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China's Inflation Drops to 14-Month Low


China's inflation rate dropped to a 14-month low in August and Vietnam is allowing foreign banks to open wholly-owned subsidiaries in the country for the first time. 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 consumer inflation eased to 4.9 percent in August, its lowest level since June last year. Food prices, the main driver of inflation in China, were up 10.3 percent in August, compared with last year.

Beijing struggled for a year to cool the politically sensitive increase in consumer prices, which was partly caused by shortages of grains, pork and other food items. The government paid subsidies to farmers and raised interest rates several times to combat inflation.

Paul Tang, chief economist of the Bank of East Asia, says now that inflation is under control, he expects Beijing to focus on the country's slowing economic growth, particularly in the export sector.

"I think the government is now considering a whole list of measures including, for example, tax relief, or measures that help ease the pain of the export industry, such as slower appreciation of the renminbi," said Tang.

Also in China, the country's competition watchdog says it will review Coca-Cola's planned takeover of juice company Huiyuan. The bid by the U.S. soft-drink maker, announced earlier this month, had sparked criticism in China over the possible sale of one of the country's best-known brands to a foreign company.

The review is the first test of China's new anti-monopoly law, which took effect in August. If approved, the $2.5-billion deal will be the biggest takeover of a Chinese company by a foreign firm.

Vietnam's central bank gave British banks HSBC and Standard Chartered the green light to open the country's first bank branches wholly-owned by a foreign company. HSBC will open its branch in the capital Hanoi and Standard Chartered in the country's southern commercial hub Ho Chi Minh City. Both banks have operated in Vietnam for years and have stakes in local banks.

The gradual opening of the banking sector was one of the conditions when Vietnam joined the World Trade Organization last year.

And the World Bank has ranked Singapore as the world's most business-friendly place for the third year in a row. The World Bank's global survey ranks the friendliest regulatory environments for startups and small companies.

Three countries from the Asia-Pacific region - Hong Kong, New Zealand and Australia - were also among the top 10 countries.