Author: CensorBiz

Washington — The Federal Reserve is gearing up to announce its first interest rate cut for more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the U.S. presidential election.   

Senior officials at the U.S. central bank including Fed chair Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool.   

The Fed, which has a dual mandate from Congress to act independently to ensure both stable prices and maximum sustainable employment, has repeatedly stressed it will make its decision on rate cuts based solely on the economic data.  

But a cut on Wednesday could still cause headaches for Powell, as it would land shortly before the election, in which former Republican president Donald Trump is running against the current Democratic vice president, Kamala Harris. 

“As much as I think the Fed tries to say that they’re not a political animal, we are in a really wild cycle right now,” Alicia Modestino, an associate professor of economics at Northeastern University, told AFP.   

How big a cut? 

The debate among policymakers on Tuesday and Wednesday this week will likely center on whether to move by 25 or 50 basis points.   

However, a rate cut of any size would be the Fed’s first since March 2020, when it slashed rates to near-zero in order to support the US economy through the Covid-19 pandemic.  

The Fed started hiking rates in 2022 in response to a surge in inflation, fueled largely by a post-pandemic supply crunch and the war in Ukraine.   

It has held its key lending rate at a two-decade high of between 5.25 and 5.50 percent for the past 14 months, waiting for economic conditions to improve.   

Now, with inflation falling, the labor market cooling, and the US economy still growing, policymakers have decided that conditions are ripe for a cut.   

Policymakers are left with a choice: making a small 25 basis point cut to ease into things, or a more aggressive cut of 50 basis points, which would be helpful for the labor market but could also risk reigniting inflation.   

“I think that in advance of the November meeting, there’s not quite enough data to say we’re in jeopardy on the employment side,” said Modestino, who was previously a senior economist at the Federal Reserve Bank of Boston.    

Analysts see the smaller cut as a safe bet.   

“We expect the Fed to cut by 25bp [basis points],” economists at Bank of America wrote in a recent note to clients.   

“The Fed likes predictability,” Modestino from Northeastern said. “It’s good for markets, good for consumers, good for workers.”   

“So a 25 basis point cut now, followed up by another 25 basis point cut in November after the next round of economic data, offers a somewhat smoother glide path for the economy,” she added.    

How many cuts?  

While analysts overwhelmingly expect the Fed to start cutting in September, there is less clarity about what comes next.   

Economists at some banks, including Goldman Sachs, expect cuts totaling 75 basis points over the last three meetings of the year, while others see more aggressive cuts, like economists at Citi, who have 125 basis points of easing as their base case.   

“The continued softening of the labor market is likely to provoke larger-sized cuts if not at this FOMC meeting then in November and December,” the Citi economists wrote in a recent note to clients, referring to the rate-setting Federal Open Market Committee (FOMC).   

The Fed will shed some light on the issue on Wednesday, when it publishes the updated economic forecasts of its 19-member FOMC — including their rate cut expectations.  

In June, FOMC members sharply reduced the number of cuts they had penciled in for this year from a median of three down to just one amid a small uptick in inflation.     

But as inflation has fallen and the labor market has weakened, expectations of more cuts have grown.  

Traders also see a greater-than 99 percent chance of at least four more cuts in 2025, which would bring the Fed’s key lending rate down to between 3.5 and 3.75 percent — 175 basis points below current levels. 
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BEIJING — China’s economy softened in August, extending a slowdown in industrial activity and real estate prices as Beijing faces pressure to ramp up spending to stimulate demand.

Data published by the National Bureau of Statistics Saturday showed weakening activity across industrial production, retail sales and real estate this month compared to July.

“We should be aware that the adverse impacts arising from the changes in the external environment are increasing,” said Liu Aihua, the bureau’s chief economist in a news conference.

Liu said that demand remained insufficient at home, and the sustained economic recovery still confronts multiple difficulties and challenges.

China has been grappling with a lagging economy post-COVID, with weak consumer demand, persistent deflationary pressures and a contraction in factory activity.

Chinese leaders have ramped up investment in manufacturing to rev up an economy that stalled during the pandemic and is still growing slower than hoped.

Beijing also has to deal with increasing pressure to implement large-scale stimulus measures to boost economic growth.

While industrial production rose by 4.5% in August compared to a year ago, it declined from July’s 5.1% growth, according to the bureau’s data released.

Retail sales grew 2.1% from the same time last year, slower than the 2.7% increase last month.

Fixed asset investment rose by 3.4% from January to August, down from 3.6% in the first seven months.

Meanwhile, investment in real estate declined by 10.2% from January to August, compared to last year.

The figures released Saturday come after trade data for August saw imports grow just 0.5% compared to a year ago.

The consumer price index rose 0.6% in August, missing forecasts according to data released Monday. Officials attributed the higher CPI to an increase in food prices due to bad weather.

But the core CPI, which excludes food and energy prices, rose by just 0.3% in August, the slowest in over three years.
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Taipei, Taiwan — The U.S.-China technology war is playing out in the smartphone market in China, where global rivals Apple and Huawei released new phones this week. Industry experts say Apple, which lacks home-field advantage, faces many challenges in defending its market share in the country.

The biggest highlight of the iPhone 16 is its artificial intelligence system, dubbed Apple Intelligence, while the Huawei Mate XT features innovative tri-fold screen technology.  But at a starting price of RMB 19,999, about $2,810, the Mate XT will cost about three times as much as the iPhone 16.

According to data from VMall, Huawei’s official shopping site, nearly 5.74 million people in China preordered the Mate XT as of late Thursday, 5½ days after Huawei began accepting preorders.

But in a survey conducted on the Chinese microblogging site Weibo by Radio France International, half of the 9,200 respondents said they would not purchase a Mate XT because the price is prohibitive. An additional 3,500 said they are not in the market for a new phone now.

“I suggest that Huawei release some products that ordinary people can afford,” a Weibo user wrote under the name “Diamond Man Yang Dong Feng.”

The iPhone 16 is not available for preorder until Friday, but some e-commerce vendors in China have promised to deliver the new devices to consumers within half a day to two days of sale.

In the competition between Apple and Huawei, iPhone 16 has some inherent disadvantages, said Shih-Fang Chiu, a senior industry analyst at the Taiwan Institute of Economic Research.

“Apple’s strength is information security and privacy, but this is difficult to achieve in the Chinese market, where the government can control the data in China’s market to a relatively high degree. In the era of AI mobile phones, this will bring challenges to Apple’s development in the Chinese market,” Chiu said.

Apple’s AI service on its iPhone 16 will roll out at a gradual pace in different languages, first in English and other languages later this year. The Chinese version will not be available until 2025.

There are other challenges Apple faces as well, Chiu added, such as regulatory controls, consumer sentiment favoring local brands and weakening spending power amid China’s economic slowdown.

According to Counterpoint Research’s statistics, Huawei held a market share of 15% in the second quarter of 2024, surpassing Apple’s 14% market share. That compares with Apple’s 17.3% share in 2023 as reported by the industry research firm International Data Corporation China, or IDC China.

Ryan Reith, the program vice president for IDC’s Mobile Device Tracker suite, said in a written response to VOA that the iPhone 16 has not made significant hardware upgrades and that AI applications alone are not attractive because consumers have GPT and other AI solutions.

AI applications are also another hurdle. Analyst Chih-Yen Tai said iPhone 16’s AI services involve personal data collection, information application and cloud computing, which will require collaboration with Chinese service providers.

That, along with the ban on Chinese civil servants and employees at state-owned enterprises from using their iPhone at work in recent years, will affect the sales of Apple products, said Tai, the deputy director of the Center for Science and Technology Policy Evaluation at Chung-Hua Institution for Economic Research in Taipei.

“China’s patriotism has led to a strong number of preorders” for Huawei’s tri-fold phones, Tai said.

“The competitors in China will sell the idea [to consumers] that iPhones will soon be edged out of the premium smartphone market. So, in the next stage, the affordable iPhone versions will be the key to whether it [Apple] can return to China or its previous glorious sales era,” Tai said.

Tzu-Ang Chen, a senior consultant in the digital technology industry in Taipei, said use of Huawei’s HarmonyOS operating system surpassed that of Apple’s iOS in China in the first quarter of this year, representing China’s determination to “go its own way” and create “one world, two systems.”

“The U.S.-China technology war has extended to smartphones,” Chen said. “IPhone sales in China will get worse and worse, obviously because Huawei is doing better, and coupled with patriotism, Apple’s position in the hearts of 1.4 billion people will never return.”

He said that as China seeks to develop pro-China markets among member countries of the Belt and Road Initiative in Southeast Asia, the Middle East and Africa, China-made mobile phones may become their first choice.

VOA’s Adrianna Zhang contributed to this report.
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Washington — The White House said on Thursday it is acting on Democratic lawmakers’ demands to close what they see as a legal loophole that allows manufacturers — most from China — to dodge tariffs on low-priced goods and flood the U.S. with illegal and unsafe products.

The Biden administration is targeting the “de minimis” exemption, which allows parcels valued at less than $800 to enter the U.S. duty free. More than 1 billion such parcels entered the U.S. in fiscal 2023, U.S Customs and Border Protection said.

White House officials attribute the more than fivefold increase from several years ago to the growth of Chinese e-commerce platforms such as Shein and Temu, and administration officials name-checked both of those popular fast-fashion retailers in a briefing with journalists on Thursday.

Daleep Singh, deputy national security adviser for international economics, said these moves to close the loophole would have a big effect on Chinese apparel, and “will drastically reduce the number of shipments entering through the de minimis exemption.”

This would likely hamper Americans’ ability to score items like an $8 T-shirt – available in a range of colors – that features a gunslinging, pants-wearing cartoon cowboy duck who proclaims, “you just yee’d your last haw.” Or a $6 crop top that reads, in English, LIVE LAUGH LOBOTOMY. Or an $8 bra made of two fuzzy, dead-eyed cat faces shorn of their noses, mouths, whiskers and facial expressions, strung together and tied halter-style around the neck. Or an $8 item that can only be described as a business-formal bra, as it is made entirely of ties. It is available in a patchwork of leopard-, zebra- and tiger-print ties, presumably for a formal office that is animal themed.

Singh added that the administration also seeks to tighten information collection requirements and consumer safety standards – and block products that don’t make the cut. And further, he said, the White House is calling on Congress to pass a law this year to “comprehensively reform the de minimis exemption.”

In a Wednesday letter, 126 House Democrats urged the president to use his executive authority, saying they could not act “amid interminable stagnation in Congress that has precluded legislation from passing.”

“While lawmakers would rather see the de minimis issue dealt with legislatively, the Democrats on the call said their patience was wearing thin,” the letter read. “Despite the fact that the concept of de minimis reform has engendered broad bipartisan support, politicking has precluded a concrete resolution.”

Congresswoman Rosa DeLauro of Connecticut, one of the initiative’s leaders, expressed concerns over fast fashion’s documented use of forced labor to make their cut-rate clothing. Rights group Amnesty International has reported that Shein, in particular, upholds “questionable labor and human rights standards.”

Shein’s model, the group says, leans on subcontracting the making of garments, which leaves no room for transparency or accountability for worker conditions, and gives workers no right to unionize or assemble.

Navtej Dhillon, deputy director of the National Economic Council, also said the moves address concerns over fentanyl shipments and for declining U.S. industry.

“Some foreign companies are attempting to use this pathway to ship illegal and dangerous products for our health, avoid our health and safety and consumer protection laws, and evade tariffs to undermine American manufacturers,” he said. “Textile and apparel manufacturing supports tens of thousands of jobs in key states like Georgia and North Carolina. These American workers and manufacturers deserve to compete on a level playing field.”

The congressional group pushing the administration cited approval from law enforcement and industry groups.

“The de minimis loophole is severely exacerbating our nation’s opioid crisis,” said Bill Johnson, executive director of the National Association of Police Organizations. “Closing it would help staunch the flow of fentanyl and other narcotics coming across our borders and help safeguard the lives of our children, families, and friends.”

And Kim Glas, president and CEO of the National Council of Textile Organizations, said the industry group “strongly supports closing the de minimis loophole,” noting the closure of 18 textile plants in the U.S. in the past year.

“De minimis is a free trade agreement for the world at the expense of U.S. manufacturers, retailers, and consumers,” she said in a statement. “Shockingly, it has now become a black market for dangerous products facilitating fentanyl, precursors and pill presses. De minimis is destruction.”

Shein said last year that they support “responsible reform” of the policy but did not give precise recommendations.

“The de minimis exemption needs a complete makeover to create a level playing field for all retailers,” SHEIN Executive Vice Chairman Donald Tang said in a statement. “At the same time, American consumers deserve to know that the products they purchase are authentic and ethically produced. We believe de minimis reform can and should achieve both.”
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HONG KONG — China must reprioritize economic growth and reforms and boost investor confidence by leveling the playing field for all companies in the country, a European business group said Wednesday. 

With “business confidence now at an all-time low” over lagging domestic demand and overcapacity in certain industries, the annual European Business in China Position Paper called on China to open its economy and allow a more free market to determine resource allocation. It also recommended introducing policies to boost domestic demand. 

Profit margins in China are at or below the global average for two-thirds of the companies surveyed earlier in the year, according to the paper published Wednesday by the European Chamber of Commerce in China. 

In August, China filed a complaint with the World Trade Organization over European Union tariffs on electric vehicles made in China. It also launched anti-dumping and subsidies investigations of European dairy products, brandy and pork exports. The tit-for-tat actions have raised fears that a trade war may break out. 

Many European businesses are deciding that the returns on investments in the world’s second-largest economy are not worth the risks, due to issues including China’s economic slowdown and a politicized business environment. 

“For some European headquarters and shareholders, the risks of investing in China are beginning to outright the returns, a trend that will only intensify if key business concerns are left unaddressed,” Jens Eskelund, president of China’s European Union Chamber of Commerce, said in a message at the beginning of the paper. 

The European Chamber’s paper proposes over 1,000 recommendations for China to resolve challenges and problems faced by European businesses operating in the country and boost investor confidence. Among them are calls for China to refrain from punishing companies for the actions of their home governments. Others include ensuring that policy packages for attracting foreign investment are followed by implementation, and refraining from “erratic policy shifts.” 

The report also recommended that the EU proactively engage with China and keep its responses “measured and proportionate” when disagreements arise. 
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KARAWANG, Indonesia — Rahmat Hidayat lost his job when the shoe factory he worked for closed down last year in the industrial town of Karawang in Indonesia’s West Java.  

The 44-year-old now earns less than half of what he used to make by selling grilled meatballs. Unable to afford his wife’s diabetes medication, Rahmat picks herbs to make a tonic instead. 

Like Rahmat, millions of working to middle class Indonesians have become poorer, largely due to an increase in layoffs and a drop in the number of job opportunities since the pandemic. 

This trend bodes ill for the outlook for Southeast Asia’s biggest economy — household consumption accounts for over half of gross domestic product — as well as the widely held investment thesis that an expanding middle class will drive Indonesia’s ambition to become a high-income nation by 2045. 

It also poses a challenge for the incoming administration of President Prabowo Subianto, who won a February election by a landslide on promises to boost economic growth and create 19 million of jobs. Prabowo takes office on Oct. 20. 

“Pushing the economy to grow higher with weak consumption is difficult,” said Mohammad Faisal, an economist at the Jakarta-based Center of Reform on Economics. 

The government classifies those who spend between $132 to $643 a month as middle class, based on a World Bank criteria. This group is key to economic growth as their spending accounts for nearly 40% of private consumption, and more than 80% if combined with the aspiring middle class, who spend $57 to $132.  

The size of the middle class, however, has dropped from 21.5% of the total population in 2019 to 17.1% in 2024, according to official data released last month. 

Even though Indonesia’s economy has bounced back after the pandemic, with growth of around above 5% a year since 2022 amid generally low inflation, this shrinking middle class is likely to pressure future growth, as the government will have to contend with lower tax revenues and a possibly more subsidies, said Jahen Rezki, an analyst from the University of Indonesia.  

“In the long run, if the middle class dwindles, it will certainly be a big burden for the state,” he said. 

Big state spending 

One of the main reasons for the demise of the middle class is the changing labour market. 

A large portion of the foreign investment coming into Indonesia has targeted industries such as mining, which are becoming much less labour intensive as more cutting-edge technology is deployed. 

Also, stronger competition from lower cost destinations such as China, especially in the textile sector, has squeezed factories, leading to lay offs that the textile association said were the worst in the last decade.  

Prabowo’s brother and adviser Hashim Djojohadikusumo said the incoming government will help the middle class by creating millions of new jobs from projects like the $28 billion free meals programme and the building of millions of homes.  

“We want to create a lot of small, medium and micro entrepreneurs, for example through our housing program. We want to build 3 million units of houses, in villages and cities. That’s to create middle class,” he told Reuters recently.  

However, how much the next government is able to spend on welfare schemes might be limited, especially next year when a large amount of government debt is due to mature, said Teguh Yudo Wicaksono, an economist at Islam Internasional Indonesia University. 

For former factory worker Rahmat, the best help the government can give is a handout he can use to expand his food business, as it has become increasingly difficult to find a job. 

His wife Fatimah said her children often ask for their favorite spicy meat dish, but she can only afford to feed them instant noodles with eggs most of the time. 

“I could only tell my kids to please wait until dad got his fair compensation from the factory, we will cook a delicious meal again,” she said.  
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Nairobi, Kenya — Central banks in Africa are turning to gold to protect themselves from economic and geopolitical instability and to diversify their financial portfolios.

In September 2023, the price of gold per ounce was $1,900. A year later, it is selling for $2,500. According to the World Gold Council, an international trade association for the gold industry, demand for the metal is expected to increase in the next 10 months despite the soaring prices.

Some experts, such as Carlos Lopes, a professor at the Nelson Mandela School of Public Governance in South Africa, attribute the African central banks’ gold rush to the need to protect their local currencies.

“In the last few years, because of inflation and all these movements for stimulation packages and the rest, the returns are extremely low,” Lopes said. “On the other hand, gold is going up in terms of price because these big banks are also going after gold as a protection. So, it is a very good investment to go to gold.”

It helps that African gold production has grown by 60% since 2010, according to the World Gold Council, higher than a global increase of 26%.

In 2022, Zimbabwe launched a gold-backed currency to curb inflation and volatility in foreign exchange rates.

Ghana and Uganda have been buying gold from artisanal miners to bolster their shrinking foreign currency reserves.

Ghana, Africa’s largest gold producer, plans to buy oil from other countries and pay them in gold to ease pressure on local currency and lower high fuel prices.

Some economists say gold cannot solve the economic problems of some African countries.

According to the World Gold Council, countries should hold onto gold for its long-term value, performance during crises and its role as an effective portfolio diversifier.

Bright Oppong Afum, a senior lecturer at the University of Mines and Technology in Ghana, said some African countries want to use gold to reduce their reliance on the global financial system.

“If sanctions are laid on you, an African country, we know the devastating effects that it will have,” he said. “The African countries are developing, or they are young, and they do not want to receive some harsh sanctions that will negatively or strongly impact the economics. And because of that, they are strategically reducing their dependencies on these external countries.”

Afum said that although some Africans know and understand the value of gold, many trade away the metal to satisfy their daily needs.

“So, they just find a mere buyer who will … exploit them,” he said.

The African Continental Free Trade Area introduced the Pan-African Payment and Settlement System, enabling countries to trade in local currencies. Experts say some continental payment systems, if implemented, can ease the economic pressures some countries are grappling with.

That, in turn, might make them less dependent on gold.
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London — Google lost its final legal challenge on Tuesday against a European Union penalty for giving its own shopping recommendations an illegal advantage over rivals in search results, ending a long-running antitrust case that came with a whopping fine. 

The European Union’s Court of Justice upheld a lower court’s decision, rejecting the company’s appeal against the $2.7 billion penalty from the European Commission, the 27-nation bloc’s top antitrust enforcer. 

“By today’s judgment, the Court of Justice dismisses the appeal and thus upholds the judgment of the General Court,” the court said in a press release summarizing its decision. 

The commission’s punished the Silicon Valley giant in 2017 for unfairly directing visitors to its own Google Shopping service to the detriment of competitors. It was one of three multibillion-dollar fines that the commission imposed on Google in the previous decade as Brussels started ramping up its crackdown on the tech industry. 

“We are disappointed with the decision of the Court, which relates to a very specific set of facts,” Google said in a brief statement. 

The company said it made changes in 2017 to comply with the commission’s decision requiring it to treat competitors equally. It started holding auctions for shopping search listings that it would bid for alongside other comparison shopping services. 

“Our approach has worked successfully for more than seven years, generating billions of clicks for more than 800 comparison shopping services,” Google said. 

At the same time, the company appealed the decision to the courts. But the EU General Court, the tribunal’s lower section, rejected its challenge in 2021 and the Court of Justice’s adviser later recommended rejecting the appeal. 

European consumer group BEUC hailed the court’s decision, saying it shows how the bloc’s competition law “remains highly relevant” in digital markets. 

“Google harmed millions of European consumers by ensuring that rival comparison shopping services were virtually invisible,” director general Agustín Reyna said. “Google’s illegal practices prevented consumers from accessing potentially cheaper prices and useful product information from rival comparison shopping services on all sorts of products, from clothes to washing machines.” 
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beijing — Chinese President Xi Jinping on Monday urged visiting Spanish Prime Minister Pedro Sanchez to play a “constructive role” in improving strained ties between Bejing and the European Union. 

Sanchez for his part said he hoped the EU could avoid a trade war with China, even as Brussels weighs imposing tariffs on China-manufactured electric vehicles.

In their meeting, Xi also talked up deepening commercial ties between China and Spain in sectors such as artificial intelligence, digital economy, new energy and other high-tech fields.

The Chinese leader said Beijing wanted to work with Brussels to further develop a China-EU relationship where the two maintain their independence and autonomy but also succeed together and bring benefit to the world, a Chinese readout said. 

“It is hoped Spain will continue to play a constructive role in this regard,” Xi added. 

Sanchez responded: “Spain wants to work constructively so that relations between the two are closer, richer and more balanced.” 

Beijing in June said that frictions with the EU over its plans to impose tariffs of up to 36.3% on its electric vehicles (EVs) could trigger a trade conflict, days after China announced a retaliatory anti-dumping probe into European pork imports. 

China in August then raised the stakes by opening an investigation into the bloc’s dairy subsidies. 

Prior to meeting Xi, Sanchez said at business events that Spain would work for a negotiated consensus to the EV dispute within the World Trade Organization and that a “trade war would benefit no one,” a government source said.  

Spain in 2023 exported $1.5 billion worth of the pork products that China will investigate, Chinese customs data showed, dwarfing the outbound shipments from the Netherlands and Denmark, which rank second and third. 

Spain also sold just under $50 million worth of targeted dairy products to China last year. 

But in a promising sign for Spain’s pork producers, a separate source with direct access to Xi’s meeting with Sanchez said the two leaders had “found harmony and understanding,” when asked about possible curbs on Spain’s outbound pork shipments. 

“The meeting went extremely well,” the source said, adding that both defended their positions while seeking agreements. 

Fair trade 

“We want to build bridges together to defend a trade order that’s fair,” Sanchez told China’s second-ranking official, Premier Li Qiang, before meeting Xi.  

Spain had a trade deficit of 17.27 billion euros ($19.07 billion) in the first half of this year, according to government statistics.  

Sanchez will also want reassurance that China will not strike back at Brussels by raising its own tariffs on imported large-engined gasoline-powered vehicles, as state Chinese media have suggested it might.  

Spain could also be impacted by the Chinese EV tariffs. Last week SEAT-CUPRA’s CEO said that an electric vehicle made in China and designed in Spain by CUPRA, which is owned by Germany’s Volkswagen, would be “wiped out” if the European Commission followed through with planned import tariffs on Chinese-made vehicles.  

Sanchez on Tuesday is expected to meet representatives of SAIC Motor, one of the Chinese automakers most affected by the EU tariffs, and sign a Memorandum of Understanding with greentech company Envision, which is building an EV battery plant in Spain. 

“In this increasingly geopolitical and economic context, as you have pointed out, we must work together to resolve differences through negotiation,” Sanchez told Xi. 

In an advisory vote in July, Spain, France and Italy supported the European Commission’s proposal to adopt additional duties on Chinese-made EVs on top of the bloc’s standard 10% tariff.  

But Beijing has been urging the EU’s member states to reject the curbs at a final vote on it in October.  

The tariffs would be implemented in addition to the EU’s standard 10% import tariff unless a qualified majority of 15 EU members representing 65% of the EU population vote against them.
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A lack of opportunities has resulted in underrepresentation of Black designers, stylists and other creatives in the fashion industry. It’s also created a new wave of Black entrepreneurs who are passing on lessons of the business. Tina Trinh reports. (Camera and Produced by: Tina Trinh)
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Athens — Greece plans to impose a 20-euro ($22) levy on cruise ship visitors to the islands of Santorini and Mykonos during the peak summer season, in a bid to avert overtourism, Prime Minister Kyriakos Mitsotakis said Sunday. 

Greece relies heavily on tourism, the main driver of the country’s economy which is still recovering from a decadelong crisis that wiped out a fourth of its output. 

But some of its most popular destinations, including Santorini, an idyllic island of quaint villages and pristine beaches with 20,000 permanent residents, risk being ruined by mass tourism. 

Speaking at a news conference a day after outlining his main economic policies for 2025, Mitsotakis clarified that excessive tourism was only a problem in a few destinations. 

“Greece does not have a structural overtourism problem… Some of its destinations have a significant issue during certain weeks or months of the year, which we need to deal with,” he said. 

“Cruise shipping has burdened Santorini and Mykonos, and this is why we are proceeding with interventions,” he added, announcing the levy. 

Greek tourism revenues stood at about 20 billion euros ($22 billion) in 2023 on the back of nearly 31 million tourist arrivals. 

In Santorini, protesters have called for curbs on tourism, as in other popular holiday destinations in Europe, including Venice and Barcelona. 

Part of the revenues from the cruise shipping tax will be returned to local communities to be invested in infrastructure, Mitsotakis said. 

The government also plans to regulate the number of cruise ships that arrive simultaneously at certain destinations, while rules to protect the environment and tackle water shortages must also be imposed on islands, he said. 

Greece also wants to increase a tax on short-term rentals and ban new licenses for such rentals in central Athens to increase the housing stock for permanent residents, Mitsotakis said Saturday. 

The government will provide more details on some of the measures Monday.
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FRANKFURT, Germany — Volkswagen is considering closing some factories in its home country for the first time in the German automaker’s 87-year history, saying it otherwise won’t meet the cost-cutting goals it needs to remain competitive.

CEO Oliver Blume also told employees Wednesday that the company must end a three-decade-old job protection pledge that would have prohibited layoffs through 2029.

The statements have stirred outrage among worker representatives and concern among German politicians.

Here are some things to know about the difficulties at one of the world’s best-known auto brands:

What is Volkswagen proposing and why?

Management says the company’s core brand that carries the company’s name needs to achieve 10 billion euros in cost savings by 2026. It recently became clear the Volkswagen Passenger Car division was not on track to do that after relying on retirements and voluntary buyouts to reduce the workforce in Germany.

With Europe’s car market smaller than before the coronavirus pandemic, Volkswagen says it now has more factory capacity than it needs — and carrying underused assembly lines is expensive.

Chief Financial Officer Arno Antlitz explained it like this to 25,000 workers who gathered at the company’s Wolfsburg home base: Europeans are buying around 2 million cars per year fewer than they did before the pandemic in 2019, when sales reached 15.7 million.

Since Volkswagen has roughly a quarter of the European market, that means “we are short of 500,000 cars, the equivalent of around two plants,” Antlitz told the workers.

“And that has nothing to do with our products or poor sales performance. The market simply is no longer there,” he said.

Does Volkswagen make money?

The Volkswagen Group, whose 10 brands include SEAT, Skoda, CUPRA and commercial vehicles, turned an operating profit of 10.1 billion euros ($11.2 billion) in the first half of this year, down 11% from last year’s first-half figure.

Higher costs outweighed a modest 1.6% increase in sales, which reached 158.8 billion euros but were held down by sluggish demand. Blume called it “a solid performance” in a “demanding environment.” Volkswagen’s luxury brands, which include Porsche, Audi and Lamborghini, are selling better than VW models.

So why is Volkswagen struggling?

The discussion about reducing costs focuses on the core brand and its workers in Germany. Volkswagen’s passenger car division recorded a 68% earnings drop in the second quarter, and its profit margin was a bare 0.9%, down from 4% in the first quarter.

One reason is the division took the bulk of the 1 billion euros that went to job buyouts and other restructuring costs. But growing costs, including for higher wages, and sluggish sales of the company’s line of electric vehicles are a deeper problem. On top of that, new, competitively priced competitors from China are increasing their share of the European market.

Volkswagen must sell more electric cars to meet ever-lower European Union emission limits that take effect starting next year. Yet the company is seeing lower profit margins from those vehicles due to high battery costs and weaker demand for EVs in Europe due to the withdrawal of consumer subsidies and the slow rollout of public charging stations.

Meanwhile, VW’s electric vehicles also face stiff competition in China from models made by local companies.

The world’s automakers are in a battle for the future, spending billions to pivot to lower-emission electric cars in a race to come up with vehicles that are competitive on price and have enough range to persuade buyers to switch. China has dozens of carmakers making electric cars more cheaply than their European equivalents. Increasingly, those cars are being sold in Europe.

Profits have also declined at Germany’s BMW and Mercedes-Benz thanks to the same pressures.

Why are VW’s proposed factory and job cuts a big deal in Germany?

Volkswagen has 10 assembly and parts plants in Germany, where 120,000 of its 684,000 workers worldwide are based. As Europe’s largest carmaker, the company is a symbol of the country’s consumer prosperity and economic growth after World War II.

It has never closed a German factory before. VW last closed a plant in 1988 in Westmoreland, Pennsylvania; its Audi division is in discussions about closing an underutilized plant in Belgium.

Far-right parties fueled by popular disenchantment with German Chancellor Olaf Scholz’s quarreling, three-party coalition government scored major gains in Sept. 1 elections in Thueringia and Saxony states, located in the former communist East Germany. Nationwide polls show the government’s approval rating at a low point. Plant closings are the last thing the Scholz government needs.

The chancellor spoke with VW management and workers after the possible plant closings became known but was careful to stress that the decision is a matter for the company and its workers.

Why hasn’t Volkswagen already made the cost cuts management wants?

Employee representatives have a lot of clout at Volkswagen. They hold half the seats on the board of directors. The state government, which is a part-owner of the company, also has two board seats — together with the employee representatives a majority — and 20% of the voting rights at the company. Lower Saxony Gov. Stephan Weil has said the company needs to address its costs but should avoid plant closings.

That means management will have to negotiate — a process that will take months.

What does the employee side say?

Managers at the employee assembly faced several minutes of boos, whistles and tooting horns before they could start their presentation on the potential explanation. “We are Volkswagen, you are not,” workers chanted.

Daniela Cavallo, who chairs the company works council representing employees, said the council “won’t go along with plant closings.” Reducing labor costs won’t turn around Volkswagen’s financial situation, she argued.

“Volkswagen’s problem is upper management isn’t doing its job,” Cavallo said. “There are many other areas where the company is responsible… We have to have competitive products; we don’t have the entry-level models in electric cars.”
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KAJIADO, Kenya — The blood, milk and meat of cattle have long been staple foods for Maasai pastoralists in Kenya, perhaps the country’s most recognizable community. But climate change is forcing the Maasai to contemplate a very different dish: fish.

A recent yearslong drought in Kenya killed millions of livestock. While Maasai elders hope the troubles are temporary and they will be able to resume traditional lives as herders, some are adjusting to a kind of food they had never learned to enjoy.

Fish were long viewed as part of the snake family due to their shape, and thus inedible. Their smell had been unpleasant and odd to the Maasai, who call semi-arid areas home.

“We never used to live near lakes and oceans, so fish was very foreign for us,” said Maasai Council of Elders chair Kelena ole Nchoi. “We grew up seeing our elders eat cows and goats.”

Among the Maasai and other pastoralists in Kenya and wider East Africa — like the Samburu, Somali and Borana — cattle are also a status symbol, a source of wealth and part of key cultural events like marriages as part of dowries.

But the prolonged drought in much of East Africa left carcasses of emaciated cattle strewn across vast dry lands. In early 2023, the Kenya National Drought Management Authority said 2.6 million livestock had died, with an estimated value of 226 billion Kenya shillings ($1.75 billion).

Meanwhile, increasing urbanization and a growing population have reduced available grazing land, forcing pastoralists to adopt new ways to survive.

In Kajiado county near Kenya’s capital, Nairobi, the local government is supporting fish farming projects for pastoralists — and encouraging them to eat fish, too.

Like many other Maasai women, Charity Oltinki previously engaged in beadwork, and her husband was in charge of the family’s herd. But the drought killed almost 100 of their cows, and only 50 sheep of their 300-strong flock survived.

“The lands were left bare, with nothing for the cows to graze on,” Oltinki said. “So, I decided to set aside a piece of land to rear fish and monitor how they would perform.”

The county government supplied her with pond liners, tilapia fish fingerlings and some feed. Using her savings from membership in a cooperative society, Oltinki secured a loan and had a well dug to ease the challenge of water scarcity.

After six months, the first batch of hundreds of fish was harvested, with the largest selling for up to 300 Kenyan shillings each ($2.30).

Another member of the Maasai community in Kajiado, Philipa Leiyan, started farming fish in addition to keeping livestock.

“When the county government introduced us to this fish farming project, we gladly received it because we considered it as an alternative source of livelihood,” Leiyan said.

The Kajiado government’s initiative started in 2014 and currently works with 600 pastoralists to help diversify their incomes and provide a buffer against the effects of climate change. There was initial reluctance, but the number of participants has grown from about 250 before the drought began in 2022.

“The program has seen some importance,” said Benson Siangot, director of fisheries in Kajiado county, adding that it also addresses issues of food insecurity and malnutrition.

The Maasai share their love for cattle with the Samburu, an ethnic group that lives in arid and semi-arid areas of northern Kenya and speaks a dialect of the Maa language that the Maasai speak.

The recent drought has forced the Samburu to look beyond cattle, too — to camels.

In Lekiji village, Abdulahi Mohamud now looks after 20 camels. The 65-year-old father of 15 lost his 30 cattle during the drought and decided to try an animal more suited to long dry spells.

“Camels are easier to rear as they primarily feed on shrubs and can survive in harsher conditions,” he said. “When the pasture dries out, all the cattle die.”

According to Mohamud, a small camel can be bought for 80,000 to 100,000 Kenyan shillings ($600 to $770) while the price of a cow ranges from 20,000 to 40,000 ($154 to $300).

He saw the camel’s resilience as worth the investment.

In a vast grazing area near Mohamud, 26-year-old Musalia Piti looked after his father’s 60 camels. The family lost 50 cattle during the drought and decided to invest in camels that they can sell whenever they need cattle for traditional ceremonies. Cows among the Samburu are used for dowries.

“You have to do whatever it takes to find cattle for wedding ceremonies, even though our herds may be smaller nowadays,” said Lesian Ole Sempere, a 59-year-old Samburu elder. Offering a cow as a gift to a prospective bride’s parents encourages them to declare their daughter as “your official wife,” he said.
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Johannesburg — After pledging $51 billion in financial support for Africa over the next three years and positioning China as a fellow developing country in contrast to the West’s colonialist past, President Xi Jinping told dozens of African leaders gathered in Beijing this week that “the China-Africa relationship is now at its best in history.”

This year’s Forum on Africa-China Cooperation, held every three years, was the first since the pandemic and China’s own economic slowdown. It comes amid growing geopolitical rivalry between Beijing and the West, and Xi was blunt in his assessment of the latter’s influence on the continent.

“Modernization is an inalienable right of all countries,” he said in his opening speech to more than 50 African leaders. “But the Western approach to it has inflicted immense sufferings on developing countries.”

Lucas Engel, an analyst with the Global China Initiative at Boston University, said China is reacting to increased competition in the region.

“Xi’s reminder of the ‘immense suffering’ inflicted on Africa by the West in his keynote speech this year is a sharper rebuke of Africa’s Western partners than we’ve seen in the past,” he told VOA. “It is likely that China is feeling the heat as Western partners ramp up cooperation with Africa.”

The theme of FOCAC 2024 was “joining hands to promote modernization,” and analysts told VOA beforehand they expected China to focus on green technology and the green energy transition, agricultural modernization and trade, and education and training.

The money announced was an increase on the $40 billion pledged at the last FOCAC, in 2021, but still fell short of previous pledges, such as the $60 billion earmarked for Africa in 2018 and 2015.

For some time, China has been seen to be moving away from the massive infrastructure projects of the early years of Xi’s trademark Belt and Road Initiative and toward what it has dubbed “small is beautiful projects.”

Some of the announcements made at FOCAC, however, surprised analysts by bucking that trend.

Xi announced China would be undertaking a $1 billion upgrade of the TAZARA railway, which will link mineral-rich, landlocked Zambia with Tanzania’s coast. He signed an agreement with the presidents of those two countries on Wednesday.

“There was already a sense that infrastructure would be one of those asks that would not be entertained by the Chinese side, so I think that has come as a bit of a surprise,” Paul Nantulya, a research associate with the Africa Center for Strategic Studies in Washington, told VOA.

“I think African countries were also quite concerned about infrastructure financing. … Now it seems like the Chinese side may have finally backed down,” said Nantulya, who was in Beijing for FOCAC. “That would indicate that China does not want to be locked out of the infrastructure game, given what the U.S. is doing with the Lobito Corridor.”

Nantulya was referring to the G7-backed strategic economic corridor that Washington says is designed to create jobs and enhance export potential for resource-rich Angola, the Democratic Republic of the Congo and Zambia. As the first big infrastructure project in Africa the U.S. has undertaken in a generation, Washington recently announced it could extend the railway to Tanzania and on to the Indian Ocean.

“China’s offer to refurbish the TAZARA railway connecting copper-rich Zambia with Tanzania on Africa’s eastern coast appears to be a direct answer to the Western-led Lobito Corridor,” said Engel of Boston University.

Did African leaders get what they wanted?

China was not the only country with an agenda at FOCAC, as African leaders also laid out their priorities for relations with their largest trading partner.

For South African President Cyril Ramaphosa, who leads the continent’s most developed economy, the primary aim was to reduce a long-standing trade imbalance and to get China to import more agricultural products. He also wants to see more value-added exports made in South Africa.

Ramaphosa embarked on a state visit to China ahead of FOCAC and made several announcements, including that South Africa would sign up for China’s Beidou satellite navigation system and inviting Chinese electric vehicle company BYD to use South Africa as a manufacturing hub.

Xi said China would in turn expand market access to African agricultural products and exempt 33 countries from import tariffs. He also announced that China would support 60,000 vocational training opportunities for Africans.

Nantulya said there seemed to be a lot of attention to detail regarding this year’s announcements.

“What that tells me is that the Chinese side has been responding to the African side,” he said. “You know, the African delegates are very mindful of the fact that one of the big criticisms of FOCAC is that it’s very high on pledges and very low on actual concrete tasks.”

Yunnan Chen, a researcher at London-based research group ODI, told VOA the pledged areas of cooperation spanned almost every sector.

“I think what’s interesting to note about them is this very striking emphasis on areas of technological cooperation — in industry, in agriculture, in science and technology,” she said.

“There’s a lot of emphasis on training and initiatives that would support knowledge transfer from China to African parties, and I think this is something that’s been very much an African demand for many years,” she added.

“Even though we have seen a decline in Chinese financing in Africa and we know that China is experiencing a lot of domestic financial troubles, there’s still a very clear and very emphatic political commitment,” she said.

Aside from Ramaphosa’s trade demands, other African leaders who held bilateral meetings with Xi had specific areas of concern.

Kenyan President William Ruto had infrastructure at the top of his list, asking that Beijing fund an extension of Kenya’s Chinese-built Standard Gauge Railway. It marked a sharp change from Ruto’s campaign rhetoric, in which he criticized his predecessor’s policy of taking Chinese loans.

Ruto made the request even though Kenya is heavily in debt to Western financial institutions such as the IMF and lenders such as China and has been experiencing violent anti-government protests.

Other key areas of cooperation announced at the conclusion of FOCAC included the military and security sectors, with Beijing vowing to allocate some $140 million in military assistance grants alongside training programs for thousands of military personnel from across the continent.

Green energy was also a focus, with Xi announcing China would launch 30 new clean energy projects on the continent.
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Washington — U.S. employment increased less than expected in August, but a drop in the jobless rate to 4.2% suggested an orderly labor market slowdown continued and probably did not warrant a big interest rate cut from the Federal Reserve this month.  

Nonfarm payrolls increased by 142,000 jobs last month after a downwardly revised 89,000 rise in July, the Labor Department’s Bureau of Labor Statistics said on Friday. Economists polled by Reuters had forecast payrolls increasing by 160,000 jobs after a previously reported 114,000 gain in July. Estimates ranged from 100,000 to 245,000 jobs.  

The smaller-than-expected increase in payrolls likely does not signal a deterioration in labor market conditions.  

August payrolls have a tendency to initially print weaker relative to the consensus estimate and recent trend before being revised higher later. Hiring typically picks up in the education sector, which is anticipated by the model that the government uses to strip out seasonal fluctuations from the data.  

The start of the new school year, however, varies across the country, which can throw off the so-called seasonal factors. The initial August payrolls counts have been revised higher in 10 of the last 13 years. Layoffs remain at historic low levels.  

The drop in the unemployment rate followed four straight monthly increases, which had lifted it near a three-year high of 4.3% in July. Early on Friday, financial markets saw a roughly 43% probability of a half-point rate cut at the Fed’s Sept. 17-18 policy meeting, according to CME Group’s FedWatch Tool. The odds of a 25 basis point rate reduction were around 57%.  

Average hourly earnings increased 0.4% in August after falling 0.1% in July. Wages increased 3.8% year-on-year after advancing 3.6% in July. Still-solid wage growth continues to underpin the economy through consumer spending. 
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