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Consumer Confidence Surges in Australia - 2003-07-21

Consumer confidence is surging in Australia, and so is consumer debt. Meanwhile, China's top banker is warning that access to easy credit could create problems down the road. The latest survey by Australia's Westpac-Melbourne Institute shows consumer confidence rose in July to its highest level since 1994.

The index rose .03 percent for the month to 116.5 from June. Analysts say consumers were encouraged by initial indications the country's central bank would cut interest rates in July. But levels remained strong, despite the Federal Reserve's decision to leave rates unchanged.

The central bank also released numbers that suggest a darker side of strong consumer confidence: unprecedented levels of credit card debt.

Catherine Wolthuizen is finance policy officer for the Australian Consumer's Association. She tells the Australian Broadcasting Corporation the country's households are carrying more than $16 billion in credit card debt.

"The amount that they're maintaining on their card is growing, and therefore the amount of interest they're maintaining - having to pay every month - is also growing," she says. "And that's showing up in these figures, that month-on-month, we hit a new record in levels of outstandings."

Easy credit is also a concern in China, where the head of the central bank says it poses a serious risk to the economy. Zhou Xiaochuan says outstanding loans in China totaled $1.9 trillion by the end of June, a yearly increase of nearly 23 percent.

Mr. Zhou says over-investment and over-capacity in certain industries could cause dangerous economic imbalances. He is recommending stronger financial safeguards against overzealous lending, and better guarantees of borrowers' rights in the commercial sector.

In Hong Kong, the accounting firm Price Waterhouse Coopers says, 31 percent of businesses in the territory have incurred losses from some form of economic crime in the last two years.

Out of 85 business leaders surveyed, more than a third say their companies experienced some form of asset misappropriation. Nearly a quarter of those polled say they had problems with cyber-crime. The Price Waterhouse report says 25 percent of the organizations in the Asia-Pacific region believe product piracy and counterfeiting will be a threat in the next five years.

Three major movie studios are reportedly suing Chinese companies over the alleged sale of pirated video discs. Fox Film Corporation, Walt Disney, and Universal Studios are seeking an apology and compensation from three Chinese companies. A Chinese reports says both plaintiffs and defendants have agreed to mediation.