SINGAPORE : Oil prices were lower in Asian trading as a jump in US heating oil stocks eased worries of a supply shortage during the northern winter, dealers said. , New York's main contract, light sweet crude for delivery in January, was down 11 cents to 57.21 dollars from its close of 57.32 dollars in the United States Wednesday.

The market was initially spooked by a drawdown in US crude stocks, but investors later started to focus on heating oil inventories which appeared to be sufficient to meet demand during the winter season, dealers said.

"The odds that heating oil shortages will develop this winter are fast approaching zero," French bank Societe Generale said, adding that the drawdown in crude oil stocks "do not signal any crude shortages whatsoever".

The US Energy Department said Wednesday crude stocks had fallen by 4.2 million barrels during the week that ended November 25 to total 317.6 million barrels.

Inventories of distillate supplies, which are used to make heating oil and diesel fuel, were much higher than expected -- up 3.4 million barrels to 127.9 million. That compared with a forecast of a rise of 613,000 barrels.

Motor gasoline stocks fell 500,000 barrels to 199.9 million barrels, despite predictions of an increase of 1.1 million barrels.

Oil prices had been falling since last week, when markets deemed there to be adequate supplies of heating fuel during the northern winter.

The US National Weather Service has said that demand for heating oil nationwide was expected to be about 20 percent below normal this week owing to warmer temperatures.

China's fledgling automotive industry harbors enormous potential but may not mount a full-fledged, export-oriented challenge to automotive giants from Japan, the United States and Western Europe for at least another decade, a study said.

"There is a lot of uncertainty in the Chinese market," said Bruce Bezlowski, a University of Michigan researcher and one of the principal authors of the report.

"At the same time, there's a real sense of euphoria and excitement when you talk to people about what the future will bring."

The study found that only about three percent of China's automotive output is export oriented. China's production capacity is expected to grow rapidly and could surpass Germany as soon as 2008 but it won't catch Japan's 10 million units of productive capacity until some time in the next decade.

The study was conducted by the University of Michigan's Office for the Study of Automotive Transportation and the IBM Institute for Business Value. It was based on in-depth interviews with 20 managers and researchers embedded in the Chinese auto industry.

China, the study said, has huge growth potential for auto sales as well.

Just 24 of every 1,000 people own a car, compared to 120 globally and 750 in the United States. The report predicted China's auto market could be larger than the US market by 2015. Around five million vehicles were sold in China last year, compared to 17 million in the United States.

"Most of the interviewees expect it will take two decades for Chinese manufacturers and suppliers to close the product and process gaps with the world class counterparts," the study said.

Bezlowski said the Chinese auto industry is still grappling with some basic questions about how to sell and service vehicles. Consequently, sales of new vehicles in China are expected to grow steadily but not exponentially, he said.

Other hurdles include adapting to the demands of a market economy and the increasing cost of petroleum.

Parking also is a major issue in big cities such as Shanghai where most of the spaces are on the street, which only adds to congestion.

The Chinese government, while rapidly building roads, also has yet to come up with a strategy for taxing fuel and controlling air pollution, the report said.

In addition, the availability of vehicle financing is underdeveloped and most customers pay cash for new vehicles, Bezlowski said.

Japan is on a recovery path after finally overcoming a decade-long slump since the "bubble" economy burst, the OECD said Tuesday, forecasting two percent growth at least until 2007.

"A number of indicators suggest that the economy has finally completed the post-bubble adjustment, allowing output to grow at a rate of around two percent in 2006-07," the Organisation for Economic Cooperation and Development (OECD) said in its latest global economic outlook.

Major banks have achieved the government's target of halving the share of non-performing loans by cutting them from 8.4 percent of total lending in 2002 to 2.9 percent in March 2005, it said. The growth forecast is largely in line with the Bank of Japan's projection which sees the world's second largest economy growing by 2.2 percent in the fiscal year to March 2006 and 1.8 percent the following year.

In the report, OECD called on the Bank of Japan to cautiously hold back from ending its easy credit stance, warning a haste change in monetary policy may trigger a hike in interest rates and push Japan's economy back to a slump. "The necessary conditions set by the Bank of Japan for ending the quantitative easing policy ... could be met in early 2006," OECD said.

"Given the risk that the end of the quantitative easing policy could be accompanied by a sharp rise in long-term interest rates, the change in monetary policy should be pursued more cautiously," it said.

The central bank vowed to keep up its policy of flooding the financial system with cash, known as quantitative easing, until deflation gives way to mild inflation for a sustained period.

The Bank has now signalled that an end is likely sometime after April of next year, saying it expects the economy to break decisively out of deflation by next year with consumer prices expected to reach zero or turn positive.

India's gross domestic product expanded a stronger than expected 8 per cent year-on-year in the three months to September, providing fresh evidence that the economy is on a higher-growth trajectory.

The figures, released yesterday by the Central Statistical Organisation, confirmed that India's surging manufacturing sector is providing a consistent second engine for economic growth alongside the long-booming services sector. Agriculture, boosted by a decent monsoon, also contributed to the strong data.

The 8 per cent rate for the second quarter of India's fiscal year compared with GDP growth of 8.1 per cent in the first quarter to June and market forecasts of a 7.5 per cent increase.

Manufacturing output expanded 9.2 per cent in the September quarter, compared with 9.6 per cent in the same period last year. Agriculture, which accounts for a quarter of GDP, grew2 per cent, compared with zero growth a year earlier.

"We started to see real signs of life in manufacturing and financial services about 18 months ago," Scott Bayman, president and chief executive of General Electric in India, said in an interview, pointing to the sharp upturn in consumer spending.

A new group of consumers - composed in large part of young people working in offshore processing, software and financial services - had put "a lot more money" into the economy, Mr Bayman said, allowing manufacturers to achieve valuable economies of scale.

He added: "My view is that 8 per cent GDP growth is going to be the run rate for the economy because to get to 10 per cent there needs to be a big increase in infrastructure, a step-up in the savings rate and a fall in deficits."

If India "dropped in China's infrastructure", it could achieve "10-12 per cent growth", Mr Bayman said. "The government has the resources if it wants to unleash them, by allowing private sector involvement and public-private partnerships."

The government expects economic growth of 7.5 per cent for the fiscal year, at the top of a 7-7.5 per cent range forecast by the Reserve Bank of India. This compares with 6.9 per cent growth last year and average growth of 6 per cent between 1993-94 and 2002-03.

Manmohan Singh, India's prime minister, said this week that India's economy was growing at an "unprecedented rate" and that the country should be targeting 10 per cent growth in two to three years' time, a rate he said was "quite feasible".

But economists say India's infrastructural shortcomings, which limit the amount of investment companies are prepared to make in new capacity, are likely to cap GDP growth at about 8 per cent. "Growth will struggle to get to 9 per cent because of capacity constraints," said Jim Walker, chief economist at CLSA.

Taiwan's embattled government sent conflicting economic policy messages yesterday in what appeared to be an attempt to prevent a defeat in local polls due on Saturday.

Frank Hsieh, the premier, announced an economic stimulus package and promised to continue to work towards direct transport links with China. Hours later Chen Shui-bian, the president, threatened to tighten policy on economic exchanges with the mainland should the opposition Kuomintang win the elections.

The moves come as most observers expect the ruling Democratic Progressive party to be defeated in the race for 23 local governments after an investigation revealed the involvement of central and local government officials in a corruption scandal over a public transport project. And dissatisfaction with the DPP's policy record is widespread.

Mr Hsieh said the government would boost domestic consumption by T$4bn ($119m, 101m, 69m) next year through a series of tax cuts and hand out T$200bn in low-interest loans to companies involved in public construction projects. The cabinet also plans to support low-income citizens through low-interest loans and give special economic assistance programmes to aborigines.

The package could boost economic growth in 2007 by more than one percentage point, government officials said.

Analysts reacted coolly, pointing out that the opposition-dominated legislature could block the package.

"This is nothing but a last-minute effort to make it look like the government is doing something on the economy in order to turn the elections round," said Herman Chiang, a professor at Taipei University.

Mr Hsieh said the government would try to reach agreement with China on permanent passenger and cargo charter flights across the Strait. Direct transport links are still cut under a ban imposed by Taiwan after the Kuomintang fled to the island after losing the civil war in China in 1949.

The sides have been in unofficial talks over flights since August. Public support for direct links has increased over the past year.

Four Taiwanese and one South Korean company are bidding to manufacture the world's cheapest laptop computer, which is to be distributed to children in developing countries from next year.

The laptop, which will cost US$100 - roughly a tenth of the price of commercial low-end machines on the market now - is being developed by the Media Laboratory at the Massachusetts Institute of Technology under a programme called "One laptop for every child".

Beyond enhancing primary education in low-income countries, the project could change the face of the PC industry, with IT manufacturers joining MIT in exploring ways to dramatically lower production costs.

Nicholas Negroponte, chairman of the Media Lab, said yesterday MIT would announce within the next two weeks who would build the '$100 laptop'. "Five original design manufacturers [ODMs] are bidding right now, four Taiwanese and one Korean," he said. "It is likely that it is going to be a Taiwanese company, since the Taiwanese account for 80 per cent of global laptop production."

Quanta Computer and Compal Computer, both Taiwanese, are the world's two largest laptop manufacturers. In Taiwan, the next largest notebook makers are Wistron, the manufacturing arm spun off by Acer three years ago, Inventec and Asustek. Honhai, the world's largest electronics manufacturing services company, also makes notebooks.

MIT plans to have 5m-10m of the low-cost laptops produced next year and distributed on a non-profit basisto primary school pupils through governments in seven developing countries: China, India, Brazil, Argentina, Egypt, Nigeria and Thailand. In 2007, MIT aims to launch a commercial version of the computer with a slightly higher price tag that could then partly subsidise the non-profit model.

"We aim to reach 100m-200m laptops in 2007," Mr Negroponte said. Global laptop production is expected to total 47m units this year.

The tender currently under way is for the initial production phase next year. "For the larger amounts, it would be unwise to have only one manufacturer," Mr Negroponte said. The low-cost computer will have a 7.5-inch screen and is to be powered by cranking a handle on its side.

Mr Negroponte said more than 50 per cent of the cost-cutting would be achieved because no sales, marketing and commercial distribution was needed.

The main portion of the remaining cost savings were to come from the flat-screen production process.