1 Unprecedented negative interest rate for eurozone (Angela
Monaghan & Phillip Inman in The Guardian) The European Central Bank has unveiled
an unprecedented package of measures in a dramatic attempt to inject life into
the eurozone's flagging economy and ward off a damaging deflationary spiral. In
a historic first for the troubled region, the ECB boss, Mario Draghi, and his
colleagues on the governing council cut the deposit rate for the region's
commercial banks to -0.1% from zero.
The central bank also cut its main interest rate to
a new record low of 0.15% from 0.25%, and announced a €400bn (£325bn) package
of cheap funding for banks on the condition it is used to lend money to
companies outside the financial sector, and not for mortgages. Draghi has come
under intense pressure over recent months to make cheaper credit available to
households and businesses to boost growth in the 18-member currency zone.
In the last quarter, GDP growth stumbled to just
0.2% and only avoided contraction thanks to a strong performance by the German
economy. The ECB stopped short of pumping funds directly into the financial
system via a programme of quantitative easing (QE), but Draghi said the bank
would "intensify preparatory work" should it prove necessary, and
left the door open to further stimulus if needed.
Data published by the EU's statistics office
revealed an unexpected fall in the annual rate of eurozone inflation to 0.5% in
May from 0.7% in April, which appeared to seal the deal for more ECB stimulus. The
Bank of England, which has already cut borrowing rates for banks and pumped
£375bn of QE into the UK economy, announced at the end of its monthly meeting
that it would maintain interest rates at 0.5% and the same level of QE.
2 China defence budget could be $145bn (BBC) China
has under-reported its 2014 defence spending by about 20%, according to an
annual report put out by the US defence department. China's stated budget for
this year was $120bn, but the US report said the actual figure was closer to
$145bn. The US called on China to be more open about its plans, amid high
tension with other regional powers over disputed islands in the South China
Sea.
The American military budget was about $600bn in
2013. The annual US report on China's defences usually gives a rough estimate
of spending, with last year's quoting a figure of between $135bn and $215bn.
3 How China moves mountains – literally (Melanie
Kembrey in Sydney Morning Herald) For years, China has been moving mountains
for its people - literally. The country has been bulldozing hundreds of
mountains to make way for new cities but scientists are not happy, saying the
consequences of the policy ‘‘have not been thought through’’. In the past
decade, mountains stretching over hundreds of kilometres have been demolished
and the soil shovelled into valleys to create flat land, in a practise that has
become commonplace in China.
The city of Lanzhou, in Gansu province, is in the
process of bulldozing more than 700 mountains in what’s been dubbed the largest
‘‘mountain-moving project’’ in Chinese history. The practise has spawned more
land for Chongqing, Shiyan, Yichang, Lanzhou and Yan'an cities. One of the
largest projects, in Yan'an in the Shaanxi province, is set to double the
city's area by creating 78.5 square kilometres of flat terrain.
One-fifth of China’s population is estimated to live
in mountainous areas and while cities are expanding rapidly, land available for
development is in short supply. But now, years after the mountain-flattening
projects started, three Chinese academics have condemned the campaign, writing
in the journal Nature that ‘‘earth-moving on this scale without scientific
support is folly’’.
Chang'an University researchers Peiyue Li, Hui Qian
and Jianhua write that when air pollution caused by the Lanzhou project became
visible in April 2013, work was halted pending an environmental assessment. But
it was resumed four weeks later because costs to the local government and
contractors were mounting. ‘‘Land-creation projects are already causing air and
water pollution, soil erosion and geological hazards such as subsidence. They
destroy forests and farmlands and endanger wild animals and plants."
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