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China's Economy Cools Slightly in First Half of 2008

China's red-hot economy has cooled moderately in the first half of this year and Thailand has unveiled an anti-poverty package to help low-income earners cope with soaring prices for food and fuel. Claudia Blume in Hong Kong has more on these and other stories in our weekly summary of business news from the Asia-Pacific region.

China's economy slowed slightly in the first six months of this year, but still maintained a strong, double-digit growth rate. The country's gross domestic product grew at 10.4 percent in the first two quarters of the year. By comparison, the growth rate registered for all of 2007 was 11.9 percent.

The cooling of China's red-hot economy was partly caused by slower exports and a drive by the central bank to tighten credit. Li Xiaochao, a spokesperson for China's National Bureau of Statistics, said natural disasters in the first half of this year also played a role.

"China experienced low temperatures and icy storms earlier this year and also the severe earthquake and also recently floods in southern parts of China - those have impact on the national economy," said Li.

Thailand's government announced a one-point-four billion dollar package of tax cuts and handouts for the country's poor. The six-month anti-poverty scheme includes cuts in taxes on fuel and delayed increases in the price of cooking gas. Low-income earners will also be able to get free tap water and electricity, as well as free bus and train rides.

Thailand's poor have been hit hard by soaring food and transportation costs. Inflation reached a ten-year high of 8.9 percent in June. To fight inflation, Thailand's central bank raised its key interest rate by 25 basis points to 3.5 percent last week - the first increase in two years.

Airlines around the world are struggling because of skyrocketing fuel costs, and Australia's national carrier Qantas is no exception. The airline announced it will cut 1,500 jobs around the world as part of its measures to offset the rising cost of oil. Qantas officials said the airline will also retire more than 20 older planes from its fleet and maintain a recruitment and executive pay freeze.

One company in the region that has greatly benefited from soaring oil prices is Malaysia's state oil company Petronas. Petronas announced a record net profit of more than $18 billion for the year ending in March, an increase of more than 30 percent compared to a year earlier.

Booming crude oil prices have also boosted Malaysia's government coffers. In the last financial year, more than forty percent of the country's government revenues were contributed by Petronas.