Step by Step2000 Unit 3 World News: Economic Developments

Unit 3 World News: Economic Developments

Part I Warming up

A.

1. Who have been meeting in Hong Kong today to discuss the outlook for the global economy?

Central Bank governors from more than a dozen countries

2. What does UNCTAD say about the worldwide total of foreign investment?

It grew by 40% last Year to more than 600 billion dollars.

3. Who has approved a cut in income tax rates?

The United States House of Representatives

4. Who has announced job cuts after a fall in demand for its products? Intel

What is its plan?

To reduce 5,000

5. What decisions have been made by EU, the U.S. and Canada after a case of foot-and-mouth disease was confirmed in France?

EU has imposed further restrictions on the movement of livestock.

The U.S. and Canada have issued temporary bans on the import of animal produce from EU.

Tapescript:

1. Central Bank governors from more than a dozen countries have been meeting in Hong Kong today. One subject they likely discussed is the outlook for the global economy because of the U. S. slowdown and Japan's struggling recovery. Another topic, how to strengthen financial markets in emerging economies in Asia and elsewhere.

2. A United Nations' report says the worldwide total of foreign investment grew by nearly 40% last year to more than 600 billion dollars. The report by the UN Conference on Trade and Development, UNCTAD says most of it took place between developed countries as big companies took one another over.

3. The United States House of Representatives has approved a cut in income tax rates, the first part of a package of tax cutting measures put forward by President Bush. The income tax reductions will amount to nearly 1 trillion dollars over ten years.

4. The world's largest maker of computer chips, Intel, has announced job cuts after a fall in demand for its products. Intel said it expected its revenue in the first quarter of this year to fall .by a quarter on the same period last year. The California-based company plans to reduce its 85,000-strong work force by 5,000.

5. The European Union has imposed further restrictions on the movement of live-stock after a case of foot-and-mouth disease was confirmed in France. The United States and Canada have issued temporary bans on the import of all animal produce from EU countries.

B.

Tapescript.

1. The dollar is trading at one German mark seventy-three point three and at 126.9 Japanese yen. The pound buys one dollar sixty-two point four. In New York, the Dow Share Index closed 45 higher at 6,783. Earlier London's 100 Share Index ended 20 higher at 4,390. In Tokyo, the Nikkei Share Index is closed for a holiday.

2. The Dow Jones Industrial Average closed up 96 points at 10,116. The Standard and Poor's 500 Index gained 6 points to close at 1,254. But the NASDAQ Index lost 1.5% as high technology and lnternet stocks were battered.

3. Right now the Dow is down another 66 points at 8,094; the NASDAQ Composite down 3 points at 1,662. Turning to Europe's major markets: London stocks were hit by a wave of profit taking after five straight record closes; the FT 100 Index down 36 points; Paris seeing losses as well, the CAC quarante down 33 points or 1%; and Frankfurt's DAX also fell 1% after briefly moving into record territory.

4. The Hang Seng Index closed down 89 points at 3,521. The turnover was 7.71 billion dollars. Now look at the ten most active stocks. Cable and Wireless HKT up 45 cents, HSBC holdings down 50 cents, Hutchison down 50 cents, Shanglongkai Property up $2.25, and China Telecom down $1.50, Changh0ng up 25 cents, Pacific Century Cyberworlds down 10 cents, CCT Telecom down 27.5 cents, New World Cyberspace down 7.5 cents, and Hanong Holdings down 25 cents. The Hang Seng Index future for November and December were all down. Hong Kong gold closed at 2,670 Hong Kong dollars, and London gold is trading at 289 U.S. dollars.

5. Consumer electronics maker Philips Electronics reported a lower than expected profit for last year. The company made about $2.4 billion, more than $300 million below estimates. Oil company Royal Dutch Shell posted its earnings. It made roughly a $3.6 billion profit for its fourth quarter. That was essentially in line with Street expectations. Electronic Data Systems also reported its fourth quarter numbers last night. It posted a 70-cent profit per share, two cents better than expectations.

Part II News reports

Summary:

This news report is about Forbes's "Super 100 Global" list.

Answer the questions:

1. Which of the following corporations are the top five on Forbes's list? Mark their ranks.

2 Citigroup

4 HSBC Banking Company

-- BP-Amoco

5 Daimler-Chrysler

1 General Electric Corporation

n Anglo-American Oil Company

n Microsoft

3 Bank of America

2. How are the companies ranked?

The companies are ranked with a composite formula, which includes total sales, profits, assets and market capitalization, or the total value of their stock.

3. How are the 100 companies distributed?

46 in the United States, 54 in Europe and Japan

4. Why were none of the Internet-related firms included in the list?

Because most of the Internet-related firms have little or no profits so far

Tapescript:

For the second year in a row, the General Electric Corporation is ranked number one in an annual survey of the 100 most powerful corporations in the world.

The survey, compiled and published by Forbes business magazine, shows General Electric of the United States ranked number one, followed in second and third place by the U.S. banking and financial services giants Citigroup and Bank of America. In fourth and fifth place are the British-based HSBC Banking Company and Daimler-Chrysler, the German-American auto-company. The companies are ranked with a composite formula, which includes total sales, profits, assets and market capitalization, or the total value of its (their) stock. What the magazine calls its "Super 100 Global" list are 46 companies based in the United States and 54 in Europe and Japan.

Mike Ozanian, the Forbes editor who compiled the list, says there is a growing trend of international mergers and acquisitions, citing companies such as Daimler-Chrysler and BP-Amoco, the Anglo-American Oil Company. Mr. Ozanian says that despite the huge capitalizations of many Internet-related firms, none were included because most have little, if any, profits -- at least not yet.

Summary:

This news report tells us that economies in the Asia-Pacific region have rebounded from the 1997- 1998 financial crisis.

Statements:

1. (F) 2. (T) 3. (T) 4. (F)

5. (F) 6. (T) 7. (T) 8. (T)

Tapescript:

Economies in the Asia-Pacific region have rebounded from the 1997 - 1998 financial crisis. That's according to the annual survey by the UN Conference on Trade and Development. The survey says economic growth in Asia is expected to exceed six percent this year.

The report says developing countries in the Asia and Pacific region performed significantly better last year than was forecast. Their collective economies grew by five-and-one-half-percent, which it says is a remarkable turnaround from the virtually zero growth experienced in 1998.

Senior UN economist, Bill Choa, says the turnaround in growth in Japan is particularly noteworthy. He says striking improvements also were made in developing countries.

The report says the resurgence in growth was particularly outstanding in South Korea. But impressive gains also were made in Thailand, Malaysia, Indonesia, Hong Kong, and Singapore. The report notes higher growth has been achieved without causing inflation to rise. It says the flourishing economy of the Asia-Pacific region is largely due to a combination of greater foreign investments and buoyant exports.

Despite the optimistic prospects for the region, Mr. Choa warns against complacency. He says there are both external and domestic downside risks. He says the region could be adversely affected by a slowdown in the U. S. economy, by a lack of sustained recovery in Japan and higher oil prices.

The United Nations report says that more emphasis must be placed on structural reforms. It recommends improved surveillance and the establishment of early warning systems to monitor the international financial system. The report says social safety nets of the Asia-Pacific region have to be strengthened and expanded so that poor people are protected in the event of another financial crisis.

Statements:

1. There was a financial crisis in Asia from 1996 to 1998.

2. Economic growth in Asia is expected to be more than 6 percent this year.

3. Economies in the Asia-Pacific region grew by 5.5 percent last year.

4. Economies in the Asia-Pacific region grew considerably in 1998.

5. High economic growth in Asia was accompanied by high inflation.

6. The flourishing economy in the Asia-Pacific region is largely due to a combination of greater foreign investments and increasing exports.

7. The economic growth in the region could be adversely affected by a slowdown in the U.S. economy and higher oil prices.

8. According to the UN report, improved surveillance and early warning systems are needed to monitor the international financial development.

C

Summary:

This news report gives us a general picture of some major U.S. stocks. It also presents some analysts' views on the market.

Statements:

1. The Dow Jones Industrial Average went up less than one percent, to 10,546.

2. An analyst said that sales growth at Intel could be stronger than expected.

3. Retail stocks gained on stronger-than-expected sales because of the Thanksgiving holiday shopping season.

4. Sales of existing homes fell a steep 3.9% in October, their second monthly decline.

5. According to investment strategist Alan Skrainka, this is a very good entry point for a long-term investor to get into the market.

Tapescript.

U.S. stock prices were mixed on Monday, with the "bluechips" in a rally mode. But volume was only moderate after a holiday-shortened week last week, showing lingering uncertainty among investors.

The Dow Jones Industrial Average went up 75 points, less than one percent, to 10,546. The S & P 500 Index gained 7 points. But the NASDAQ Composite backed off an early rally, taking a loss of almost one percent on weakness in selected technology stocks.

The Dow Industrials actually got a boost from their technology components. Shares of Intel traded higher after an analyst said sales growth at the leading computer chip-maker could be stronger than expected. Microsoft stock also edged higher.

Retail stocks gained on stronger-than-expected sales over the Thanksgiving weekend, as the holiday shopping season got underway.

However, analysts caution the retail picture is still clouded because many stores offered bargains to attract shoppers. Experts worry that higher oil prices and interest rates will make this a less than merry Christmas season for U.S. merchants.

The latest on the U.S. economy points to slower growth. Sales of existing homes fell a steep 3.9 percent in October, their second monthly decline.

Many analysts think uncertainty over the economy makes it increasingly likely that the major stock averages will close lower for the year. But investment strategist Alan Skrainka says the longer-term looks better.

"No one can guess what will happen to the market over the next month. But over the long-term, we think the market looks very good. If you're a long-term investor, this is a very good entry point for getting into the market because this is what you've been waiting for. All the fear and uncertainty in the marketplace is setting us up for some very good values in the market."

Part III China and WTO

1. After six days of grueling talks, Beijing reached an agreement with the United States on China's entry into the WTO.

2. At 4 p. m., top U.S. trade representative, Sharline Baschevsky, and Chinese foreign trade minister, Shi Guangsheng, put their signatures on paper to confirm China's entry into the WTO.

3. The agreement marks the end of thirteen long and often painful years of negotiations between China and the United States.

Tapescript:

Anchor: Good evening. China has cleared a major obstacle to becoming a member of the World Trade Organization. After six days of grueling talks, Beijing reached an agreement with the United States on China's entry into the WTO. President Jiang Zemin says the deal will give a much-needed boost to Sino-U. S. ties, while Bill Clinton says it will be good for world trade.

Reporter: The historic moment came at 4 p.m. when top U. S. trade representative, Sharline Baschevsky and her counter part, Chinese foreign trade minister, Shi Guangsheng, put their signatures on paper to confirm China's entry into the World Trade Organization.

Sharline: On behalf of the President of the United States, who has worked very hard with President Jiang and Premier Zhu Rongji on this agreement, may I just once again express my thanks and gratitude to Minister Shi, my old-time friend, to President Jiang, to Premier Zhu Rongji, and the many others on the China side.

Reporter: It's taken 13 years for the two countries to come to the deal. Both sides attribute the success to their leaders.

American official: I applaud President Clinton, President Jiang, Premier Zhu for putting the long-term interest of U.S. and China over short-term political expediency, and putting a 21st-century vision of a freer world economy over old, outdated 20th century divisions between us.

Reporter: The United States says the agreement is likely to bring about enormous changes to the world, not only economically, but also politically.

Translator of Chairman Jiang: I think today we meet in a very pleasant atmosphere.

Sharline: May we shake hands today?

Reporter: Today's events come after six days of dramatic development. The American delegation repeatedly extended this day after initially describing the talks as disappointing.

Anchor: Tcklay's ceremony marks the end of 13 long and often painful years of negotiations between China and the United States. China will become the 135th country to join the World Trade Organization. Before then, it will first have to get another 27 countries to agree to its accession.

B.

The two governments have reached agreement on:

-- Terms and conditions of access to China's market with specific commitments on industrial goods, agricultural products and services

-- Provisions relating to rules on market opening

-- China's reducing its average import duties from 22 to 17 percent

-- China's opening its market for U.S. banks, insurers, telecommunications firms and even film exporters

-- China's joining the WTO as a developing nation

Tapescript:

Anchor: U.S. President Bill Clinton described the deal as good for the United States, China and the world economy. He says he will work to ensure China's bilateral trade relations with the U.S. are also upgraded.

Reporter: Full details of the WTO deal have yet to be released, but the agreement stresses the mutual benefits that will result from China's entry to the WTO. The document gives terms and conditions of access to China's market with specific commitments on industrial goods, agricultural products and services. It also says the two governments have reached agreement on provisions relating to rules on market opening. And it says the two sides will jointly notify the WTO about the agreement so it can be incorporated into the negotiations on China's accession. A U. S. statement said China agreed to reduce its average import duties from 22 to 17 percent and that the deal opens the China market for U. S. banks, insurers} telecommunications firms and even film exporters. U.S. firms will also be granted access to China's distribution networks. The deal will see China joining the WTO as a developing nation. That means market opening will be phased in, enabling state industries and other struggling firms to prepare for the arrival of foreign competition.

Clinton: President Jiang Zemin and Premier Zhu Rongji have shown genuine leadership in committing China to open its markets and abide by global rules of fair trade. And opening the economy of China, the agreement will create unprecedented opportunities for American farmers, workers and companies.

Part IV UN business conference

Title of the conference: Aid and Trade

Conference venue: Javits Convention Center in New York

Features: Four major seminars and more than 150 exhibits

Number of attendees: More than 500

Aim of the conference: Encouraging partnerships in the global economy

Attitudes of the attendees:

-- Having some level of interest in working with the UN

-- Showing some skepticism about the mixing of business with the world organization

Column A Column B

1. Reinhart Helmke a. Head of Imnarsat, a British-

based voice and data transmis

sion company

2. Kofi Annan b. Former vice president of the

Boeing Aircraft Company, now

a consultant

3. Michael Storey c. Director of the UN Office for

Project Services and chief or:

ganizer of the conference

4. Larry Clarkson d. UN Secretary-General

1-- c 2-- d 3-- a 4-- b

Tapescript.

The first conference on business and the United Nations opened Wednesday in New York. It's part of an effort to encourage partnerships designed to bring more of the world's people into the global economy.

UN Secretary-General Kofi Annan has said many times that the world organization will remain relevant only if it involves other institutions _ universities, non-governmental groups and private businesses -- in its mission. The two-day conference on business, titled "Aid and Trade," features four major seminars and more than 150 exhibits sponsored by both nations and private companies.

Significantly, the conference is not being held at a UN facility but at New York's Javits Convention Center, the scene of numerous business and trade fairs.

While some of the more than 500 attendees from business and government listened to speeches, others mingled with representatives of the various businesses and countries that had set up booths.

Reinhart Helmke, Director of the UN Office for Project Services and chief organizer of the conference, says the main purpose of the event is to demonstrate that globalization is for everyone.

"Globalization is the best opportunity that has been given to mankind in a very long period of time. Let's make the best out of it that we can. Let's use the free flow of information, the potential of large-based participation (to) carry this out in a cooperative fashion which includes as many segments of the civil society, obviously including the business sector that hasn't been as much included in the past."

Mr. Helmke says the partnerships can involve direct UN participation or private sector investment in countries. One outstanding UN project, he says, is the world organization's partnership with Ericsson, the Swedish telecommunications company. The company maintains an emergency response team that provides telecommunications capabilities at the scenes of natural disasters such as the recent flooding in Mozambique.

One of the conference participants is Michael Storey, head of Inmarsat, a British-based voice and data transmission company. He says the work that his firm and other communications companies are doing in developing nations provides a catalyst for greater economic development.

"I believe that telecommunications and particularly information technology and the Internet is going to be ... is the great factor for economic development into this next millennium."

Larry Clarkson, a former vice president of the Boeing Aircraft Company and now a consultant, told the conference it is very important to have global rules involving trade and investment to prevent businesses from exploiting people in poorer nations. At the same time, however, Mr. Clarkson says governments of developing nations must also uphold rules of behavior.

Although all the business people attending the conference have some level of interest in working with the United Nations, there was some skepticism about whether business and the world organization really mix.

Even so Mr. Storey says he admires the UN initiative and hopes it will help foster increasing business involvement in developing nations.