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China Invests in British Oil Giant BP


A Chinese fund has bought a stake in British energy giant BP and an Australian survey forecasts slower growth for that country's economy this year. Claudia Blume in Hong Kong has more on these and other business stories from the Asia-Pacific region.

China bought slightly less than one percent of the shares of oil company BP, Britain's largest company.

The investment, worth about two billion dollars, was made by the State Administration of Foreign Exchange, an arm of China's central bank that manages the country's huge foreign exchange reserves.

The move follows other Chinese investments in leading European and American companies such as private equity firm Blackstone, Morgan Stanley investment bank and French oil group Total. China's worldwide buying spree comes as the country's foreign currency reserves have swollen to almost $1.7 trillion.

Australia's economic growth is set to slow this year, due to the weaker global economy and easing domestic demand. That is according to a survey by Australia's Westpac-Melbourne Institute, which releases a monthly index indicating the likely pace of economic activity three to nine months ahead. Westpac's chief economist Bill Evans says the index peaked in November at 6.5 percent but slowed to 3.3 percent in February.

"What it's telling us is that domestic demand growth last year was nearly six percent and the reserve bank didn't like that and they realized that would lead to further inflation pressures this year. It looks now like domestic demand could slow to about three percent this year, which would take a lot of pressure off inflation," he said.

Jetstar Airways, a low-cost carrier owned by Australian airline Qantas, formed a partnership with Vietnam's Pacific Airlines to expand in Asia. The Vietnamese airline will be renamed Jetstar Pacific in May and embark on an expansion plan. Qantas bought an 18 percent stake in the Vietnamese airline last year and wants to increase its stake to 30 percent by 2010.

In other news from the aviation industry, Japan Airlines International - or JAL - agreed to plead guilty and pay a $110 million fine for its role in a price-fixing scandal.

The U.S. Justice Department accused the company, a unit of Japan Airlines, of fixing prices on cargo shipments to and from the United States for almost six years. Prosecutors said that JAL, the largest cargo carrier between the United States and Japan, made about $2 billion on that route from 2000 to 2006.

The company's admission of wrongdoing comes one year after similar guilty pleas from British Airways and Korean Air Lines.

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