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NEWSWEEK International Editions: Highlights and Exclusives, October 6, 2008 Issue

http://www.newsweek.com/id/161325

COVER: Helping Hand (Pacific edition). Chinese Prime Minister Wen Jiabao gives Newsweek International Editor Fareed Zakaria a rare exclusive interview about a range of issues including the impact ofthe United States' current financial crisis. Wen, who is known for his openness and economic mastery, told Zakaria that despite the impressive growth his country has experienced over the past 30 years, things have changed because ofthe United States' subprime problems. "We have seen a decline in external demand, andChina's domestic demand cannot be significantly increased in a short period of time. [So] we do risk a slowdown. We must re-adjust macroeconomic policy," Wen says. "A U.S. recession would certainly have an impact onChina's economy. Ten years ago, China-U.S. trade stood at only $102.6 billion. Today the figure has soared to $302 billion-a 1.5-fold increase. A shrinking of U.S. demand would certainly have an impact onChina's exports. And U.S. finance is closely connected with Chinese finance. If anything goes wrong in the U.S. financial sector, we would be anxious about the security of Chinese capital."

Too Large To Grow So Fast. Ruchir Sharma, head of global emerging markets at Morgan Stanley Investment Management, writes in a guest essay thatChina's impressive growth is finally slowing although the country remains a powerhouse. "China has simply grown too big to keep expanding at the 10 percent rate it has sustained for 30 years, and is likely to slow to 8 percent at best next year and for the foreseeable future," he writes. "The decisive end of the era of double-digit growth is here, with major implications for the nation and the world."

http://www.newsweek.com/id/161234

Mr. More-of-the-Same. Tokyo Bureau Chief Christian Caryl reports that althoughJapan's economy is teetering on the brink of recession and consumer confidence is hitting lows not seen in years, Taro Aso, who was namedJapan's prime minister last week, has not backed away from government targets to balance the budget. Though Aso just took office, he is likely to face a constitutionally mandated election within months. The opposition Democratic Party ofJapan (DPJ), which already controls the upper house of parliament, promises to put up a good fight. Unless Aso can win over key constituencies fast, he could soon be ousted.

http://www.newsweek.com/id/161160

Moving Beyond Mrs. Thatcher. Contributing Editor Stryker McGuire reports thatBritain's Conservatives are preparing for power since all indicators point to a David Cameron-led victory in the next election. Ever since Cameron became Conservative Party leader nearly three years ago, he has faced two big challenges. First was to rebrand his party in order to cast off its reputation as "the nasty party." The second was to show his repositioning of the party was more than cosmetic. Skeptical at first, the electorate is now massing behind the Tories. The fact that the polls have shown them running consistently ahead of Labour by 20 points or so for the better part of 2008, suggests Cameron and his team must be doing something right.

http://www.newsweek.com/id/161161

Russia Hit the Rocks Hardest. Moscow Bureau Chief Owen Matthews and Special Correspondent Anna Nemtsova report that since the Georgian war in early August, an estimated $45 billion in foreign investment has leftRussia as spooked investors fled. Now Russian stocks are 57 percent off their May peak. Meanwhile, President Dmitry Medvedev has tried to stabilize the market by promising a $44 billion credit line to secure banks, and even offering $19.6 billion to buy up flagging shares. But with inflation rising, business costs soaring and the state apparently unwilling to protect investors, the promises aren't working.

http://www.newsweek.com/id/161166

INTERVIEWS: Afghan President Hamid Karzai. Special Diplomatic Correspondent Lally Weymouth talks to Hamid Karzai, who says that the Taliban are not strengthening, but "we are not doing things that we should be doing. Such as, we did not pay attention in time to the sanctuaries of the Taliban." He says the international community should have done all that was needed to be done-"political and diplomatic ... They should have used and kept open all options ... to bring security toAfghanistan."

http://www.newsweek.com/id/161205

Georgian President Mikheil Saakashvili. Saakashvili tellsWeymouth that he does not think he miscalculated last summer when he fired on Russian troops in South Ossetia. "I think since last November the attack was in the making by the Russians. That's when they started the real military buildup. We warned Europe and the West that a Russian attack was foreseeable sometime in early fall."

http://www.newsweek.com/id/161206

WORLD VIEW: Palin is Ready? Please. Newsweek International Editor Fareed Zakaria writes that for John McCain to have chosen Sarah Palin to be his running-mate is fundamentally irresponsible. "Palin has been given a set of talking points by campaign advisers, simple ideological mantras that she repeats and repeats as long as she can. ("We mustn't blink.") But if forced off those rehearsed lines, what she has to say is often, quite frankly, gibberish," Zakaria writes. Palin, "has never spent a day thinking about any important national or international issue, and this is a hell of a time to start."

http://www.newsweek.com/id/161204

THE LAST WORD: Lech Kaczynski, President ofPoland. Kaczynski, who has been a fervent backer of U.S. plans to deploy 10 interceptor missiles on Polish territory, says he is not afraid of an attack fromRussia and the shield is there to defend "theoretically, against world terrorism. But I know how it defendsPoland: by ensuring that Americans do not become indifferent to any attempts to includePoland inRussia's sphere of influence." He adds that is not militarily aimed againstRussia in any way.

http://www.newsweek.com/id/161170

SOURCE Newsweek