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Germany's Gabriel sees 'deal' with China on e-car quota

Chinese officials reassured Gabriel that "German wishes will be respected," Foreign Minister Sigmar Gabriel said while visiting Beijing on Wednesday. The talks on softening the ambitious e-car quota were "on the right way," he added.

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Duterte's real motives behind imposing Philippine martial law

After declaring martial law in Mindanao province on Tuesday, President Rodrigo Duterte cut short his Russia visit and hinted Wednesday he could extend the state of emergency to other parts of the country.

"I may decide to expand the area to include the Visayas because it is just walking distance (from Mindanao) and they can always escape there to begin another terrorist activity," Duterte said, referring to militants linked with self-proclaimed "Islamic State" (IS) terrorist group.

Duterte also said he might put the entire country under martial law and impose curfew in several conflict-ridden areas.

Philippinen Rodrigo Duterte (Reuters/E. Acayan)

Firebrand Duterte is known for his aggressive political style

"We have reached dangerous levels. With martial law, I will solve all Mindanao problems," said the president, who is often in news for his aggressive political style and a violent anti-drug campaign  .

The Philippine constitution limits the martial law period up to 60 days but Duterte said it could last up to a year.

On Tuesday, violent clashes broke out between security forces and militants linked with IS, leaving at least one police officer dead.

The bloodshed began when police and soldiers raided an apartment in the southern city of Marawi where Isnilon Hapilon, an alleged leader of the notorious Abu Sayyaf gang and the Philippine head of IS, was suspected of hiding.

Abuse of power

"The imposition of martial law will send a strong signal to militants that the government is in control of the situation. But the authorities have to rely on the security forces that are overstretched, and if you remove constitutional protections, there is a danger of power abuse," Jose Antonio, a Manila-based security analyst and military historian, told DW.

"Duterte didn't need to declare martial law to address the situation. But this is typical of his character. His style of governance is authoritarian and he does not tolerate dissent. He is moving the country toward a complete martial law," Antonio added.

Opposition parties have warned Duterte against expanding military powers.

"The reported declaration of martial law in Mindanao is subject to revocation by the members of the House of Representatives and Senate. This cannot be set aside by the president," Congressman Edcel Lagman said in a statement.

Duterte's real motives behind imposing Philippine martial law

The bloodshed began when police raided an apartment in Marawi where Isnilon Hapilon was suspected of hiding

Chaos in Marawi

Meanwhile, thousands of Marawi residents are fleeing to safer areas. The markets are closed and there is no electricity in the city. People are worried about running low on food and other life-saving supplies.

"Everyone is trying to get out of the city. People are using trucks and cars to leave the city but many roads have been closed off by the military," Halil Amerol, regional director of the Bangsamoro Development Agency, told DW.

Nadia, an English teacher in the city, was one of those who tried to get out of the city after hearing about the military's possible air strikes.

"We couldn't leave because we didn't have a vehicle. We couldn't walk

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Woman arrested for smuggling US space technology to China

A woman in California was arrested on Tuesday on federal charges of conspiring to procure and illegally export sensitive space communications technology to her native China, according to the US Justice Department.

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Moody's China downgrade rattles Asian markets

China's main stock index fell one percent on Wednesday dragging the MSCI index of Asia-Pacific shares down 0.2 percent after Moody's had slashed China's credit rating for the first time in almost three decades.

The Australian dollar, regarded as a proxy for China due to the country's status as a major trading partner, was down 0.4 percent at $0.7450 after falling as low as $0.7439. The offshore yuan also slipped, but later recouped its losses.

Kyoya Okazawa, head of global markets, Japan at BNP Paribas Securities in Tokyo, said Moody's downgrade of China's sovereign debt came not entirely out of the blue.

"At the end of the day, overseas investors had been taking a cautious stance toward China, even before this, so it was not entirely surprising to the street," he said.

Debt fears

On Wednesday, international ratings agency Moody's cut China's rating by one notch to A1 from Aa3 in its first downgrade of the country in nearly 30 years. The agency said it expected the financial strength of the economy will erode in coming years as growth slows and debt continues to rise.

China's massive debt has been at the centre of concerns among economists and Beijing is walking a fine line as it tries to contain financial risks. Its total outstanding credit surged to 260 percent of gross domestic product (GDP) by the end of 2016 and the International Monetary Fund has warned that a debt crisis in the country could "imperil global financial stability."

Beijing rejected the assessment, saying Moody's had used an "inappropriate" method to assess the risks facing the economy . "It over-estimated the difficulties that the Chinese economy is facing," the Finance Ministry said in a statement. It added that the government's debt ratio in 2016 was 36.7 percent, lower than major market economies, and that the "expansion of the scale of government debt has been effectively controlled."

Economic fallout

Chinese authorities have stepped up regulatory curbs in recent months to defuse financial risks and have cracked down on risky lending practices, with the central bank moving toward tighter policy. But the steps have been largely cautious to avoid braking economic growth too sharply.

Analysts are divided in their opinions on whether or not the downgrade will have a negative impact on these efforts.

While BNP's Kyoya Okazawa believes the effects will be limited over the long term, Liao Qun, Hong Kong-based chief economist of Citic Bank International, said the ratings cut would certainly hit China negatively by making China's debt financing more difficult amid rising financing cost.

"This is like throwing cold water when everyone is optimistic about China's economy," he told the news agency AFP, adding that the move "makes no sense" because China's growth had improved and the threat of US trade protectionism had subsided.

China's 13th Five-Year-Plan released in 2016 announced an average annual growth rate of above 6.5 percent for 2016-2020. But Moody's said it expects China's growth potential to decline to close to five percent over the

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South Korean military fires warning shots at objects flown from North

Seoul's forces fired around 90 machine gun rounds towards the targets and across the heavily militarized border, according to South's Yonhap news agency. The incident was triggered by ten spherical objects flying with the wind in the border area. Some of them traveled into Seoul's territory, defense ministry spokesman Moon Sang-Gyun said on Wednesday.

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