【华尔街日报亚洲版】July 6th 2012

VOL. XXXVI NO. 217 * * FRIDAY - SUNDAY, JULY 6 - 8, 2012 Your E-Book Is Reading You WEEKEND JOURNAL W1 Your E-Book Is Reading You WEEKEND JOURNAL W1 As of 12 p.m. ET DJIA 12918.96 g 0.19% FTSE 100 5692.63 À 0.14% Nikkei 225 9079.80 g 0.27% Shanghai Comp. 2201.35 g 1.17% Hang Seng 19809.13 À 0.50% Sensex 17538.67 À 0.43% S&P/ASX 200 4169.20 g 0.07% asia.WSJ.com (India facsimile Vol. 4 No. 21) Australia:A$6.00(InclGST),Brunei:B$7.00,China:RM B25.00,Hong Kong:HK$20.00(InclM acau),India:Rs30.00,Indonesia:Rp18,000(InclPPN),Japan:Yen500(InclJCT),Korea:W on2,500, M alaysia:RM 7.00,Pakistan:Rs140.00,Philippines:Peso80.00,Singapore:S$4.50(InclGST),SriLanka:Slrs180(InclVAT),Taiw an:NT$60.00,Thailand:Baht50.00,Vietnam :US$2.50 KDN PP 9315/10/2012 (031275) M ICA (P) NO.030/10/2011 SK.M ENPEN R.I.NO:01/SK/M ENPEN/SCJJ/1998 TGL.4 SEPT 1998 Central Banks Take Action China’sMoves Spark Concern About Economy BEIJING—China’s central bank lowered interest rates for the second time in less than a month, a move that sparked concern that the world’s second-largest econ- omy may be slowing more than anticipated. The People’s Bank of China said it would cut the one-year yuan lending rate by 0.31 per- centage point, to 6%, effective Friday, making borrowing more attractive. To boost the effect, the PBOC—which sets a floor on lending rates and ceiling on deposit rates—also said banks could lend at 70% of the benchmark rate, down from 80% currently, making loans more affordable for borrow- ers. Combined with the similar cut in June, “in theory from where we were just a few weeks ago, the price of a one- year loan has fallen [2.4 per- centage] points,” said Patrick Perret-Green, a Citigroup ana- lyst. “I think it means that [the central bank] is clearly wor- ried,” said Louis Kuijs, project director of Fung Global Insti- tute, a Hong Kong think tank. “They want to have a de- cent amount of policy easing in the system by the time we get into the summer,” he added. In the first quarter, China’s growth decelerated to 8.1% from the year-earlier quarter, the slowest pace since the Please turn to page 14 By Bob Davis, Aaron Back and LinglingWei Sources: ECB and People’s Bank of China via Thomson Reuters; Bloomberg News (photo) European Central Bank 0 1 2 3 4% '08 '09 '10 '11 '122007 The Wall Street Journal People’s Bank of China 0 1 2 3 4 5 6 7% '08 '09 '10 '11 '122007 6% Lending rate 3% Deposit rate 0.75% Main rate 0% Deposit rate Loosening Policies s ECB Cuts Rates, Citing Regional Economic Slump The European Central Bank cut its benchmark interest rates by 0.25 percentage point, bringing the refinanc- ing rate to a record low of 0.75% and the overnight de- posit rate to zero. The bank’s president, Ma- rio Draghi, conceded Thursday that the euro zone’s debt cri- sis had led to a generalized economic slowdown, hitting even the strongest countries in the region. The governing council’s decision was unani- mous, indicating that even hawks such as German central bank chief Jens Weidmann had voted for the easing. Mr. Draghi, while welcom- ing the outcome of last week’s landmark euro-zone summit, forecast profound conse- quences for the cherished in- dependence of his institution Please turn to page 14 BY GEOFFREY T. SMITH AND CHRISTOPHER LAWTON WimbledonThrows In theTowel onTrying toKeepThem i i i Colorful Designs Are Popular Keepsakes Among Players WIMBLEDON, England— Wimbledon has discarded an- other of its many traditions: The towel police are history. After years of discouraging players from taking tourna- ment towels, officials at the All England Club now mostly shrug as competitors stuff their racket bags with what has become the most coveted keepsake from the champion- ships. “We’d like to see as many of them returned as possible, but it’s not the end of the world if we don’t,” said Johnny Perkins, a spokesman for the club. “There are bigger things to be worrying about.” This is the 25th year of the commemorative Wimbledon towel made by Christy, a com- pany founded in England that once made towels for Queen Victoria. It was bought by Welspun India Ltd. in 2006. This year, Christy produced 99,500 Wimbledon towels, of various sizes, most of which are sold to the public. Sales have increased 46% since 2008, the company says; next year, Wimbledon towels will be sold in India for the first time. Towels like the players use retail for £28, or $44. Christy sets aside 6,000 of the colorful towels for Wim- bledon players, who are given two during each match. Rob- ert Walker, CEO of Welspun UK Ltd., said about 60% of those 6,000 towels vanish by the end of the tournament. When Mr. Walker was at Wimbledon last week, British star “Andy Murray threw one into the crowd,” Mr. Walker said. “I said, ‘Well, we’ll have to knock that one off the stock list.’ ” He was joking: Christy and Wimbledon don’t sell left- overs. “We just don’t want to run a shortage at the tourna- ment,” he said. The towels have become a popular souvenir. Novak Djok- ovic, the defending Wimble- Please turn to page 14 BY TOM PERROTTA U.S.Targets ChinaAgain, ThisTime OverAutos The Obama administration Thursday intensified its trade offensive with China by press- ing the World Trade Organi- zation to force the country to stop imposing duties on U.S. auto exports. The announcement is the second enforcement action the U.S. has brought against China during an election year in which President Barack Obama and Republican presi- dential hopeful Mitt Romney are trying to appear tough on China. Mr. Obama, on a campaign swing in Ohio, boasted about the number of trade cases his administration has brought against China and said Thurs- day’s announcement is de- signed “to hold China ac- countable for unfair trade practices that harm American auto makers.” “As long as we’re compet- ing on a fair playing field in- Please turn to page 14 By Jared A. Favole, Carol E. Lee and Tom Barkley dingbat The Bank of England will expand its stimulus plan ..... 6 dingbat Samaras said Greece will pick up pace of reform ..........6 Temasek’s fiscal-year profit fell 16%, as sluggish global growth hit the Singapore sovereign wealth fund’s investment portfolio. Business..................15 India’s fruitless effort to support the rupee shows how powerless some central banks are. In Depth .................. 13 Inside Tournament towel dingbat Obama uses a bus tour to trumpet his auto bailout...... 8 Up to 10 winners. Challenge open to U.S. Fortune 1000 companies running an Oracle 11g data warehouse on IBM Power system. Offer expires August 31, 2012. Configuration terms apply. See page 19 and URL above for official rules. oracle.com/IBMchallenge Exadata 5xFaster Than IBM Or you win $10,000,000 Oracle Exadata Data Warehouse IBM Power 795 Data Warehouse 2 | Friday - Sunday, July 6 - 8, 2012 THEWALL STREET JOURNAL. PAGE TWO ONLINE TODAY Most Read in Asia 1. Discovery May Help Tell Universe’s Secrets 2. Apple Preps for New Tablet 3. Libor Scandal Set to Spread 4. Turkey Finds Pilots’ Bodies 5. Lower Expectations, Better Results Most Emailed in Asia 1. Chinese Developers Face Pinch 2. Opinion Asia: Michael Auslin: China’s Party Is About to End 3. Leaders’ Salary Gap Widens 4. He Texts, She Tweets—Are They E-Compatible? 5. Opinion: Fleming: What Life Was Like in 1776 China Real Time wsj.com/chinarealtime ‘The birth approval system…does not accord with provisions on the protection of human rights contained in the…constitution.’ An open letter from 15 prominent Chinese scholars calling for family- planning laws to be rethought i i i Business & Finance nMoody’s and S&P cut their out- looks on Barclays as political scru- tiny mounts after the bank’s set- tlement with regulators and the departure of top executives. 20 n Chinese authorities detained a former Alibaba manager on suspi- cion of taking bribes, spotlighting the e-commerce company’s contin- ued efforts against corruption. 17 n Sichuan Hongda said the deci- sion to halt work on a $1.6 billion copper-alloy plant in southwest China following violent protests would affect earnings. 17 n Australia hopes to secure a deal with China next week to make the Australian dollar the third currency to be directly con- vertible with the yuan. 4 nMacau’s Melco Crown and Phil- ippine property developer Belle agreed to join forces on a casino resort in Manila. 18 n Chinese sports-apparel com- pany Li Ning is replacing its CEO and making other changes in a three-year program aimed at im- proving profitability. 17 n Profit at retail holding com- pany Seven & i more than doubled in its fiscal first quarter, helped by 7-Eleven stores’ performance in Japan and the U.S. 18 n The euro fell sharply after the ECB cut rates to a record low. Ac- tion from the ECB, BOE and China’s central bank initially helped European stocks, but the gains faded. U.S. shares fell, while Asian shares were mixed. 22, 23 i i i World-Wide n Health officials said the out- break of an unidentified disease in Cambodia that has killed more than 60 children since April is un- likely to be a form of influenza. 4 n The first truck carrying sup- plies to NATO troops in Afghani- stan crossed the Pakistani border after the end of a seven-month closure of the routes by Pakistan. n Investigators urged improve- ments in pilot training and search procedures in their final report on the crash of an Air France plane in 2009 that killed 228 people. 7 n South Korea’s plan to resume whaling despite an international moratorium triggered fierce reac- tions from antiwhaling nations and environmental activists. 5 n Secretary of State Clinton will become the first U.S. chief diplo- mat to visit Laos in 57 years, as part of eight-nation tour. n The Philippines protested China’s plans to place most of the South China Sea under the juris- diction of a newly created city. n Cuban President Castro is looking to strengthen economic ties with Beijing. 4 Libyan firefighters extinguish a fire at a warehouse in the city of Ajdabiya that had been used for storing voting materials ahead of Saturday’s general election. A ge nc e Fr an ce -P re ss e/ G et ty Im ag es Inside Asia News: Japan’s nuclear-crisis panel finds fault. 5 U.S. News: Romney muddies health-care debate. 8 The Business: Airbus’s move is a sign of a countertrend. 15 Markets: Nine big banks unveil ‘living wills.’ 21 What’s News— THE WALL STREET JOURNAL ASIA Dow Jones Publishing Company (Asia) 25/F, Central Plaza, 18 Harbour Road, Hong Kong Tel 852-2573 7121 Fax 852-2834 5291 www.wsj-asia.com SUBSCRIPTIONS and Address Changes, please telephone our local customer service hotline, Hong Kong/Taiwan: 852-2831 2555; Beijing: 86-10 6581 4090; Shanghai: 86-21 5836 8228; Indonesia: 62-21 527 7592; Japan: 81-3 6269-2760; Korea: 82-2 3700 1925; Malaysia: 60-3 2026 4061; Philippines: 63-2 848 5873; Singapore: 65-6415 4000; Thailand: 66-2 690 4222 to 7; India: 91-11 6462 0215. Or email: service@wsj-asia.com ADVERTISING SALES worldwide through Dow Jones International. Hong Kong: 852-2831 2504; Singapore: 65- 6415 4300; Tokyo: 81-3 6269-2701; Frankfurt: 49 69 29725390; London: 44 207 842 9600; Paris: 33 1 40 17 17 01; New York: 1-212 659 2176. Or email: wsja.publisher@dowjones.com Trademarks appearing herein are used under license from Dow Jones & Company. USPS 337-350ISSN 0377-9920 THEWALL STREET JOURNAL. Friday - Sunday, July 6 - 8, 2012 | 3 WORLD NEWS Donor Nations to Assess Afghan Aid Senior international officials and Afghan leaders are meeting on Sun- day in Tokyo to decide on long-term economic support for Afghanistan, amid an economic downturn that is testing the West’s commitment to the war-torn country. While donor nations say the aid will come with new strings attached to ensure greater transparency, Af- ghan officials are pushing for more discretion in how these funds are distributed. Western officials say that Af- ghanistan must show tangible prog- ress on a range of issues, from boosting the rule of law to ensuring a peaceful transition of power after Afghan President Hamid Karzai’s term of office expires in 2014, the year when most U.S. and interna- tional troops are scheduled to with- draw. Afghanistan “will need the sup- port of donors for a long time to come,” said Vygaudas Usackas, the European Union’s special represen- tative for Afghanistan. “On the other hand, we’re not blind, and we all feel the considerable fatigue of the taxpayers of the European and international community.” Officials in Japan, a major donor that is hosting the conference, have played down expectations for break- throughs. They anticipate a push- back from Afghanistan’s delegation, to be headed by Mr. Karzai. United Nations Secretary-General Ban Ki-moon and U.S. Secretary of State Hillary Clinton are among the conference’s participants. While the Afghans want greater control over the flow of funds into their country, the U.S., European na- tions and Japan want tougher benchmarks for anticorruption and other government reform measures. After years of conflict, Afghani- stan remains a ward of the interna- tional community. International do- nors expect that Afghanistan will need around $8 billion per year, di- vided roughly between security as- sistance and development aid, for at least another decade. Afghan officials have floated higher estimates of the aid required. Afghan and Western officials say they expect the Tokyo conference to yield donor commitments through 2017 and beyond earmarked for eco- nomic development to roughly equal the separate $4.1 billion that is esti- mated to be required annually just to sustain Afghan security forces. The U.S. provides the majority of those security funds. Donor nations are expected to back a decadelong development strategy that is supposed to take the country toward greater self-suffi- ciency. The plan hinges in part on the Afghan government’s ability to boost tax revenue: Last year, the Af- ghan government took in only around $2 billion in revenues. The main goal of the meeting is to close a $3.3 billion to $3.9 billion estimated “fiscal gap” between the amount pledged by the international community so far and what the World Bank has forecast is needed to sustain the country’s economy over the next five years, according to a senior Japanese foreign-minis- try official. Another major objective is to set up a framework for future discus- sions since the Tokyo conference is the last currently planned, the offi- cial said. At a news conference Sunday in Kabul, Bob Saum, the World Bank country director in Afghanistan, said Afghanistan’s economy is ex- pected to grow at an average annual rate of 4.9% through 2025, but added that there was potential to increase that growth rate to 6.7% if the economy is properly managed. Afghan officials have pinned hopes on natural-resource extrac- tion—primarily revenue from min- ing—to bring money into govern- ment coffers and create new jobs. At the same time, the World Bank has indicated that the reservoir of inter- national aid is finite and that the Afghan government must prioritize its development goals. “Tough choices may be needed,” Mr. Saum said. Afghanistan’s mineral wealth is seen as the country’s best hope for economic growth, but perceptions of widespread corruption and a vio- lent insurgency have frightened away potential investors. One of the issues in contention in Tokyo is Kabul’s desire for a growing share of international aid channeled directly through Afghanistan’s state budget, but persistent worries about fraud have given top donor nations pause. Officials in Kabul are well aware of the problem and have pledged to do more to combat corruption. Speaking at the same news confer- ence as the World Bank official, Af- ghan Finance Minister Omar Zakh- ilwal said the Tokyo conference would focus specifically on mea- sures to combat corruption. “We will be talking about the specific ar- eas we have made progress in, what areas need to be further focused on,” he said. “Corruption exists,” Mr. Zakh- ilwal said. “Unfortunately, the gov- ernment bodies still require re- form.” Critics also complain that Afghan authorities aren’t pushing hard to make high-level corruption arrests. But Mr. Zakhilwal also pointed a fin- ger at the international organiza- tions that have been a primary mechanism for delivering aid to Af- ghanistan, saying a “big amount of corruption also exists in the inter- national contracts.” Gran Hewad, an Afghan political analyst based in Afghanistan, said donor nations were likely to be less patient with corruption. “It was always difficult for the international community in the last 10 years, but they were compromis- ing,” he said. “They were closing their eyes and compromising, be- cause their troops were there. As troops are leaving, then there’s no excuse.” By Nathan Hodge in Kabul and Chester Dawson in Tokyo Afghan President Hamid Karzai’s term of office expires in 2014. 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With our company history, dating back over almost one and a half centuries, we understand value-based management is the only way to achieve sustainable success. 4 | Friday - Sunday, July 6 - 8, 2012 THEWALL STREET JOURNAL. WORLD NEWS: ASIA Cuba Moves Closer to Beijing BEIJING—Cuban President Raúl Castro is looking to strengthen the country’s economic ties to Beijing as it moves to liberalize its economy somewhat and limit its energy de- pendence on Venezuela, whose leader is battling cancer and a tough election at home. Mr. Castro landed in Beijing on Wednesday to meet with China’s top leaders before heading out to Viet- nam on Saturday, touring onetime Communist fellow travelers that have revamped their economies. On Thursday, Cuban representatives signed economic, technology and agricultural agreements with Chi- nese officials, though few specifics were disclosed. “Currently relations are matur- ing with each passing day,” Mr. Cas- tro said on Thursday in an appear- ance with China President