Official figures on Chinese economic growth are due today, and the consensus among economists is that a year-on-year gain of 7.6% is likely. But many suspect the true story is grimmer than that, a fact that would compound problems for a global economy that continues to be burdened by the eurozone crisis and slow U.S. growth. 

Key Chinese province of Guangdong sees poor first half

China's bellwether industrial province of Guangdong has experienced a sharp slowdown across a range of economic measures since the beginning of the year, Gov. Zhu Xiaodan says. Zhu mentioned lower-than-targeted figures for first-half GDP growth (7.4%), investment, expenditure, foreign trade and financial revenue, citing long-term structural problems and economic fluctuations for the poorer performance. 

As Europe's banks fail to lend, ECB may take further steps

With banks failing to step up lending in response to the European Central Bank's new 0% overnight-deposit rates, the ECB held out the possibility of a further jolt. The bank's main interest rate of 0.75%, cut by a quarter point only last week, could be lowered again. "Should the situation deteriorate, there is no article of faith preventing us from going below 0.75 percent," said ECB Governing Council member Klaas Knot. 

U.S. weekly jobless claims drop sharply, but meaning is uncertain

The number of U.S. weekly unemployment claims fell last week to a four-year low of 350,000, but the drop may only reflect a delayed shutdown at auto plants for annual retooling. The weekly figures also were in conflict with other recent indicators pointing to a broad economic slowdown. 

S. Korean lawmakers are warned against hamstringing conglomerates

Foreign investors may be upset if South Korean lawmakers go too far in curbing the power of the nation's corporate conglomerates, warned Finance Minister Bahk Jae-wan. "If we adopt systems quite different from international standards in the process of discussing economic democratization, we may get objections from overseas," Bahk told the parliamentary finance committee. The fear is that too much regulation could cut into the conglomerates' hiring and investment. 

China accuses EU of "lack of trust" in trade dispute

China strongly warned the European Union on Thursday that continued investigation of trade practices involving makers of Chinese telecommunications equipment may lead to retaliation. China called the EU investigation of possible government subsidies "groundless" and said that if the EU persists, China may launch its own probe of subsidies in several EU export industries.

Market Activities
INTERNATIONAL MARKETS OVERVIEW

Slowing global growth and despair over the apparent absence of any sense of urgency by the U.S. Federal Reserve weighed down European stocks Thursday. And the sentiment carried over into the U.S. market, where poor corporate earnings added to the gloom, sending the S&P 500 down 0.5% for the day. Here is a continuously updated list of global stock indexes.

Economic Trends & Outlook
India's industrial output rebounds in May

India's industrial output staged a modest comeback in May, rising 2.4% and reversing the 0.9% contraction in April. However, the latest rate is down from 6.2% a year earlier, and concerns remain over the capital goods and mining sectors. 

Moody's is upbeat on ASEAN nations

Sustained investment and household spending have helped buoy the ASEAN economies despite a turbulent global market, Moody's declared as it projected a positive outlook for the region. Only the worldwide slowdown is keeping annual growth among Association of Southeast Asian Nations members slightly below its potential at 5%, Moody's said. 

Japan's corporate-goods prices drop at steepest rate in 27 months

Sharp declines in prices of crude oil and other raw materials helped push down Japan's corporate-goods prices in June at their fastest rate since March 2010, the Bank of Japan reported. The eurozone debt crisis and global economic slowdown contributed to the fall.

Australian unemployment ticks up

After a run of favorable jobless figures, Australia's unemployment rate ticked up 0.1 point in June to 5.2% as employers cut 27,000 jobs. The new rate, though much lower than in other advanced economies, is more in line with other Australian indicators and reflects big layoffs at some major employers. 

As S. Korea's housing prices fall, declining consumption might follow

A new report indicates that falling prices in South Korea's housing sector may lead consumers to slow their purchases, adding further downward pressure on the nation's economy. "A structural change in Korea's housing system -- such as weakening demand for house ownership -- currently is likely to be a painful procedure for Korean consumers, whether or not they own houses," said Na Hong-suk, an analyst at Macquarie Equities Research, which prepared the report. 

Economists see near term as rocky for Malaysian economy

New figures due this week for Malaysia's industrial output in May are likely to show year-on-year growth of about 4.6%, a survey of economists reveals. But the outlook is choppy, with little improvement expected before the end of the year.

Capital Markets & Financial Products
Chinese banks issued loans at a surprisingly high pace in June

China's banks are lending at a rapid pace, topping expectation in June with $144.3 billion in yuan loans, according to the People's Bank of China. The new figures support Premier Wen Jiabao's stimulus plan and Beijing's assertions that the economy is stabilizing. Looking ahead, "the data confirms our view that further rate cuts are not needed and thus are unlikely," said Dariusz Kowalczyk, a Hong Kong-based senior economist and strategist at Credit Agricole CIB. 

Chinese banks buoy Singapore bid for yuan trading

Singapore's drive to become a major yuan trading hub is getting a boost from two Chinese banking giants -- Bank of China and Industrial and Commerce Bank of China -- which are competing for the right to clear such trades in the city-state. Given the "immense pent-up demand for the yuan," as described by Singapore Exchange chief Magnus Böcker, competition is fierce among London, Tokyo, Taipei, Luxembourg, Kuala Lumpur and others to become the world's second offshore yuan-trading hub after Hong Kong. 

Looking ahead, Bank of Korea institutes first rate cut in 3 years

Anticipating repercussions from ongoing global economic turmoil, the Bank of Korea reduced its key interest rate to 3.0%, the first cut in more than three years. "The rate was cut in the hope to affect companies and the real economy rather than real estate. We see that it will give a plus to the real economy and alleviate burden on household debts," said BOK's governor, Kim Choong-soo. 

Philippines sees foreign investment funds reverse course

Foreign money that flooded into the Philippines a year ago is now on the way out. According to the Philippine central bank, the net outflow in June was $7.69 million, reversing the year-earlier inflow of $353.79 million.

Industry & Regulatory Update
China clarifies boundaries for yuan FDI

In a clarification issued to financial institutions, the People's Bank of China lays out restrictions for yuan-denominated foreign direct investment. Barred are investments in securities, derivatives and property. These rules have been already implemented, a central bank official said, noting as well that the rules are not related to recent changes in economic indicators and cross-border capital flows. 

China bars primary bond funds from IPOs

Primary bond funds in China can no longer subscribe to equity IPOs, a practice previously common to this type of fund. The Securities Association of China instituted the ban, effectively transforming primary bond funds into pure bond funds. 

Washington OKs U.S. investment in Myanmar

Following up on the lifting of U.S. sanctions on Myanmar in May, the Obama administration has given the go-ahead to U.S. companies for investment in the newly open country. Worries had grown that the delayed approval from Washington would put American companies at a disadvantage, particularly in competition for access to Myanmar's oil fields.

Ethics & Standards
Japanese government looks at new ways to penalize insider trading

Looking to apply sterner penalties for insider trading, Japanese lawmakers are preparing to require that the country's pension funds refrain from any future dealings with asset managers who engage in the practice. With fines against companies accused of insider trading restricted by law, the government is taking other steps aimed at "seriously moving to clean up the Tokyo market," said Tsutomu Okubo, lead director of the upper house's financial affairs committee.