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The Week in Asia Business - 2002-12-30


Beijing's powerbrokers have appointed Zhou Xiaochuan as China's new central bank governor, replacing Dai Xianglong. Mr. Zhou, who is 54, formerly headed the country's stock market watchdog and the China Construction Bank. He also oversaw the nation's foreign exchange affairs. At the People's Bank of China, he will supervise monetary policy and foreign exchange issues, while the central bank's president, Liu Mingkang, will manage banking regulation.

Analysts expect Mr. Zhou will bring more flexibility to China's exchange rate policies. However, it is not clear if he will revalue the nation's currency, the yuan. It has been pegged at 8.3 to the dollar for seven years, and both the United States and Japan believe it is too weak. They say that gives China an unfair advantage by making its products and labor costs very inexpensive to overseas customers.

Despite Japan's economic slump, one sector is still going strong: the automobile industry. Vehicle production rose more than nine-percent in November from one year ago to nearly 900,000 cars, buses and trucks.

Stephen Usher, auto analyst for investment bank JP Morgan in Tokyo, says production is driven largely by overseas sales, but notes that domestic sales are also improving. "The November figures benefited from both continued strength in the export segment as well as an emerging uptick, or rebound, in domestic sales volumes," he says. "The plethora of new products that we have seen in the last couple of months in the compact car segment has contributed to stronger domestic sales volume, and that, combined with continued high levels of shipments to Europe and the United States, has meant that domestic production is continuing to grow."

South Korean industrial output is going strong, thanks to rising demand for computer chips and other electronic goods. Factory production rose .7 percent in November, more than most economists had expected.

A rebound in exports is fueling the increase in output. South Korean exports increased by more than quarter in November compared to the same period in 2001. That is leading companies such as Samsung, the world's top computer memory chipmaker, to boost production and support overall economic growth. South Korean central bank estimates the economy will expand by more than six-percent this year, making it one of the best performers in the region.

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