China 'boosts East Asian growth'

The World Bank has upped its 2009 growth forecast for China from 7.2% to 8.4%, but says the nation needs to encourage more consumer spending.

Manufacturing accounts for about 40% of China's economy

The Washington-based body also raised its projection of 2009 GDP growth in East Asia as a whole to 6.7% from 5.3%, thanks to China's strong growth.

But it said growth in the region could be just 1% if China was excluded.

And it said China, boosted by a recent stimulus plan, must move away from an industry and investment-based economy.

"The economic rebound in East Asia and the Pacific has been surprisingly swift and very welcome, but take China out of the equation and the regional picture is less rosy," the bank said in a report.

"The rebound has yet to become a recovery."

Stimulus package

At the end of 2008, the Chinese government announced a 4 trillion yuan ($586bn; £355bn) stimulus plan involving increased spending on infrastructure to boost the domestic economy.

In China stimulus spending has gone mostly to building roads and other public works projects.

It's a good time to concentrate and focus effort on rebalancing the economy and getting more growth out of the domestic economy Louis Kuijs, World Bank China economist

Earlier this week, data showed China's manufacturing sector had grown in October at its fastest rate in 18 months.

But the World Bank warned that manufacturing industries would be under pressure next year as the impact of the stimulus faded away.

It also said China could no longer rely on exports and investment to drive growth and had to encourage its own consumers to increase spending.

"We think that now that the government has basically succeeded in dampening the impact of the global crisis, it's a good time to concentrate and focus effort on rebalancing the economy and getting more growth out of the domestic economy," said Louis Kuijs, the bank's chief China economist.

"This calls for more emphasis on consumption and services and less emphasis on investment and industry."

Losing momentum

China's rebound has helped other Asian economies as its consumers and factories buy imports.

But the bank said that growth in the region outside of China would be slower on average this year than in South Asia, the Middle East and North Africa.

Indonesia and Vietnam were doing well but output was shrinking in Cambodia, Malaysia and Thailand and static in Mongolia, the bank said.

And it added that in Singapore and Taiwan industrial production was 15% below the pre-crisis levels of 18 months ago.

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US interest rates left unchanged

The Federal Reserve has kept US interest rates on hold at between 0% and 0.25%, as had been widely expected.

The Fed has kept rates on hold to help the continuing recovery

Despite the US economy growing 3.5% in July to September - its first expansion since June 2008 - rates were left unchanged to further aid the recovery.

The Fed reiterated its view that rates would need to stay at the historic low for an "extended period".

While economic activity had "continued to pick up", it said high unemployment remained a concern.

The most recent official jobless rate totalled 9.8% in September, a 26-year high.

Recovering car sales

Analysts have also cautioned that the economic expansion between July and September was greatly helped by President Obama's $787bn (£480bn) stimulus package, with some fearing that growth will slow markedly when this impetus comes to an end.

One of the most successful parts of the stimulus spending was the $3bn "cash for clunkers" car scrappage scheme, which gave people who traded in old cars $3,500 towards the cost of a new vehicle.

This initiative operated in July and August, giving US car sales a major boost in both months.

Car sales subsequently fell sharply in September after the scheme had concluded.

However, both General Motors and Ford reported earlier this week that their domestic sales rose again in October, suggesting that the recovery in the US car market has now resumed.

US interest rates were cut to the current level of between 0% and 0.25% in December last year, where they have remained ever since.

Before then rates had fallen steadily from a high of 5.25% in September 2007.

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G20 'to call for economy balance'

This week's G20 summit in the US will call for major reforms to promote a more balanced global economy, according to a document seen by the BBC.

A draft paper hints at significant policy changes from G20 countries, including the UK, the US and China.

And while stimulus packages should continue for now, the document called for the creation of "transparent and credible" means to unwind that support.

Leaders will meet in Pittsburgh with the economy high on the agenda.

No enforcement

The document says huge imbalances in the global economy must be ironed out.

If this does not happen, the world will "face anaemic growth" at levels that are "unacceptably low", it says.

However the paper does not suggest any mechanism for enforcing its plans - other than countries coming under pressure from the International Monetary Fund (IMF).

And while no countries are mentioned by name, BBC business correspondent Joe Lynam says the document is suggesting that rich indebted countries, such as Britain and the US, should save more while cautious and savings-oriented nations such as Germany and China increase spending.

The document is ambitious, our business correspondent adds, and is aimed at removing some of the wild economic swings that have marked the opening decade of the 21st Century.

There have long been calls for China to allow its currency, the yuan, to rise, encouraging Chinese consumers to spend more on foreign goods.

But others argue that in the longer term, China should work on improving pensions, healthcare and other policies, to reduce the incentive people have to save so much.

Stimulus withdrawal

Nations such as China need to spend more, the G20 is set to say

The document appears to back comments made by British Prime Minister Gordon Brown that there will be no early end to the international stimulus package aimed at taking the world out of recession.

But it calls on the IMF and the G20's Financial Stability Board to draw up, by November, "transparent and credible" ways of withdrawing that financial support.

The document also acknowledges that each country will have to find its own way of winding back its support in terms of the scale and timing of the pullback of support.

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US gets tough on ratings agencies

US credit rating agencies will face tighter supervision under new rules adopted by the US financial watchdog.

The Securities and Exchange Commission (SEC) said agencies must disclose more information on past ratings to help investors make informed judgements.

The agencies, which give firms ratings to determine how safe an investment they may be, have been criticised for their role in the financial crisis.

The dominant agency firms include Standard & Poor's, Moody's, and Fitch.

'Flash trading' moves

Head of the SEC, Mary Schapiro, said that investors' reliance on agency ratings "did not serve them well over the last several years".

Earlier this year, credit rating agencies admitted errors were made when assessing some of the financial instruments that have been blamed for the credit crunch.

The agencies have been accused of failing to spot the size and risk of the bad US housing debt that was resold around the world, causing multi-billion-pound losses.

They gave high ratings to sub-prime mortgage investment vehicles that later turned out to be incorrect.

The SEC also proposed rules to ban "flash trading" - the process where certain financial institutions gain access to trading information seconds before it is made public.

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Developer showcases new Halo game

Microsoft has shown off the full version of the long-awaited follow-up to the first person shooter, Halo 3, ahead of its launch on Tuesday.

The Halo series is one of the most popular video games of all time, selling millions of units worldwide.

Set prior to events in the last game, Halo 3: ODST allows gamers to take control of an elite human soldier fighting hordes of alien invaders.

Halo 3: ODST will be in the shops on global release 22 September.

Initially developed as a add-on to fill the gap between the big instalments of the game, it snowballed into a stand-alone game in its own right.

Piers Harding-Rolls - senior analyst with Screen Digest - told BBC News that the title was "very big" for publisher Microsoft and that previous versions had done "fantastically well".

"We expect it to sell well and the chart track data - which looks at what gamers intend to purchase - has Halo 3: ODST pretty high up," he said.

"The last version - Halo 3 - sold more than eight million copies worldwide, although it is difficult to say whether it will be as big as the last one," he added.

Set toward the end of this millennium, Halo 3: ODST - which stands for Orbital Drop Shock Troopers - sees the human race engaged in a life-or-death struggle with a coalition of alien races called The Covenant.

Speaking to BBC News, Alex Cutting, associate producer with Microsoft Games Studios, said players would notice a big difference from previous Halo titles.

"There is no Master Chief (the main character in previous Halo games), instead players are going to be more ordinary," he said.

There are a number of gameplay changes reflecting the fact players are now regular troopers, rather than the turbo-charged super-soldier Master Chief.

"This means they are going to take damage if they fall off buildings and aren't nearly as fast as Master Chief," said Mr Cutting.

The latest version of Halo has players in the role of regular soldiers.

Jon Hicks, editor of the UK's Official Xbox Magazine, told BBC News that the lack of Master Chief would not be a problem.

"There might be those who miss [him], but I'm expecting they'll be in the minority.

"Everything else is pure Halo - the weapons, the vehicles, the setting - and it's engineered into the existing world and storyline in a way that even the biggest fans will fully appreciate," he said.

Health check

Probably the most significant change is how characters' health is affected by events in the game.

While Master Chief regenerated health, providing he was not being shot at, the ODST squaddies have a limited supply, which can be topped up from only a few health packs scattered across the map.

The developers behind the Halo series, Bungie, have intentionally made the combat location - an African city called New Mombasa - a dark environment, so they have added a visor system that has night vision and identifies enemy troopers with a red outline.

As in previous versions, fallen enemy soldiers can be looted for weapons and ammo. It also sees the return of the silenced pistol that made its debut in the first Halo.

"The pistol is quite a throwback to the Halo 1 pistol, of which people were really big fans," said Mr Cutting.

The first in the series - Halo: Combat Evolved - was released on Xbox in 2001

The game is not just played through the eyes of a single ODST soldier. There are various items scattered throughout the game that belonged to fellow troopers.

Picking up the item will trigger a flashback, putting you in the combat boots of the lost teammate and allowing you to replay the events that lead up to the item being dropped.

"You find out what your team has been up to during the time you were unconscious after your crash landing on New Mombasa," said Mr Cutting.

Multiplayer

The developers have also added a new mode to multiplayer called Firefight.

Entirely co-operative, the game sees up to four players defending themselves from successive waves of alien attackers, with each group being progressively harder than the last.

"You have to constantly adjust your strategy and work as a team, otherwise you won't last long," said Mr Cutting.

"As a co-operative game, its basically a score game and your team is trying to get the highest score possible.

Teams' scores are logged on a tournament ladder on the Bungie website.

Mr Hicks said the new Firefight feature gave the game a new dimension, compared with previous titles.

"Fighting off endless waves of enemies has been around since Space Invaders and given some excellent updates in Gears of War 2 and Call of Duty: World at War, but this adds a much brighter and more varied element to Halo.

"You really feel like you're facing a genuine threat, rather than a simple onrushing horde."

Mr Cutting said that the developers were now focusing all their attention on the next instalment of the Halo franchise - Halo Reach - due for release late next year.

By Daniel Emery