Jeffrey Schwartz, the CEO of McDonald’s’ («www.businessweek.com») China operation, boarded a plane on the morning of Jan. 28 in Shanghai for what should have been a routine flight to Beijing. But with some of the worst winter weather in memory hammering the country’s transportation network, there are no routine flights in China these days. Schwartz didn’t arrive in the Chinese capital till that night. “That hour-and-45-minute journey took me 12 hours,” he says. “It was the snow.”

Millions of people throughout China are suffering far greater hardships. One of the worst snowstorms to hit China since the government began keeping records in 1950 has wreaked havoc throughout the country. At least two dozen people have died in accidents and 827,000 people have been displaced. Heavy snowfall has caused gridlock at train stations and airports, just two weeks before the Chinese New Year begins and hundreds of millions of Chinese return home for the holidays.

The weather is already taking its toll on the Chinese economy. So far the snowstorms have cost $3 billion in damages, according to the Civil Affairs Ministry. The heavy snow, sleet, and freezing rain have created transportation bottlenecks for travelers as well as for shipments of coal, vital to fueling China’s power plants. Over the weekend a power outage forced authorities to cancel trains from Beijing to the southern metropolis of Guangzhou, stranding 600,000 passengers at the Guangzhou train station. Guangdong province has halted train ticket sales from Jan. 27 to Feb. 6, and bad weather has forced 19 airports across China to shut down. On Jan. 28, the Shanghai stock exchange plunged 7.2%, hitting a five-month low, on worries about the economic impact of the freeze. Shares did not recover much Jan. 29, rising less than 1%. Jarring Slowdown Feared

The concern among economists is the weather’s impact on China’s inflation problem. Even before the storms of January the consumer price index was rising at a troublesome rate, with prices in December jumping 6.5%. Much of that was from rising food prices, due in part to a «www.businessweek.com» (BusinessWeek.com, 8/17/07). Now, “because of the transport disruption and the damage to farmland, food prices may go up even more rapidly,” says Paul Cavey, an economist with «investing.businessweek.com» in Hong Kong. The Agriculture Ministry’s basket of wholesale food prices “has shot up quite remarkably” this month, he adds; it rose 11%.

Soaring prices and electricity shortages are bound to have an impact on China’s export machine. Roughly half of China’s provinces have reported brownouts because power plants could not get enough coal. “A lot of factories will close because households will be given priority for using electricity,” says Mingchun Sun, an economist in Hong Kong with Lehman Brothers («www.businessweek.com»). “That will hurt production and exports.” Sun predicts export growth—which has been running at 22% over the past four months—to slide to as low as 10% in January. And since factories will close for a week during Chinese New Year next month, export growth in February will be disappointing, too. (There was no Chinese New Year slowdown last February; a change in tax laws that took effect after the holiday encouraged companies to go into overdrive in the weeks beforehand.)

While Sun says the chances of a rebound in the spring are good, he worries that rising inflation and falling export numbers could jolt an economy that already has been slowing. On Jan. 24 the government announced that economic growth for the fourth quarter of 2007 was 11.2%, still torrid but down from 11.9% six months earlier.

DUBAI: As the United States warns the world away from business with Tehran, Moscow is deepening its ties to Irans energy sector, underscoring Russias differences with Washington over Iranian nuclear plans and Kosovos independence.

While the timing of Moscows announcement on Tuesday may have been political, the deal for Gazprom, the Russian state-controlled energy giant, to take on big new Iranian oil and gas projects dovetails with Gazproms strategic ambitions, analysts said.

Gazprom, the worlds biggest gas producer, plans to play a larger role in developing Irans giant South Pars gas field, and will also drill for oil.

“The Russian government and the United States are at loggerheads over how to engage with Iran, with Russia actively favouring a more open relationship,” said Ronald Smith, chief strategist at Alfa Bank. “This makes Gazprom rather indifferent to American policy wishes.”

The U.S. accuses Iran of using uranium enrichment to develop weapons, while Tehran says it needs nuclear power. Russia has been reluctant to impose more U.N. sanctions on Iran.

Although the Kremlin has voiced its own concerns about Tehrans ambitions, it is building Irans first nuclear power plant and has supplied the fuel it will use.

“There is probably a political element given what happened last week in Kosovo,” said Chris Weafer, chief strategist at UralSib bank.

Russia opposes Kosovos split from Serbia, which the U.S. has backed. Despite growing clout on the world stage, Moscow has proved powerless to prevent Kosovo announcing its independence this week.

“I would say this investment is in keeping with Gazproms declared position to become as global as possible but the timing of the announcement clearly has a political message as well.”

Gazprom is advancing in Iran while U.S. political pressure has delayed progress on gas projects by European companies such as Total and Royal Dutch Shell. It has also led some European banks to pull financing for Iranian oil deals.

With European and U.S. companies out of the competition, Gazprom has an edge as it bids for a bigger role in developing the worlds second-largest gas reserves after Russias own.

“The Russians know full well that they are at a disadvantage in terms of the quality of their technology compared to the West under normal circumstances,” said Ali Rashidi, a university economics professor in Iran.

“Under conditions that Iran cannot attract real rather than token Western foreign investment, the Russians are in an ideal situation to fill the void.”

Gazprom may also have been able to negotiate better terms due to the lack of competition and Irans eagerness to press ahead with development despite U.N. and U.S. sanctions, Rashidi said.

Strategically, a tie-up between Moscow and Tehran makes sense, analysts said. Gazproms major market is Europe, which would also be the likely destination for much of Irans future production. Gazprom supplies a quarter of Europes gas needs.

The deal with Iran will do little to help Gazproms ambition to boost its presence in the United States.

But for now, its exposure there is small, analysts said. That, and Europes dependence on Gazprom, would limit the effectiveness of any reprisal action from the United States, said Teymur Huseynov, head of the Eurasia department at risk consultancy Exclusive Analysis.

“Gazproms vulnerability to U.S. sanctions is minimal,” Huseynov said. “And if you put sanctions on Gazprom you are basically threatening Europes energy security and that would strain the relationship with Europe and the United States.”

Increased coordination between the two countries on investment policy and pricing would also boost the chances of the formation of a gas producers group resembling the Organization of the Petroleum Exporting Countries, Huseynov said.

Iran has called on Russia to set up such a group, which has caused jitters in top customers and politicians in Europe.

Gazprom could also help Iran develop its pipeline system, potentially linking the north of the country to fields in the south, Huseynov added. That would lessen dependency on gas imported from Turkmenistan, which angered Tehran when it cut off gas supplies at the end of December.

The Russian gas export monopoly owns all the gas pipelines in Armenia, to which Iran has recently completed a new export pipeline. Gazprom will operate the section of that pipeline in Armenia.

Gazprom has been involved in Iran for years and invested about $4 billion in the country between 2000-2007, said Huseynov. It was involved in an earlier phase of development at South Pars with Total and Malaysias Petronas.

SINGAPORE: Virgin Galactic, the billionaire Richard Bransons space travel venture, plans to order five more spaceships and aims to turn a profit in five years from its commercial start in 2010, Alex Tai, the firms group director, said Thursday.

Prospective space travellers have so far placed deposits totaling more than $31 million for tickets that cost $200,000 each and would give them five minutes in space, Tai said.

“In the short term, we have firm orders for five spaceships and options for seven,” Tai said during an interview at the Singapore Airshow. “We believe there is a very strong market.”

About 80,000 people from 120 countries have shown interest in these commercial space flights that are likely to start in 2010. Seriously interested travellers are asked to deposit at least $20,000, according to Virgin Galactics Web site (http://www.virgingalactic.com).

“It really is a life-time experience,” Tai said.

Virgin, which wants to be the first to take paying passengers into space on a regular basis, will invest $250 million in the space program, Tai said.

He declined to give the cost of each craft or the maker, though some parts will come from Pratt Whitney, the jet engine unit of United Technologies.

Asked when the company would become profitable, Tai said: “I imagine it will be inside the first five years.”

Virgins SpaceShipTwo, introduced last month and to be tested later this year, will be able to carry 8 people into suborbital space. Virgin expects to start with one flight a week before ramping it up to 14 flights a week.

For $200,000, Virgin will prepare space travellers over three days for their 2-hour flight beyond Earths atmosphere that will culminate in five minutes in space. The three-day program will include simulating a zero- gravity environment, showing travellers what it means to accelerate and decelerate quickly, as well as what the Earth looks like from space, Tai said. The spaceship will initially be launched from Mojave, California, but will eventually take off from a space port in New Mexico.

Virgin Galactic is one of several contenders in the new commercial space race. Others include Astrium, the space arm of the European Aeronautic Defense Space; Blue Origin, started by the Amazon.com founder Jeff Bezos; Space Exploration Technologies (SpaceX), created by the PayPal founder Elon Musk; and Bigelow Aerospace, a venture aimed at creating space hotels, started by the hotel owner Robert Bigelow.