Chinese leaders gather for congress

CHINA'S communists have called the scandal surrounding disgraced politician Bo Xilai a "profound lesson" for the ruling party, as delegates gather in Beijing on the eve of a key leadership congress.

The party's handling of Bo's case underlines the leadership's resolve to uphold integrity and prosecute corruption no matter how high ranking the culprits, said Cai Mingzhao, spokesman for the 18th national Communist Party congress.

Bo had been one of China's highest-profile politicians and a candidate for higher office when he fell from grace amid a scandal over his wife's involvement in the murder of a British businessman. Bo dropped from view and in September was expelled from the party. He is being prosecuted for yet-unspecified charges, though he's been accused of corruption, abuse of power and assisting in covering up his wife's case.

"Problems involving Bo Xilai ... and others are serious corruption cases among our party's high-ranking leading cadres, and have offered a profound lesson," Cai told a news conference on Wednesday.

The struggle against corruption remains long term, complex and extremely difficult, Cai said. The 18th national party congress, which opens on Thursday, will thoroughly address the issue and its disciplinary arm will adopt new measures in education, prevention, supervision and punishment, he said.

Cai also cited Liu Zhijun, a former railways minister who was expelled from the party and faces corruption charges.

National party congresses are held once every five years, and this year's meeting will usher in a once-in-a-decade transition to a new generation of top officials led by Vice President Xi Jinping.

The congress comes as Xi faces calls from academics and other commentators to embark on political reforms from strengthening the rule of law to making the system more transparent.

Cai indicated that Communist Party rule was a key driving force behind China's success and that any political reforms would not detract from that.

"China has scored world-renowned development achievements. It speaks fully to the strong leadership of the (Communist Party) and the fact that the political party system of China suits China's national reality," Cai said.

"We have to unswervingly stick to the right path blazed by the party and the people in their long term practice. We should never be intimidated by any risks nor be confused by any distractions," he said.

Calls for political reform have occasionally been made and steps taken in recent years to strengthen the legal system and increase the government's responsiveness, but the moves were aimed at strengthening one-party rule. The party has allowed nonpartisan elections for the lowest-level village leadership posts, but it controls policymaking, and harasses and jails activists who call for multiparty democracy.

Over the coming week, in addition to selecting members of leading party bodies, the 2270 delegates will hear and deliberate over the work of the party over the last five years, a party discipline report and revisions to the party constitution.

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US stocks dive as 'fiscal cliff' looms

US stock markets have tumbled in early trade after President Barack Obama's re-election victory set up a tough battle with Republicans over a looming "fiscal cliff".

In the first six minutes of trade on Wednesday, the Dow Jones Industrial Average dropped 197.98 points (1.49 per cent) to 13,047.70.

The broad-based S&P 500 fell 21.28 (1.49 per cent) to 1,407.11, while the Nasdaq Composite shed 41.87 (1.39 per cent) at 2,970.06.

Obama won a resounding victory over Republican challenger Mitt Romney in a closely fought race late Tuesday.

But voters left Congress divided, with Democrats maintaining the Senate and Republicans holding the House of Representatives.

"Focus now shifts to the upcoming fiscal cliff of tax increases and spending cuts that go into effect in 2013 unless a budget compromise is met by Congress," said Wells Fargo analysts.

"By returning a divided government to Washington, the electorate has given neither party a clear mandate to address the lacklustre recovery, the fiscal cliff, and the looming debt crisis," said Brian Kessler at Moody's Analytics.

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US Democrats hold narrow Senate majority

A NEWLY re-elected President Barack Obama will once again deal with a divided Congress as Democrats retain control of the US Senate and Republicans kept their solid majority in the House of Representatives.

The results of Tuesday's election mean that President Barack Obama, despite being re-elected to a second term, will face the same Republican pushback in 2013 that has hurt efforts to enact his major legislation.

Democrats had been seen as vulnerable to losing control of the Senate, since they had more seats to defend, but they were assured of retaining or even increasing their 53-47 advantage. Among the winners for the Democrats was the first openly gay US senator.

Republican candidates in Missouri and Indiana - both states won by Republican presidential nominee Mitt Romney - were defeated after making damaging comments about rape and abortion. An incumbent Republican fell in liberal Massachusetts. Republicans also lost a seat in Maine, where an independent who is expected to caucus with the Democrats won.

Only a dozen or so Senate races out of the 33 on the ballot were seen as competitive, and almost all of those that were called on Tuesday - in Wisconsin, Virginia, Connecticut, Missouri, Ohio, Pennsylvania, New Mexico and Florida - went the Democrats' way. Republicans picked up a Democratic-held seat in Nebraska.

More than $US2 billion ($A1.9 billion) was spent on the nasty fight for Congress. All 435 House seats were on the ballot, and Republicans retained control there, though Democrats made a few gains.

Control of the Senate at the very least gives Democrats a firewall against Republican attempts to overturn Obama's signature legislative achievement, his health care reform law, before it is fully implemented in 2014. Republicans had promised to repeal it.

The first post-election test of wills could start next week, when Congress returns from its election recess to deal with unfinished business - including a looming "fiscal cliff" of $400 billion in higher taxes and $100 billion in automatic cuts in military and domestic spending to take effect in January if Congress doesn't head them off. Economists warn that the combination could plunge the nation back into a recession.

Newly elected Massachusetts Senator Elizabeth Warren, a Democrat who won a marquee race against incumbent Scott Brown, said on Wednesday she believes there is a "lot of room for compromise" on the impending fiscal crisis.

Warren, a favourite among liberals as a leading consumer advocate, told NBC's Today that Congress can find a middle ground to bring down the deficit by cutting spending while raising revenues.

In the new Senate, Democrats will remain below the 60-vote supermajority needed to easily pass legislation under Senate rules.

"Now that the election is over, it's time to put politics aside and work together to find solutions," said Senate Majority Leader Harry Reid.

Senate Minority Leader Mitch McConnell said the voters have not endorsed the "failures or excesses of the president's first term," but rather have given him more time to finish the job.

"To the extent he wants to move to the political centre, which is where the work gets done in a divided government, we'll be there to meet him half way," McConnell said.

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23 people saved, 50 missing off Bangladesh

FISHING boats have helped rescue 23 people after a boat crowded with illegal migrants capsized off Bangladesh's coast, but about 50 people are missing.

About 70 illegal migrants, mostly Rohingya Muslims, were reportedly travelling on the boat to Malaysia when it sank in the Bay of Bengal on Wednesday.

Border commander Zahid Hossain said no bodies had been recovered so far, but quoted survivors as saying they saw some bodies after the boat sank off Bangladesh's Teknaf coast, 320 kilometres south of Dhaka.

Survivors said they were travelling to Malaysia to look for jobs, coast guard official Leiutenant Badruddoza said.

The officials said other fishing boats rescued many of the survivors.

In recent years, poor young people have made dangerous attempts to go abroad for work, often through unscrupulous human traffickers, with local reports saying stateless Rohingya people living in Bangladesh often attempt the risky trips.

Another boat carrying more than 100 people sank in the Bay of Bengal last month, local media reported. Authorities have not confirmed that sinking, but police launched an investigation after several people filed complaints saying they survived the accident on the trip, organised by a gang of people traffickers.

More than 25,000 Rohingya people live in two official camps run jointly by the government and the United Nations in Cox's Bazar. But hundreds of thousands of others live outside the camps after crossing the border from Burma in recent years for economic reasons or because of alleged persecution.

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Obama wins despite lower turnout

A DROP in US voter turnout failed to keep President Barack Obama from winning a second term.

Preliminary figures suggest fewer people voted this year than four years ago, when voters shattered turnout records as they elected Obama as the country's first black president.

"This is one of those rare elections in which turnout in every state in the nation went down," said Curtis Gans, the director of American University's Center for the Study of the American Electorate.

Still, the full picture may not be known for weeks, because much of the counting takes place after election day.

With 97 per cent of precincts reporting, The Associated Press' figures showed more than 118 million people had voted in the White House race, but that number will go up as more votes are counted. In 2008, 131 million people voted, according to the Federal Election Commission.

The biggest plunge by far, according to the American University analysis, came in East Coast states still reeling from last week's superstorm Sandy, which wiped out power for millions and disrupted usual voting routines. Fifteen per cent fewer voters cast ballots in New York this year than in 2008. In New Jersey, it was almost 12 per cent. The gap in New Jersey could narrow in the coming days because elections officials have given displaced residents in some areas until Friday to cast special email ballots.

Several factors could have contributed to waning voter enthusiasm, Gans said. The 2012 race was one of the nastiest in recent memory, leaving many voters feeling turned off. With Democrats weary from a difficult four years and Republicans splintered by a divisive primary, neither party was particularly enthused about their own candidate. Stricter voting restrictions in many states may also have kept some voters away from the polls.

Both Obama and Republican Mitt Romney made voter turnout a top priority in the waning days of an intensely close race. For months leading up to election day, both candidates were obsessed with a tiny sliver of undecided voters.

It may be that those who were still undecided on Tuesday decided not to show up, said Kyle Kondik, a political analyst at the University of Virginia's Center for Politics.

One bright spot in this year's voting was the number of early and mail-in ballots cast. Before polls opened on election day, more than 32 million people had voted, either by mail or in person, in 34 states and the District of Columbia. In a number of states, early voting appeared to far exceed totals from 2008.

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Unemployment expected to rise

OFFICIAL data to be released on Thursday is expected to show a rise in unemployment as the mining boom wanes and the manufacturing and retail sectors struggle.

An AAP survey of 16 economists shows that the median unemployment rate is expected to rise to 5.5 per cent for October, while total employment numbers are expected to grow by 5,000 when Australian Bureau of Statistics figures are released on Thursday.

The ABS reported last month that the unemployment rate for September rose by a larger than expected rate to 5.4 per cent, from 5.1 per cent in August, despite a rise of 14,500 in total employment.

The AAP survey on Tuesday found that the participation rate - the number of people employed or looking for work - is expected to remain at 65.2 per cent for October.

AMP senior economist Bob Cuneen said the unemployment rate would continue to rise as growth in the mining sector slowed, along with weakness in other parts of the economy.

"There might be some marginal job gains for the month - we've pencilled in 5,000," he said.

"But we have the weight of several recent job loss announcements, plus the signs that the mining boom is starting to peak, and the continuing struggle in the non-mining economy, in terms of the retail spending story and manufacturing.

National Australia Bank senior economist David de Garis said high-profile job losses in the mining sector suggested a slowdown in employment growth could be felt sooner rather than later.

"We know there have been some areas where resource companies have been closing down either unprofitable or high-cost operations," he said.

"It could take a while for weaker sectors such as manufacturing, construction and retail to improve."

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Granny Obama celebrates in Kenya

WAVING her walking cane and smiling broadly, the step-grandmother of Barack Obama has celebrated along with her fellow villagers.

Kogelo, a tiny town where children play soccer in bare feet, was the home of Obama's father, and claims several relatives of the president among its population. The family matriarch is Sarah Obama, who was married to the president's late grandfather.

"Take the great job that people have given to you and lead them well," Sarah Obama advised her relative by marriage after his victory. "They have shown immense love to have voted for you."

Residents hoisted branches of green leaves, red plastic chairs and even bicycles into the air to celebrate Obama's win.

"The community is happy. The community is waking up from their sleep to come and celebrate," said Kennedy Rajula, the president's cousin.

Sarah Obama is the second wife of Obama's paternal grandfather. Obama referred to her as Granny in his memoir, Dreams from My Father, and described meeting her during his 1988 trip to his father's homeland and their awkwardness as they struggled to communicate.

Kenya takes great pride in its association with Obama, and Prime Minister Raila Odinga told The Associated Press the election victory was a great day for the US and Kenya.

"Obama's victory has proved that it was not a fluke the first time round, that the American society has changed, that the people of America have now, basically living the American dream of a people who are united by race, by religion, by ethnicity and so on," Odinga said. "People are prepared to work together to build their country."

Meanwhile, in Moneygall, Ireland, the Guinness flowed as the results of the president's re-election dawned on the village.

In May 2011, Obama visited Moneygall, a small village in County Offaly in central Ireland, after an amateur genealogist traced the president's maternal ancestors back to the area.

On Tuesday night, some residents gathered in Ollie Hayes' pub - where Obama sampled a glass of Guinness during his whirlwind visit - hopeful that the man who brought international attention to the sleepy village would be returned to the White House.

The pub was busy on Wednesday morning as locals and tourists popped in to sample the atmosphere in the aftermath of Obama's victory.

The president's great-great-great grandfather was a shoemaker in the village in the 19th century.

Jim Ryan, a native of Tipperary who immigrated to Perth four years ago, was back in Ireland to visit his parents. They suggested a day trip to Moneygall.

"They wanted to come up and see if there's any craic (fun) happening given the Obama connection. They weren't wrong: it's not even midday yet and there's loads (of people) around," he said.

Inside the Obama Cafe, established after the president's visit, owner Paul Costello was busy serving customers.

Outside a handwritten sign says "election specials", underneath American flags blowing under a grey Irish sky.

Tea and coffee was on the house to celebrate the success of Obama.

"This is great news for the village," Costello said. "For us, it'll allow us to establish our business knowing he'll be in power for four more years."

For many residents, the big question on Wednesday morning was whether the president would return to Moneygall.

"I tell you something, if he comes back, he can have anything on the menu. I won't even charge him," Costello joked.

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World leaders hail Obama victory

WORLD leaders have hailed President Barack Obama's sweeping re-election.

Congratulations poured in from across the world, including fellow UN Security Council members Britain, China, France and Russia as well as its Middle East ally Israel and Obama's ancestral home in Kenya.

The Taliban, however, seized on Obama's win to lash out against US military policy in Afghanistan, and Iran's reaction was tepid.

Russian President Vladimir Putin, whose relations with Washington have often been frosty, congratulated Obama on his victory over Republican challenger Mitt Romney.

"We hope that the positive beginnings that have taken hold in Russian-US relations on the world arena will grow in the interests of international security and stability," Russian news agencies quoted Putin's spokesman Dmitry Peskov as saying.

Moscow was ready to "go as far as the US administration is willing to go," Foreign Minister Sergei Lavrov was quoted as saying by the RIA Novosti news agency.

Chinese President Hu Jintao, who himself is handing over power at a Communist Party congress starting this week, noted "positive progress" in Sino-US relations over the past four years despite tensions over issues such as trade and territorial disputes involving US allies.

China will "look to the future and make continuous efforts for fresh and greater progress in the building of the China-US cooperative partnership," a foreign ministry spokesman said.

Afghan President Hamid Karzai congratulated Obama and said he hoped his win would lead to "further-expanded" relations, though reaction on the streets of the war-torn nation was muted and Taliban insurgents told Obama he should withdraw forces immediately, ahead of schedule.

"Obama must by now know that they have lost the war in Afghanistan," a Taliban spokesman said. "They should leave our sacred land and focus on their own country instead."

Pakistani President Asif Ali Zardari said he was confident relations with the United States would "continue to prosper".

Pakistan is a key ally in the US "war on terror" but relations over the past two years have grown fraught, especially after last year's US killing of Osama bin Laden in Pakistan and botched air strikes.

Israeli Prime Minister Benjamin Netanyahu, whose relationship with Obama has at times appeared tense, also joined the well wishers.

"I will continue to work with President Obama to ensure the vital security interests of Israel and the United States," said Netanyahu, who had appeared to throw his support behind Romney during the election campaign.

Elsewhere in the Middle East, Palestinian president Mahmud Abbas urged the US leader to pursue peace efforts, while Palestinian negotiator Saeb Erakat said he hoped Obama's re-election would mean the creation of a Palestinian state in the next four years.

Direct talks between Israel and the Palestinians have been on hold since September 2010.

Iran, facing Western pressure particularly from the US and arch foe Israel over its nuclear drive, said Obama's win would not lead to a normalisation of ties, but said the possibility of negotiations was "not taboo".

"Relations with the United States are not simple, especially after all the pressure and US crimes committed against the Iranian people," Fars news agency quoted judiciary chief Ayatollah Sadeq Larijani as saying.

British Prime Minister David Cameron said he was looking forward to working again with his "friend" Obama on several fronts, including helping the world economy and finding a solution for the escalating Syria conflict.

"There are so many things that we need to do: We need to kickstart the world economy and I want to see an EU-US trade deal," Cameron said.

United Nations leader Ban Ki-moon urged Obama to act quickly on ending the war in Syria and reviving the Middle East peace process, while German Chancellor Angela Merkel said she looked forward to continuing cooperation "so both our countries can continue to stand side-by-side to contend with the important foreign policy and economic challenges that we face as friends and allies".

Merkel's message was echoed by European Union President Herman Van Rompuy, Commission President Jose Manuel Barroso and French President Francois Hollande.

The Dalai Lama wrote to Obama, saying the president had worked hard "to to live up to that great hope and trust placed in you by the American public."

Through a Washington envoy, Pope Benedict XVI said he hoped God would guide Obama to deal with "his very serious responsibilities to his country and to the international community".

South African President Jacob Zuma urged the US to continue playing a positive role in Africa, and the Nelson Mandela Foundation said the US was a vital partner in Africa's efforts to overcome poverty and inequality.

Egypt's Islamist President Mohamed Morsi also hailed the win, saying he hoped it would strengthen the "friendship between the two countries".

In Muslim majority Malaysia, Prime Minister Najib Razak urged Obama to continue to foster understanding and respect between the United States and Muslims worldwide.

And Turkish President Abdullah Gul said the bonds between Turkey and the United States were strengthened during Obama's first term.

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