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Japan Sees Deflation Return


Japan saw consumer prices fall last month, raising concerns that the country is returning to deflation. In Hong Kong, the dominant telecommunications company performed below market expectations last year. Claudia Blume at VOA's Asia News Center has more on these and other business stories from the region.

Consumer prices in Japan fell one-tenth of a percent in February, the first fall in 10 months. The decline in prices revives fears that the country has not yet conquered deflation, which eroded prices in Japan for a decade before stopping last year.

The Japanese government, however, reported that unemployment held steady in February, at four percent, and 70,000 more people found jobs.

In Hong Kong, PCCW, the city's leading fixed-line phone operator, posted a net profit of $160 million for 2006 - a drop of 21 percent from a year earlier. Financial analysts had expected the company to report earnings of more than $200 million.

"We didn't have very much investment and other gain this year … and that's impacted down on our profits for this year," said Alex Arena, PCCW's executive director.

China has pledged to invest $13 billion in Tibet over the next four years. This includes the construction of the world's highest airport at 4,300 meters above sea level. Beijing also plans to build a railway line between the regional capital Lhasa and Tibet's second-largest city, Xigaze. Other projects include projects to increase water and electricity supplies, and education facilities.

Beijing says it aims to improve living standards for Tibetans. Critics say, however, China wants to consolidate its control over Tibet and exploit the region's resources.

Citigroup plans to double the number of its outlets in China to more than 30 from 16 now. The U.S. bank said China is crucial for its long-term growth.

Citigroup was one of four foreign banks that won approval in March to incorporate locally in China, a step toward entering the country's retail market.

The Bank of China and the Royal Bank of Scotland jointly opened a private banking service that targets the growing ranks of the country's super-rich. The service, available in Shanghai and Beijing, is only for customers who have over $1 million to invest. There are currently about 320,000 millionaires in China.

In other banking news, Asian Finance Bank began operations in Malaysia, as the country's third foreign-owned Islamic bank. The bank, majority-owned by Qatar Islamic Bank, plans to have seven branches in the country and wants to use Malaysia as a hub to expand regionally.

Malaysia is trying to become an international financial center for banks that follow Islamic restrictions on paying interest or investments in industries such as liquor sales and gambling.

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