WeeJapan’s embattled prime minister, Naoto Kan, will step down by August despite surviving a no-confidence vote on Thursday. The pressure for Kan to resign has only intensified since the March 11 earthquake and nuclear crisis. The opposition party, which can block bills in parliament, said that it would not cooperate with Kan. Members of Kan’s cabinet told media that he should be replaced. Kan’s decision to resign by August may give him time to prepare an extra budget that will pay for the reconstruction. However, Kan also stated that he might stay at his post until the damaged nuclear reactors at the stricken nuclear plant achieved a “cold shutdown,” which could take until January.

South Korea’s core inflation reached a two-year high in May as Asian countries struggle to contain rising prices. Core inflation, which does not include energy or agricultural prices, rose to 3.5 percent, compared to 3.2 percent in April. It was the highest reading since June 2009. The South Korean government attributed the rise in inflation to higher prices for processed food, housing and dining out. The consumer price index rose 4.1 percent in the month, slightly down from the 4.2 percent recorded in April, though above the government’s target of 2 to 4 percent for the fifth straight month.

South Korea’s exports climbed 23.5 percent year on year to USD48 bllion, down from the USD49.1 billion recorded in April. Imports rose 29.9 percent in May to USD45.26 billion. The country’s trade surplus came in at USD2.75 billion, compared with USD5.14 billion the previous month. Both exports and the trade surplus came in lower than expected. The HSBC Purchasing Managers Index (PMI) was 51.2 in May, down from 51.7 in April and the lowest figure in 6 months. A reading above 50 indicates an expansion of manufacturing activity, while a reading under 50 indicates contraction. 

China’s environmental situation is “very grave” after three decades of runaway economic growth, senior government officials said. China’s Ministry of Environmental Protection highlighted daunting environmental challenges facing the country in its recently released 2010 environmental report. “The overall environmental situation is still very grave and is facing many difficulties and challenges,” the vice minister Li Ganjie said. Although China has met targets for improving water and air quality, he said that polluting industries are increasingly moving to the countryside and deteriorating the environment in rural areas. He said China needed a law that would regulate heavy metals.

A Standard and Poor’s report said that a “sudden” slowdown in China could depress commodity prices by up to 75 percent. The report was published as China attempts to cool its economy with interest rate hikes and hikes banks’ reserve ratio requirement. A Standard and Poor’s analyst said that the ratings agency did not view a steep slowdown in Chinese economic growth as the base case scenario. “The current situations isn’t a bubble and it’s not going to burst, but there is a risk,” the analyst said.

China’s Railway Ministry will deploy more trains for coal transport in a bid to ease summer power shortages. China is expected to experience a shortage of 30 to 40 gigawatts this summer, twice what Japan will face as a result of the March 11 earthquake. The power shortages are caused by strong demand, drought conditions and government mandated price caps that leave little incentive for power companies to produce electricity an unprofitable prices. More than 70 percent of China’s electricity is generated by coal.