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Asia Business: The Week in Review - 2004-02-16

China says it will accelerate reform in its banking sector through a series of measures to tighten lending and a Malaysian steel tycoon with links to former Prime Minister Mahathir Mohamed has been charged with embezzlement.

China's Prime Minister Wen Jiabao told a gathering of the nation's top financial officials that money and credit are growing too fast, and could cause the economy to overheat.

Officials plan new measures to slow the growth of money supply and lending, and to ease restrictions on the flow of money out of China. The government also promises to speed up reforms of debt-ridden state banks.

Mr. Wen particularly singled out construction, property development and automobile production as areas were growth has been too rapid.

China's economy is believed to have grown by more than 10 percent last year, and there has been a surge in consumption in most sectors. Economists fear the rapid growth could lead to rapid inflation, and strain the country's shaky banking system.

Australian telecommunications giant Telstra reported its net profit nearly doubled to $1.8 billion in the second half of 2003, compared with the same period a year earlier. But the company said profit a year earlier had been depressed because it had written-off a cable company joint venture in Hong Kong.

Telstra's Chief Financial Officer John Standhope described the gains as solid but said the company still faces challenges in restructuring. "We are undoubtedly a complicated company," he says. "We have a hundred-year legacy of being part of the commonwealth service that brings with it some excellent processes and some bureaucratic processes we are systematically upgrading."

The company said the gain in profit came on the back of an eight percent rise in services provided to mobile-phone customers.

Eric Chai, the retired head of Malaysia's troubled steel giant Perwaja, has been charged in a Kuala Lumpur court for fraud. Mr. Chai allegedly approved a $20 million payment from Perwaja to a Hong Kong account held by a bogus company.

The 71-year-old tycoon was chosen by former Prime Minister Mahathir Mohamad to lead Perwaja in 1988. But the company came close to collapsing under heavy debts in the mid-nineties.

A handful of protesters outside the courthouse where Mr. Chai was charged called for a wider crackdown on corruption and the arrest of former Prime Minister Mahathir.