China cuts rates to drive growth

The Chinese central bank has cut interest rates for the first time in four years to kick start the world’s second biggest economy amid the deepening debt crisis in Europe, The Australian Financial Review reports.

The People’s Bank of China announced late yesterday it had cut its one-year lending rate by a quarter of a per cent to 6.31%, the first drop since 2008. The deposit rate was cut to 3.25% from 3.5%.

In a sign of how concerned China is about its slowing growth rate, the central bank also relaxed the rules for banks so that they may offer a 20% discount to the benchmark lending rate, up from 10% previously.

“This move carries a significant message,” said Qu Hongbin, co-head of Asia Economics at HSBC. “It is official: Beijing will do whatever it takes to support growth this year.”

The bold moves comes just days after China ruled out an official stimulus package, similar to its 2009 response to the global financial crisis and suggests the government will try to boost the economy using monetary policy instead of government spending.

Agency to explain coal campaign role

A taxpayer-funded environmental agency in NSW has been ordered to explain its role in a secret plan to cripple the Australian coal industry, The Australian reports.

NSW Attorney-General Greg Smith has written to the Environmental Defenders Office, asking what part it played in preparing a document titled Stopping the Coal Export Boom.

The pressure on the EDO to explain its role in the Greenpeace-led campaign comes a day after the latest national accounts showed the mining boom underpinning the nation's economy, with engineering construction delivering more than half of Australia's growth in the past year.

The EDO is a community legal centre specialising in public-interest environmental law and in 2011-12 received about $1.8 million, the vast bulk of its budget, from the state government.

Greenpeace and other groups were embarrassed in March by the leaking of the document, which canvassed ways of raising money "to disrupt and delay key projects and infrastructure while gradually eroding public and political support for the coal industry and continually building the power of the movement to win more".

Miners’ advertisements back Labor

The mining industry is taking the highly unusual step of launching an advertising campaign in support of a federal Labor government policy and one of its ministers, The Australian Financial Review reports.

The Minerals Council of Australia will launch newspaper advertisements hitting back at union criticism of Special Minister of State Gary Gray and the use of enterprise migration agreements.

Gray has been targeted by Western Australian union leaders because he chaired the government’s national resources sector employment taskforce.

Two years ago the taskforce recommended that EMAs be allowed for big resource projects.

Previously, the MCA has taken advertisements opposing the federal Labor government’s policies such as its original resource rent tax and the carbon pricing scheme.

Its new ads will run in newspapers and refer to “the loud and sometimes race-based opposition to temporary skilled migration”

Resources jobs offset the losses

Australia’s job market rebounded last month as the resources boom generated strong demand for labour and offset job losses in other industries, The Australian Financial Review reports.

The 38,900 job gain in May means employment has jumped 1.1% this year, the best January-to-May result in five years, upsetting forecasts the jobless rate was heading to 5.5% or more.

Unemployment edged up to 5.1% last month and has been virtually steady for a year.

Western Australia still has the lowest jobless rate, which held at 3.8%, a level that suggests wage pressures pose a threat to a resources industry struggling to attract skilled labour and facing a revenue squeeze because of lower commodity prices.

On Wednesday, the national accounts showed the economy expanded at an annual pace of 4.3% in the first quarter, a big increase that surprised economists.

The jobs report on Thursday again led traders to lower expectations of more cuts to official interest rates.