders interested in long-term gains, analysts said.
| 5 |
First Chicago NBD Corp, while still open to acquisitions to expand its banking network, expects more retail branches to be cut over time as customers bank electronically or at supermarkets.
"As customers use more and more of those (channels), we've got to take away more of the brick and mortar" branches, Verne Istock, chief executive, said in an interview Thursday.
But don't expect First Chicago to make drastic cuts like the nearly 280 branches that Ohio-based KeyCorp said last month it would close or sell.
"I don't think that's the approach we want," Istock said. "I think that's pretty dramatic. I think you're better off to do it on an orderly basis from a customer satisfaction standpoint as well as an employee basis."
First Chicago has closed about 25 branches since the merger with Detroit-based NBD Bancorp a year ago that created what is now the ninth largest bank holding company in the United States, with $106.7 billion in assets.
But at the same time, First Chicago could be looking to expand its retail customer base through acquisitions of other banks in the greater Midwest.
"I have publicly said on more occasions than once that this organization does have an interest in expanding through acquisitions where it makes sense for shareholders," Istock said.
This means any acquisition First Chicago does could only dilute earnings for a short time, if at all, he added.
But Istock also said First Chicago has not had talks with Milwaukee based Firstar Corp, which has been mentioned as a possible First Chicago target for at least a year.
"We've had no discussions," he said of Firstar. He would not comment on other possible acquisition targets.
Istock also reiterated that an acquisition could be made outside of traditional banking as regulatory lines between banking other financial businesses are erased.
Insurance, investment banking and securities banking are all areas that could be targets of traditional banks, he said.
"We're willing to consider any alternative that we think makes sense for our shareholders first of all and also for enhancing our customer relationships," Istock said.
Analysts see First Chicago as having excess capital on its books, which weighs on a bank's performance. EVEREN Securities analyst Thomas Maier said the bank could have more than $2 billion in excess capital, while others estimate a lower amount.
An aggressive 40-million-share stock repurchase plan has helped allay analysts' and investors' concerns about the excess capital. But making a purchase could also put capital to work.
"It's a way of in fact buying your stock back without having to go out in the market to do it," Maier said.
First Chicago shares were up 5/8 at 55-1/2 Friday.
((--Chicago newsdesk 312 408 8787))
| 5 |
Magna Group Inc's planned acquisition of Homeland Bankshares Corp is not likely to alter the St. Louis-based bank holding company's own potential to be acquired, analysts said.
"It certainly doesn't make them any less attractive or likely as a takeover candidate," said Steven Schroll, a banking industry analyst at Piper Jaffray.
Magna is among several Missouri-based banks considered by analysts to be likely acquisition targets.
"I don't think it probably changes the company either way too much" in terms of takeover prospects, said Joseph Stieven, a banking analyst at Stifel Nicolaus.
Still, with Iowa's limit on how much of the state's total deposits a single banking company can hold, Magna's acquisition of Iowa-based Homeland could prevent some potential buyers from swallowing up Magna, analysts noted.
"It could complicate it, because Iowa does have relatively low state cap," Stieven said. "But it doesn't necessarily mean it was done as a defensive measure."
Schroll's initial reading of the proposed deal is that it will add to Magna's earnings in 1997, the year the deal is expected to close.
"We believe it could be 15 cents accretive, maybe more," Schroll said, cautioning that this was a preliminary view of the deal.
Magna said in a news release the deal would be accretive within 12 months.
Other analysts noted that Homeland has a relatively high ratio of equity to assets and said paying about 1.65 times book value for Homeland might be a bit expensive. Homeland's ratio of equity to assets was 10.79 percent in the second quarter.
The price of "165 (percent) of book could be pretty generous if you've got an overcapitalized bank," said Ben Crabtree, banking analyst at Dain Bosworth.
"It sounds like a pretty big price," agreed Stieven.
Magna was down 1/4 at 24-1/2 Monday afternoon, while Homeland was up 2-1/4 at 36-1/4.
--Reuters Chicago newsdesk, 312-408-8787
| 5 |
Mercury Finance Co. got hit by a lawsuit charging it violated securities laws after the auto-loan company said phony bookkeeping entries had inflated its earnings and that it fired its chief accountant.
The stock, which remained halted on the New York Stock Exchange, has not traded since it closed at $14.875 on Tuesday.
The exchange would not indicate where the stock might open but traders said it was changing hands at $4.25 overseas, which would mean a loss of more than $1.8 billion in market worth for the company, based in suburban Lake Forest, Ill.
One of the officers named in the lawsuit was James Doyle, the former controller who Mercury said has not been seen since last Thursday. In its statement on Wednesday, Mercury said it fired Doyle.
Filed in federal court in Chicago on Wednesday, the lawsuit alleges the company and some senior officers misrepresented or omitted crucial information about Mercury's earnings for the last three years, lawyers who filed the suit said in a statement.
The lawsuit also said Doyle had sold tens of thousands and Chairman John Brincat hundreds of thousands of shares of Mercury stock at inflated prices, netting millions of dollars in illegal profits.
Brincat was not available for comment. A company spokesman declined to comment. Attempts to locate Doyle were not successful.
The finance company said on Wednesday its 1996 earnings would be restated to $56.7 million from $120.7 million and that earnings for the three prior years would also adjusted downward, though not as sharply.
The problems appeared to stem from unauthorised entries in financial records by its chief accounting officer, Doyle, the company said.
It also said it was in violation of certain provisions if its loan agreements and that a special committee of directors has been formed to investigate the problems.
Analysts were hesitant to talk about Mercury, saying they did not have much information.
But they did say the company's planned acquisition of Fidelity Acceptance from BankBoston Corp. was unlikely to be completed. The deal, announced on Jan. 10, called for Mercury to issue about $458 million in stock to BankBoston. BankBoston said on Wednesday it was awaiting an audit of Mercury.
"I think the odds are very high that the deal will not go through," one analyst said, who asked not to be identified.
Analysts also said Mercury has not been as forthcoming as other consumer finance companies when providing detailed financial information.
Mercury helped pioneer the business of lending to consumers whose credit was less than perfect. It started making loans to people in the military and has grown into one of the country's largest lenders in the used-car market.
"They haven't been quite as open as any others in the industry have been," one analyst said.
Two brokerage firms cut ratings on Mercury Thursday.
Gruntal & Co. said it suspended its rating, adding, "We recommend that holders exit positions as soon as possible."
Piper Jaffray cut its rating to market performer from buy and in a research report said, "Our guess is most of the over recognised income came from (Mercury's) insurance subsidiary."
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H&R Block Inc. Thursday reported a big loss for the latest quarter, as its CompuServe online service posted a $58 million loss and became more of a headache to its parent.
H&R Block had a net loss of $74.1 million, or 71 cents a share, in its second quarter ended Oct. 31, compared with a loss of $8.3 million, or 8 cents a share, in the 1995 quarter. Revenues grew to $253.4 million from $221.0 million.
Kansas City-based H&R Block, the nation's largest tax preparation company, blamed the bad news mainly on losses at its CompuServe unit, the world's second-largest online service, which has failed to sign up new subscribers, especially in the United States.
H&R Block still owns 80.1 percent of CompuServe, after selling the rest of the stock in April in an initial step to spin off the unit.
But plans to complete the spin-off were suspended in August after CompuServe reported poor first-quarter earnings and projected second-quarter losses.
Just nine months ago, shareholders and analysts were pushing for a spinoff, arguing that CompuServe's value was being held back by H&R Block's staid tax business.
Now they want a spinoff because the online services provider is weighing on H&R Block's performance.
"The business model changed for CompuServe in a fairly dramatic way and now CompuServe's valuation is clearly holding back H&R Block's valuation," said Martin Romm, analyst at CS First Boston.
"How quickly things change," said Dennis Hudson, analyst at George K. Baum. "What happened was a whole lot of competition came in (to the online market.) The market became saturated before people expected."
Analysts said H&R Block was waiting for CompuServe's new business strategy announced Thursday -- focusing on the corporate market rather than home users -- to push the unit toward profitability before the spinoff is completed.
H&R Block also cut its quarterly dividend to 20 cents a share from 32 cents, a move that it had previously said would occur after the spinoff was completed.
"Even though the separation has not been completed, the board decided such action was prudent at this time because CompuServe is not adding to the company's profitability," said Frank Salizzoni, H&R Block's president and chief executive officer and CompuServe's chairman.
"In taking this action today, the board is indicating it anticipates the separation of CompuServe."
Both Romm and Hudson said they continue to rate H&R Block stock as a buy and stressed that there was nothing wrong with the company's core tax business.
The company said its Tax Services unit reported a pretax loss of $42.2 million in the second quarter, up $6.9 million a year ago.
"This year's deeper second quarter loss in these core businesses is in large part a result of the company's investments to expand its office network and roll out new products," Salizzoni said.
"They're making these investments primarily in new stores that are absorbing costs primarily without any commensurate contribution in revenue," Romm said, noting that the tax season does not begin until early next year.
H&R Block stock fell 37.5 cents to $28 on the New York Stock Exchange. CompuServe lost 93.75 cents to $10.6875 on Nasdaq.
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Mercantile Bancorp Inc would likely remain a potential target in the Missouri bank merger wave after its planned combination with Mark Twain Bancshares Inc.
"This certainly doesn't mean that Mercantile is no longer a buyout candidate," said Michael Ancell, analyst at Edward D. Jones & Co. "It's clear that the bank merger wave has rolled into St. Louis and it's turning into a tsunami."
As the largest bank holding company in Missouri behind Boatmen's Bancshares Inc, Mercantile is seen by analysts as attractive to banks looking to establish a presence in the lower Midwest.
In August, NationsBank Corp agreed to buy Boatmen's Bancshares Inc for $9.5 billion.
That deal valued Boatmen's at a pricey 2.7 times book value, analysts said. Mercantile's deal values Mark Twain at about 2.8 times book value, analysts said. The pooling of interests deal is worth $49.62 a share to Mark Twain shareholders, based on Friday's closing price, the banks said.
The St. Louis-based bank holding companies would have a combined total of $21.3 billion in assets.
"It's a pretty pricey transaction," said James Schutz, banking analyst at Chicago Corp. "Mark Twain is a very profitable and a very attractive franchise."
Mark Twain reported return on average assets of 1.82 percent in the third quarter and return on average realized common equity of 18.49 percent, putting it in the upper echelon of Midwest banks, analysts said.
"It's an in-market deal, which allows for a tremendous ammount of efficiencies, which is good for Mercantile," said Joseph Steiven, analyst at Stifel Nicolaus. "They're paying full-boat prices, but they're getting an excellent company."
But Schutz noted that Mark Twain already operates efficiently, and questioned how much more in efficiency Mercantile could wring out of Mark Twain.
"The question I would ask is how is Mercantile going to earn back this premium they're paying," Schutz said.
That question appeared to be in the market Monday, with Mercantile shares down 2-3/8 at 49-3/4 and Mark Twain up 3-5/8 to 46.
Mark Twain chief executive John Dubinsky, who is slated to become chief executive of Mercantile's St. Louis bank when the deal is completed, indicated there were not likely to be wholesale job cuts when the two banks combine.
"Between Mercantile and Mark Twain as we sit here today, there are over 200 job openings," Dubinsky said in an interview. "There will be some duplications, there will be some consolidation of job functions."
But "quality" individuals whose jobs are eliminated because of duplication will be able to apply for other jobs, he said, noting "I would be very surprised if there was a large number of individuals that won't be needed."
Dubinsky also would not rule out the possibility of the combined Mercantile/Mark Twain being acquired.
"Banking is changing so rapidly," he said. "One couldn't make any comment with certainty about the future."
--Reuters Chicago newsdesk, 312-408-8787
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Mercury Finance Co. said Wednesday it found problems in its bookkeeping that caused it to overstate earnings by $90 million over four years and that its chief accountant had apparently disappeared.
The Northbrook, Ill.-based finance company said the irregularities appear to have come from unauthorized entries in financial records by its chief accounting officer.
The company said a special committee of the board has been formed to investigate with legal and accounting experts.
The accountant, James Doyle, was last seen at the company on Jan. 23, the day it reported fourth quarter results, Mercury Finance spokesman Joseph Kopec said.
"He called Friday and said he would not be in for personal reasons," Kopec said. "They haven't seen him since."
Doyle's whereabouts were unknown.
The problems may jeopardize Mercury's planned acquisition of Fidelity Acceptance Corp., a consumer finance company, from BankBoston Corp. in a $393 million deal announced on Jan. 10.
Wednesday's announcement caught the financial community by surprise, with analysts unwilling to comment after Mercury's statement, saying they were still trying to gather information.
As a result of the adjustments, shareholders' equity as of Dec. 31, 1996, would be reduced from $353 million to $263 million, the company said.
As a result of the overstatement of earnings, Mercury said it is in violation of some of its debt agreements and was negotiating with lenders.
It said its financial condition remained strong and would support continuing operations and its expansion plans.
BankBoston said it would await the results of the accounting investigation before proceeding with the sale of Fidelity Acceptance. Mercury said it was optimistic about completing the deal.
Mercury said 1996 net income would be restated to $56.7 million from $120.7 million, 1995 profits would be cut to $76.9 million from $98.9 million and 1994 earnings would be $83 million instead of the $86.5 million originally reported.
In addition, 1993 profits would be trimmed to $64.2 million from $64.9 million.
Mercury stock was halted all day on the New York Stock Exchange. It closed Tuesday at $14.875.
Moody's Investors Service cut its rating on Mercury's short-term borrowings and Standard & Poor's said it may lower its rating.
Mercury Finance suffered another blow last year, when Daniel Terra, chairman of the company since it went public in 1989, died in June.
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Caterpillar Inc chief financial officer Douglas Oberhelman said Tuesday that an increase in U.S. dealer new machine inventories at the end of 1996 was intentional.
"It's higher than it was a year ago and that's by design," Olberhelman said in an interview with Reuters. "As it turned out last year, we didn't have enough inventory in dealer hands and this year we will, we hope," he said.
Some analysts expressed concern Tuesday at the increase in inventories.
The Peoria, Illinois-based heavy equipment maker Tuesday reported record net income of $381 million or $1.99 a share for the fourth quarter, up from $300 million or $1.53 a share a year ago and $0.11 ahead of consensus estimates.
But the company's outlook that the 1997 profit level would "approximate" that of 1996 appeared to be pushing the stock lower Tuesday.
Oberhelman defended the company's view of slowing U.S. economic growth in the face of analysts' comments that the view was too conservative.
"We're trying to call it as we see it," he said. "I will tell you that a year ago, we called for a softer economy in the U.S. and it didn't happen. We were pleasantly surprised."
He added that the company is prepared to increase production if demand is stronger than expected, as it did in 1996.
After focusing the last several years on improving operations, Oberhelman said the company now thinks it's time to increase spending on research and development and on capital assets to improve shareholder value in the future.
Total capital expenditures were $642 million in 1996 and are expected to rise 10 to 15 percent in 1997, while research and development is expected to rise 20 percent from the $410 million spent in 1996, Caterpillar said.
"It's going to be a little bit of everything," he said when asked if the expenditures would be focused on acquisition or internal development.
He said the company is likely to continue its pace of about 50 new or upgraded product introductions a year through 1999.
One area the company is looking to gain in is power generation equipment, a $5 billion worldwide market Caterpillar sees tripling in the next several years.
"We'll still be building there, both internally and through acquisitions," he said.
Caterpillar shares were down 1-3/4 at 76-3/4 Tuesday.
(Chicago newsdesk 312 408 8787)
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Sears, Roebuck and Co. Thursday said earnings jumped 24.6 percent in the fourth quarter, boosted by strong sales and improved profit margins during the Christmas selling season.
"We ended the year with excellent fourth-quarter results, which are even more impressive given the strength of last year's fourth quarter," Sears Chairman Arthur Martinez said in a statement.
December included the company's first ever back-to-back billion-dollar sales weeks, he said. The Christmas season is crucial for retailers since store chains typically earn half or more of their annual profit during the period.
"They had a great 1996 capped off by the best Christmas of any department store operator," said Alan Rifkin, analyst at Dain Bosworth Inc. He noted that Sears' sales at comparable stores rose 9.5 percent in December.
The nation's second-largest retailer said earnings rose to $567 million, or $1.42 a share, in the quarter, from $455 million, or $1.13 a share, in the 1995 period. Sales grew 10.8 percent to $12.04 billion from $10.87 billion.
The earnings beat Wall Street forecasts that averaged $1.38 a share, according to First Call, which tracks estimates.
But Sears' stock fell $2 to $49.125 on the New York Stock Exchange, mostly on profit-taking.
"The stock was up strongly early in the week and I think people are just taking profits," Rifkin said.
Analysts said Sears gained from its decision to remodel some stores and expand its clothing offerings.
"Clearly they're gaining market share and clearly they're doing the right thing and the consumer likes what she sees when she goes into the store," said Karen Sack, analyst at the S&P Equity Group.
Operating income from domestic operations rose 14.8 percent to $531 million in the quarter as revenue rose 11.6 percent to $10.92 billion. Comparable-store sales rose 5.4 percent for the quarter.
Operating income from domestic operations for all of 1996 rose 20.9 percent to $1.28 billion, while revenues increased 10.2 percent to $34.85 billion.
Gross margins as a percent of merchandise sales rose to 27.9 percent from 26.9 percent in the 1995 period.
Rifkin said margins were not likely to rise as much in 1997 as in the fourth quarter, but said cost-cutting should drive earnings growth this year.
He forecast earnings at $3.60 a share in 1997 and $4.25 a share in 1998, up from $3.12 a share in 1996.
International operations, including merchandising and credit operations in Canada and Mexico, earned $36 million in the quarter, compared with a loss of $7 million in the 1995 period.
The increase in earnings was largely attributable to improved performance at both Sears Canada and Sears Mexico, lower selling and administrative expenses at Sears Mexico, and writeoffs of Sears Canada properties in the year-ago quarter, it said.
Sears, based in Hoffman Estates, Ill., operates more than 800 department stores and 2,500 other stores offering clothing, home and automotive products and services.
While earnings rose in the quarter, they fell for the year, in part because 1995 included a gain of $776 million from the former Allstate Corp. subsidiary, which was spun off to Sears' shareholders in June 1995.
For all of 1996, Sears earned $1.27 billion, or $3.12 a share, in net profits, down from $1.80 billion, or $4.50 a share, in 1995. Sales grew 9 percent to $38.22 billion from $35.0 billion.
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From free gift wrapping and valet parking to sweepstakes and private scheduled visits with Santa, retail malls are pulling out the stops to attract customers during the key holiday season.
So far their efforts, as well as a strong economy, appear to be yielding results, as mall operators said they saw double-digit sales increases on Black Friday, the name retailers have given to the day after Thanskgiving.
"I think overall, consistently across the board, we're seeing sales up anywhere from high single digits to low double digits for the day," said Robert Michaels, president of General Growth Properties Inc., which owns and operates 120 retail centers across the country.
Traffic patterns varied at different malls, with some reporting traffic up by close to 10 percent, while others saw traffic flat. But unlike last year, when there were many window shoppers, this year, people were buying.
"Everyone was browsing last year," said Sarah Liddle, associate marketing director of Newport Centre Mall, in Jersey City, N.J. "Everyone was a little skeptical about what they were going to buy. Yesterday, it was unbelievable how many (shopping) bags were going through this mall."
That appeared to be the case throughout the country, according to Billie Scott, spokeswoman for Simon DeBartolo Group Inc, which owns Newport Centre and owns or has an interest in 185 properties, most of them malls and retail centers.
"For the most part, (according to) the people I talked to, traffic was at last year's level or above, but I guess the big difference is people were buying," she said.
The publicly traded companies that own many malls -- and are known as real estate investment trusts (REIT) -- do not have as much of their revenue directly generated during the holiday shopping season as retailers. But a portion of rents are based on a percentage of sales, and the season will also help set rents in the future.
"The high sales in the fourth quarter justify the rent the rest of the year," said Lee Schalop, an analyst who follows REITs at J.P. Morgan Securities.
To attract shopppers, malls offer features ranging from free gift wrapping to giveaways including $1,000 shopping sprees.
At the Woodfield Mall in Schaumburg, Illinois, a northwest suburb of Chicago, Santa is available for five-minute prescheduled visits during the hour before the shopping center opens. Woodfield is owned by Bloomfield Hills, Michigan-based Taubman Centers Inc., which also said sales appeared strong to kick off the holiday shopping season.
"Everything we're hearing is positive," said Taubman spokeswoman Karen Mac Donald. "Everyone is saying they had a good day yesterday. They were up."
At the Paramus Park mall in Paramus, N.J., prizes are being given away each week, with a grand prize of a trip to New York and dinner with the Rockettes.
"It's an effort to distinguish ourselves," said Kathy Lickteig, spokeswoman for Columbia, Maryland-based Rouse Co., which owns Paramus Park. "At this time of the year, it is very important to have something special to attract shoppers."
But while services are a factor in attracting shoppers, mall owners said having the best stores is the key for bringing shoppers in to a mall.
"Number one, it does come down to having the right shops," said General Growth's Michaels.
Mall operators said the stronger economy and the fact that there are five fewer days between Thanksgiving and Christmas may have helped prompt more shopping Friday.
In fact, many operators said they have had promotions earlier this season because of the shorter shopping period, with some starting as early as Veteran's Day.
Heidi Holwerda, vice president of marketing for Muskegon, Michigan-based Horizon Group Inc., an outlet mall operator with 36 centers, said her company began coordinated sales Nov. 10.
"As a result, we've seen some pretty significant increases in November in regard to traffic," she said, noting that traffic was up 10 percent in centers that the company has owned for at least a year.
| 5 |
First Chicago NBD Corp said Wednesday rising bankruptcy filings contributed to a rise in credit card charge offs in the fourth quarter.
Charge offs rose to 6.7 percent of managed receivables in the quarter, compared to 5.9 percent a year ago.
"The fourth quarter increase is due to a combination of factors, including a resurgence of bankruptcy filings after a third quarter lull, an increase in contractual charge offs, and average loan volume that was basically flat in the third quarter," chief financial officer Robert Rosholt said.
But in a telephone message to investors, Rosholt also noted that credit card fee revenue rose 28 percent from a year ago to $259 million, adjusting for securitization.
"Clearly this demonstrates bank card's ability to counter some of the effects of deteriorating credit quality," he said.
While the credit card business continues to be profitable for the $104.6 billion asset bank holding company, some analysts noted the charge-off rate was high.
"I think that's very clear that that's not as profitable an operation as it is at other places," said James Schutz, analyst at Chicago Corp.
But other analysts said the bank has tightened credit standards in the past year and were less concerned about the charge-off rate.
"That thing has bounced around all over this year (1996) and it's still a very profitable line of business this year," said Robert Ollech, analyst at Principal Financial Securities.
Rosholt also said the bank plans to improve its trading operations to restore results in market-driven revenues.
Market-driven revenues were $83 million in the fourth quarter, up from $40 million in the previous quarter but down from the bank's average of $100 million a quarter, Rosholt said.
Trading profits were $12 million in the quarter, compared to a $12 million loss in the third quarter.
"We plan to get back to our $100 million per quarter average as we improve our execution of trading activities this year," Rosholt said.
Return on common equity was 17.5 percent in the quarter, up from 15.4 percent a year ago, while return on assets was 1.46 percent, up from 1.02 percent a year ago.
Earlier Wednesday, the bank reported operating income of $377 million or $1.14 a share in the fourth quarter, compared to $318 million or $0.96 a year ago.
Earnings were $0.01 a share below estimates, according to First Call. First Chicago shares were up 1/8 at 54-3/8.
((--Chicago newsdesk 312 408 8787))
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Mercantile Bancorp Inc said Monday it could still make other acquisitions while it is completing its $855 million merger with Mark Twain Bancshares Inc.
"While this will be an active project for us beginning today, it doesn't mean that we don't have additional capacity to continue," John Beirise, Mercantile's group president in charge of mergers and acquisitions, said in an interview.
Beirise noted that not all of Mercantile will be involved in the acquisition of St. Louis-based Mark Twain, so acquisitions in other geographic locations might be possible. He also said Mercantile has been an active acquirer, and so is adept at assimilating mergers.
St. Louis-based Mercantile, with $18.2 billion in assets, currently has four mergers pending.
The Mark Twain deal, announced Monday and expected to close in the second quarter of 1997, is an exchange of shares valued at $49.62 per Mark Twain share, based on Friday's closing price, the banks said.
That works out to 2.8 times Mark Twain's book value, a price Beirise conceded was lofty for banks in general.
"In general it is, yes, but not many banks earn 1.8 (return) on assets," he said. Mark Twain reported return on average assets of 1.82 percent in the third quarter, well above average for Midwest banks.
Beirise said Mercantile was not considering its potential as a takeover target when it made the deal to acquire Mark Twain. Mercantile, the second largest bank holding company in Missouri behind Boatmen's Bancshares Inc, has been mentioned by analysts as an acquisition target for banks trying to expand their Midwest presence. Boatmen's agreed in August to be acquired by NationsBank Corp.
Beirise said as long as the bank delivered value for shareholders, it would be a difficult takeover target.
"Someone would have to make the case that we're not doing the job," Beirise said. "We think as long as we're doing the job, we are the best value for our shareholders."
--Reuters Chicago newsdesk, 312-408-8787
| 5 |
McDonnell Douglas Corp. stock tumbled Monday after the Defence Department eliminated the company from the race to build a new generation fighter jet that eventually could be worth $200 billion or more.
The decision was a blow to McDonnell Douglas, the nation's second-largest defence contractor and a long-time leader in fighter jets, and could force it to restructure, seek a merger or become more acquisition-minded, industry analysts said.
The Pentagon on Saturday awarded four-year contracts to Boeing Co. and Lockheed Martin Corp. to develop prototype fighter jets for the early 21st century for the Air Force, Navy, Marine Corps and the British Royal Navy.
British and U.S. forces have announced plans to buy 3,000 of the joint strike fighter jets, with initial delivery scheduled for 2008.
With potential export sales of another 2,000 jets and additional funding for development and support, the programme could be worth $200 billion to $500 billion over the coming decades, industry executives said.
McDonnell Douglas stock lost $4.25 to close at $52.50 on the New York Stock Exchange, where it was one of the biggest losers of the day. Boeing rose $1.50 to $93.25 and Lockheed Martin rose $1.875 to $95.625, also on the NYSE.
John Modzelewski, an analyst at PaineWebber, said the decision could force St. Louis-based McDonnell Douglas to seek acquisitions more aggressively to help build its business, or into a merger with another defence or aerospace company.
"Everything's back on the table," Modzelewski said.
In the past year, McDonnell Douglas has been the subject of rumoured talks with Boeing, Rockwell International Corp. and Raytheon Co..
McDonnell Douglas has declined to comment on potential mergers and acquisitions. "We have said we will look at mergers, acquisitions and partnerships that will grow our business," a company spokesman said.
"This will be something of a wakeup call," CS First Boston analyst Peter Aseritis said. "It's a fairly sharp and dramatic blow to McDonnell Douglas and I would venture to guess one they probably didn't see coming."
PaineWebber's Modzelewski said, "Without having the internal growth such as joint strike fighter would give them, they're going to have to grow through acquisition." That could include Texas Instruments Inc.'s defence electronics business, which is for sale, according to published reports.
McDonnell Douglas Chief Executive Harry Stonecipher said on Saturday the loss was a surprise to the company.
"Certainly in terms of the overall future, 10 years and beyond, it is a significant programme to us," Stonecipher said.
But in a statement to employees Monday, Stonecipher noted the company's backlog of aircraft orders to the military at home and abroad and said it was pursuing other orders. The company has a $46 billion order backlog, a spokesman said.
"This decision does not mean we are out of the military aircraft business," Stonecipher said.
McDonnell currently builds the Air Force F-15 fighter and the Navy-Marine F-18E/F as well as the C-17 military cargo plane. Both the F-15 and the F-18 are to be replaced by the joint strike fighter in the next century.
PaineWebber's Modzelewski said McDonnell Douglas was likely to participate in the new jet fighter programme as a subcontractor, as politics will force the wealth to be spread.
But despite its key role providing fighter jets for decades, the based company has failed to win a major role in any of the next generation of tactical aircraft.
Already the smallest of the three major commercial jet makers, McDonnell said last month it would not continue to compete against Boeing and Europe's Airbus Industrie in the market for the biggest commercial jetliners.
| 5 |
Mercury Finance Co.'s agreement to buy a consumer finance business fell apart Thursday after the auto-loan company said phony bookkeeping entries had inflated its earnings and it had fired its chief accountant.
At the same time, the officer blamed for the overstated earnings may be cooperating with federal authorities.
BankBoston Corp. said it terminated its agreement to sell its Fidelity Acceptance Corp. unit to Mercury for 32.7 million shares of Mercury stock. When the deal was announced on Jan. 10, the stock was worth about $458 million.
Mercury Finance stock has not traded since it closed at $14.875 on the New York Stock Exchange on Tuesday. The NYSE would not indicate where the stock might open but traders said it was changing hands at $4.25 overseas. That would make the 32.7 million shares worth about $139 million.
"BankBoston today informed Mercury Finance Co. that recent events regarding Mercury Finance constituted a breach of the provisions of BankBoston's agreement for the exchange of shares of Fidelity Acceptance Corp. for shares of Mercury Finance," BankBoston said in a statement.
Analysts said BankBoston, a Boston-based banking company, would have little trouble finding another buyer for Fidelity, its auto financing arm.
"At the time they were structuring this deal there were four or five other firms that expressed interest or made bids on Fidelity," said Nancy Bush at Brown Brothers Harriman.
"I don't think they're going to get the kind of sweetheart deal they got with Mercury," she added.
A Mercury Finance spokesman declined to comment on the deal.
But the spokesman said the company was interested in talking to James Doyle, the controller who Mercury Finance said had disappeared but who is reportedly cooperating with federal authorities.
A Dow Jones news wire report quoted Doyle's attorney as saying Doyle had accused Mercury Finance of a charade and that the controller had not disappeared but was cooperating with the authorities.
The attorney was not available and his assistant would not confirm the accuracy of the Dow Jones report.
A spokesman for the U.S. attorney's office in Chicago declined to comment.
Mercury Finance said on Wednesday its 1996 earnings would be restated to $56.7 million from $120.7 million and that earnings for the three prior years would also be adjusted downward, though not as sharply.
The problems appeared to stem from unauthorised entries in financial records by its chief accounting officer, Doyle, who the company said had been fired.
Mercury Finance also said it was in violation of certain provisions if its loan agreements and that a special committee of directors has been formed to investigate the problems.
Mercury Finance said Thursday that the NYSE was seeking more information. Mercury spokesman Joseph Kopec said the exchange wanted "additional assurance that the numbers in the release Wednesday were reliable."
Kopec said he did not know if the Lake Forest, Ill.-based finance company would issue additional information.
Mercury Finance also got hit by at least three lawsuits charging it violated securities laws.
Filed in federal court in Chicago on Wednesday and Thursday, the lawsuits alleged the company and some senior officers misrepresented or omitted crucial information about Mercury Finance's earnings for the last three years, lawyers who filed the suits said in statements.
Also, Standard & Poor's Corp. cut its debt rating on the company's commercial paper and said it may cut the rating further.
| 5 |
Caterpillar Inc. Tuesday reported record profits of $1.36 billion for 1996, spurred by a 27 percent jump in fourth-quarter earnings, but said it expected near flat results this year.
The world's largest heavy equipment maker said earnings for all of 1996 rose from 1995's $1.14 billion while revenues grew 2.8 percent to $16.52 billion from $16.07 billion.
For the fourth quarter, profits rose to $381 million, or $1.99 a share, from $300 million, or $1.53 a share, in the 1995 period.
Peoria, Ill.-based Caterpillar's fourth-quarter results exceeded Wall Street analysts' average estimate of $1.88 a share, according to First Call Corp., which tracks earnings estimates.
Despite the strong results, investors pushed Caterpillar's stock down $2.125 to $76.375 on the New York Stock Exchange, apparently on concerns about the outlook for 1997.
The company said it expected 1997 profits to be nearly flat with 1996 levels, with revenues from ongoing operations growing only slightly.
Caterpillar said higher demand in developing regions should offset a slightly weaker market for its machines in the United States and Japan this year.
"It's basically '97," Lisa Shalett, analyst at Sanford C. Bernstein, said of the stock's fall. But she added that one-time currency factors also helped boost the earnings above estimates.
"It comes across as a surprise, but it's not necessarily a surprise from operations," Shalett said of fourth-quarter earnings.
But other analysts suggested Cateprillar was being too conservative in its view for 1997.
"Caterpillar always looks at the glass being half empty," said Thomas Burns Jr., analyst at NatWest Securities Corp. "We think its half full.
"We expect a better U.S. economy," he said. "We don't expect housing starts to be off." He noted that Federal Reserve Board Chairman Alan Greenspan made positive comments about the economy on Tuesday.
Caterpillar said it stood by its forecast, but was prepared to meet higher demand than expected, as it did in 1996.
"We're trying to call it as we see it," Chief Financial Officer Douglas Oberhelman said in a telephone interview. "I will tell you that a year ago, we called for a softer economy in the U.S. and it didn't happen. We were pleasantly surprised."
Caterpillar said profit margins as a percent of sales rose to 25.2 percent in 1996 from 22.3 percent in 1995 due to higher prices and the effect of the stronger dollar against the yen and European currencies.
Lower material costs and improvements in the manufacturing process also helped.
Total capital expenditures in 1996 were $642 million and are expected to increase 10 to 15 percent in 1997, Caterpillar said.
"In 1997, we plan to increase spending for capital assets, research and product development to enhance our prospects for long-term growth and profitability," Chairman Donald Fites said in a statement accompanying the results. "In addition, we intend to increase our investments for new business opportunities around the globe."
Research and development spending is expected to rise 20 percent from $410 million in 1996, the company said.
Major initiatives include electric power generation, agricultural products, mining systems, compact machines and strengthening the company's product support system, Caterpillar said.
| 5 |
Magna Group Inc. has a definitive agreement to acquire Homeland Bankshares Corp., the second-largest banking company in Iowa, for about $216 million, the companies said Tuesday.
St. Louis-based Magna will issue 5 million shares of its common stock and pay $92 million in cash in exchange for all theoutstanding Homeland common shares. Homeland shareholders may choose to exchange each of their shares for either about 1.55 Magna shares, a comparable amount in cash or a combination.
Magna said it will repurchase about 600,000 shares of the stock, under its current repurchase plan.
"We certainly will consider buy back programmes beyond that, but nothing has been approved beyond that," G. Thomas Andes, Magna chairman, said in a news conference.
Waterloo, Iowa-based Homeland, with assets of $1.2 billion as of June 30, owns and operates four commercial banks and one savings bank and provides financial services through a network of 33 locations in Iowa.
Magna, with $5.35 billion in assets, is the third-largest banking institution in the St. Louis metropolitan area and the nation's 95th largest banking company. It has 106 banking locations throughout Illinois and Missouri and a trust and brokerage company.
After the acquisition, Magna would have about 55 percent of its assets in Illinois, 25 percent in Missouri and 20 percent in Iowa, Andes said.
The deal is subject to approval by Homeland shareholders and regulators.
Magna said it expected the acquisition to boost earnings within 12 months, and save about $8 million through centralization of systems and procedures.
Some of the cost savings will come from job cuts, though those cuts could come from attrition, Andes said.
Homeland Chief Executive Erl Schmiesing said during the news conference that cuts were underway at Homeland in any case as it consolidated.
Magna will continue to consider other acqusitions, possibly in Iowa, Andes said.
"We certainly like the state of Iowa," he said. "We would certainly welcome the opportunity to expand in the state of Iowa, as well as Illinois and Missouri."
Magna is also among several Missouri-based banks considered by analysts to be likely acquisition targets, a perception that did not change with the Homeland acquisition announcment.
"It certainly doesn't make them any less attractive or likely as a takeover candidate," said Steven Schroll, a banking industry analyst at Piper Jaffray.
Homeland's stock rose $1.75 to $35.75, while Magna edged down 6.25 cents to $24.81 Tuesday on Nasdaq.
| 5 |
Rawlings Sporting Goods Inc chief financial officer Paul Martin said on Friday the company is not for sale, although it recognizes its responsibility to shareholders.
"The company is not for sale and the company doesn't comment on takeover rumors," Martin said in a telephone interview. "Obviously, we recognize our fiduciary responsibilities." Stock of the St. Louis-based sporting goods company has jumped more than 50 percent since early December, with market sources pointing to takeover rumors.
"We keep hearing takeover, takeover," said one analyst, who does not follow the stock directly.
Another analyst said he was skeptical there were any takeover talks currently underway.
"I think it's just pure speculation right now, I don't think there's anything happening," said Timothy Conder, analyst at A.G. Edwards. He added that, based on fundamentals, the stock, which closed up 1-1/8 at 12-5/8 Friday, has a fair price of 9-1/2.
In a research report on Thursday, Conder reiterated a maintain/aggressive rating on the stock, saying in the long term, Rawlings brand name makes it an attractive takeover candidate.
One potential acquirer for Rawlings that is repeatedly mentioned is Beaverton, Oregon-based Nike Inc. A Nike spokesperson could not be reached for comment Friday.
Conder said Friday the case for Nike is that it would round out the company's on-field baseball presence. But the case against Nike is that Rawlings is too small and does not have margins that match Nike's.
Martin said Rawlings is scheduled to report fiscal 1997 first quarter financial results Tuesday, but added the company in November said it expected to report a modest loss for the quarter.
Rawlings said it expected revenues to decline in the quarter because of lower sales in baseballs and baseball gloves. The company reported net income of $890,000, or $0.12 a share a year ago.
Conder pointed out in his research note that the recent settlement of the Major League Baseball labor situation removes a large risk factor.
Major League Baseball is also considering using commemorative Jackie Robinson and Joe DiMaggio baseballs during the 1997 baseball season, which could boost Rawlings business in 1997, he said.
((--Chicago newsdesk 312 408 8787))
| 5 |
Just nine months ago, shareholders and analysts were pushing for H&R Block Inc to spin off its CompuServe unit, arguing that the unit's value was being held back by H&R Block's staid tax business.
On April 19, H&R Block began that process with a public offering of about 20 percent of CompuServe Corp.
Analysts are still looking for the spinoff to be completed, but now the focus is on the sagging fortunes of the online service which is weighing on H&R Block's performance.
"The business model changed for CompuServe in a fairly dramatic way and now CompuServe's valuation is clearly holding back H&R Block's valuation," said Martin Romm, analyst at CS First Boston.
On Thursday, H&R Block reported a net loss for the fiscal 1997 second quarter of $74.1 million or $0.71 a share, compared to a loss of $8.3 million or $0.08 a share a year ago. Kansas City-based H&R Block said the larger loss was primarily due to CompuServe's $58 million second quarter loss. H&R Block still owns 80.1 percent of CompuServe.
"How quickly things change," said Dennis Hudson, analyst at George K. Baum. "What happened was a whole lot of competition came in (to the online market.) The market became saturated before people expected."
In August, H&R Block suspended the rest of the spinoff, citing CompuServe's performance and market conditions, among other factors.
Analysts said H&R Block is waiting for implementation of CompuServe's newly announced business strategy -- focusing on business and professional users, rather than home users -- to push the company toward profits before completing the spinoff.
H&R Block also said Thursday it was reducing its quarterly dividend to $0.20 a share from $0.32, a move that it had previously said would occur after the spinoff was completed.
"The timing of (the dividend cut) was a little bit surprising," Romm said.
Both Romm and Hudson said they continued to rate H&R Block stock as a buy and stressed that there was nothing wrong with the company's core tax business.
"I believe the company will have a very good tax season this year," Romm said, noting H&R Block has made investments to grow the business. The company said its Tax Services unit reported a pre-tax loss of $42.2 million in the second quarter, up $6.9 million from a year ago.
"They're making these investments primarily in new stores that are absorbing costs primarily without any commensurate contribution in revenue," Romm said, noting that the tax season does not begin for more than a month.
H&R Block stock was down 1/2 at 27-7/8 Thursday, after falling as low as 26-3/8 earlier in Thursday's session.
--Reuters Chicago newsdesk, 312-408-8787
| 5 |
Aiming to fill Americans' seemingly insatiable desire for sport utility vehicles, Chrysler Corp. and Ford Motor Co. both introduced new models of the go-anywhere vehicles Tuesday at the North American International Auto Show.
The plush Lincoln Navigator and the brawny Dodge Durango were introduced a day after General Motors Corp.'s unit unveiled an upscale version of its popular Yukon sport/utility vehicle and Subaru of America Inc., a unit of Fuji Heavy Industries Ltd 7270T, debuted a new sport/utility based on a passenger car chassis.
Sport/utility vehicles sales climbed to just over two million in the United States in 1996 and are the fastest-growing automotive segment.
The vehicles are so popular that even sportscar maker Porsche AG said Tuesday it also plans to enter the market by the turn of the century.
Although more and more companies are adding more and more models, the market is yet to be saturated, as more drivers foresake cars for the larger vehicles.
"They really are considered substitutes," said Diane Swonk, deputy chief economist at First Chicago NBD Corp. "These are replacing old station wagons. They're also eating very heavily into the luxury car markets."
Luxury is a key feature of the new Ford and GM models.
Ford's Lincoln Navigator, which is expected to be available in July, includes leather seating surfaces, walnut wood accents and second row bucket seats.
It is expected to be priced in the mid-$40,000 range and will compete at the premium end of the market with vehicles by Lexus and Land Rover. It is aimed at affluent empty nesters or high-profile active families. The target age for Navigator owners is 45-55, said Jim O'Connor, general manager of Ford's Lincoln Mercury division.
The vehicle, which O'Connor expects will sell 20,000 annually, was driven through a mock rock wall and waterfall to make its debut.
The vehicle seats eight, has a 5.4-litre V8 engine with 8,000 pound towing capacity and 116.4 cubic feet of cargo space.
GMC's Yukon Denali, which is scheduled to be in production in the 1998 calendar year, features four heated seats and a premium sound system, among other accessories.
"We're certainly going upscale," Roy Roberts, general manager of GM's Pontiac-GMC division, said when asked about pricing. He declined to comment further.
Chrysler made its typical auto show splash with the introduction of the Dodge Durango, which broke through the floor of a mock-up of the automaker's new headquarters building.
Touting it as a breakthrough vehicle that offers "more of everything," Chrysler said sales could eventually reach 200,000 units. The automaker invested $910 million to bring the vehicle to market.
The Durango, which goes on sale in December, uses the same chassis and beefy front end as the Dodge Dakota pickup truck. It is aimed at a more downscale audience than Chrysler's tony Jeep Grand Cherokee. One unique feature is a rear cargo well sized to fit a hunting rifle.
The vehicle is bigger than Ford's popular Explorer, but smaller than the Yukon, Navigator and Ford Expedition.
Durango features an optional third bench seat, boosting its seating capacity up to eight people.
Despite growing criticism about sport/utilities' poor fuel economy, the Durango offers the biggest engines in its class, including 5.2-litre and 5.9-litre V8s.
Pricing was not announced, but Chrysler Vice Chairman Robert Lutz said the Durango could be made with a four-cylinder engine, if necessary.
With so many new sport/utility vehicles entering the market, it is becoming more competitive, which will eventually lead to pressure on margins.
"We'll get saturation if people can't afford to buy these things, relative to the cars they drive," said Joseph Phillippi, analyst at Lehman Brothers.
Demand for more affordable sport/utilities will push manufacturers to build them on car platforms, as Subaru, Toyota and Honda are doing, Phillippi said, adding that few drivers travel far off road and don't need the ruggedness and high ground clearance of a truck-based sport/utility.
Executives at the Big Three automakers stress that their new sport/utility vehicles will not compete with existing lines.
"We don't think this will be a major drag at all on Expedition," O'Connor said of Ford's current top-of-the-line sport utility vehicle. Instead, he said the Navigator should attract new customers to Lincoln-Mercury.
"I think it will bring a whole new customer to Lincoln," he said.
But the automakers also know that if they don't offer sport/utility vehicles in a variety of niches, others will.
"I'd rather have the alternative be in my dealer" showroom, said Chrysler's Lutz.
As for Porsche, Chairman Wendelin Wiedeking would not go into specifics on the German automaker's plans in the sector, other than to say it was in discussions with a third party.
| 5 |
Most banks in the U.S. Midwest are expected to post third quarter earnings gains of 10 percent or more as the strong economy continues to generate loan growth, cost-cutting programs show results and credit quality remains reasonably sound.
"It looks like credit quality trends should hold up very well," said Michael Ancell, banking analyst at Edward D. Jones. He expects the banks he follows to have average earnings gains of 11 percent.
For most of the year, analysts who follow banks have been waiting to see deterioration in credit quality, especially in credit card loans.
But while some banks, like First Chicago NBD, showed a higher charge-off rate in credit card receivables in the second quarter, a wider wave of loan quality problems has yet to appear, analysts said.
"I don't see large increases in (loan loss) provision," said James Schutz, banking analyst at Chicago Corp.
Many banks have also been aggressively cutting costs, which should help third quarter results. Analysts pointed to Milwaukee-based Firstar Corp as one bank that could benefit from an aggressive cost-cutting plan.
Others point to banks that have been generating fee revenue, such as Northern Trust Corp and Norwest Corp, as also primed for strong gains.
"Most people are working very hard at expense controls," said Thomas Maier, banking analyst at EVEREN Securities. "I'm more in mind at looking more favorably at those banks that are strong revenue growers. Ultimately, you've got to sell product, in any business."
Another factor helping gains in earnings per share is stock buyback programs, with many banks aggressively repurchasing their stock. First Bank System Inc, which announced a plan earlier this year to repurchase 25 million shares, was seen by analysts as one of the most aggressive on this front.
Meanwhile, analysts said the 10 percent pace of earnings gains should continue into next year.
"Even though the credit quality cycle is not getting any better, it certainly is not getting any worse at any kind of a rapid pace," said Ben Crabtree, analyst at Dain Bosworth.
Following are third quarter earnings estimates and actual earnings reported a year earlier, according to First Call:
BANK 1996 1995
---- ---- ----
Banc One Corp $0.82 $0.75
Boatmen's Bancshares Inc $0.94 $0.86
Commerce Bancshares Inc $0.81 $0.72
Fifth Third Bancorp $0.83 $0.73
Firstar Corp $1.00 $0.88
First Bank System $1.21 $1.06
First Chicago NBD $1.09 $1.06
KeyCorp $0.95 $0.90
Marshall and Ilsley Corp $0.52 $0.48
Mercantile Bancorp Inc $0.98 $1.02
Northern Trust $1.12 $0.98
Norwest $0.79 $0.69
--Reuters Chicago newsdesk, 312-408-8787
| 5 |
Dayton Hudson Corp., the nation's fourth-largest retailer, Tuesday reported higher third-quarter results, giving added credence to analysts' projections of an industrywide strong holiday shopping season.
Women's retail chains Ann Taylor and The Limited also posted higher results.
General merchandise retailers should post decent gains in November and December combined, said Howard Eilenberg, an analyst at Johnson Redbook Service, a unit of Lynch, Jones & Ryan Inc.
"It's going to be overall in the 5-to-5-1/2 percent increase range (over the previous year's sales). More importantly, the gross margins and the profits are going to look better," Eilenberg said.
Dayton Hudson said it had a 164 percent increase in operating earnings for its third quarter ended Nov. 2. Results were aided by a strong performance at its Target discount stores.
The Minneapolis-based retailer reported operating earnings of $116 million, or 49 cents a share, several cents above analysts' estimates. A year earlier it earned $44 million, or 18 cents a share.
"The key issue was a very strong performance from Target in all areas," said Saul Yaari, retail analyst at Piper Jaffray.
Target's operating profit in the third quarter rose 82 percent to $213 million, and total revenues increased 14 percent while same-store revenues rose 5 percent, Dayton Hudson said.
Meanwhile, Dayton Hudson's Mervyn's unit reported a 98 percent increase in operating profits to $64 million in the quarter, boosted by reductions in marketing costs, store expenses and headquarters costs. The increase came despite a 3 percent drop in revenue and a decrease in gross margins.
"Our third-quarter results reflect continued strong profit performance at Target and Mervyn's," Dayton Hudson Chairman Bob Ulrich said in a news release. "While the holiday calendar is challenging, we believe we are well positioned for a successful finish to 1996."
The 1996 holiday season includes five fewer selling days between Thanskgiving and Christmas than a year ago.
New York-based AnnTaylor Stores Corp. reported net income of $3.3 million, or 13 cents a share, after a $2 million, or 8-cent-a-share after-tax charge related to obligations under its former chairman's contract. That compared with $666,000, or 3 cents a share, a year ago.
Columbus, Ohio-based Limited Inc. reported operating earnings of $88.4 million, or 15 cents a share, before gains from initial public offerings, compared with $69.1 million, or 10 cents a share, a year ago.
"Our much improved third-quarter results reflect performance gains and continuing momentum in certain of our women's and our emerging businesses" including the Abercrombie & Fitch business, Limited Chief Executive Leslie Wexner said in a statement.
"Consistent with our sales plan, we enter the holiday period well positioned, with overall inventories up 3 percent per square foot at retail," he said.
Analysts agreed The Limited was well positioned for the key holiday shopping season.
"I think they're positioned for a decent Christmas," said Elizabeth Pierce, analyst at Stephens Inc. "Inventories are conservatively managed."
Dayton Hudson stock rose $1.25 to $37.625, Limited rose 25 cents to $17.75 and AnnTaylor fell 87.5 cents to $20.50, all on the New York Stock Exchange.
| 5 |
Equity Residential Properties Trust, a real estate investment trust led by Chicago real estate investor Sam Zell, agreed Friday to buy Wellsford Residential Property Trust( in a deal valuing Wellsford at $1 billion.
The deal would make Equity Residential, which is already the largest publicly traded apartment building owner in the country, the second largest real estate investment trust in any category, the company said.
"Consolidation of this industry is critical for its evolution," Zell, who is chairman of Equity Residential, said in a statement. "The size and liquidity of the combined entity reinforces EQR's status as the No. 1 multifamily (real estate investment trust)."
The deal values New York-based Wellsford at about $1 billion, or $29.61 a share, an 18.7 percent premium over its recent stock price, the companies said.
Equity Residential said it expected to trim about $3.1 million in annual general and administrative expenses and $800,000 in property management expenses after the closing of the deal, which is expected to occur by May.
Equity Residential expects the merger to add 10 cents to 13 cents a share in annualized funds from operation -- the measure commonly used to measure real estate investment fund performance.
When the deal closes, Equity Residential will own and operate 317 properties with 90,873 units. It also adds properties in areas like the Pacific Northwest and West Coast, where strong demand allows for higher rents.
"Those markets have higher rental growth than the national average from other markets," said Jeff Langbaum, associate analyst at investment firm Alex. Brown & Sons. Equity Residential estimated rent growth in those areas at 5 percent to 6 percent annualy, while Langbaum estimated the national average at about 4 percent.
Each Wellsford share will be exchanged for 0.625 share of Equity Residential, or about $27.11, plus one share of Wellsford Properties Inc., a newly formed company that will continue Wellsford's development activities, the companies said in a joint statement.
The exchange ratio is subject to upward revision if Equity Residential shares fall below $40. If they drop below $37, the parties have the right to terminate the merger agreement.
Equity Residential also will exchange about $158 million in preferred shares. In addition, Equity Residential will assume about $330 million in Wellsford's debt.
The deal continues the consolidation of real estate investment trusts (REIT).
"It's pretty apparent that that's the way the REIT world, especially apartments right now, is heading," Langbaum said.
In December, Houston-based Cambden Property Trust said it would acquire Dallas-based Paragon Group Inc., to create an apartment real estate trust with 36,199 units.
Unlike the hostile takeover Zell's Manufactured Home Communites Inc. launched against Chateau Properties Inc., which was rebuffed by the manufactured housing community operator last year, the Equity Residential deal was unanimously approved by both companies' boards of trustees, the companies said.
Wellsford shares were up $1.875 at $27.625, while Equity Residential was down $1.125 at $42.25 on the New York Stock Exchange in late trading.
| 5 |
Caterpillar Inc., the world's largest construction and mining equipment maker, Tuesday reported record third-quarter profits of $310 million, up 45 percent from $213 million a year ago.
Sales jumped to $4.03 billion from $3.73 billion, while earnings per share rose 50 percent to $1.61 from $1.07.
The results exceeded expectations on Wall Street and Caterpillar stock jumped $2.50 to $76.625 on the New York Stock Exchange. Analysts had forecast profits of $1.34 a share, according to First Call, which tracks earnings estimates.
For the first nine months of 1997, sales were $12.06 billion, up slightly from $11.86 billion a year ago, while profit surged to $980 million from $836 million.
"There really wasn't much of a sales increase but there was a tremendous bottom-line increase," Caterpillar Chief Financial Officer Douglas Oberhelman said in a telephone interview. Most of the earnings gain was due to improved operations, though some was currency related, he said.
Profit margins rose to 25 percent in the quarter from 19 percent a year ago, primarily due to higher prices, stronger volume and the effects of a stronger U.S. dollar, Caterpillar said. Price gains were seen equally inside and outside the United States, Oberhelman said.
Continuing improvements in manufacturing and essentially flat material costs also helped boost profits but were partly offset by an unfavourable product sales mix, the heavy equipment maker said.
The sales mix in the quarter shifted more toward lower margin smaller machines, Oberhelman said, but he added that this mix shifts month-to-month and quarter-to-quarter.
"The thing that's encouraging is the gross margins remain strong," said Lisa Shalett, analyst at Sanford C. Bernstein & Co., Inc. "It looks like the productivity gains they talked about in the second quarter are continuing"
Higher machine sales in the United States accounted for most of a 5 percent increase in sales volume in the quarter, Caterpillar said.
But deliveries to U.S. dealer rental fleets fell from a year ago as rental inventories remained high, the company said.
Machine sales in Europe fell due to declines in Germany and France, where the contruction sector remains weak, the company said. Sales in China, Japan, Australia and Latin America were up, while sales in Canada were unchanged and sales fell in the former Soviet Union.
The company also said it expected 1997 sales to be up slightly from an expected record in 1996, while it expects 1996 profits to exceed the $1.14 billion reported in 1995. The current record for sales is $16.07 billion, set in 1995.
"Our preliminary outlook for 1997 is to slightly surpass the record levels achieved in 1996," Chairman Donald Fites said in a statement.
"We continue to see opportunities for solid growth in the vast majority of the global markets we serve, particularly in the fast-growing developing nations where infrastructure needs are greatest," Fites said.
Higher industrial demand in developing regions, Canada and Australia are expected to offset slightly lower demand in the United States, Europe and Japan, the Peoria, Ill.-based company said.
"The outlook statement surprised me on two levels," Shalett said. "It talked about slightly higher sales but not higher profit. I thought that was deliberate."
She also said that while sales gains outside the United States, Europe and Japan are expected to offset lower demand in those areas, "it's not clear to us that it makes up for (those areas) on the profit side."
| 5 |
Mercury Finance Co. said Wednesday it found problems in its bookkeeping that caused it to overstate earnings by $90 million over four years and that its chief accountant had apparently disappeared.
The Northbrook, Ill.-based finance company said the irregularities appear to have come from unauthorised entries in financial records by its chief accounting officer.
The company said a special committee of the board has been formed to investigate with legal and accounting experts.
The accountant, James Doyle, was last seen at the company on Jan. 23, the day it reported fourth quarter results, Mercury Finance spokesman Joseph Kopec said.
"He called Friday and said he would not be in for personal reasons," Kopec said. "They haven't seen him since."
Doyle's whereabouts were unknown.
The problems may jeopardise Mercury's planned acquisition of Fidelity Acceptance Corp., a consumer finance company, from BankBoston Corp. in a $393 million deal announced on Jan. 10.
Wednesday's announcement caught the financial community by surprise, with analysts unwilling to comment after Mercury's statement, saying they were still trying to gather information.
As a result of the adjustments, shareholders' equity as of Dec. 31, 1996, would be reduced from $353 million to $263 million, the company said.
As a result of the overstatement of earnings, Mercury said it is in violation of some of its debt agreements and was negotiating with lenders.
It said its financial condition remained strong and would support continuing operations and its expansion plans.
BankBoston said it would await the results of the accounting investigation before proceeding with the sale of Fidelity Acceptance. Mercury said it was optimistic about completing the deal.
Mercury said 1996 net income would be restated to $56.7 million from $120.7 million, 1995 profits would be cut to $76.9 million from $98.9 million and 1994 earnings would be $83 million instead of the $86.5 million originally reported.
In addition, 1993 profits would be trimmed to $64.2 million from $64.9 million.
Mercury stock was halted all day on the New York Stock Exchange. It closed Tuesday at $14.875.
Moody's Investors Service cut its rating on Mercury's short-term borrowings and Standard & Poor's said it may lower its rating.
Mercury Finance suffered another blow last year, when Daniel Terra, chairman of the company since it went public in 1989, died in June.
| 5 |
A brisk start to holiday shopping should help retailers post solid sales gains for November and make this season merrier than last year for the nation's store chains.
But quirks in the calendar, with a later Thanksgiving this year, and some retailers tallying sales differently than others, could obscure overall results for November.
Industry analysts said they expect sales at stores open at least a year to rise 2.5 percent to 4.0 percent overall in November, with clothing continuing to be a strong contributor, as it was in October.
Most retailers report November sales on Thursday.
"We think the majority of companies are going to be on or above plan for the month of November, with good inventory levels," said Harry Ikenson, retail analyst at Rodman & Renshaw Inc. "We think the promotional level for Thanksgiving was high, but probably no higher than last year."
With discounts and markdowns no higher and in some cases lower than last year, and inventories being managed tightly, profit margins should improve, helping to lift fourth quarter earnings, analysts said.
"On balance, good business now is going to translate into decent earnings," said Dean Ramos at Dain Bosworth Inc. Ramos said his index of sales could be one to two points higher than the 3.1 percent rise reported last year and that the trend should continue through December.
"Absent some sort of event that shakes the consumer you should see good retail sales" in December, he said.
Holiday sales are crucial to retailers who typically earn a quarter or more of the year's profits during the season, analysts said. Steady economic growth and low unemployment have helped boost sales so far, and store chains should also benefit from easy comparisons with weak results a year ago.
Consumers got off to a fast start on their holiday shopping after Thanksgiving, analysts said.
Retail consumer spending in the post-Thanksgiving weekend rose 4.3 percent from a year ago, according to TeleCheck Services, which tracks check-writing volume. Overall, same-store sales rose 2.1 percent, TeleCheck said.
Several department store operators were expcted to be among the winners when sales are reported on Thursday.
Rodman & Renshaw's Ikenson said he expected J.C. Penney Co. Inc. and May Department Stores Co. to be above expectations, with Penney's same-store sales up 7.5 percent to 8 percent and May's up 6 percent to 7 percent. Federated Department Stores Inc. should be up 7 percent to 9 percent, with gains in all its segments, he said.
He also sees speciality retailer Paul Harris Stores Inc. up 15 percent to 17 percent, but Charming Shoppes Inc. slightly below expectations with a gain of 5 percent.
Dean Witter analyst Patrick McCormack said in a research report he expected sames store sales to be up 3 percent in the month for the firm's index of 44 companies.
He also saw JC Penney, May, and Federated above expectations, as well as Sears, Roebuck and Co.
Sears was forecast by analysts to post a smaller-than-expected decline of 1 percent to 2 percent, which is due to a quirk in the company's sales reporting calendar that should help boost results in December.
Sears Senior Executive Vice President John Costello said on Sunday that post-Thanskgiving sales appeared to be up across the board, from men's and children's clothing to Craftsman tools to fine jewelry.
"Optimism is up and it looks like consumers are responding to the short season by getting an earlier start," he said.
Most analyts expect big-ticket consumer electronics to continue to be weak, though one saw some signs of a pickup in sales at the end of the month.
"Sears and Wal-Mart over the last week talked about a pickup in the computer area," said Michael Niemira, analyst at Bank of Tokyo-Mitsubishi. He forecast sales overall up 2.5 percent for November at a comparable number of stores.
| 5 |
Caterpillar Inc. said Tuesday it is prepared to unilaterally impose employment terms, effective Oct. 1, on employees represented by the United Auto Workers after declaring an impasse in talks with the union.
The impasse revolves around the firings of some union workers before and during the 17-month strike against the Peoria, Ill.-based heavy equipment maker that ended in December without a new contract.
Caterpillar is willing to have firings after the strike sent to arbitration, but not those before and during the walkout.
The terms Caterpillar said it will impose at its eight UAW-represented plants in the United States include a pledge not to close any faciltities except the company's York, Pa., plant through September 2001, and job guarantees through that time period. Caterpillar has 31 manufacturing plants in the United States.
"We are taking this step to provide our employees with an added sense of security about their future, while giving Caterpillar the labor costs and the flexibility we need to keep jobs in the U.S. and keep our U.S.-made products competitive around the world," Caterpillar Vice President Wayne Zimmerman said in a statement.
Other terms include a 19 percent increase in Caterpillar's supplement of pensions for retirees until they become eligible for Social Security, an average increase of 7-1/2 percent in pensions and a doubling of potential incentive pay, Caterpillar said.
Caterpillar's UAW workers have been working without a contract since 1991. A 17-month strike against the equipment maker ended in December without a resolution of contract issues.
The UAW said Tuesday it does not agree that it has reached a lawful impasse with the company that makes it necessary for the terms to be put into effect.
"This tactic is yet another attempt to subvert the collective bargaining process," UAW Vice President Richard Shoemaker said in a statement.
The union said it will pursue the appropriate legal remedies if the company takes action to implement employment conditions without the existance of an impasse.
One analyst said the impasse declaration by Caterpillar appears to be genuine, not just a bargaining ploy.
"I don't think this is really a bargaining move," said Barry Bannister, analyst at S.G. Warburg. "It's just an obvious impasse."
He also said he did not expect the move to affect the stock, noting that strikers returned to Caterpillar several months ago without an effect on the company's profit margins.
| 5 |
Mercantile Bancorp Inc. said Monday it agreed to acquire Roosevelt Financial Group Inc. for about $1 billion in cash and stock, a move that would create the largest bank in Missouri.
The companies said the acquisition will create the largest locally managed and independently owned financial services organisation based in the southern Midwest. It will make Mercantile the largest banking company in Missouri, with more than 23 percent of the state's deposits, Mercantile said.
Mercantile will become the largest bank in St. Louis, where it is headquartered, and in Springfield, Mo., and will strengthen its presence in other major Missouri markets such as Kansas City.
Roosevelt, a savings and loan with $9 billion in assets that is also based in St. Louis, has 81 offices and branches in Missouri, Kansas and Illinois.
The acquisition follows Mercantile's agreement to buy Mark Twain Bancshares Inc., another St. Louis-based bank, for $855 million in stock. That deal was announced on Oct. 28.
"Our combination with Roosevelt will materially enhance our mix of strong retail, middle market lending and other speciality businesses," Mercantile Chairman Thomas Jacobsen said in a statement.
Mercantile plans to take a pretax charge of $25 million to $30 million for merger-related costs when the deal closes next year but also expects it to add to earnings in 1997 and 1998, officials said.
The deal would save about $20 million a year in branch costs annually, Jacobsen said but would not elaborate on how many branches would be closed.
"There will be some certainly, but probably fewer than you might think," Jacobsen said at a news conference.
Analysts said they were told separately that about 50 overlapping branches were expected to be closed by 1998.
Due to attrition and since the two companies will not be completely merged, layoffs were expected to be minimal, officials said.
"We're not aware of anyone at this time that won't be able to find a role with the ongoing company," said Stanley Bradshaw, chief executive at Roosevelt.
Mercantile, which said both the Roosevelt and Mark Twain acquisitions were expected to close in the second quarter of 1997, would not rule out future acquisitions.
"We have continuing interest in Illinois, Iowa and Arkansas," said John Beirise, group vice president for emerging markets at Mercantile. "Oklahoma has interest to us and would also be a logical extension."
The Mercantile that emerges after the pending takeovers are completed will have $30 billion in assets and could itself become an attractive takeover target, analysts said.
Mercantile, which will have a stock market worth of more than $4 billion, could be even more attractive once the acquisitions have been assimilated.
"I'd say Merc was already attractive anyway," said Joseph Stieven, a banking analyst at Stifel Nicolaus, which advised Roosevelt on the deal. "This makes them no less atttractive."
Said Joseph Roberto, banking analyst at Keefe Bruyette & Woods, "I think it makes Mercantile more attractive. It gives them the No. 1 market share across the state."
Mercantile said it will exchange up to 13 million shares of its stock at a ratio of 0.4211 Mercantile share for each Roosevelt share, and pay $22 cash for each remaining share.
Based on the $50.75 closing price Friday of Mercantile's shares on the New York Stock Exchange, the exchange ratio would value Roosevelt shares at about $21.37 each. Roosevelt's stock closed Friday at $18.125 on Nasdaq.
Roosevelt shares added $2.375 to $20.50 on Nasdaq while Mercantile stock fell $1 to $49.75 on the New York Stock Exchange.
Mercantile also said it planned to repurchase up to 7 million of its own shares in connection with the acquisition.
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