Author: CensorBiz

Many of the wigs and false eyelashes labeled “Made in China” that are sold by American retailers may violate U.S. sanctions on North Korea, which is where they are actually manufactured, according to experts.

China imported approximately 30 tons of North Korean-made wigs and false eyelashes in April worth over $22.7 million, according to data from China’s General Customs Administration examined by VOA’s Korean Service.

About half, amounting to more than $11.2 million, were imported by Chinese companies in Henan province. Xiaogang, a city in central Henan province, is the world’s largest wig manufacturing, distribution and export hub.

Although North Korea sealed its border with China in January 2020 at the beginning of the pandemic, trade between the neighbors has resumed gradually since North Korea declared victory over COVID-19 in August 2022. China is North Korea’s biggest trading partner.

The amount of Pyongyang’s wig and false lash exports to China in April shows that “trade is returning after the pandemic” as North Korea’s total exports to China in 2021 “only amounted to $56.3 million,” said Troy Stangarone, senior director at Korea Economic Institute (KEI) to VOA Korean by email.

As North Korea’s exports to China return to pre-pandemic levels, experts said U.S. companies must be vigilant that supply chains do not include Chinese manufacturers that use North Korean labor. U.S. penalties for sanctions violations convictions include “incarceration, fines, and forfeiture of any/all goods imported and proceeds of these crimes,” according to federal law.

“Chinese firms have been known to subcontract with North Korean firms and label the goods as made in China,” Stangarone said. “Any efforts by Chinese firms to directly or indirectly export wigs and fake lashes or any other North Korean goods to the United States would be a violation of U.S. sanctions.”

Despite the sanctions, however, there is still a good chance that those items could end up in the U.S., he added.

$128.6 million in human hair products

China was the top global exporter of human hair products including wigs and fake lashes in 2021, totaling approximately $1.84 billion while the U.S. was the largest importer of those products worth approximately $1.01 billion in the same year.

In April, China was the largest exporter of wigs and other human hair products to the U.S. amounting to $128.6 million.

“If firms utilize China as part of their supply chain, they need to be aware” they could be “unknowingly sending North Korean goods to the United States,” said Stangarone.

The U.S. Treasury issued an advisory in 2017 cautioning American businesses to “closely examine their entire supply chain(s) for North Korean laborers and goods and services or technology” especially “those businesses with operation in high-risk countries.”

The advisory said that North Korea uses forced labor to raise revenue to fund its weapons of mass destruction (WMD) and ballistic missile programs.

The “use of North Korean citizens or nationals as laborers in supply chains could trigger U.S. sanctions, and the issuance of work authorizations for these North Korean nationals is prohibited under UN Security Council resolution 2397” issued in 2017, said the advisory.

Joshua Stanton, a Washington-based attorney who helped draft the Sanctions Enforcement and Policy Enforcement Act in 2016, said, “Importing products made with forced or penal labor into the United States has long been a violation of the U.S. Tariff Act.”

He continued, “If goods are made in whole or in part with North Korean labor, they’re subject to rebuttable presumption that they’re made with forced labor.”

Regulations ban imports from North Korea

The regulations ban imports of goods, services or technology from North Korea. 

In 2019, California-based e.l.f. Cosmetics agreed to pay nearly $1 million for importing over $4 million worth of false eyelash kits from Chinese suppliers that sourced materials from North Korea in violation of the North Korean Sanctions Regulations. 

The U.S. Treasury said the cosmetics company “appears not to have exercised sufficient supply chain due diligence while sourcing products from a region” in which North Korea is “known to export goods.”

“If U.S. Customs and Border Protection’s Office of Trade identifies those [North Korean-made] wigs, it will seize them and sell them at auction,” said Stanton.

Stanton said U.S. Customs and Border Protection (CBP) may rely on tips to identify North Korea-made products such as items coming from an exporter or factory with a known history of employing labor in North Korea, among other ways of detection.

In 2022, CBP seized goods produced by the Chinese companies Jingde Trading, Rixin Foods and Zhejiang Sunrise Garment Group at U.S. ports.

The seizures were based on CBP’s “investigation indicating that these companies use North Korean labor in their supply chains in violation of the Countering America’s Adversaries Through Sanctions Act (CAATSA),” the CBP said in December 2022. 

CAATSA bans the importation to the U.S. of items made by North Korean workers “anywhere in the world,” said the statement.

Although U.N. Security Council sanctions on North Korea do not explicitly list wigs and false lashes as banned export items, China and North Korea could be violating those sanctions, according to Stanton. U.N. sanctions ban the Pyongyang regime from exporting items like coal, textiles and seafood to prevent sales revenue from funding its weapons programs.

“The U.N. sanctions are not required to list every product and item that North Korea exports,” Stanton said.

North Korea’s “export to China is nonetheless a violation of UN sanctions if China fails to ensure that Pyongyang doesn’t use the profits for prohibited activities, including WMD proliferations,” continued Stanton.

North Korea conducted a record number of weapons tests last year to enhance the development of its missile and nuclear programs, a practice that Pyongyang is continuing this year. Its latest attempted launch of a satellite using ballistic missile technology banned by the UN failed on May 31.

Christy Lee contributed to this report.
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Consumer prices in the United States cooled last month, rising just 0.1% from April to May and extending the past year’s steady easing of inflation. At the same time, some measures of underlying price pressures remained high.

Measured year over year, inflation slowed to just 4% in May — the lowest 12-month figure in over two years and well below April’s 4.9% annual rise. The pullback was driven by tumbling gas prices, a much smaller rise in grocery prices than in previous months and less expensive furniture, air fares and appliances.

Tuesday’s inflation figures arrive just as Federal Reserve officials begin a pivotal two-day meeting, after which they’re expected to leave interest rates alone after imposing 10 straight rate hikes dating back to March 2022. On Wednesday, the central bank will likely announce that it’s skipping a rate hike but may hint that it will resume raising rates as soon as July. Top Fed officials have said they’re leaning toward a so-called “skip” to allow time to assess how their rate hikes have affected inflation and the overall economy.

Still, last month’s drop-off in overall inflation isn’t likely to convince the Fed’s policymakers that they’re close to curbing the high inflation that has gripped the nation for two years. The Fed tends to focus more on “core” prices, which exclude volatile food and energy costs and generally provide a clearer view of inflation.

And core prices remained high last month, rising 0.4% from April to May, the sixth straight month of increases at that level or higher. Compared with a year ago, core inflation slipped to 5.3% from 5.5%. That is still far above the Fed’s target of 2%.

Last month’s core inflation was fueled mainly by high apartment rental costs and a second straight jump in used car prices, which soared 4.4% just from April to May. On the other hand, wholesale prices of used cars declined last month, which may foretell lower retail used-car prices in coming months.

Gas prices, adjusted for seasonal patterns, fell 5.6% from April to May; they’re down nearly 20% from a year ago. And grocery prices ticked up just 0.1%, a relief to consumers, though they’re still 5.8% higher than they were a year ago.

The stubbornness of underlying inflation reflects a fundamental challenge for the Fed: The economy has steadily defied long-standing forecasts for a recession, dating back more than a year. Instead, businesses have kept hiring at a healthy pace, average paychecks are climbing and workers are freely spending their larger wages.

Though a resilient economy is great for households and businesses, it may also be helping fuel chronically high inflation. Some economists argue that many companies are keeping prices artificially high, more than is needed to cover their own higher costs, to drive profit growth. The nation’s consumers might have to pull back, en masse, before most businesses will reduce prices. In the meantime, steadily robust hiring is allowing Americans, as a whole, to keep spending.

The Fed has raised its benchmark rate by a hefty 5 percentage points over the past 15 months — the fastest pace of rate increases in four decades. Those hikes have led to much higher costs for mortgages, auto loans, credit cards and business borrowing. The Fed’s goal is to slow borrowing and spending, cool the economy and tame inflation — without causing a deep recession. It’s a notoriously difficult task.

There are some signs that the Fed’s efforts are having the desired effect. Inflation is expected to take another big step down in the June figures that will be reported next month. Price growth could slide as low as 3.2% from a year earlier, according to some economists’ estimates. That would be significantly below inflation’s peak of 9.1% in June 2022, the highest level in four decades.

Yet any sharp declines in May and June will in part reflect the fact that prices soared in both those months last year. As those months drop out of the year-over-year inflation calculations, they are replaced with smaller monthly gains. The effect can sharply lower measures of annual inflation.

Still, core prices are expected to stay high in May, driven up by another jump in used car prices and steady increases in rental costs. Used car prices soared 4.4% just from March to April. Economists expect another increase, though not quite as large, from April to May.
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South Korea has charged a former Samsung executive accused of stealing company secrets worth hundreds of millions of dollars to set up a copycat chip factory in China, prosecutors told AFP on Tuesday.

Semiconductors have become a flashpoint issue between the United States and China, which are locked in a fierce battle over access to chip-making technology and supplies.

South Korean prosecutors said the 65-year-old former Samsung employee allegedly stole the company’s factory blueprints and clean-room designs from 2018 and 2019.

The Suwon district prosecutor’s office said the suspect unsuccessfully tried to set up a copycat production facility in the Chinese city of Xian — where Samsung already has a chip factory.

The man, who has not been identified and is in detention pending trial, stole material that is classified by South Korea as a “national core technology” — a category of tech that could potentially harm national security and the economy if disclosed overseas.

Prosecutors said he had been in custody for some time and was formally charged on Monday.

They described him as a “top expert in semiconductor manufacturing”, who had worked in the industry for decades.

South Korean authorities said the information allegedly targeted in the theft would have been worth at least $236 million to Samsung.

“It is a serious crime that can have a tremendous negative impact on our economic security by shaking the foundation of the domestic semiconductor industry at a time when competition for chip production is intensifying every day,” prosecutors said in a statement on Monday.

“The semiconductor industry accounted for 16.5% of South Korea’s total exports in 2022… and is a national security asset.”

Six other people who worked with the executive have been charged over suspected involvement in the theft.

Samsung declined to comment when contacted by AFP on Tuesday.

Chip war

Samsung Electronics is one of the world’s largest producers of chips and smartphones, and its parent group’s turnover is equivalent to about one-fifth of South Korea’s GDP.

Like many of the world’s biggest chip makers, a large portion of its production is based in China.

Chips are the lifeblood of the modern global economy, and China — the world’s second-largest economy — relies on a steady supply of chips made by foreign firms for its huge electronics manufacturing industry.

The United States imposed a series of export controls last year to prevent China from acquiring the most advanced chips that could be used in cutting-edge weapons and frontier tech such as artificial intelligence.

The Netherlands and Japan followed this year with restrictions of their own, without naming China.

But the curbs have infuriated Beijing, which has accused Washington of “technological terrorism.”

China last month said U.S. chip giant Micron had failed a national security review, and told operators of “critical information infrastructure” to stop buying its products.

Analysts have described that move as retaliation for the U.S. semiconductor curbs.

“Amid intensifying semiconductor competition between the U.S. and China, South Korea is in a difficult situation as it has to side with its security ally U.S. while it obviously cannot ignore Beijing and its influence,” Kim Dae-jong, a professor of business administration at Sejong University, told AFP.

“Samsung Electronics should pay more attention to technology and information security. China is trying to catch up.”
…

Australia’s national science agency Tuesday unveiled a new blueprint to ensure the nation’s food supply is secure and resilient. The Commonwealth Scientific and Industrial Research Organization has said the sector faces serious challenges, including climate change and disruptions to supply chains.

More than 70% of Australia’s agricultural production is exported overseas, according to government data, helping to feed an estimated 70 million people around the world and at home. It makes Australia a key global food producer.

But CSIRO, the Commonwealth Scientific and Industrial Research Organization, is warning that the nation’s food systems must change to remain sustainable in the future.

Australia’s national science agency has identified several key threats to food production; “recent climate extremes, the COVID-19 pandemic, and geopolitical uncertainties.” It has also identified other critical challenges, including increasing demand, as well as disruptions to supply chains and the workforce.

It has unveiled a new plan called Reshaping Australian Food Systems to make food production more sustainable, nutritious, productive and resilient.

Michael Robertson, the director of CSIRO Agriculture and Food, told the Australian Broadcasting Corp. that new approaches are needed in agriculture.

“There is also an awful lot of innovation required around new products, new food products, new ways of producing crops and animals on farms, the use of renewable energy in food processing [and] better understanding of our supply chains and transport networks,” he said.

Robertson also said that climate change would bring more extremes to farmers and disruptions to water supplies.

Better access to healthy diets and minimizing food waste are among five key areas identified in the CSIRO blueprint. The agency has estimated that a third of Australia’s food production goes to waste each year.

Australia’s agricultural activity is determined by the climate, the availability of water and the proximity to markets.

Livestock grazing takes place across the country, while horticulture — the production of fruit, vegetables and flowers — and cropping, that includes the planting of wheat and barley, are generally located in coastal regions.

In 2021–22 exports of Australian agricultural, fishery and forestry products were worth $51.2 billion, according to official records.
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Canada’s worst-ever spring wildfire season has forced its forestry industry to shutter sawmills, driving up lumber prices and setting production back for months just as housing construction has slowed due to higher costs and a tight labor market. 

Canada has the world’s third-largest forest area and is the second-largest softwood lumber producer, according to Canadian government estimates, making it a key supplier of a critical housing material. 

This year’s unprecedented fires have already consumed at least 4 million hectares, or 1% of Canada’s forest, according to the Forest Products Association of Canada (FPAC), an industry group. 

The fires are blazing through Alberta, British Columbia and Quebec, all provinces with active forestry industries. 

The fires have also forced thousands of people to evacuate their homes and blanketed cities with smoke as far away as Toronto, New York and Washington. 

Fires in British Columbia and Alberta have forced significant downtime at sawmills, and “ground zero” has now shifted to Quebec, FPAC CEO Derek Nighbor said. 

“It’s significant. Closing mills and having to restart them is a lot of work and that’s people who have to be laid off temporarily,” said Nighbor, who did not have an overall estimate of lost production. 

Chicago lumber futures for July delivery have climbed 7% since June 1. 

The unexpected disruption to the lumber industry risks further slowing new home construction, adding to Canada’s acute housing shortage. Investment in residential building construction, after adjusting for inflation, fell in March to its lowest level since June of 2020. 

Resolute Forest Products has temporarily shut four Quebec sawmills due to nearby fires and a related log shortage, Resolute Vice President Seth Kursman said. Workers were digging trenches near the facilities to suppress the fires. 

Kursman said it was premature to say if the company may need to declare force majeure – unexpected circumstances that prevent a business from meeting contract obligations – or could make up the lost production later in the year. The closed mills mainly produce softwood lumber for North American markets. 

Supply constraints 

Resolute has also paused harvesting activities in areas near fires. 

Long-term damage to forests will require up to eight weeks to assess once the fires abate, Nighbor said. 

“Is there anything that’s salvageable? Is it younger trees that have been taken out or is it 60-to-80-year-old trees, because that will impact future operations,” he said. 

Wildfires can temporarily boost lumber prices as supplies are constrained and buyers increase inventories, although prices tend to revert later in the year, RBC Capital Markets analyst Paul Quinn said in a note. 

Chantiers Chibougamau was forced to shut its Nordic Kraft pulp mill in Lebel-sur-Quevillon, Quebec after a fire spread within 500 meters (1,640 feet) of it, but it expects to resume production this week, company spokesperson Frederic Verreault said. 

Forest fires are partly a natural phenomenon, culling debris and creating new growth. But big blazes can also reduce timber supply for the long term, Quinn said. 

Nighbor said as Canada’s wildfires worsen, federal and provincial governments should allow for expanded tree harvesting, especially of older trees, to reduce fire risk. 

Prime Minister Justin Trudeau’s government has set a goal of protecting 30% of Canada’s lands by 2030. About 13% is currently protected, Nighbor said. 

“There’s this sense in some political circles that protecting trees is going to be some solution for (the) climate. We need to be looking (at forestry) through a fire lens,” he said. 

Forests can become more fire-resilient by thinning them of dying trees, prescribed burning and retaining tree species that are fire-resistant, said Michelle Ward, vice president at Canfor. The forestry company has not had to shut facilities due to fire. 

The government will continue to protect natural lands, but responsible forestry practices can also support fire resilience, said Keean Nembhard, a spokesperson for the Canadian natural resources department. 

Joe Foy, protected areas campaigner with the Wilderness Committee, an environmental group, said protecting communities from fire is better left to governments than forestry companies. 

“Unleashing forest companies to build hundreds of kilometers (of) more roads to do more clear-cutting results in a worse situation, not a better one,” Foy said.  
…

Pakistani authorities are touting the arrival of the first shipment of discounted Russian crude oil as “transformative,” however, analysts say the extent of relief it will bring the country’s crisis-riddled economy is not clear.  

Pakistan’s minister for petroleum, Musadik Malik, told the Reuters news agency that Islamabad paid Moscow for the cargo in yuan, the Chinese currency. The Pakistani government has so far not disclosed the price.

Announcing the arrival of the Russian vessel “Pure Point,” with a little more than 45,000 metric tons of crude oil, Pakistani Prime Minister Shehbaz Sharif said in a tweet Sunday night that the country was moving “one step at a time toward prosperity, economic growth and energy security and affordability.”

Authorities at the southern Karachi Port terminal began offloading the cargo Monday morning. Shariq Amin Farooqi, public relations officer for the Karachi Port Trust, told VOA the entire process would take 26 to 30 hours.  

Economic distress  

The discounted crude shipment comes at a time when import-dependent Pakistan faces a severe liquidity crunch. The country spends the biggest portion of its import funds, around $18 billion annually, on energy and fuel. 

According to recent central bank data, foreign exchange reserves were below $10 billion as of June 2, with the State Bank of Pakistan holding less than $4 billion – barely enough to cover a month of select imports.   

Pakistan has been teetering on the brink of default since last year. Its economy has grown at a rate of 0.29% in the fiscal year ending this month, according to government projections, while annual inflation reached a record high of almost 38% last month.  

Russian deal  

As part of what the government in Islamabad has called a “trial” shipment, Pakistan will receive a total of 100,000 metric tons of crude oil from Russia. The second shipment is expected in a few weeks.  

Islamabad began negotiating for discounted crude oil from Moscow last year in a bid to take advantage of the $60 per barrel price cap placed on Russian oil by the United States and its allies to deprive Moscow of funds in the wake of the war on Ukraine.

The deal was finalized in April after Pakistan’s minister for petroleum, Musadik Malik, led a delegation to Moscow late last year and a Russian delegation visited Islamabad in March to cement the details.   

The Pakistani government has so far not disclosed the payment method or the price at which it is acquiring crude from Moscow.

Dubai-based oil trading expert Ahmad Waqar told VOA that for the deal to truly ease Pakistan’s economic pain, it should include purchase on credit as Pakistan is strapped for cash.  

“In my opinion, right now, more than discount we need to get cargo on credit,” Waqar said.

Pakistan traditionally buys the bulk of its energy from Gulf countries with Saudi Arabia and the United Arab Emirates its top suppliers. While the Saudis have often supplied fuel on credit, Pakistan’s budget for the next fiscal year starting in July does not include any such facility from its Middle Eastern ally.  

Waqar said he believes the cost of getting cargo all the way from Russia via Oman, instead of from Gulf countries located nearby could also chip away at the possible benefit to Pakistan.    

“Russian cargoes are not as cheap as they used to be, let’s say, 10 months ago when India started buying from Russia…There was a different pricing level at the time. Since then, more international traders started buying and prices went up. It’s not possible to now say that ‘I can get Russian cargo very cheaply,’” Waqar said.  

In the past, petroleum minister Malik also tried to downplay the relief Russian oil could provide to Pakistanis at the pump, however, after the arrival of the cargo, local media quoted him saying Pakistanis will see a reduction in prices in a few weeks.  

How much usable fuel will be produced from the Russian crude is also not clear yet. Pakistan Refinery Limited, tasked with processing it, will submit a report to the government detailing the quality and quantity of the products.   

US approval  

Despite initial pushback from Washington, Pakistan’s neighbors China and India’s energy imports from Russia rose after the war in Ukraine began last year, with the latter seeing its purchases increase almost ten-fold since April 2022.  

Responding to Pakistan’s decision to purchase crude oil from Russia, the State Department in April said that it understood the demand for Russian energy and would not interfere in any country’s decision to buy from Moscow.  

“Countries will make their own sovereign decisions. We have never tried to keep Russian energy off the market,” said spokesperson Vedant Patel.    

The Pakistani ambassador to the U.S., Masood Khan, also dismissed concerns that the deal could damage already strained ties between Islamabad and Washington, saying U.S. officials had been consulted.   

“We have placed the first order for Russian oil, and this has been done in consultation with the United States government. There’s no misunderstanding between Washington and Islamabad on this count,” Khan told a gathering at the Washington-based Wilson Center in April.
…

In a good month, Celina Chanthanouvong has about $200 left after rent, groceries and car insurance. That doesn’t factor in her student loans, which have been on hold since the start of the pandemic and are estimated to cost $300 a month. The pause in repayment has been a lifeline keeping the 25-year-old afloat. 

“I don’t even know where I would begin to budget that money,” said Chanthanouvong, who works in marketing in San Francisco. 

Now, after more than three years, the lifeline is being pulled away. 

More than 40 million Americans will be on the hook for federal student loan payments starting in late August under the terms of a debt ceiling deal approved by Congress last week. The Biden administration has been targeting that timeline for months, but the deal ends any hope of a further extension of the pause, which has been prolonged while the Supreme Court decides the president’s debt cancellation. 

Without cancellation, the Education Department predicts borrowers will fall behind on their loans at historic rates. Among the most vulnerable are those who finished college during the pandemic. Millions have never had to make a loan payment, and their bills will soon come amid soaring inflation and forecasts of economic recession. 

Advocates fear it will add a financial burden that younger borrowers can’t afford.

“I worry that we’re going to see levels of default of new graduates that we’ve never seen before,” said Natalia Abrams, president of the nonprofit Student Debt Crisis Center.

Chanthanouvong earned a bachelor’s in sociology from the University of California-Merced in 2019. She couldn’t find a job for a year, leaving her to rely on odd jobs for income. She found a full-time job last year, but at $70,000, her salary barely covers the cost of living in the Bay Area. 

“I’m not going out. I don’t buy Starbucks every day. I’m cooking at home,” she said. “And sometimes, I don’t even have $100 after everything.” 

Under President Joe Biden’s cancellation plan, Chanthanouvong would be eligible to get $20,000 of her debt erased, leaving her owing $5,000. But she isn’t banking on the relief. Instead, she invited her partner to move in and split rent. The financial pinch has them postponing or rethinking major life milestones. 

“My partner and I agreed, maybe we don’t want kids,” she said. “Not because we don’t want them, but because it would be financially irresponsible for us to bring a human being into this world.” 

Out of the more than 44 million federal student loan borrowers, about 7 million are below the age of 25, according to data from the Education Department. Their average loan balance is less than $14,000, lower than any other age group. 

Yet borrowers with lower balances are the most likely to default. It’s fueled by millions who drop out before graduating, along with others who graduate but struggle to find good jobs. Among those who defaulted in 2021, the median loan balance was $15,300, and the vast majority had balances under $40,000, according to the Federal Reserve Bank of New York.

Resuming student loan payments will cost U.S. consumers $18 billion a month, the investment firm Jefferies has estimated. The hit to household budgets is ill-timed for the overall economy, Jefferies says, because the United States is widely believed to be on the brink of a recession. 

Despite the student loan moratorium, Americans mostly didn’t bank their savings, according to Jefferies economist Thomas Simons. So they’ll likely have to cut back on other things — travel, restaurants — to fit resumed loan payments into their budgets. Belt-tightening could hurt an economy that relies heavily on consumer spending. 

Noshin Hoque graduated from Stony Brook University early in the pandemic with about $20,000 in federal student loans. Instead of testing the 2020 job market, she enrolled at a master’s program in social work at Columbia University, borrowing $34,000 more. 

With the payments paused, she felt a new level of financial security. She cut costs by living with her parents in New York City and her job at a nonprofit paid enough to save money and help her parents. 

She recalls splurging on a $110 polo shirt as a Father’s Day gift for her dad. 

“Being able to do stuff for my parents and having them experience that luxury with me has just been such a plus,” said Hoque, who works for Young Invincibles, a nonprofit that supports student debt cancellation. 

It gave her the comfort to enter a new stage of life. She got married to a recent medical school graduate, and they’re expecting their first child in November. At the same time, they’re bracing for the crush of loan payments, which will cost at least $400 a month combined. They hope to pay more to avoid interest, which is prohibited for them as practicing Muslims. 

To prepare, they stopped eating at restaurants. They canceled a vacation to Italy. Money they wanted to put toward their child’s education fund will go to their loans instead. 

“We’re back to square one of planning our finances,” she said. “I feel that so deeply.”

Even the logistics of making payments will be a hurdle for newer borrowers, said Rachel Rotunda, director of government relations at National Association of Student Financial Aid Administrators. They’ll need to find out who their loan servicers are, choose a repayment plan and learn to navigate the payment system. 

“The volume of borrowers going back on the system at the same time — this has never happened before,” Rotunda said. “It’s fair to say it’s going to be bumpy.”

The Education Department has promised to make the restart of payments as smooth as possible. In a statement, the agency said it will continue to push for Biden’s debt cancellation as a way to reduce borrowers’ debt load and ease the transition. 

For Beka Favela, 30, the payment pause provided independence. She earned a master’s in counseling last year, and her job as a therapist allowed her to move out of her parents’ house.

Without making payments on her $80,000 in student loans, she started saving. She bought furniture. She chipped away at credit card debt. But once the pause ends, she expects to pay about $500 a month. It will consume most of her disposable income, leaving little for surprise costs. If finances get tighter, she wonders if she’ll have to move back home.

“I don’t want to feel like I’m regressing in order to make ends meet,” said Favela, of Westmont, Illinois. “I just want to keep moving forward. I’m worried, is that going to be possible?” 
…

Despite Western attempts to stifle Russia’s economy through sanctions following its invasion of Ukraine last year, Russian trade volumes with dozens of countries have actually increased since the war began — with NATO member Turkey providing a “critical” economic lifeline for Moscow, according to an analysis by the Washington-based Atlantic Council.

The countries that have increased trade since the February 2022 invasion include several European Union and NATO members, according to the analysis.

“Such surges in trade, however, are not necessarily an indicator of support” for the war launched by Russian President Vladimir Putin, the report says. “Instead, it is more likely they are predominantly the result of companies — and countries — pursuing legal opportunities for cheaper exports and new gaps in the Russian market.”

China

It notes that China’s trade with Russia had already been increasing at an average annual rate of 23% over the past five years, excluding the impact of the COVID-19 pandemic in 2020. It said China’s trade with Russia has jumped by another 27% since the Ukraine invasion.

Other countries have seen a far greater increase in trade with Russia since February 2022.

“We see increases of trade across a range of different countries, with places like India and Greece, for example, importing cheap Russian oil at below market prices. And this is what’s causing the surge of trade there,” said Niels Graham, a co-author of the Atlantic Council report, in an interview this week with VOA.

“But we also see other countries like Turkey, for example, exporting a lot of electronics as well as chemical industrial goods to Russia to take advantage of the holes in the Russian market that have been caused by the sort of G7 statecraft response,” he said.

He said that Beijing is actually showing signs of “restraint” since Moscow’s invasion of Ukraine.

“China is certainly engaging with Russia, certainly increasing its trade overall, but doing so very much in line overwhelmingly with the red lines the West has drawn — for fear of Western retaliation against China, cutting it off from a much more important Western market,” Graham told VOA.

Russian Oil

India’s trade with Russia has soared by 250% since 2021, the biggest increase by far among Russia’s trading partners.

China and India imported record volumes of Russian oil in May, according to Reuters, totaling about 110 million barrels for the month. Analysts say the world’s two biggest buyers of Russian oil are capitalizing on discounted prices after the G7 group of rich nations imposed a price cap of $60 per barrel in December.

Washington has warned that Moscow is seeking to circumvent the price cap by using the Eastern Siberia Pacific Ocean pipeline along with ports in eastern Russia, where there may be less Western oversight of trading activities.

The West never intended to completely block Russia oil sales, said Graham.

“Doing so against an oil producer as large as Russia would have skyrocketed global oil prices, would have likely tipped the global economy into recession, and would have made a lot of countries angry against Western actions,” he said.

Turkish lifeline

The Atlantic Council report says NATO member Turkey also provides a vital lifeline for Russia’s economy, with trade volumes increasing by some 93% since the invasion.

It said Turkey has sold Russia sensitive material like integrated circuits and semiconductors which could be used in weapons systems.

“Although Turkish exports of electronic machinery, including critical integrated circuits, fell in the immediate aftermath of Russia’s full-scale invasion, they have since recovered and grown well beyond the pre-invasion average. From March 2022 to March 2023, Turkish electronic exports to Russia jumped by about 85%,” the Atlantic Council report said.

“To Ankara’s credit, following pressure from the Group of Seven [G7], Turkey has agreed to halt its transit of sanctioned goods to Russia,” the report added. “However, its trade with Russia remains a vital economic lifeline for its businesses as the country recovers and reconstructs from a devastating earthquake earlier this year.”

Turkey assured the European Union in March that it would no longer ship or transit goods to Russia that are subject to sanctions or export controls, according to an EU official quoted by Reuters.

Ankara has denied exporting goods to Russia that could have military applications.
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Pakistanis traditionally give generously to charity, but most avoid paying taxes. Now, charities are feeling the pressure as donations drop amid record-setting 38% inflation. Low tax collection, meanwhile, hurts economic growth, forcing more to rely on charities for survival.

Every day, thousands of Pakistanis come to one of the Saylani Welfare Trust’s free food distribution centers, spread across the country, for a hot meal.

Security guard Muhammad Khursheed is one of them.

He said if the free food from Saylani wasn’t available, he would be spending all his salary on just food.

With an annual inflation rate of almost 38% eating through people’s incomes, Saylani, one of Pakistan’s largest charities, is seeing a rise in daily demand for its free food but a drop in donations.

Suhail Ahamed is a regional manager with the charity.

He said that up until a few months ago, he used to get 30,000 pieces of bread made. Now the number has reached almost 42,000. Donations have reduced but Saylani has not cut down its work, he added.

Charitable giving is a big part of Pakistani culture. In a 2021 Gallup Pakistan survey, around 76% of the respondents said they had given money to help someone in the year before.

At the same time, the proportion of Pakistanis who pay taxes has always remained dismally low.

The country’s tax to GDP ratio is below 10%, meaning the government receives less than 10% of the size of the economy in taxes.

What most countries need to sustain economic growth, according to experts, is a tax to GDP ratio of at least 15%.

Economic researcher Ali Khizar says in Pakistan, huge sectors such as agriculture, trade, retail and real estate use political muscle to keep their taxes low.

“These sacred cows have presence in the parliament. These sacred cows have really strong lobby in the military establishment, and they are very much entrenched in those who are making the decisions,” he said.

A complicated taxation system, ineffective implementation, and lack of trust in the government also cause many to evade taxes.

Broadening the tax net and increasing collection are among the conditions for reviving a stalled 2019 International Monetary Fund bailout deal. However, authorities will likely miss the target.

With Pakistan teetering on the brink of default, and millions getting pushed into poverty because of the rising cost of food and fuel, pressure on charities like Saylani is growing, says regional manager Ahmed.

He said they are very worried that their work may stop but will try their best to prevent that from happening.     
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The United States will push back on China’s targeting of American firms, which Washington considers politically motivated and unfair, U.S. Ambassador to China Nicholas Burns said on Wednesday.

Several U.S. companies have faced increased scrutiny in China in recent months, including U.S. memory chipmaker Micron Technology Inc, which China’s cyberspace regulator said in May would be barred from selling to operators of key infrastructure.  

Businesses groups have warned about the rise in China’s use of exit bans, pressure on foreign due diligence firms, and the vague wording of China’s new counterespionage law, which bans the transfer of any information related to national security and broadens the definition of spying.

Burns said five U.S. companies had been singled out by Chinese authorities in recent months: Micron, Deloitte, and consultancies Bain & Company, Capvision, and Mintz Group.

“It’s not happening to companies of other countries, but it is to ours,” Burns told a U.S. Global Leadership Coalition forum in Washington via video link from Beijing.

“It looks political in nature. It looks like payback from the Chinese perspective, and it’s wrong. And obviously we are going to resist this and we are going to push back,” Burns said.

Chinese leader Xi Jinping has emphasized national security since taking office in 2012 as suspicion of the U.S. and its allies grows, but that focus contrasts with Beijing’s message that it is opening up to overseas investment.

The Biden administration has pushed to boost engagement with China even as ties have deteriorated over disputes ranging from military activity in the South China Sea, Beijing’s human rights record, and technology competition.

Chinese officials complain that Washington has put hundreds of Chinese companies under various U.S. sanctions or on export ban lists.  

Burns said the U.S. was restricting American companies’ ability to sell technology such as advanced semiconductors to China so as to not give China’s military a “leg up.”  

“While we compete, it is important that we manage that competition so that it has limits and barriers, and it is always a peaceful competition,” Burns said. 
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After his May 29 inauguration, Nigerian president Bola Tinubu announced he would soon end a decades-old fuel subsidy, saying the country can no longer afford the cost. His comments sparked panic buying of gas and raised concerns about inflation in one of Africa’s top oil-producing countries. Gibson Emeka has this report from Abuja.

Camera: Gibson Emeka
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The World Bank on Tuesday raised its 2023 global growth forecast as the U.S. and other major economies have proven more resilient than predicted but said higher interest rates would cause a larger-than-expected drag next year.

Real global GDP is set to climb 2.1% this year, the World Bank said in its latest Global Economic Prospects report. That’s up from a 1.7% forecast issued in January but well below the 2022 growth rate of 3.1%.

The development lender cut its 2024 global growth forecast to 2.4% from 2.7% in January, citing the continuing effects of tighter monetary policy, particularly in reducing business and residential investment.

“Growth over the rest of 2023 is set to slow substantially as it is weighed down by the lagged and ongoing effects of monetary tightening, and more restrictive credit conditions,” it said.

“These factors are envisaged to continue to affect activity heading into next year, leaving global growth below previous projections.”

The bank predicted global growth rebounding to 3.0% in 2025.  

In January, the World Bank had warned that global GDP was slowing to the brink of recession, but since then, strength in the labor market and consumption in the U.S. had exceeded expectations as has China’s recovery from COVID-19 lockdowns.

U.S. growth for 2023 is now forecast at 1.1%, more than double the 0.5% forecast in January, while China’s growth is expected to climb to 5.6%, compared to a 4.3% forecast in January after COVID-reduced growth of 3% in 2022.

The bank, however, halved its previous 2024 U.S. growth forecast for the U.S. to 0.8%, and cut China’s forecast by 0.4 percentage point to 4.6%.

The euro zone got a forecast increase to 0.4% growth for 2023 from a flat outlook in January, but the forecast for next year was also cut slightly.

Recent banking sector stress is also contributing to tighter financial conditions that will continue into 2024, the lender said.

It cited one potential downside scenario where banking stress results in a severe credit crunch and broader financial market stress in advanced economies. This would likely cut 2024 growth by nearly half to just 1.3% – the slowest pace in 30 years outside of the 2009 and 2020 recessions.

“In another scenario where financial stress propagates globally to a far greater degree, the world economy would fall into recession in 2024,” the bank added.

The bank said inflation is expected to gradually edge down as growth decelerates and labor demand in many economies softens and commodity prices remain stable. But it added that core inflation is expected to remain above central bank targets in many countries throughout 2024.
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The U.S. Department of Homeland Security is looking at how artificial intelligence can be used to help identify goods made with child or forced labor and prevent those goods from entering the country. VOA’s Julie Taboh has more. VOA footage by Adam Greenbaum.
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Stretch limousines — once a symbol of the rich and famous — are now rarely seen on the roads and at red carpet events. Karina Bafradzhian investigates why demand for limousines has declined.
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The labor market in the United States continued to defy expectations in May, adding 339,000 new jobs. The figure was far above what economists had expected and signals that ongoing efforts to cool the economy and lower inflation are having, at best, only mixed success.

The increase in jobs came along with steadily rising wages. The figures released Friday show a 4.3% year-over-year increase in workers’ pay. The new jobs were also spread over various sectors of the economy, with professional services, government, health care, construction and transportation all showing significant increases.

The data also showed an upward revision of previous estimates of job growth for March and April, indicating another 93,000 jobs were added over those months.

“For all the talk of recession coming, you’d never know it by looking at the job market,” Greg McBride, senior vice president and chief financial analyst for Bankrate.com told VOA. “Another month of strong payroll growth, upward revisions to both March and April, and payroll growth that tended to be concentrated in higher paying jobs. You don’t see that very often … and that speaks to the robustness of the labor market.”

Unemployment ticks up

Counterintuitively, the Labor Department also reported an uptick in the unemployment rate from 3.4% to 3.7%. The number remains near historic lows, and it is not uncommon for the unemployment rate to increase even as the number of jobs increases. This is because the “establishment” survey, which the government uses to count jobs, and the “household” survey, which it uses to measure unemployment, are different.

The disparity was largely because many people previously listed as self-employed are now seeking work in the regular workforce, temporarily skewing the unemployment figures.

The numbers point to an American economy that has remained resilient through a period of sharp interest rate increases by the Federal Reserve, which has raised rates from near zero to between 5% and 5.25% in the 14 months since March 2022.

The aim of the Fed’s rate hikes has been to lower inflation, which spiked in 2022, hitting an annual rate of 9.1% in June of last year.

The rate of inflation has slowed markedly since then, to 4.9% in May, the latest data available. That figure is still outpacing wage growth, which leaves many workers feeling as though they are losing ground even with higher take-home pay.

Unalloyed good news

Joseph E. Gagnon, a senior fellow with the Peterson Institute for International Economics, told VOA that while there were many nuances to the report, one piece of what he called “unalloyed good news” is that the U.S. labor force is continuing to grow.

Friday’s data showed a seasonally adjusted U.S. labor force of 168.8 million, well above pre-pandemic levels, which Gagnon said is good for the economy as a whole and for those concerned about inflation.

“It means people are getting more income and more employment opportunities,” Gagnon said. “But it also means that there’s less inflation pressure, because if there’s more workers out there, they can produce more, and that can actually hold prices down.”

Biden celebrates

In Washington, Democrats and Republicans elected to view the jobs report through their preferred lenses.

In a statement released after the report, President Joe Biden celebrated the news, while noting that he had recently negotiated a deal with Republicans in the House of Representatives to raise the nation’s debt ceiling and avoid the potential for a catastrophic default on the nation’s debts.

“We have now created over 13 million jobs since I took office,” he said. “That is more jobs in 28 months than any President has created in an entire 4-year term.”

He added, “In short, the Biden economic plan is working. And due to the historic action taken by Congress this week, my economic plan will continue to deliver good jobs for the American people in communities throughout the country.”

GOP counters

Republicans were quick to point out that the rosy jobs report belies the fact that many Americans continue to feel that they are struggling economically.

“Real wages are down as 60 percent of workers report living paycheck-to-paycheck and 83% say the economic situation of the nation is negative,” the Republican National Committee tweeted. “Biden’s inflation is killing the financial well-being of American families.”

The Republicans’ claim that the strong economy is not benefiting all Americans appears to have some resonance with the public. On Tuesday, The Conference Board, which tracks consumer sentiment, reported that its consumer confidence index had dropped from 103.7 to 102.3 in May. (The Conference Board uses a scale that sets consumer confidence measured in 1985 as 100.)

“Consumer confidence declined in May as consumers’ view of current conditions became somewhat less upbeat while their expectations remained gloomy,” Ataman Ozyildirim, senior director of economics at The Conference Board, said in a statement.

Ozyildirim reported that consumers’ experience of the economy seems to be at odds with official numbers. Survey respondents estimated job availability to be lower than the government reports it to be and said that they expect higher inflation over the next six months, even as the official rate falls.

Impact on Fed

It is unclear, at this point, how the larger than expected jobs numbers for last month will affect the thinking of policymakers at the Federal Reserve, who had been signaling that they might be prepared to pause interest rate increases while they assess the impact current rates are having on inflation.

The Fed has been attempting to engineer what economists call a “soft landing.” That is, policymakers are attempting to slow the economy enough to push inflation down to a more manageable level, but not so much that the country is tipped into a recession. One expected effect of a cooling economy was supposed to have been slower, or even negative, job growth.

Gagnon said that it’s possible the central bank might consider another small rate increase this month but said much of the urgency that marked large rate increases a year ago no longer applies.

“I think the Fed is not in an ideal place, but it’s not horrible,” he said. “It can be patient, or slow. It’s a close call as to whether they might want to raise rates a bit more, but I don’t see the urgent need that we had a year ago of raising 75 basis points every meeting. We’re not there now.”
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The nation’s employers stepped up their hiring in May, adding a robust 339,000 jobs, well above expectations and evidence of strength in an economy that the Federal Reserve is desperately trying to cool. 

Friday’s report from the government showed that the unemployment rate rose to 3.7%, from a five-decade low of 3.4% in April. 

The stronger hiring demonstrates the job market’s resilience after more than a year of rapid interest rate increases by the Fed. Many industries, from construction to restaurants to health care, are still adding jobs to keep up with consumer demand and restore their workforces to pre-pandemic levels. 

Having imposed 10 straight rate hikes since March 2022, the Federal Reserve is widely expected to skip a rate increase when it meets later this month, though it may resume its hikes after that. Chair Jerome Powell and other Fed officials have made clear that they regard strong hiring as likely to keep inflation persistently high because employers tend to sharply raise pay in a tight job market. Many of these companies then pass on their higher wage costs to customers in the form of higher prices. 

The May jobs report adds to other recent evidence that the economy is still managing to chug ahead despite long-standing predictions that a recession was near. Consumers ramped up their spending in April, even after adjusting for inflation, and sales of new homes rose despite higher mortgage rates. 

Some cracks in the economy’s foundations, though, have begun to emerge. Home sales have tumbled. A measure of factory activity indicated that it has contracted for seven straight months. 

And consumers are showing signs of straining to keep up with higher prices. The proportion of Americans who are struggling to stay current on their credit card and auto loan debt rose in the first three months of this year, according to the Federal Reserve Bank of New York. 

Fed officials are expected to forgo a rate increase at their June 13-14 meeting to allow time to assess how their previous rate hikes have affected the inflation pressures underlying the economy. Higher rates typically take time to affect growth and hiring. The Fed wants to avoid raising its key rate to the point where it would slow borrowing and spending so much as to cause a deep recession. 

The U.S. economy as a whole has been gradually weakening. It grew at a lackluster 1.3% annual rate from January through March, after 2.6% annual growth from October through December and 3.2% from July through September. 

The Federal Reserve’s so-called Beige Book, a collection of anecdotal reports mostly from businesses across the country, reported this week that the pace of hiring gains in April and May had “cooled some” compared with previous reports. Many companies reported that they were fully staffed. 

At the same time, despite some high-profile job cuts by financial and high-technology companies, the pace of layoffs remains unusually low. The number of people seeking first-time unemployment benefits, a proxy for layoffs, barely rose from a low level last week.

Many employers are still engaged in so-called “catch-up hiring,” particularly in such sectors as restaurants, hotels and entertainment venues. Even as customer demand in these industries has spiked, the number of employed workers remains below pre-pandemic levels.

Consumers, who drive roughly two-thirds of economic activity, are still mostly spending at a solid pace, despite higher prices and borrowing rates. Their spending jumped 0.8% in April, the fastest monthly pace since January, as Americans flocked to airports, restaurants and concert halls, among other places. 
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President Joe Biden is set to sign the Fiscal Responsibility Act, legislation that suspends the U.S. government’s debt limit through January 2025 and avoids a potentially disastrous default on U.S. financial obligations.

He is scheduled to deliver remarks on the legislation’s passage Friday evening.

The U.S. Senate voted Thursday night 63-36 in support of the measure. Democratic senators John Fetterman, Elizabeth Warren, Ed Markey, Jeff Merkley and Bernie Sanders, who is an independent but caucuses with Democrats, joined 31 Republicans in voting against the bill.

“Tonight, senators from both parties voted to protect the hard-earned economic progress we have made and prevent a first-ever default by the United States,” Biden said in a statement Thursday.

The bill allows the government to continue to borrow more money over the next 19 months to meet its obligations, exceeding the current $31.4 trillion debt limit.

Despite objections by far-right Republican lawmakers who said it did not go far enough to cut spending and from Democratic progressives who said it trimmed too much, the bill passed the House of Representatives under a 314-117 vote Wednesday night.

The legislation does not set a new monetary cap, but the borrowing authority would extend to January 2, 2025, two months past next year’s presidential election.

In addition, the legislation calls for maintaining most federal spending at the current level in the fiscal year starting in October, with a 1% increase in the following 12 months.

“With the latest debt limit debate now behind us, our leaders must get serious about reforming this process so that we never again jeopardize the full faith and credit of the United States,” Kelly Veney Darnell, interim CEO of the Bipartisan Policy Center, said in a statement sent to VOA.

“Bipartisan legislation like the Responsible Budgeting Act, introduced in the last Congress, would require lawmakers to routinely address our fiscal health by annually debating and voting on significant deficit reducing legislation — but without the full faith and credit of the country hanging in the balance,” she said.

Republican House Speaker Kevin McCarthy, who negotiated the deal with Biden, told reporters that getting the bill passed “wasn’t an easy fight.” He emphasized the budget savings and criticized Democrats who wanted to separate the debate about future government spending from the need to suspend the debt limit so current financial obligations could be met.

“We put the citizens of America first and we didn’t do it by taking the easy way,” McCarthy said. “We didn’t do it by the ways that people did in the past by just lifting [the debt ceiling]. We decided you had to spend less, and we achieved that goal.”

McCarthy said he intends to follow Wednesday’s action with more efforts to cut federal spending.

The measure does not raise taxes on the wealthy, a step wanted by Democrats. Nor will it stop the national debt total from continuing to increase, perhaps by another $3 trillion or more over the next year-and-a-half until the next expiration of the debt limit.

Other pieces of the legislation include a reduction in the number of new agents hired by the country’s tax collection agency, a requirement that states return $30 billion in unspent coronavirus pandemic assistance to the federal government and extending from 50 to 54 the upper age bracket for those required to work in order to receive food aid.

Ken Bredemeier contributed to this report.
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