From Volume 5, Issue Number 48 of EIR Online, Published Nov. 28, 2006

World Economic News

Brazil Sugar Industry: 'Ethanol Frenzy' Drives Up Prices

Brazil's sugar-industry forecasting company Datagro is reporting that the world's sugar, meat, corn, soy, and wheat are becoming increasingly "interdependent" with ethanol, such that the soaring demand for corn to produce ethanol is not only knocking out corn as a food crop, but is driving up the prices of other human and animal foodstuffs as well, according to Bloomberg Nov. 22.

Datagro President Plinio Nastari, speaking to a Nov. 22 London seminar of the International Sugar Organization, observed that land in the United States and globally is being diverted to grow corn, reducing soy supply, and driving up animal feed prices. In the U.S., in particular, said Nastari, while land is still available for expanded corn cultivation, arable land is limited by water availability, and he cited the depletion of the Ogallala Aquifer, the largest U.S. groundwater reservoir. And yet limited arable land will be increasingly devoted to ethanol production, he stated.

Nastari, speaking for the food cartels, is not particularly concerned about the impact of rising food prices on consumers. In fact, he appears quite content with the fact that, as he said, "the ethanol frenzy is the main factor behind the recovery in soy and meat prices."

Philippines Remittances Soar to $13.4 Billion

This represents a 50% growth over 2003, and a 10% leap just in the past year, the Philippines Inquirer reported Nov. 20. At least 8 million Filipinos, 10% of the population, are now working overseas, usually without their families, at the behest of the government, in order get the foreign exchange needed to pay debt service.

World Bank Concludes China Poverty Worsening

Even the World Bank has concluded that poverty is worsening for the poorest people in China, Xinhua reported Nov. 23. In a study of 2001-2003, World Bank economists found that real incomes for the poorest 10% of the Chinese population (that would be 100 million people) fell by 2.4%, while, they stated, everyone else was better off: "Preliminary analysis on Chinese data indicates that average income of the bottom decile went down slightly between 2001 and 2003, whereas all other income categories saw significant increases. Our analysis suggests that a considerable number of people below the poverty line were hit by an income shock—they only kept up consumption by spending their savings."

China Makes Biggest Railway Investment in Its History

The Chinese government will invest 1.5 trillion yuan ($190 billion) to build the national railway system until 2010, Li Guoyong, transportation director of the National Development and Reform Commission, announced in Shanghai on Nov. 22 at the China Railway Financing Forum.

"We will invest 300 billion yuan [$38 billion] in railway construction next year," Li Guoyong said. This investment level will be "the biggest in China's history," and will increase China's rail network by almost 20%. Another 300 billion yuan will be spent on rail lines; 250 billion yuan will be spent on buying rolling stock; and 625 billion yuan for civil engineering.

China's rail system is hindered by infrastructure bottlenecks, including lack of or overburdened trunk lines and lack of machinery. This situation will continue to be a problem in 2010, but the Ministry of Railways expects to resolve the bottlenecks by 2015. "We plan to set up an inter-city passenger transportation express, which will reach a speed of at least 200 kilometers per hour," Li Guoyong said.

China Daily quoted one economist saying that China's "transportation turnover rate for railways will double with the completion of main trunk lines in 2010. The railway industry's boom is expected to last over 10 years."

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