Статті

First-time claims for U.S. unemployment compensation edged higher again last week, the Labor Department reported Thursday, as the delta variant of the coronavirus continues to play havoc with the world’s largest economy.

A total of 362,000 jobless workers filed for assistance, up 11,000 from the revised figure of the week before, the third straight week the figure moved higher. The increase last week was at odds with projections of economists, who had predicted a declining number.

Still, the claims figures for the last month have been on the whole the lowest since the pandemic swept through the U.S. in March 2020, although they remain well above the 218,000 average in 2019.

The increase in unemployment compensation claims comes as the U.S. government in early September ended extra $300-a-week payments to jobless workers on top of often less generous state benefits.

The jobless claims total has fallen steadily but unevenly since topping 900,000 in early January. Filings for unemployment compensation have often been seen as a current reading of the country’s economic health, but other statistics are also relevant barometers.

Even as the U.S. said last month that its world-leading economy grew by an annualized rate of 6.6% in the April-to-June period, in August it only added a disappointing 235,000 jobs, a figure economists said was partly reflective of the surging delta variant of the coronavirus inhibiting job growth. The September jobs figure is due out in a week.

The August total was down sharply from the more than 2 million combined figure added in June and July. The unemployment rate dipped to 5.2%, which is still nearly two percentage points higher than before the pandemic started in March 2020.

About 8.7 million workers remain unemployed in the U.S. There are nearly 11 million available jobs in the country, but the skills of the available workers often do not match what employers want, or the job openings are not where the unemployed live.

The size of the U.S. economy – nearly $23 trillion – now exceeds its pre-pandemic level as it recovers faster than many economists had predicted during the worst of the business closings more than a year ago. Policy makers at the Federal Reserve, the country’s central bank, have signaled that in November they could start reversing the bank’s pandemic stimulus programs and next year could begin to increase its benchmark interest rate.

How fast the U.S. economic growth continues is unclear, with the delta variant of the coronavirus posing a threat to the recovery. In recent weeks, about 120,000 or more new cases have been identified each day in the U.S. and on some days more than 2,000 people have been dying from COVID-19.  

Political disputes have erupted in numerous states between conservative Republican governors who have resisted imposing mandatory face mask and vaccination rules in their states at schools and businesses, although some education and municipal leaders are advocating tougher rules to try to prevent the spread of the delta variant.

U.S. President Joe Biden has ordered workers at companies with 100 or more employees to get vaccinated or be tested weekly for the coronavirus. In addition, he is requiring 2.5 million national government workers and contractors who work for the government to get vaccinated if they haven’t already been inoculated.

Many companies imposed their own vaccination mandates before Biden acted and are now starting to fire workers who have balked at getting vaccinated.

Nearly 67% of U.S. adults have now been fully vaccinated against the coronavirus, and overall, 55.5% of the U.S. population of 332 million, according to the Centers for Disease Control and Prevention.

 
…

U.S. lawmakers have less than three weeks to avert a default on the country’s sovereign debt by raising the limit on the amount of money the Treasury Department can borrow. Failure to do so would result in the United States purposely defaulting on its debts for the first time in history. 

By now, the extent of the damage that economists predict the U.S. economy would suffer in the event of default triggered by bitter conflict between Congressional Democrats and Republicans has been widely reported.

An estimate from Moody’s Analytics earlier this month predicted that in a prolonged default scenario, the U.S. would slide into recession, with the Gross Domestic Product falling by almost 4%. Some six million jobs would be lost, driving the unemployment rate up to 9%. The resulting stock market sell-off would erase $15 trillion in household wealth. In the short term, interest rates would spike, and in the long term, they would never fall back to pre-default lows. 

But the damage from a U.S. default would not be contained to the United States itself. Securities issued by the U.S. have been so trustworthy for so long that they are treated as essentially risk-free in financial markets, and are used to underpin a vast number of financial contracts worldwide. 

“The U.S. Treasury market is the world’s anchor asset,” said Jacob Kirkegaard, a senior fellow with the Peterson Institute for International Economics. “If it turns out that that asset is not actually risk free, but that it can actually default, that would basically detonate a bomb in the middle of the global financial system. And that will be extremely messy.” 

Immediate fallout 

In the event of a default, it is generally assumed that there would be a broad sell-off of Treasury securities, known as Treasuries. This would happen for multiple reasons — from individual investors being spooked by the default, to companies that had collateralized loans with Treasuries being forced to replace them with something the lender sees as more secure. 

The sell-off would make it more expensive for the U.S. to borrow in the future, driving up interest rates in the United States and driving down the value of the dollar against other world currencies. 

Here are five ways those effects would echo through the global economy. 

Reduced global trade 

If a default drove the U.S. into recession, U.S. consumers and businesses would reduce the amount of goods and services they purchase from outside the country. 

While this would impact virtually all countries to some extent, emerging market countries that rely on exports to the United States for much of their income would be particularly hard-hit. 

The expected devaluation of the dollar would have a similar impact — making it more expensive for U.S firms to purchase supplies overseas, resulting in trade being reduced even further. 

Dollarized economies would suffer 

The U.S. dollar is a common currency in much of the world. Some countries have adopted it as the official currency, while in others it exists side-by-side with a local currency that is often “pegged” to the dollar to keep its value stable. 

In the event that a default drove down the value of the dollar, countries with highly dollarized economies would see the buying power of existing currency stock diminished.

“Emerging markets would suffer greatly from this, because they wouldn’t have a domestic currency that’s very credible,” said Kirkegaard. 

Business contracts affected 

Around the world, many cross-border transactions carry requirements that they be settled in U.S. dollars. In ordinary times, this is seen as a practical way to be sure that sudden swings in the value of a local currency don’t dramatically disadvantage one party in a transaction that is to be settled in the future. 

A sudden and sharp decline in the value of the dollar would mean that individuals and companies anticipating payment on existing contracts in dollars would effectively be receiving less than they had expected for their goods and services. 

More sophisticated trade contracts may contain anti-default clauses that require agreements to be renegotiated in the event of a default that drives down the value of a reserve currency. While this would keep both parties to a contract whole, it would also complicate and likely slow down many transactions. 

Capital flows away from the U.S. 

One of the economic advantages the United States has long enjoyed is that it is a magnet for global capital. When the global economy is strong, investors seeking growth funnel money to U.S. firms. When times are bad, investors seek shelter in U.S. Treasuries. Either way, global markets are directing capital into the U.S. 

But when interest rates go up for the wrong reason — because investors don’t trust the U.S. government to pay its debts — that system is broken. 

The result is that to some degree, investors seeking shelter would be more cautious about assuming that Treasury securities are the go-to investment to protect the value of their assets. The logical move would be for them to begin directing at least some of their investments to securities issued by other governments and denominated in different currencies. 

New reserve currency 

A side effect of those new capital flows could be a challenge to the dollar as the world’s “reserve currency.” 

A reserve currency is money held by a country’s central bank and large financial institutions in order to facilitate global trade for domestic companies, to meet international debt obligations, and to influence domestic currency exchange rates, among other reasons. 

The stability of the dollar has made it the dominant global reserve currency since the end of World War II. This has generated constant global demand for dollars, making it possible for the U.S. government to borrow at lower interest rates than other large nations.

The United States’ global competitors, including China and Russia — but even allies, like the European Union — have for years suggested that it would be better if the dollar’s dominance were not as complete as it is. 

There has been little movement to unseat the dollar in recent decades, but a shock like a default on U.S. debts could persuade some countries to hedge their bets by taking on other currencies, like the euro or renminbi, as additions to their reserve holdings. 

“If you are China or, for that matter, the euro area, you have been wanting to replace or supplant the dollar’s dominant role in the global economy with either the renminbi or the euro,” said Kirkegaard. “You couldn’t ask for a better thing.” 

 
…

The U.S. Commerce Department on Wednesday asked a group of anonymous domestic solar manufacturers for additional information before it would consider a request to impose duties on panels produced in three Southeast Asian countries.

The move delays the department’s decision, which had been expected this week. The case is the latest dispute between the U.S. solar project builders that rely on cheap imports for most of their supplies and the tiny domestic manufacturing sector that says it can’t compete effectively with the flood of low-priced imports from Asia.

U.S. solar project developers have lobbied forcefully against any Commerce investigation into new tariffs, saying the probe alone would spook the foreign solar producers they rely on and cripple a sector that is critical to meeting the nation’s climate change goals.

The anonymous group seeking the tariffs last month asked the Commerce Department to investigate whether imports from Malaysia, Thailand and Vietnam were unfair. It accuses Chinese producers of shifting manufacturing to those nations to avoid U.S. duties on solar cells and panels made in China.

On Wednesday, the Commerce Department sent the group’s attorney, Timothy Brightbill, a letter that set an Oct. 6 deadline for the so-called American Solar Manufacturers Against Chinese Circumvention to respond to a series of questions.

One question asks members of the group to identify themselves. The group said in filings with Commerce that its members wished to remain anonymous because they feared retribution in the marketplace, a claim the department has also asked it to explain.

The department said it would issue a decision within 45 days of receiving a response.

Brightbill did not immediately respond to a request for comment.

The U.S. Solar Energy Industries Association, the trade group that opposes the tariff request, said that it was disappointed the department did not dismiss the group’s petition outright, but that the additional information would show that the petitioners “have no case.” 

 
…

A Malawi Magistrate’s Court in the capital, Lilongwe, has sentenced a Chinese national, described by some as one of the biggest African wildlife trafficking kingpins, to 32 years in prison after convicting him on three wildlife crimes. The court, however, said the sentences will run concurrently for 14 years and then there is a plan to deport him. But the convict is looking to appeal the sentence.

Judge Justice Violet Chipao on Tuesday sentenced Lin Yunhua to 14 years in prison for trading in rhino horn, 14 years for possession of rhino horn and an additional six years for money laundering. Justice Chipao however said the sentences will run concurrently, meaning that Lin will serve a total of 14 years. 

Lin, a Chinese national and the leader of wildlife trafficking syndicate Lin-Zhang gang — named after the husband-and-wife leaders — has been operating out of Malawi for at least a decade. Malawi’s authorities arrested him in August 2019 following a three-month manhunt. 

Prosecution lawyer, Andy Kaonga says Lin would face another punishment after completing the sentence. 

“Once he serves the sentence, our colleagues at the DPP [Director of Public Prosecution] office will probably take it to the minister of homeland security and then start the process of his deportation because the court has recommended that he should be deported from the country,” he said.  

The sentencing of Lin brings the number of wildlife trafficking syndicate members sent to prison to 14. These include four Malawian and 10 Chinese nationals, including Lin’s wife currently serving an 11-year prison term. Lin’s daughter was also arrested in December 2020 for alleged money laundering offences. Her trial is ongoing. 

Brighton Kumchedwa, Malawi’s director of the Department of National Parks & Wildlife, warned that the crackdown on members of the Lin-Zhang gang should send a message to other wildlife trafficking syndicates. 

“We are now starting to deal with the sponsors, the king pins. My message to these syndicates is ‘they should watch out; Malawi is not a playing ground. We eventually will get to them. So, they better stop,” he said.

Kumchedwa says the crackdown is a result of new strategies the government put in place toward combating wildlife crimes. 

“From 2015 thereabout we changed completely the game of handling wildlife crimes. So, we used [our] own intelligence combined with police intelligence. We also used sniffer dogs in the process. So, it’s different strategies that have seen us going this far,” he said. 

Mary Rice is the executive director of the London-based Environmental Investigation Agency (EIA), an organization campaigning against environmental crimes and abuse. Speaking to VOA via a messaging app from London, Rice says the crackdown shows Malawi’s commitment to bring high-level wildlife criminals to justice,

“It was not an easy road. But the tenacity and resilience of the investigators, the lawyers and the judge who made some very, very interesting comments in the sentencing, they are all to be applauded for their work. We know there have been many, many obstacles along the way. So, I think it’s a great result,” she said.

Defense lawyer Chrispine Ndalama told VOA Tuesday his client is considering appealing against the sentence. 

“Of course, over the phone, the client indicated that he would want to appeal but I will have to look at the judgment first, to see and understand the reasoning of the court so that I can advise my client properly as to whether we need to appeal or not,” he said.

Ndalama says he expected the court to give Lin a lesser sentence because he pleaded guilty to charges of possession of wildlife products. 

The court has given the defense 30 days to appeal the sentence. 
…

China is the world’s largest seafood consumer, and its fleet often fishes waters claimed by South Korea. When South Korean authorities try to enforce international regulations, they often meet fierce resistance. Seung Hyuk Park filed this report with information provided by Hyungjin Kim in Seoul.
…

Australia is under growing international pressure to commit to net-zero carbon emissions by 2050, but the policy is fiercely dividing its center-right government.

Australia is one of the world’s major exporters of coal and gas. Coal is mined in every state. Most exports go to countries in Asia, including China, Japan and South Korea. 

In 2020, exports were worth about $39 billion. Trade has almost doubled in the past decade. But China’s informal import restrictions on Australian coal saw the value of exports fall sharply, although prices have started to recover. Coal also generates about 70% of Australia’s electricity. Coal-fired power makes it the most carbon polluting nation per capita in the world. 

Prime Minister Scott Morrison is planning to eventually shift his country’s reliance on coal and gas in favor of clean energy technologies, a shift from his time as a treasurer in 2017. In support of the mining industry, then-treasurer Morrison brought a piece of coal to Parliament to argue the need to continue producing coal in a famous scene. 

“This is coal,” he said. “Don’t be afraid. Don’t be scared. It’s coal that has delivered prosperity to Australian businesses and has ensured that Australian industry has been able to remain competitive on a global market.” 

Clean energy is still an issue that deeply divides his center-right governing coalition. 

Some members of the National Party — the junior alliance partner — are adamant that Australia’s coal industry is too valuable to lose and insist it will thrive for decades. Many regional communities depend on it. There is also disagreement about committing to a target of reaching net-zero emissions by 2050. The prime minister said he wants to achieve net zero emissions “as soon as possible” but has not outlined any measures to do so. 

But government lawmaker Trent Zimmerman said Australia must join the global push to reduce emissions.

“We need both the target and the plan that matches it,” Zimmerman said. “It is very hard to divorce the two and obviously much of the international community has moved in that direction. In fact, eighty percent of global emissions or thereabouts are covered by pledges that relate to reaching net-zero. So, it is important for Australia that we are part of that because it is the right thing to do.”

Morrison has said he is yet to decide whether he will attend the Glasgow Climate Change Conference, also known as COP26, in November. He told a newspaper that he wanted to oversee Australia’s eventual emergence from COVID-19 lockdowns. His critics insist he is “too embarrassed” by his government’s climate change policies to attend the summit in the Scottish capital. 

Opinion polls by the Australia Institute, an independent public policy think tank based in Canberra, have shown that most Australians want stronger measures to curb emissions. A United Nations climate change report recently warned that global warming will inflict more severe and frequent droughts, storms, heatwaves and bushfires in Australia.

However, those surveys reported by the Sydney Morning Herald newspaper also revealed support for the coal industry. Less than half of Australians believe that coal power should be phased out within a decade. Australia’s addiction to fossil fuels might be hard to give up, according to the survey. 
…

The World Bank is predicting slower economic growth for developing nations in the East Asia and Pacific regions due to the COVID-19 pandemic.

A report issued by the bank Tuesday said while China’s economy is expected to grow by 8.5% in 2021, the rest of the region will only expand by 2.5%, down from its April forecast of 4.4%. 

Manuela Ferro, the World Bank’s vice president for East Asia and Pacific, says the region’s economic recovery from the pandemic “faces a reversal of fortune.” 

The report says the persistence of COVD-19 will likely hurt growth and increase inequality throughout the region.

The bank is urging governments to enhance testing and tracing to contain the spread of the virus, increase regional production of vaccines and strengthen their health systems. 

The Manila-based Asian Development Bank issued a separate report last week predicting the region’s developing economies will likely grow at a slower-than-expected pace in 2021 due to lingering COVID-19 outbreaks and the slow pace of vaccination efforts. 

The ADB also predicted that economies in Southeast Asia would grow by just 3.1% this year. It also had predicted 4.4% growth back in its economic outlook back in April. 
…

Botswana is set to emerge this week from an 18-month state of emergency that will remove the president’s emergency powers and end pandemic restrictions on trade and gatherings. While many shops, bars, and restaurants want to get back to normal, some in Botswana’s alcohol industry say it’s too soon to lift restrictions on night spots.

The minister of trade and industry, Kgafela Mmusi, says the end of the edict, set for this Thursday, means businesses can revert to normal trading hours. This includes the reopening of nightspots. 

That should be welcome news to Botswana’s alcohol industry, which employs around 50,000 people, including those who work at bars, breweries and distributors. 

But Botswana Beverages Association president Peter Noke warns some establishments might not be ready to reopen. 

Those that do will likely have restrictions, including a ban on dancing.

He said they have requested that dance floors be converted into seating areas.

“There should be sufficient spacing between the tables and there will be no dancing,” he said. “If one wishes to dance, they can only do so while seated.”

Music promoter Zain Aftermath says the decision to eliminate the dance floor is ill-advised. 

“How are you going to open clubs and then say people should not dance? It doesn’t make sense. I wouldn’t leave my house to go to a nightclub, pay and buy alcohol so that I can sit on a chair. It is going to affect attendance in a huge way,” he said.

Workers’ union leader Johannes Tshukudu welcomes the reopening as entertainment industry workers have been mostly out of work since March of last year. But he too, urges caution. 

“We don’t expect full capacity at the beginning, we may decide to have half capacity at the venues so that at least so that we use that as an observation element. We don’t want to see this thing [opening of night clubs] as a trap by the government to justify reintroducing the state of emergency,” he said.

Minister Kgafela says the government will keep an eye on nightspots to ensure compliance with the rules. 
…

Thousands of farmers in India blocked highways and rail tracks on Monday to give renewed momentum to their months-long demand for scrapping agricultural laws that have triggered the country’s longest farm protest and presented a political challenge to Prime Minister Narendra Modi. 

The nationwide protest, or “bharat bandh,” was held on the first anniversary of the passage of the laws that the government says will modernize the agricultural sector, but which farmers fear will spell an existential threat to their livelihoods.

The legislation allows farmers to do business outside government-run wholesale markets where they have sold their crops for decades at guaranteed prices.

But farmers fear that opening up sales of farm produce to the corporate sector will end an era of assured prices for crops like rice and wheat. They say farmers in states such as Bihar where the system has been scrapped are already in distress and get a lower price for their crop. 

Defiant farmers have camped on highways on the outskirts of New Delhi since November amid the persisting stalemate — the government has often said it is open to a dialogue but will not repeal the laws.

On Monday, thousands of farmers waving flags converged outside key roads leading to the Indian capital choking traffic. A farmer from Haryana, Sunil Kumar, who was among the protestors, said the stir demonstrated the farmers’ determination to continue their struggle has not ended.

Life was also disrupted in the northern states of Punjab and Haryana, lush rice and wheat growing states, that have been at the forefront of the protest.

The farmers stir also reverberated in the south of the country — they held protests in the southern cities of Chennai and Bengaluru and Kerala state. In some places they squatted on rail tracks.

Ahead of Monday’s protest, Rakesh Tikait, one of the farm leaders spearheading the stir, said that they are ready to protest for ten years, but will not allow the “black legislation” to be passed.

Several opposition parties including the Congress Party have supported the farmers’ demands. In a tweet, senior leader Rahul Gandhi called the government “exploitative” and extended support to farmers using hashtag #Istandwithfarmers. 

The government maintains the laws will improve farm incomes and agricultural productivity. Prime Minister Narendra Modi called them a “watershed moment” for Indian agriculture when they were passed last year.

India’s agriculture has not kept pace with its economy shrinking to just 15% of gross domestic product over the decades. But nearly two thirds of the country, or some 800 million people, depend on agriculture for their livelihood as the country has not been able to generate enough non-farm-based jobs. 

“The protest is a reflection of the compound anger they carry at the neglect of agriculture, especially farmers’ incomes which have become so low over the decades,” says agriculture economist Devinder Sharma. “The government believes that facilitating corporate entry would pull agriculture out of the crisis but that will not help because a majority of the farmers are small.”

The bulk of Indian farmers own plots of less than one hectare and fear that the laws will make them vulnerable to corporates that will drive down prices and force them to sell their land.

With the stalemate showing no signs of a resolution, the political impact of the farmers stir will be tested early next year when elections in India’s most populous state, Uttar Pradesh, are held.

Farmers from the state that adjoins New Delhi are among those who have been at the forefront of the ten-month old agitation. They held a mammoth rally earlier this month and say they will step up protests across the state ahead of the polls to show that the government is pursuing what they call anti-farmer policies. 
…

Up to 90% of British fuel stations ran dry across major English cities on Monday after panic buying deepened a supply chain crisis triggered by a shortage of truckers that retailers are warning could batter the world’s fifth-largest economy. 

A dire post-Brexit shortage of truck drivers emerging after the COVID-19 pandemic has sown chaos through British supply chains in everything from food to fuel, raising the specter of disruptions and price rises in the run up to Christmas. 

Just days after Prime Minister Boris Johnson’s government spent millions of pounds to avert a food shortage due to a spike in prices for natural gas, the biggest cost in fertilizer production, ministers asked people to refrain from panic buying. 

But lines of dozens of cars snaked back from gasoline stations across the country on Sunday, swallowing up supplies and forcing many gas stations to simply close. Pumps across British cities were either closed or had signs saying fuel was unavailable on Monday, Reuters reporters said. 

The Petrol Retailers Association (PRA), which represents independent fuel retailers which now account for 65% of all UK forecourts, said members had reported that 50% to 90% of pumps were dry in some areas. 

“We are unfortunately seeing panic buying of fuel in many areas of the country,” Gordon Balmer, executive director of the PRA, who worked for BP for 30 years, told Reuters. 

“We need some calm,” Balmer said. “Please don’t panic buy: if people drain the network then it becomes a self-fulfilling prophecy.” 

Britain is considering calling in the army to ensure fuel supplies reach consumers, according to The Times and Financial Times. 

Environment Secretary George Eustice said there was no shortage of fuel and urged people to refrain from panic buying. 

Haulers, gas stations and retailers warned that there were no quick fixes, however, as the shortfall of truck drivers – estimated to be around 100,000 – was so acute, and because transporting fuel demands additional training and licensing. 

Supply chain crunch 

Britain’s retail industry warned the government on Friday that unless it moves to alleviate an acute shortage of truckers in the next 10 days significant disruption was inevitable in the run-up to Christmas.

For months, supermarkets, processors and farmers have warned that a shortage of heavy goods vehicle (HGV) drivers was straining supply chains to breaking point – making it harder to get goods onto shelves.

Aldi UK CEO Giles Hurley said that while his discount supermarket chain was in a good position, nobody could guarantee there would not be inflation in the market around Christmas. 

BP said on Sunday that nearly a third of its British petrol stations had run out of the two main grades of fuel as panic buying forced the government to suspend competition laws and allow firms to work together to ease shortages. 

Business Secretary Kwasi Kwarteng said the suspension would allow firms to share information and coordinate their response. 

“This step will allow government to work constructively with fuel producers, suppliers, haulers and retailers to ensure that disruption is minimized as far as possible,” the business department said in a statement. 

The government on Sunday announced a plan to issue temporary visas for 5,000 foreign truck drivers. Around 25,000 truckers returned to Europe before Brexit and Britain was unable to test 40,000 drivers during COVID-19 lockdowns.
…

Malaysia’s Prime Minister Ismail Sabri Yaakob on Monday presented a new five-year economic plan, boosting infrastructure spending and committing to a carbon tax under climate change goals as the country looks to chart its way out of a pandemic-induced slump. 

Launching the 12th Malaysia Plan in parliament, Ismail Sabri said the country’s financial position was expected to improve in 2023, with the economy targeted to grow 4.5%-5.5% per annum in the next five years. 

Malaysia posted average annual growth of 2.7% between 2016-2020, dragged down by a 5.6% contraction last year due to the outbreak of COVID-19, the premier said. 

Gross national income per capita rose to $10,150 in 2020, about 20% lower than the level required to become a high-income country. Malaysia now expects to reach that target by 2025, Ismail Sabri said. 

“The 12th Malaysia Plan is a comprehensive development plan that will introduce a number of reforms to ensure sustainable economic growth and more equal distribution of opportunities and results,” Ismail Sabri said. 

Malaysia’s export-driven economy has taken a hit from the pandemic. The central bank slashed its full-year growth forecast to 3.0%-4.0% from 6-7.5% last month – the second cut this year. 

The government will spend $95.53 billion on existing and new development projects between 2021 and 2025, compared with $62 billion in the 11th Malaysia plan, Ismail Sabri said. 

These include new highways and rail networks linking rural areas with urban and industrial hubs, more affordable housing, as well as improvements in health, education, and broadband connectivity. 

Malaysia also aims to become a carbon neutral country by 2050, Ismail Sabri said, adding that economic instruments such as carbon pricing and a carbon tax will be introduced. 

The government also pledged to stop building coal-fired power stations, as it continues its efforts to reduce greenhouse gas emissions intensity of GDP by 45% in 2030, the premier said. 

Other promises included plans to reduce the country’s dependence on foreign labor, provide support to small and medium-sized businesses, and turn Malaysia into a regional investment hub. 
…

Democrats pushed a $3.5 trillion, 10-year bill strengthening social safety net and climate programs through the House Budget Committee on Saturday, but one Democrat opposed the measure in an illustration of the challenges party leaders face in winning the near unanimity they’ll need to carry the sprawling package through Congress. 

The Democratic-dominated panel, meeting virtually, approved the measure on a near party-line vote, 20-17. Passage marked a necessary but minor step for Democrats by edging the bill closer to debate by the full House. Under budget rules, the committee wasn’t allowed to significantly amend the 2,465-page measure, the product of 13 other House committees. 

The more important work has been happening in an opaque procession of mostly unannounced phone calls, meetings and other bargaining sessions among party leaders and rank-and-file lawmakers. President Joe Biden, House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Chuck Schumer, D-N.Y., have led a behind-the-scenes hunt for compromises to resolve internal divisions and, they hope, allow approval of the mammoth bill soon. 

Pelosi told fellow Democrats in a letter Saturday that they must pass the social and environment bill this week, along with a separate infrastructure bill and a third measure preventing a government shutdown on Friday. 

“The next few days will be a time of intensity,” she wrote.

Political vulnerability

Moderate Rep. Scott Peters, D-Calif., joined all 16 Republicans on the Budget Committee in opposing the legislation. His objections included one that troubles many Democrats: a reluctance to support a bill with provisions that would later be dropped by the Senate.

Many Democrats don’t want to become politically vulnerable by backing language that might be controversial back home, only to see it not become law. That preference for voting only on a social and environment bill that’s already a House-Senate compromise could complicate Pelosi’s effort for a House vote this week. 

Peters was among three Democrats who earlier this month voted against a plan favored by most in his party to lower pharmaceutical costs by letting Medicare negotiate for the prescription drugs it buys.

Party leaders have tried for weeks to resolve differences among Democrats over the package’s final price tag, which seems sure to shrink. There are also disputes over which initiatives should be reshaped, among them expanded Medicare, tax breaks for children and health care, a push toward cleaner energy, and higher levies on the rich and corporations. 

Democrats’ wafer-thin majorities in the House and Senate mean compromise is mandatory. Before the measure the Budget panel approved Saturday even reaches the House floor, it is expected to be changed to reflect whatever House-Senate accords have been reached, and additional revisions are likely. 

‘Decades of disinvestment’

The overall bill embodies the crux of Biden’s top domestic goals. Budget panel Chairman John Yarmuth, D-Ky., cited “decades of disinvestment” on needs like health care, education, child care and the environment as the rationale for the legislation. 

“The futures of millions of Americans and their families are at stake. We can no longer afford the costs of neglect and inaction. The time to act is now,” Yarmuth said. 

Republicans say the proposal is unneeded, unaffordable amid accumulated federal debt exceeding $28 trillion and reflects Democrats’ drive to insert government into people’s lives. Its tax boosts will cost jobs and include credits for buying electric vehicles, purchases often made by people with comfortable incomes, they said. 

“This bill is a disaster for working-class families,” said Rep. Jason Smith of Missouri, the committee’s top Republican. “It’s a big giveaway to the wealthy, it’s a laundry list of agenda items pulled right out of the Bernie Sanders socialist playbook.”

The unusual weekend session occurred as top Democrats amp up efforts to end increasingly bitter disputes between the party’s centrist and progressive wings that threaten to undermine Biden’s agenda.

 A collapse of the measure at his own party’s hands would be a wounding preview to the coming election year, in which House and Senate control are at stake.

Infrastructure bill

To nail down moderates’ support for an earlier budget blueprint, Pelosi promised to begin House consideration by Monday of another pillar of Biden’s domestic plans: a $1 trillion collection of roadway and other infrastructure projects. Pelosi reaffirmed this week that the infrastructure debate would begin Monday.

But many moderates who consider the infrastructure bill their top goal also want to cut the $3.5 trillion social and environment package and trim or reshape some of its programs. Sens. Joe Manchin, D-W.Va., and Kyrsten Sinema, D-Ariz., have been among the most visible centrists demanding a smaller price tag. 

In response, progressives — their top priority is the $3.5 trillion measure — are threatening to vote against the infrastructure bill if it comes up for a vote first. Their opposition seems likely to be enough to scuttle it, and Pelosi hasn’t definitively said when a vote on final passage of the infrastructure measure will occur.

With each portion of the party threatening to upend the other’s most cherished goal — a political disaster in the making for Democrats — top Democrats are using the moment to accelerate talks on the massive social and climate legislation. Compromise is a requirement, because the party can lose no votes in the Senate and a maximum of three in the House to succeed in the narrowly split Congress.
…

A top executive of Chinese communications giant Huawei Technologies has resolved criminal charges against her as part of a deal with the U.S. Justice Department that could pave the way for her to return to China. 

The deal with Meng Wanzhou, Huawei’s chief financial officer and the daughter of the company’s founder, was disclosed in federal court in Brooklyn on Friday. It calls for the Justice Department to dismiss the case next December, or four years after her arrest, if she complies with certain conditions. 

The deal, known as a deferred prosecution agreement, resolves a yearslong legal and geopolitical tussle that involved not only the U.S. and China but also Canada, where Meng has remained since her arrest there in December 2018. Meng appeared via videoconference at Friday’s hearing. 

The deal was reached as President Joe Biden and Chinese counterpart Xi Jinping have sought to minimize signs of public tension, even as the world’s two dominant economies are at odds on issues as diverse as cybersecurity, climate change, human rights, and trade and tariffs. 

A spokesperson for Huawei declined to comment, and a spokesman for the Justice Department in Washington did not respond to an email seeking comment. 

Charges unsealed in 2019

Under then-President Donald Trump, the Justice Department unsealed criminal charges in 2019, just before a crucial two-day round of trade talks between the U.S. and China, that accused Huawei of stealing trade secrets. The charges also alleged that Meng had committed fraud by misleading banks about the company’s business dealings in Iran. 

The indictment accuses Huawei of using a Hong Kong shell company called Skycom to sell equipment to Iran in violation of U.S. sanctions. 

Meng fought the Justice Department’s extradition request, and her lawyers called the case against her flawed. Last month, a Canadian judge didn’t rule on whether Meng should be extradited to the U.S. after a Canadian Justice Department lawyer wrapped up his case saying there was enough evidence to show she was dishonest and deserved to stand trial in the U.S. 

Huawei is the biggest global supplier of network gear for phone and internet companies, and some analysts say Chinese companies have flouted international rules and norms amid allegations of technology theft. The company represents China’s progress in becoming a technological power and has been a subject of U.S. security and law enforcement concerns. 

It has repeatedly denied the U.S. government’s allegations and the security concerns about its products. 
…

China Evergrande inched closer on Friday to the potential default that investors fear as an interest deadline expired without any announcement from the property giant whose mountain of debt has spooked world markets.

The company owes $305 billion, has run short of cash and investors are worried a collapse could pose systemic risks to China’s financial system and reverberate around the world.

A deadline for paying $83.5 million in bond interest passed without remark from Evergrande or any sign of bondholders being paid. The firm is now in uncharted waters and enters a 30-day grace period. It will default if that passes without payment.

“These are periods of eerie silence as no-one wants to take massive risks at this stage,” said Howe Chung Wan, head of Asia fixed income at Principal Global Investors in Singapore.

“There’s no precedent to this at the size of Evergrande … we have to see in the next 10 days or so, before China goes into holiday, how this is going to play out.”

China’s central bank again injected cash into the banking system on Friday, seen as a signal of support for markets. But authorities have been silent on Evergrande’s predicament and China’s state media has offered no clues on a rescue package.

Evergrande appointed financial advisers and warned of default last week, and world markets fell heavily on Monday amid fears of contagion, though they have since stabilized.

The conundrum for policymakers is how fiercely they can impose financial discipline without fueling social unrest, since an ugly collapse at Evergrande could crush a property market which accounts for 40% of Chinese household wealth.

Protests by disgruntled suppliers, home buyers and investors last week illustrated discontent that could spiral in the event a default sparks crises at other developers.

Evergrande has promised to prioritize such investors and resolved one coupon payment on a domestic bond this week. But it has said nothing about the offshore interest payment that was due on Thursday or a $47.5 million payment due next week.

Bondholders are starting to think it might be a month or so before things become clearer and markets have already assumed they will take a large haircut.

“Current market pricing estimates that investors in Evergrande’s dollar bonds are likely to recover very little,” said Jennifer James, a portfolio manager and lead emerging markets analyst at Janus Henderson Investors.

“The likeliest outcome is that the company will engage with creditors to come up with a restructuring agreement,” she said, warning that if such a deal is mismanaged “the loss of confidence could have contagion effects.”

Play for time

Global markets have begun to recover after Evergrande’s plight sparked a sharp selloff, trading on the basis that the crisis can be contained.

Only some $20 billion of Evergrande’s debts are owed offshore. Yet the risks at home are considerable because of the risks to China’s property sector, a vast store of wealth.

“Housing sales and investments could inevitably slow further – this would knock nearly 1 percentage point off GDP growth,” analysts at Societe Generale said in a note.

“The longer policymakers wait before acting, the higher the hard-landing risk.”

So far there have been few signs of official intervention.

The People’s Bank of China’s $42 billion cash injection this week is the largest weekly sum since January and has helped put a floor under stocks.

Bloomberg Law also reported that regulators had asked Evergrande to avoid a near-term default, citing unnamed people familiar with the matter.

However The Wall Street Journal said, citing unnamed officials, that authorities had asked local governments to prepare for Evergrande’s downfall.

“Given the deliberate pace of Chinese policy making, the authorities may well choose to play for time,” said Wei-Liang Chang, a macro strategist at DBS Bank in Singapore.

He said they could extend liquidity assistance through the grace period on Evergrande’s coupon payments, given it had no dollar bond maturities looming until March 2022.

Evergrande’s shares handed back some Thursday gains on Friday and fell 6%, while stock of its electric-vehicle unit dropped 18% to a four-year low. Its bonds fell slightly on Friday and its offshore bonds with imminent payments due last traded around 30 cents on the dollar. 

 
…

Japan’s widening wealth gap has emerged as a key issue in a ruling party leadership contest that will decide who becomes the next prime minister, with candidates forced to reassess the legacy of former premier Shinzo Abe’s “Abenomics” policies.

Under Abenomics, a mix of expansionary fiscal and monetary policies and a growth strategy deployed by Abe in 2013, share prices and corporate profits boomed, but a government survey published earlier this year showed households hardly benefited.

Mindful of the flaws of Abenomics, frontrunners in the Liberal Democratic Party’s leadership race –- vaccination minister Taro Kono and former foreign minister Fumio Kishida — have pledged to focus more on boosting household wealth.

“What’s important is to deliver the benefits of economic growth to a wider population,” Kishida said Thursday. “We must create a virtual cycle of growth and distribution.”

But the candidates are thin on details over how to do this with Japan’s economic policy tool-kit depleted by years of massive monetary and fiscal stimulus.

Kono calls for rewarding companies that boost wages with a cut in corporate tax, while Kishida wants to expand Japan’s middle class with targeted payouts to low-income households.

The winner of the LDP leadership vote on Sept. 29 is assured of becoming Japan’s next prime minister because of the party’s parliamentary majority. Two women – Sanae Takaichi, 60, a former internal affairs minister, and Seiko Noda, 61, a former minister for gender equality – are the other candidates in a four-way race.

Parliament is expected to convene on Oct. 4 to vote in a successor to Prime Minister Yoshihide Suga, who announced his decision to quit less than a year after taking over from Abe.

A government survey, conducted once every five years and released in February, has drawn increasing attention to trends in inequality during Abe’s time.

Shigeto Nagai, head of Japan economics at Oxford Economics, said the survey revealed “the stark failure of Abenomics to boost household wealth through asset price growth.”

Average wealth among households fell by 3.5% from 2014 to 2019 with only the top 10% wealthiest enjoying an increase, according to survey conducted once every five years.

Japanese households’ traditional aversion to risk meant they did not benefit from the stock market rally, with the balance of their financial assets down 8.1% in the five years from 2014, the survey showed.

“We think the new premier will need to consider the failures of Abenomics and recognize the myth that reflation policies relying on aggressive monetary easing will not solve all Japan’s problems without tackling endemic structural issues,” Nagai said.

Bank of Japan Governor Haruhiko Kuroda defended Abenomics and said the pandemic, not slow wage growth, was mainly to blame for sluggish consumption.

“Unlike in the United States and Europe, Japanese firms protected jobs even when the pandemic hit,” Kuroda said when asked why the trickle-down to households has been weak.

“Wage growth has been fairly modest, but that’s not the main reason consumption is weak,” he told a briefing Wednesday.

“As the pandemic subsides, consumption will likely strengthen.” 

 
…

Chinese officials are bracing for a potential financial crisis as giant real estate conglomerate China Evergrande Group appears to be unable to make good on bond payments due on Thursday. 

According to the Wall Street Journal, the central government has instructed local officials across the country to begin “getting ready for the possible storm,” if the firm is unable to come to an agreement with creditors. Evergrande is currently carrying a staggering load of more than $300 billion in debts and other liabilities. 

The central government in China is concerned about civil unrest because of both the size and the nature of Evergrande. The company has more than 800 construction projects spread across every province in the country, employing thousands of Chinese workers and engaging with an untold number of suppliers.

Many of the projects are housing units for which individual buyers paid large sums of money in advance. In some cases, construction has already been halted because the company has been unable to pay suppliers.

In addition to angry homeowners, the company is facing complaints from individual investors who have placed money in the company’s publicly traded shares. Since July of 2020, the company’s share price has plummeted by 91%, to about 34 cents a share today. 

Actual default may be postponed 

Evergrande had two major bond payments due Thursday. One, denominated in U.S. dollars, was for $83.5 million. The agreement with creditors gives the company a 30-day grace period before it is officially considered to be in default. However, failure to make payment on the due date will be seen as a very bad sign by the financial markets. 

The second bond payment was denominated in Chinese renminbi, and the company announced Wednesday that the debt had been “resolved through off-exchange negotiations” — though what exactly that means and how much the company actually paid is not clear. 

In addition to its real estate holdings, Evergrande has a wide array of subsidiaries, including an electric vehicle manufacturer, a soccer team, two theme parks, and a life insurance company, among other things. The company has been trying to sell off some of those assets to help pay its debts, but so far it does not appear to have been successful in raising enough cash to satisfy its creditors. 

The company’s chairman, Hui Ka Yan, has been striving to instill confidence in the company. In a memo to employees this week, he praised the company’s workforce as “an invincible army that is loyal and bears hardship without complaint.”

Hui added, “I firmly believe that Evergrande people’s spirit of never admitting defeat, and becoming stronger when the going gets tough, is our source of strength in overcoming all difficulties!” He promised that the company would emerge from its “darkest hour.” 

Government intervention possible 

Signals from the Chinese government about its intentions toward Evergrande have been mixed. In recent weeks, the government has not suggested that it intends to help the company. On Wednesday, the government issued a vaguely worded statement urging the company to “avoid near-term default” on its dollar-denominated bonds. 

Many experts believe the Chinese government will step in if it appears that Evergrande is facing collapse — deeming it too big to fail. However, that does not mean that all stakeholders in the company will be made whole. Most likely to be hurt are those holding the company’s U.S. dollar-denominated debt, who will face a “haircut” — meaning that they will be forced to accept payments of less than they are owed by the massive company. 

“It’s unlikely that the Chinese government will allow chaos to ensue,” said Doug Barry, a spokesman for the U.S.-China Business Council. “They have plenty of money to cover the losses, though foreign bond holders may receive a sizable haircut.” 

Major restructuring possible 

Experts expect that the Chinese government eventually will organize a major restructuring of the company. That would involve selling off large parts of Evergrande to other Chinese companies — probably state-owned firms. Those transactions would likely be facilitated by funding from state-owned banks. 

The goal, experts say, would be to avoid the collapse of housing projects that the company has already sold to Chinese buyers, and the related loss of construction jobs and related economic activity that would entail. 

“The government may help in restructuring Evergrande with shareholders and bondholders taking a big hit,” said Robert Dekle, a professor of economics at the University of Southern California. “This is overall good for China, reducing over-borrowing and moral hazard in the future.” 

A positive change 

Although a restructuring of Evergrande would be painful — especially for its investors — it could have important positive implications for the future of the Chinese economy. The country is currently dotted with thousands of “zombie” companies that have been kept solvent only by continued infusions of cash from state-owned banks. By refusing to bail out Evergrande’s bondholders and investors, the Chinese government may be signaling that in the future, companies will be expected to stand — or fall — on their own. 

“Longer term, China needs to get its financial house in order, especially throwing light on the shadow economy where even more debt bombs and zombie companies may lurk,” said Barry, of the U.S.-China Business Council. “Odds are good that the government will get on top of things without serious damage to the domestic or global economy. It’s a sobering reminder of the role China plays and the need for more transparency and fewer shadows and casino activities.” 

Global contagion seen as unlikely 

Evergrande’s troubles have caused investors in other high-yield Chinese debt to become cautious, demanding much higher interest rates to compensate for the perception of increased risk. 

However, experts believe that the fallout from the company’s troubles will have limited impact outside of China.

“Apparently there are other Chinese property developers in trouble,” said Dekle, the USC economist. “But the fact that Chinese authorities have allowed the firm to reach near bankruptcy suggests that the fallout will be self contained.” 

Voice of America Mandarin Service reporter Mo Yu contributed to this story. 

 
…

First-time claims for U.S. unemployment compensation unexpectedly increased again last week but remained near the low point during the 18-month coronavirus pandemic, the Labor Department reported Thursday.

A total of 351,000 jobless workers filed for assistance, up 16,000 from the revised figure of the week before, the second straight week the figure moved higher. The increase was at odds with projections of economists, who had predicted a declining number.

Still, the claims figures for the last month have been on the whole the lowest since the pandemic swept through the U.S. in March 2020, although they remain above the 218,000 average in 2019.

The jobless claims total has fallen steadily but unevenly since topping 900,000 in early January. Filings for unemployment compensation have often been seen as a current reading of the country’s economic health, but other statistics also are relevant barometers.

Even as the U.S. said last month that its world-leading economy grew at an annualized rate of 6.6% in the April-to-June period, it added only a disappointing 235,000 more jobs in August, a figure economists said was partly reflective of the surging Delta variant of the coronavirus inhibiting job growth.

The number of new jobs was down sharply from the more than 2 million combined figure added in June and July. The unemployment rate dipped to 5.2%, which is still nearly two percentage points higher than before the pandemic started in March 2020.

About 8.7 million workers remain unemployed in the U.S. There are nearly 11 million available jobs in the country, but the skills of the available workers often do not match what employers want, or the job openings are not where the unemployed live.

The size of the U.S. economy – nearly $23 trillion – now exceeds its pre-pandemic level as it recovers faster than many economists had predicted during the worst of the business closings more than a year ago.

Policy makers at the Federal Reserve, the country’s central bank, on Wednesday signaled that in November it could start reversing its pandemic stimulus programs and next year could begin to increase its benchmark interest rate.

How fast the U.S. economy will continue to grow is unclear.

For months, the national government had sent an extra $300 a week in unemployment compensation, on top of often less generous state aid, to jobless workers. But that extra assistance ended earlier this month, with about 7.5 million jobless workers affected by the cutoff in extra funding.

The delta variant of the coronavirus also poses a new threat to the economy.  

Political disputes have erupted in numerous states between conservative Republican governors who have resisted imposing mandatory face mask and vaccination rules in their states at schools and businesses, although some education and municipal leaders are advocating tougher rules to try to prevent the spread of the Delta variant.

U.S. President Joe Biden has ordered workers at companies with 100 or more employees to get vaccinated or be tested weekly for the coronavirus. In addition, he is requiring 2.5 million national government workers and contractors who work for the government to get vaccinated if they haven’t already been inoculated.

In recent weeks, about 150,000 new cases have been identified each day in the U.S. and more than 2,000 people are dying from COVID-19 every day.    

More than 66% of U.S. adults now have been fully vaccinated against the coronavirus, and overall, 54.9% of the U.S. population of 332 million have completed their shots, according to the Centers for Disease Control and Prevention.

 
…