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To: Paul Shread who wrote (90)	8/16/1998 3:23:00 PM
From: djane	Respond to of 149

FOCUS-Floods affect China's biggest oilfield Sunday August 16, 12:17 pm Eastern Time (Adds Daqing oilfield output cut) By Benjamin Kang Lim BEIJING, Aug 16 (Reuters) - Three dikes have burst along the raging Nen river in northeast China, forcing the country's largest oilfield to slash output by more than 6,800 tonnes in five days, an anti-flood official and state media said on Sunday. Daqing oilfield's output was cut by 6,821 tonnes between August 12-16, the official Xinhua news agency said. Floods inundated 1,217 oil wells, 527 of which were forced to close, Xinhua said. An overwhelming majority of Daqing's 25,000 wells were in operation. Daqing in Heilongjiang province produced 60.9 million tonnes of oil in 1997, accounting for half of China's total output. Official figures more than a week old estimate that more than 2,000 people have died and 240 million people affected in China's worst floods along the mighty Yangtze River since 1954. Damage has been estimated at $24 billion and the figure was expected to rise. About 200,000 soldiers and civilians have been reinforcing flood defences near Daqing, said the People's Daily, mouthpiece of the Communist Party. The Nen ripped a 500-metre (yard) hole in a dike near Daqing last Friday. A second breach, measuring 20 metres wide along a 2.7-km (1.7-mile) levee in Zhaoyuan county, on Saturday has inundated 13,333 hectares (33,000 acres) of farmland, Xinhua said. ''The water, if not effectively blocked, will pose a threat to the oilfield and a railway,'' the news agency said. Flood workers have given up efforts to repair the two breaches, Xinhua said. An anti-flood official said a third dike collapsed near Daqing on Sunday, but played down the threat to the oilfield. The official told Reuters it would take 1-1/2 days for flood waters to reach a highway where a new dike is being built as a defence against the floods. No casualties have been reported. Up to 60,000 people have been evacuated, he said. As torrential rains sweep across northern and northeastern China, the industrial city of Harbin near Daqing is bracing for its worst flooding since 1949, Xinhua said. Parliamentary chief Li Peng warned that the water level on the Songhua River would ''very probably'' exceed the 1957 record of 120.3 metres (394.7 ft), or 2.2 metres (7.2 ft) above the danger level, Xinhua said. ''The flooding situation still remains very serious,'' said Li Peng, who sits on the Communist Party's powerful seven-member Politburo Standing Committee. ''Full preparations should be made to cope with problems and difficulties that may possibly appear,'' Li said last Friday while inspecting Heilongjiang province. Harbin should remain on high alert and prepare for the worst, he added. Li visited flood-ravaged areas on the heels of Premier Zhu Rongji and President Jiang Zemin. Harbin has imposed a curfew at several sections of the Songhua River embankments, Xinhua said. It said about 500,000 soldiers and civilians had been reinforcing river embankments and thousands of residents had been evacuated. The State Council, or cabinet, had issued a circular calling for diligence in efforts to prevent epidemics after the waters subside. Efforts should also be made to protect water resources and sterilise drinking water, the circular said. In northern Inner Mongolia, about 70,000 people stranded by floods have been rescued but another 76,000 were still marooned along the banks of the Ulyji Muren River, Xinhua said. The floods have damaged a railway bridge and washed away 200 metres (220 yards) of railway roadbed, forcing the Tongliao-Ranghulu railway to suspend operations, it said. Chinese meteorologists have forecast light to torrential rains for the upper and middle reaches of the Yangtze and its tributary rivers over the next few days. Related News Categories: international Help Copyright c 1998 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon See our Important Disclaimers and Legal Information. Questions or Comments?

To: Paul Shread who wrote (90)	8/16/1998 3:26:00 PM
From: djane	Respond to of 149

HK government market intervention fuels debate Sunday August 16, 6:25 am Eastern Time By Mishi Saran HONG KONG, Aug 16 (Reuters) - A Hong Kong government decision to intervene in the stock and futures markets to fend off international speculators could be tested again in the coming weeks, politicians and financial analysts say. Facing its worst crisis since British rule ended in the middle of last year, the Beijing-backed government poured money into the stock market on Friday to lift the blue-chip Hang Seng index from five-year lows. The aim was to punish foreign speculators who had been playing off attacks on the Hong Kong dollar, which drove up interest rates, and corresponding falls in the stock market. ''There was more than a trace of vengefulness in Friday's action. The government went in with its guns blazing to avenge the pain inflicted by big international hedge funds on the Hong Kong economy,'' an editorial in the Sunday Morning Post newspaper said. But the action raised serious questions about how the government will handle future crises. Hong Kong's vast foreign currency reserves, around US$96.5 billion, gave it the muscle to mount future operations of this sort, it said. ''But now it has issued a challenge to the market, and that could invite big players, some with combined resources that dwarf'' even the government's reserves, to try to bankrupt Hong Kong, the paper added. The ''Rambo-esque'' intervention achieved its short term goals with spectacular success, it said, but Hong Kong could pay a price later. Chief Secretary Anson Chan Fang On-sang, returning from a two-day visit to Singapore, weighed in with a fresh defence of the government action on Saturday. ''We absolutely don't want to intervene in anyone short- selling the index futures, but we cannot tolerate somebody creating confusion in the foreign exchange market, damaging our economic system, the interests of our businessmen and the public,'' he said. The Hong Kong dollar has been pegged to the U.S. dollar since a currency crisis in 1983. It is fixed at HK$7.80 to the U.S. dollar in a currency board system which means the monetary system should be regulated by changes in interest rate levels rather than government intervention. A number of politicians and economists said that intervention was by definition a quick fix to check a market irregularity, but it was by no means a solution to Hong Kong's array of economic problems. Since Asia's financial crisis swept over Hong Kong late last year, the once towering property market has fallen by 50 percent in value while the stock market came down more than 50 percent and hit five-year lows last week before the government intervened. The overall economy shrank 2.8 percent in the first quarter of this year and the government has said the second and third quarters will be bad as well. The economic contraction has meant soaring unemployment, widespread store closures and growing anxiety for Hong Kong residents. Liberal Party member Lui Chee-wah said the economic downturn was the fundamental cause of the plunge of the stock market and and the expensive actions by the government would not address this issue. Lui said in a comment to the Post that the government's abrupt departure from its non-interventionist policy cast further doubts on its resolve to keep the dollar peg. ''The government's intervention caused Friday's short-covering rally,'' said market commentator K.L. Law in the Sunday Post. ''But it was a mistake and now Hong Kong has a bull's eye painted across its forehead.'' Some market sources admitted they felt uneasy about the intervention, they stopped short of criticising the government for its action. ''In general, this is not a good way (to tackle the situation,'' said Ricky Tam, senior research manager at Delta Asia Financial Group. ''But, under a tough situation, the government had to do something. I think under these circumstances they have done the right thing,'' Tam said. Over the past few months, speculators had little competition in a thin market, Tam said. But now they had a target -- the government. Tam said the government could be playing a dangerous game, indicating at what levels it would support the stock market. Kent Rossiter, institutional sales manager at Nikko Securities said: ''In general, I like it when governments don't get involved.'' But he added: ''This is a special case when the government came out to maintain a tough front.'' A currency became worthless when people lost faith in it, Rossiter said. ''Because of that, I don't think its wrong they try to support the dollar. I'm not upset, it's a respectable job,'' he said. Related News Categories: international, US Market News Help Copyright c 1998 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon See our Important Disclaimers and Legal Information. Questions or Comments?

To: Paul Shread who wrote (90)	8/16/1998 3:28:00 PM
From: djane	Respond to of 149

China mulls bond issue, floods may be factor Saturday August 15, 4:05 am Eastern Time By William Kazer SHANGHAI, Aug 15 (Reuters) - China said on Saturday it would issue special bonds to help boost the economy, and analysts linked the plan partly to damage from devastating floods. The China Securities newspaper gave no details of the size of the bond issue but it said senior parliament members, meeting in Beijing, were reviewing the impact of the proposal on the nation's budget. China has said it would step up spending on roads, railways and other basic infrastructure to stimulate a slowing economy as it struggles to meet a full-year growth target of 8.0 percent. The economy has also been hammered by the worst floods since 1954 as swollen waters of the Yangtze River have killed more than 2,000 people and inflicted over $24 billion in damage. Banking sources have said a special bond offer of 100 billion yuan ($12 billion) was being planned to fund infrastructure projects such as contruction of roads, railways and grain storage facilities. Economists said most of the spending proposals were made before the extent of the flood damage was known. But they added that local governments would be able to spend some of the money on repairing infrastructure damaged by raging flood waters that have washed away roads and rail links and disrupted power supplies in the Yangtze River valley. ''The floods have been worse than expected,'' said Wang Lingyi, an economist at the Shanghai Academy of Social Sciences. ''A portion of the money will go to provinces along the Yangtze River where there has been significant flood damage,'' he said. An analyst at Shenyin & Wanguo Securities Co Ltd said China would probably have to issue more bonds to cover the bulk of the spending linked to the floods. China had already said it planned to issue some 280.8 billion yuan worth of domestic and foreign bonds this year. That was part of its 1998 national budget which proposed a deficit of 46 billion yuan, down 10 billion from 1997. That was seen as highly optimistic when it was approved by parliament in March -- even before the disastrous summer flooding and economic weakness became fully apparent. China recorded year-on-year economic growth of 7.0 percent in the first half, a full percentage point below the full-year growth target and down from the 8.8 percent recorded for all of 1997. Beijing contends that it needs to speed up spending on infrastructure to ensure that it reaches the 8.0 percent growth level this year. Officials have said they need faster growth to create jobs to re-employ displaced workers as the nation overhauls its ailing state industry. In recent months, China has also stepped up tax rebates to help ailing exporters who are complaining that they need help to offset slowing overseas sales. Exporters have been struggling as Asian competitors benefit from sharply weaker currencies due to the regional financial crisis. ''All of this (spending) will affect the budget deficit this year,'' said Wang of the Shanghai Academy of Social Sciences. ''The authorities don't want to borrow foreign exchange so that means they have to issue more domestic bonds.'' ($1.0 equals 8.3 yuan) Related News Categories: international Help Copyright c 1998 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon See our Important Disclaimers and Legal Information. Questions or Comments?