Business Desk
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.

TAXES
CHINA ELIMINATES FLAT TAX ON PEASANTS A 2,000-year-old grievance will be lifted next year when China scraps taxes for hundreds of millions of peasants, the government’s traditional source of revenue.
Reforms introduced as proof of China’s commitment to those left behind by the economic boom are so far ahead of schedule that farm taxes, which date back to before the first emperor, will be abolished early, the finance minister, Jin Renqing, said. Local governments would be compensated for the loss of income from central funds. Taxes have been one of the peasantry’s great historical grievances. Even today, while urban residents pay income tax and businesses tax on profits, China’s 800 million registered rural dwellers pay flat-rate taxes on crops, irrespective of the profits they make.
The system has contributed to a widening gap in income between city and country, which the ruling Communist Party now believes is one of the biggest threats to its rule.
– The Daily Telegraph
WALL STREET
MORGAN STANLEY PROFIT RISES 49% Morgan Stanley, attempting to recover from the biggest management shakeup since the firm’s founding in 1934, said fiscal fourth-quarter profit rose 49%, buoyed by a jump in fixed-income trading and a tax benefit.
– Bloomberg News
PRIVATE EQUITY
KOHLBERG KRAVIS ROBERTS RACES TO CATCH UP IN ASIA Kohlberg Kravis Roberts & Co., the firm that engineered the biggest-ever leveraged buyout, is now racing to catch up with rivals in the fight for Asian assets.
KKR opened a Hong Kong branch in September, seven months after co-founder Henry Kravis said in an interview at a Frankfurt conference that he had no plans to establish an office in Asia.
– Bloomberg News
REAL ESTATE
HOUSING STARTS UNEXPECTEDLY RISE Housing starts in America unexpectedly rose in November and producer prices fell by the most since April 2003, reinforcing growth and tame inflation in the world’s largest economy this year. Builders broke ground on 2.123 million homes at an annual pace, up 5.3% from October, the Commerce Department said yesterday in Washington.
– Bloomberg News
FEDERAL RESERVE IS CONCERNED ABOUT INTEREST-ONLY MORTGAGES The Federal Reserve said interest-only and other nontraditional mortgages pose a threat to the financial system and urged the nation’s banks to tighten lending standards.
– Bloomberg News
RETAIL
WAL-MART FACES INVESTIGATION OVER TRANSPORT OF MATERIALS Wal-Mart Stores executives said yesterday that they believed the company was complying with environmental laws regarding the transportation of goods returned by customers, saying they’re surprised some federal and state officials think otherwise.
Earlier, the retail giant revealed in a filing with the Securities and Exchange Commission that it is the target of a criminal investigation by the U.S. Attorney in Los Angeles stemming from the transportation of certain materials between its stores in California and its return center in Las Vegas.
– Dow Jones Newswires
IN BRIEF
Richard McCabe is retiring as chief market analyst at Merrill Lynch & Co. after 43 years with the company. Mary Ann Bartels, Merrill’s equity-trading strategist, will succeed him … The Food and Drug Administration approved the first new drug in more than a decade to treat adults with the most common type of kidney cancer. The drug Nexavar is made by Bayer Pharmaceuticals and Onyx Pharmaceuticals … Research In Motion has been “vindicated” by recent U.S. patent office rulings on its BlackBerry e-mail service, and a shutoff of the service in America may be avoided, its co-chief executive, James Balsillie, said.
– Bloomberg News and Dow Jones Newswires