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MUNICH — China’s foreign minister told a gathering of international security policy officials Saturday that trying to shut China out of trade in the name of avoiding dependency would be a historic mistake.

Wang Yi spoke at the Munich Security Conference. Host Germany wants to avoid over-reliance on trade with an increasingly assertive China and diversify its supply of key goods in an approach it calls “de-risking.” That’s in line with the approach of other industrial powers in the Group of Seven, which has stressed that it doesn’t seek to harm China or thwart its development.

Beijing has criticized the strategy.

“Today … more people have come to realize that the absence of cooperation is the biggest risk,” Wang said through an interpreter. “Those who attempt to shut China out in the name of de-risking will make a historical mistake.”

“The world economy is like a big ocean that cannot be cut into isolated lakes,” he said. “The trend toward economic globalization cannot be reversed. We need to work together to make globalization more universally beneficial and inclusive.”

His comments came amid calls over the last year from the United States and the European Union to reduce their dependence on China.

Wang also renewed China’s pushback against allegations of forced labor in the western Xinjiang region, where it is accused of running labor transfer programs in which Uyghurs and other Turkic minorities are forced to toil in factories as part of a longstanding campaign of assimilation and mass detention.

He complained of “fabricated information from different parties” and asserted that the aim is “to stop the development of China.”
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ALGIERS, Algeria — In a square near the center of Algiers, currency traders carry wads of euros, pounds and dollars, hoping to exchange them to those worried about the plummeting value of the Algerian dinar.

This black market for foreign currencies is among the signs of the economic woes plaguing Algeria. The state, reluctant to allow the exchange rate to adjust fully, has proven incapable of limiting demand among the population as confidence in the dinar remains low.

The widening parallel exchange rate underscores how everyday Algerians have lost buying power as the government has juggled competing priorities, trying to combat inflation and maintain state spending, subsidies and price controls that keep people afloat.

In the oil-rich North African nation, business owners are rumored to be dumping their assets and scrounging up euros on the black market so their wealth isn’t stuck. Middle-class people also rely on euros and dollars to buy things in short supply like medicine, vehicle parts or certain foods.

Last week, the official exchange rate allowed one euro to be sold for 145 Algerian dinar, while on the same day, currency traders were selling one euro for nearly 241 dinars on the black market — 66% higher than the official exchange rate.

Rabah Belamane, a 72-year-old retired teacher from Algiers, told The Associated Press that the official rate is a fiction and that his pension doesn’t go as far as it used to in either dinar or euro.

“The real value of the dinar is on the informal market, not in the bank, which uses an artificial rate to lie to the public,” Belamane said.

Algeria has long been known for having among the region’s most closed economies. It limits the amount of foreign currency its citizens can access to a modest tourism allowance that amounts to less than needed to carry out one of Islam’s pilgrimages to Mecca or visit family in Europe’s large Algerian diaspora.

The government estimates roughly $7 billion worth of foreign currency trades hands on the country’s black market.

From Lebanon to Nigeria, experts warn that having two parallel exchange rates can distort a country’s economy, discourage investment and encourage corruption. Algeria has historically been reluctant to lower the official value of the dinar, worried that devaluation will spike prices and anger the population.

Traders are intimately aware that the gap between the official and black market exchange rate can narrow or widen by the day. They expect it to swing up as Ramadan approaches.

“In recent days, the supply of euros has been lacking, which explains how it has shot up,” trader Nourdine Sadaoui told the AP as he took a pause from yelling “Change!” at people passing by.

That shortage may make purchasing certain goods difficult for Algerians. But some in government believe it reflects the success of import restrictions and laws limiting how many euros can be brought into the country.

Hicham Safar, the head of a finance committee in the lower house of Algeria’s Parliament, said last week that he “welcomed” such concerns. The growing chasm between the official and black market rates meant fewer euros are getting into the country, he said.

“There’s no more overcharging on imports,” he said on television station Echourouk, citing efforts by customs officials to better regulate imports through the Bank of Algeria and minimize the use of foreign currency.

For decades, steady revenue from oil and gas allowed Algeria to import everything from toothpicks to industrial machinery. The country’s large import market concentrated economic power in the hands of a small group of businessmen known to overbill clients and stash profits abroad, including in European and Emirati banks.

Since President Abdelmajid Tebboune took power, the country has targeted the so-called “oligarchs,” including businesses active in imports. Throughout his tenure, the costs of basic goods in Algerian dinars have swung and imports have been further limited.

Algeria emerged as an unexpected beneficiary of the war in Ukraine, as energy prices rose and Europe sought non-Russian suppliers of oil and gas. But the country has experienced food crises and rising anger as the prices of necessities like chicken, cooking oil and legumes have risen.

Economist Karim Allam said the strength of the euro had worked to Algeria’s detriment, cutting into the purchasing power of those who make money in dinars. He is skeptical of the idea that a shortage of foreign currencies reflects the government’s success, but also doubts that business people are fleeing the country in droves or sending money abroad.

“I don’t think they’ll take the risk of smuggling currency out of the country, which is considered an economic crime punishable by 20 years’ imprisonment,” he said.

Regardless, the falling value of the dinar on the black market is one indicator of how Algerians continue to lose purchasing power despite governmental efforts to stabilize the economy while keeping government spending and subsidies high.

“Inflation has destroyed the buying power of Algerians, who are falling into poverty. The dinar has become worthless,” said Belamane, the retired teacher.
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TOKYO — Japan unexpectedly slipped into a recession at the end of last year, losing its title as the world’s third-biggest economy to Germany and raising doubts about when the central bank would begin to exit its decade-long ultra-loose monetary policy.

Some analysts are warning of another contraction in the current quarter as weak demand in China, sluggish consumption and production halts at a unit of Toyota Motor Corp all point to a challenging path to an economic recovery.

“What’s particularly striking is the sluggishness in consumption and capital expenditure that are key pillars of domestic demand,” said Yoshiki Shinke, senior executive economist at Dai-ichi Life Research Institute.

“The economy will continue to lack momentum for the time being with no key drivers of growth.”

Japan’s gross domestic product (GDP) fell an annualized 0.4% in the October-December period after a 3.3% slump in the previous quarter, government data showed on Thursday, confounding market forecasts for a 1.4% increase.

Two consecutive quarters of contraction are typically considered the definition of a technical recession.

While many analysts still expect the Bank of Japan to phase out its massive monetary stimulus this year, the weak data may cast doubt on its forecast that rising wages will underpin consumption and keep inflation durably around its 2% target.

“Two consecutive declines in GDP and three consecutive declines in domestic demand are bad news, even if revisions may change the final numbers at the margin,” said Stephan Angrick, senior economist at Moody’s Analytics.

“This makes it harder for the central bank to justify a rate hike, let alone a series of hikes.”

Economy minister Yoshitaka Shindo stressed the need to achieve solid wage growth to underpin consumption, which he described as “lacking momentum” due to rising prices.

“Our understanding is that the BOJ looks comprehensively at various data, including consumption, and risks to the economy in guiding monetary policy,” he told a news conference after the data’s release, when asked about the impact on BOJ policy.

The yen JPY was steady following the release of the data and last stood at 150.22 per dollar, pinned near a three-month low hit earlier in the week.

The Nikkei N225 rose 0.8%, reversing some of its losses made from the previous session, possibly on expectations the BOJ may continue with its massive easing program for longer than expected.

On a quarterly basis, GDP slid 0.1% against median forecasts of a 0.3% gain, and compared with a 0.8% contraction in the previous quarter.

Consumption, capital expenditure weak

Private consumption, which makes up more than half of economic activity, fell 0.2%, weaker than a market forecast for a 0.1% gain, as rising living costs and warm weather discouraged households from dining out and buying winter clothes.

Capital expenditure, another key private-sector growth engine, fell 0.1%, compared with forecasts of a 0.3% gain, as supply constraints delayed construction projects.

External demand, or exports minus imports, contributed 0.2 percentage point to GDP as exports rose 2.6% from the previous quarter, the data showed.

The BOJ has been laying the groundwork to end negative rates by April and overhaul other parts of its ultra-loose monetary framework but is likely to go slow on any subsequent policy tightening amid lingering risks, sources have told Reuters.

While BOJ officials have not offered clues on when exactly they could end negative rates, many market players expect such an action to happen either in March or April. A Reuters poll taken in January showed April as the top choice among economists for the negative rate policy to be abandoned.

Some analysts say Japan’s tight labor market and robust corporate spending plans are keeping alive the chance of an early exit from ultra-loose policy.

“While the second consecutive contraction in GDP in Q4 would suggest that Japan’s economy is now in recession, business surveys and the labor market tell a different story. Either way, growth is set to remain sluggish this year as the household savings rate has turned negative,” said Marcel Thieliant, head of Asia-Pacific at Capital Economics.

“The (BOJ) has been arguing that private consumption has ‘continued to increase moderately’ and we suspect that it will continue to strike an optimistic tone at its upcoming meeting in March,” Thieliant said, sticking to his projection the bank will end its negative interest rate policy in April.
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Harare, Zimbabwe — Zimbabwe’s government said Monday it is introducing a gold-backed currency to replace the country’s nearly worthless dollar, which most businesses have shunned, preferring the U.S. dollar or South African rand.

Minister for Finance and Economic Development Mthuli Ncube told reporters in an online press conference that Zimbabwe was making the move to ensure sustained growth.

“Really this is a quest for currency stability,” Ncube said. “What has emerged over the years is the U.S. [dollar] being the most dominant.

“Going forward, we want to make sure that the growth we have achieved so far — which is very strong — is maintained and even increased,” he said. “We can only do that if we have further stability in the domestic currency. … And the way to do that is perhaps to link the exchange rate to some hard asset such as gold.”

He did not say when Zimbabwe will introduce the gold-backed currency.

Since Zimbabwe’s independence in 1980, the country has introduced new currencies several times after citizens and businesses shunned the previous money.

The present-day currency, known as the dollar, bondnotes or ZWL, was introduced in 2014. Within months it started losing value, something economists attributed to the government overprinting notes and businesses failing to have confidence in the currency.

It now trades at 20,000 for 1 U.S. dollar.

Prosper Chitambara, a senior economist with the Labor and Economic Development Research Institute of Zimbabwe, said the move will help control money supply.

“It also helps to stabilize the value of the currency because, ultimately, the value of the currency would be determined to a greater extent by the value of gold,” he said. “On paper, it sounds [like] a good idea to link your currency to an underlying asset such as gold.”

Ultimately, Chitambara said, Zimbabwe needs to exercise fiscal responsibility if it wants a stable domestic currency.

“We need to ensure fiscal sustainability through ensuring there is fiscal discipline, fiscal consolidation, restructuring public spending with a view of eliminating waste and nonproductive spending,” he said.

Also, he said, it is important to ensure monetary discipline through controlling supply and making institutional reforms to address waste and inefficiencies in public enterprises.

Zimbabwe “has been losing money through subsidizing loss-making parastatals and entities,” he said, referring to state-owned companies.

Steven Dhlamini, an economics professor at National University of Science and Technology, said the success of the change will also hinge on whether people have confidence in the gold-backed currency — “whether they believe the government will indeed be transparent and accountable as to the production of the gold viz-a-vis the printing of the currency.”

“So once the trust is established, then that is critical in ensuring the currency will be acceptable and will be stable,” he said.
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WASHINGTON — Annual inflation in the United States cooled last month yet remained elevated in the latest sign that the pandemic-fueled price surge is gradually and fitfully coming under control. 

Tuesday’s report from the Labor Department showed that the consumer price index rose 0.3% from December to January, up from a 0.2% increase the previous month. Compared with a year ago, prices are up 3.1%. 

That is less than the 3.4% figure in December and far below the 9.1% inflation peak in mid-2022. 

The latest reading is well above the Federal Reserve’s 2% target at a time when public frustration with inflation has become a pivotal issue in President Joe Biden’s bid for re-election. 

Excluding the volatile food and energy categories, so-called core prices climbed 0.4% last month, up from 0.3% in December and 3.9% over the past 12 months. Core inflation is watched especially closely because it typically provides a better read of where inflation is likely headed. The annual figure is the same as it was in December. 

Biden administration officials note that inflation has plummeted since pandemic-related supply disruptions and significant government aid sent it soaring three years ago. And a raft of forward-looking data suggests that inflation will continue to cool. 

Still, even as it nears the Fed’s target level, many Americans remain exasperated that average prices are still about 19% higher than they were when Biden took office. 

The mixed data released Tuesday could reinforce the caution of Fed officials, who have said they’re pleased with the progress in sharply reducing inflation but want to see further evidence before feeling confident that it’s sustainably headed back to their 2% target. Most economists think the central bank will want to wait until May or June to begin cutting its benchmark rate from its 22-year-high of roughly 5.4. 

The Fed raised its key rate 11 times from March 2022 to July of last year in a concerted drive to defeat high inflation. The result has been much higher borrowing rates for businesses and consumers, including for mortgages and auto loans. Rate cuts, whenever they happen, would eventually lead to lower borrowing costs for many categories of loans. 

In the final three months of last year, the economy grew at an unexpectedly rapid 3.3% annual rate. There are signs that growth remains healthy so far in 2024. Businesses engaged in a burst of hiring last month. Surveys of manufacturing companies found that new orders rose in January. And services companies reported an uptick in sales.
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NEW YORK — How much choice is too much?

Apparently for Coca-Cola, it’s about 400 different types of drinks.

That’s why the beverage company recently decided to discontinue half of them, shedding brands like Tab, Zico coconut water, Diet Coke Fiesty Cherry and Odwalla juices but still leaving about 200 others to choose from.

It’s a move that other businesses are making as well, reducing the variety of offerings from mayonnaise to cereals to cars and instead focusing on what they think will sell best.

Stew Leonard’s, a supermarket chain that operates stores in Connecticut, New York and New Jersey, now has 24 cereal flavors or types, down from 49 in 2019. Edgewell Personal Care Co., the maker of Schick razors and Banana Boat suntan lotion, has trimmed certain varieties of its anti-bacteria wipes Wet Ones, among others. And Dollar General, based in Goodlettsville, Tennessee, used to stock six different kinds of mayonnaise on its shelves and is now looking to drop a couple of them.

“The consumer is not going to know the difference,” Todd J. Vasos, CEO of Dollar General, told analysts in December. “Actually, it’s going to make her life a little simpler when she goes to the shelf.”

Just a year ago, Kohl’s store in Clifton, New Jersey had tables stacked high with sweaters and shirts in a rainbow of colors as well as dress racks crammed with a wide assortment of styles. Now, it boasts a more edited approach — tables have slim piles of knit shirts that focus on fewer colors, and many dress racks have been reduced to just three or four styles.

Under its new CEO Tom Kingsbury, Kohl’s has been cutting back on the colors and variations of sweaters, jeans and other items, while sending their buyers into the New York market more frequently to bring in fresh trendy merchandise.

“We would go out, and we would buy a lot of goods and it would come in 12, 14 months later, and it didn’t perform very well,” Kingsbury told analysts in a call in November. “We’re going to be using the marketplace, so that we can react to the business quickly, getting into trends.”

Some customers like the changes so far.

“It’s pretty organized,” said Kimberly Ribeiro, 30, who was at the Kohl’s store on a recent Friday. “If it’s not so cluttered, then you don’t get overwhelmed.”

Even in the auto world, shoppers are finding fewer choices. Both General Motors and Ford have been touting how they are limiting the number of option combinations customers can get on their vehicles to reduce manufacturing and purchasing complexity.

That’s a reversal from a few years ago when there was an explosion of choices, encouraged in part by online shopping that paid no mind to space constraints. But that didn’t always lead to sales, so companies started pruning selections a year or two before the pandemic.

During the pandemic, the pruning only accelerated, with companies focusing on necessities as they wrestled with supply chain clogs. But even after the pandemic, when goods began moving freely again, many businesses decided less was better and justified the limited selection by asserting shoppers don’t want so much choice. It’s also more profitable for companies because they’re not carrying over as many leftovers that need to be discounted.

Overall, new items accounted for about 2% of products in stores in 2023 across categories such as beauty, footwear, technology and toys, down from 5% of items in 2019, says market-research firm Circana.

Eric O’Toole, president of Edgewell’s North America division, noted the pandemic presented “a really valuable stimulus” for reassessing assortment.

“We avoid jumping on fads, as the supply chain and retailer costs required to support  

getting to shelf typically don’t generate a return in the end,” O’Toole said. “A tighter,  

more curated portfolio supports healthy profit management.”

Many think they’re doing shoppers a favor, with studies showing that fewer choices, not lots of variety, encourage shoppers to buy more.

In 2000, psychologists Sheena Lyengar and Mark Lepper published a study that showed limited selection is better for the shopper. In their experiment, Lyengar and Lepper found consumers were 10 times more likely to purchase jam on display when the number of jams available was cut down from 24 to 6 even though they were more likely to stop at the display offering more selection. Subsequent studies have confirmed this phenomenon. 

“Retailers are recognizing that they have to be respectful of shoppers’ time,” said Paco Underhill whose company, Envirosell, studies consumer behavior.

Still, retailers can’t just slash products willy-nilly, said David Berliner, who leads the business restructuring and turnaround practice at BDO.

“You want to make these cuts so they’re not even aware of it, and you want the store to still look full,” Berliner said. “If you do it too much, you might scare some away.”
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WASHINGTON — U.S. Treasury Secretary Janet Yellen will travel to the battleground states of Pennsylvania and Michigan this week as part of an election-year push aimed at showcasing what she calls “the strongest economic comeback of our lifetimes.”

Yellen will visit Pittsburgh on Feb. 13 and Detroit on Feb. 14 for events with elected officials and community leaders focused on the Biden administration’s efforts to lower health care costs, support small businesses and boost economic opportunity, the Treasury said.

The trips build on Yellen’s visits to Illinois and Wisconsin in January and other states such as Nevada and North Carolina last year. But the administration’s marketing efforts have failed to convince the American public, according to recent polls.

A recent Reuters/Ipsos poll showed President Joe Biden is running six percentage points behind Republican front-runner former President Donald Trump, with voters focused on immigration challenges, Biden’s age and are still unhappy about the economy despite big improvements since he took office in 2021.

Yellen has counseled patience in the past, arguing that the shock caused by the COVID pandemic left lingering concerns, while expressing confidence about improving consumer sentiment.

“Over the past three years, the Biden administration has driven the strongest economic comeback of our lifetimes,” Yellen said in a speech to be given at the Greater Pittsburgh Chamber of Commerce on Tuesday. She will also meet with Democratic Senator Bob Casey, a strong supporter of Biden.

She will hail strong economic growth in the U.S., a quicker and more rapid cooling of inflation than in other advanced economies, and the continued strength of the labor market.

With unemployment below 4% and household median wealth up 37% between 2019 and 2022 — the largest three-year increase on record — Americans now had more purchasing power, she said.

In Detroit, whose economic recovery has lagged behind other cities somewhat, Yellen will speak at a joint event with Governor Gretchen Whitmer, meet with Senator Debbie Stabenow and local business leaders, and give a speech focused on small businesses.

Detroit has seen economic advances, but other Midwestern counterparts have higher numbers of workers earning a living wage, according to University of Michigan economists.
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Dubai, United Arab Emirates — The International Monetary Fund said on Sunday Middle East economies were lagging below growth projections due to oil production cuts and the Israel-Gaza conflict, even as the global economic outlook remained resilient.

Despite uncertainties, “the global economy has been surprisingly resilient,” IMF managing director Kristalina Georgieva told the Arab Fiscal Forum in Dubai, while warning of a potential wider impact on regional economies of continued conflict in Gaza.

In a regional economic report last month, the IMF revised its GDP growth forecast for the Middle East and North Africa down to 2.9% this year, lagging below October projections, due in part to short term oil production cuts and the conflict in Gaza.

The IMF last month edged its forecast for global economic growth higher, upgrading the outlook for both the United States and China and citing faster-than-expected easing of inflation.

Georgieva said economies neighboring Israel and the Palestinian territories saw the conflict weighing on tourism revenues, while Red Sea attacks weighed on freight costs globally.

Those factors compounded “the challenges of economies that are still recovering from previous shocks,” she told the forum on the sidelines of the World Governments Summit in Dubai.

The Iran-aligned Houthis in Yemen have been targeting commercial vessels with drones and missiles in the Red Sea since mid-November, and say their attacks are in solidarity with Palestinians as Israel strikes Hamas militants in Gaza. But the U.S. and its allies characterize them as indiscriminate and a menace to global trade. 

Several global shippers have been diverting traffic to the Cape of Good Hope, a longer route than through Egypt’s Suez Canal.

Egypt’s Finance Minister Mohamed Maait told Reuters on the sidelines of the summit that part of the impact of the diversion on Suez Canal revenues could be absorbed due to good growth in “the period before the events.”

AI Tsunami

The IMF will publish on Monday a paper that shows phasing out energy subsidies could save $336 billion in the Middle East, equivalent to the economies of Iraq and Libya combined, Georgieva said.

Georgieva said that eliminating regressive energy subsidies also “discourages pollution, and helps improve social spending.”

In the Middle East and North Africa (MENA) region, fossil fuel subsidies made up 19% of GDP in 2022, the IMF has said.

It has recommended the gradual unwinding of energy subsidies for the region’s economies, including oil exporters, and suggested targeted support as an alternative.

Advanced technology, including Artificial Intelligence, is a key theme of focus at the World Governments Summit, with several top executives from major global tech firms due to speak, including Sam Altman, CEO of OpenAI.

Georgieva said globally, 40% of jobs are exposed to AI, and countries that lack the infrastructure and a skilled workforce to invest could fall behind.

Regional economies such as the UAE and Saudi Arabia have significantly increased investment in AI as part of strategies to diversify income sources.
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HAVANA — Cuba has charged 30 people with stealing 133 tons of chicken and selling them on the street in a rare major heist at a time of food shortages in the communist-run nation. 

Thieves took the meat, in 1,660 white boxes, from a state facility in the capital, Havana, and used the sale proceeds to buy refrigerators, laptops, televisions and air conditioners, according to a Cuban state TV broadcast late Friday. 

The chicken had been earmarked for Cuba`s “rationbook” system introduced after the late Fidel Castro’s 1959 revolution to provide subsidized staples for all. 

Rigoberto Mustelier, director of government food distributor COPMAR, said the quantity stolen was the equivalent of a month`s ration of chicken for a medium-sized province at current distribution rates. 

The amount of chicken available via the rationbook has fallen sharply in recent years as an economic crisis has brought scarcities of food, fuel and medicines. 

Many subsidized products reach the populace days, weeks or even months later than scheduled, leaving people who make an average wage of 4,209 pesos a month ($14 at the informal exchange rate) to seek other ways to make ends meet. 

Authorities did not say when the chicken theft took place but noted it likely occurred between midnight and 2 a.m., when they detected fluctuations in the temperature of the cold storage facility. Video surveillance captured trucks transporting the chicken off site. 

The 30 charged included shift bosses and information technology workers at the plant, as well as security guards and outsiders not directly affiliated with the company, the TV report said. 

The suspects, if found guilty, could face up to 20 years in prison. 

Crime has increased alongside economic hardship since the end of the COVID-19 pandemic, although reports of large-scale thefts are still a rarity on the Caribbean island. 
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Having enough feed for livestock is critical to the food security of many African countries. Some farmers are considering adopting a Chinese-engineered grass called Juncao, advertised as high-yielding and fast-maturing. Some scientists advise caution. Francis Ontomwa has more from Kajiado, Kenya. Video: Amos Wangwa.
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About 10,000 people born between 1946 and 1964 leave the workforce each day
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Baghdad, Iraq — Iraq has banned eight local commercial banks from engaging in U.S. dollar transactions, taking action to reduce fraud, money laundering and other illegal uses of U.S. currency days after a visit by a top U.S. Treasury official.

The banks are banned from accessing the Iraqi central bank’s daily dollar auction, a main source of hard currency in the import-dependent country that has become a focal point of a U.S. crackdown on currency smuggling to neighboring Iran.

A rare ally of both the United States and Iran with more than $100 billion in reserves held in the U.S., Iraq relies heavily on Washington’s goodwill to ensure that its access to oil revenues and finances are not blocked.

A central bank document verified by an official at the bank listed the banned banks.

They are: Ahsur International Bank for Investment; Investment Bank of Iraq; Union Bank of Iraq; Kurdistan International Islamic Bank for Investment and Development; Al Huda Bank; Al Janoob Islamic Bank for Investment and Finance; Arabia Islamic Bank and Hammurabi Commercial Bank.

The head of Iraq’s private bank association, which represents the banks involved, and Ashur and Hammurabi did not immediately respond to requests for comment. Reuters is contacting the other banks.

A Treasury spokesperson said: “We commend the continued steps taken by the Central Bank of Iraq to protect the Iraqi financial system from abuse, which has led to legitimate Iraqi banks achieving international connectivity through correspondent banking relationships.”

In July 2023, Iraq banned 14 banks from conducting dollar transactions as part of a wider crackdown on dollar smuggling to Iran via the Iraqi banking system. The decision came after a request from Washington, according to Iraqi and U.S. officials.

Banks banned from dollar transactions can continue operating and can engage in transactions in other currencies, the central bank says.

The U.S. Treasury Department’s top sanctions official, Brian Nelson, last week met top Iraqi officials in Baghdad, discussing how to protect the Iraqi and international financial systems from criminal, corrupt and terrorist actors.

Treasury announced action against Al-Huda Bank during the visit, saying it was involved in diverting billions of U.S. dollars to Iranian-backed groups.

A senior Treasury official told Reuters that Washington expected Iraq to do more to help counter Iran-backed armed groups operating out of Iraq after the killing of three U.S. soldiers that has been blamed on hard-line Iraqi factions.

The current Iraqi government came to power with the support of powerful, Iran-backed parties and armed groups with interests in Iraq’s highly informal economy, including the financial sector long seen as a money-laundering hotspot.

Still, Western officials have lauded cooperation with Iraqi Prime Minister Mohammed Shia al-Sudani toward carrying out economic and financial reforms meant to curb the ability of Iran and its allies to access U.S. dollars, and to bring the Iraqi economy into line with international standards.
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washington — The International Monetary Fund says China’s economic decline is likely to continue over the next four years as the world’s second largest economy deals with a range of challenges from a rapidly aging population, higher unemployment and a property crisis.

In a report released on Friday, the global financial policy body – also known as the IMF – projected China’s economic growth would drop to 4.6% this year, down from its 5.2% growth in 2023, and fall further to 3.4% by 2028.

The property market, which has historically represented about a quarter of China’s GDP, has been a particular area of trouble for the Chinese economy lately, with a Hong Kong court on Monday ordering Chinese property giant China Evergrande, mired in more than $300 billion of debt, to liquidate.

An IMF analysis released Friday predicted real estate investment is likely to fall 30% to 60% in the next ten years relative to 2022 levels.

“Absent a comprehensive restructuring policy package for the troubled property sector, real estate investment could drop more than expected, and for longer, with negative implications for domestic growth and trading partners,” the IMF report read.

However, Zhang Zhengxin, the IMF’s executive director for China, disagreed with the fund’s findings in a January 10 statement included in the report.

“The Report warns of the risks in China’s real estate market, but staff’s estimate is, to some extent, too pessimistic,” Zhang wrote. “Since August 2023, the real estate market transactions have experienced general improvement, which has gradually strengthened market confidence.”

The real estate crisis is closely linked to Chinese consumers’ spending habits, according to Christopher Tang, Senior Associate Dean of Global Initiatives at the University of California Los Angeles Anderson School and Faculty Director of the UCLA Center for Global Management.

“As they see their equity in their home investment declining, they spend less on everything – lower consumer spending, the demand falls which reduces production and hence slower economic growth,” Tang told VOA in an emailed response. “There is a domino effect when the real estate market is so huge and intertwined with decades of aggressive housing development and easy lending from banks.”

Ali Wyne, the senior research and advocacy adviser for U.S.-China at the think tank International Crisis Group, said local government debt and tensions between China and Western democracies also factor into predictions of an economic downturn.

“The evidence thus far does not suggest that a hard landing is in the offing, but it does suggest that China’s growth headwinds are more intractable than they were a decade ago or even at the outset of the 2020s,” Wyne told VOA in an email.

The IMF recommended that the Chinese government encourage its citizens to find new means of investment and pursue market-oriented reforms, among other means, to boost the country’s economy, according to the report.

Tang said China needs to promote new demand-side economic policies and loosen market regulations.

“China needs to promote a freer market to support market competition that can stimulate jobs through entrepreneurship and new startups and reduce its focus on state-owned enterprises that lack incentive to innovate and to compete,” Tang wrote.
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WASHINGTON — The nation’s employers delivered a stunning burst of hiring to begin 2024, adding 353,000 jobs in January in the latest sign of the economy’s continuing ability to shrug off the highest interest rates in two decades.

Friday’s government report showed that last month’s job gain — far above what economists had predicted — topped the December gain of 333,000, a figure that was itself revised sharply higher. The unemployment rate stayed at 3.7%, just above a half-century low.

Wages rose unexpectedly fast in January, too. Average hourly pay climbed a sharp 0.6% from December, the fastest monthly gain in nearly two years, and 4.5% from January 2023. The strong hiring and wage growth could complicate or delay the Federal Reserve’s intention to start cutting interest rates later this year.

The latest gains showcased employers’ willingness to keep hiring to meet steady consumer spending. It comes as the intensifying presidential campaign is pivoting in no small part on views of President Joe Biden’s economic stewardship. Public polls show widespread dissatisfaction largely because even though inflation has sharply slowed, most prices remain well above pre-pandemic levels. Some recent surveys, though, show public approval gradually improving.

This week, the Fed took note of the economy’s durability, with Chair Jerome Powell saying “the economy is performing well, the labor market remains strong.” The central bank made clear that while it’s nearing a long-awaited shift toward cutting interest rates, it’s in no hurry to do so.

The details in Friday’s jobs report pointed to broad hiring gains across the economy. Professional and business services, a category that includes managers and technical workers, added 74,000 jobs. Healthcare companies added 70,000, retailers 45,000, governments at all levels 36,000 and manufacturers 23,000.

The unemployment rate has now come in below 4% for two straight years, the longest such streak since the 1960s.

“Overall, the labor market remains strong and continues to defy expectations of a softening,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. “For Fed officials, these data strongly support patience on rate cuts. Policymakers will be in no rush to lower rates if job and wage growth continue to be robust over coming months.”

To fight inflation, the Fed raised its benchmark rate 11 times beginning in March 2022. The higher borrowing costs were widely expected to boost unemployment and likely cause a recession. Yet the economy has managed to deliver enough job growth to avoid a downturn without accelerating inflation pressures. Inflation cooled throughout 2023, making it likelier that the Fed would achieve a “soft landing” — taming inflation without derailing the economy.

A series of high-profile layoff announcements, from the likes of UPS, Google and Amazon, have raised some concerns about whether they might herald the start of a wave of job cuts. Yet measured against the nation’s vast labor force, the recent layoffs haven’t been significant enough to make a dent in the overall job market. Historically speaking, layoffs are still relatively low, hiring is still solid and the unemployment rate is still consistent with a healthy economy.

Consumers as a whole have proved more resilient than expected in the face of the Fed’s rate hikes. Having socked away savings during the pandemic, most were willing to spend it as the economy reopened. And a wave of early retirements, some of them related to COVID-19, limited the number of people available for work and contributed to a tight labor market.

The gradual improvement in public confidence has emerged in a series of recent surveys. A measure of consumer sentiment by the University of Michigan has jumped in the past two months by the most since 1991. A survey by the Federal Reserve Bank of New York found that Americans’ inflation expectations have reached their lowest point in nearly three years. And a new poll from The Associated Press-NORC Center for Public Affairs Research found that 35% of U.S. adults call the national economy good, up from 30% who said so late last year.

The rate at which Americans are quitting their jobs, considered a reliable predictor of wage trends, has slowed to pre-pandemic levels. That suggests that workers have grown somewhat less confident of finding a better job elsewhere. Employers, as a result, may be less likely to feel pressure to raise wages to keep them — and to increase their prices to make up for their higher labor costs. That cycle can perpetuate inflation.
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Taipei, Taiwan — A new report finds that some global carmakers are applying weaker human rights and responsible-sourcing standards to their joint ventures in China due to pressure from the Chinese government.

The lax standards increase the risk of exposing supply chains to forced labor from China’s Xinjiang Autonomous Region, where more than 1 million Uyghurs and other ethnic minorities have been subject to mass internment and other forms of persecution.

According to the report from Human Rights Watch, titled Asleep at the Wheel, several major global carmakers, including Volkswagen, Tesla, General Motors and Toyota, have failed to minimize the risk of Uyghur forced labor being used in their aluminum supply chain, an important material for automotive parts.

“The aluminum supply chain operates with multiple layers between the car company and the aluminum producer, and these layers create an opaqueness that kind of benefits the car industry because carmakers can buy material without knowing its origin and without knowing the risks to a context like Xinjiang,” Jim Wormington, a senior researcher at HRW and author of the report, told VOA by phone.

In recent years, several international investigations have found evidence of forced labor in Xinjiang. Some research warns that the supply chains of certain industries, such as the solar panel and auto industries, may be exposed to forced labor from Xinjiang.

With about 15% of the aluminum produced in China being sourced from Xinjiang, HRW found evidence through Chinese state media articles, company reports and government statements that aluminum producers in the region are participating in labor transfers.

“The link between Xinjiang, the aluminum industry, and forced labor is Chinese government-backed labor transfer programs, which coerce Uyghurs and members of other Turkic Muslim communities into jobs in Xinjiang and other regions,” the report said. It added that evidence from Chinese government sources shows that aluminum smelters in Xinjiang participated in labor transfers.

Since most aluminum from Xinjiang is mixed with other metals to make aluminum alloys in other parts of China, it’s difficult to determine how much aluminum came from Xinjiang. “Aluminum ingots from Xinjiang are brought and sold by commodities traders, further obscuring the links between Xinjiang and supply chains,” the report said.

At least three aluminum producers or smelters in Xinjiang, including Xinjiang East Hope Nonferrous Metals, Tianshan Aluminum and Xinfa Group Xinjiang, have been identified as either receiving labor transfers targeting Uyghurs and other ethnic minorities or are being closely linked to Xinjiang Production Construction Corps, which plays a key role in the repression of Uyghurs in Xinjiang, according to previous research and investigations.

In response to criticism of facilitating forced labor in Xinjiang, the Chinese Embassy in Washington said the accusation is “a lie of the century fabricated to smear China.”

“The people in Xinjiang have their workers’ rights concretely guaranteed,” a spokesperson from the embassy told VOA in a written response. “This falsehood only proves that some in the United States are using human rights to disadvantage China, disrupt international trade rules and undercut the stability of international industrial and supply chains.”

Despite Beijing’s efforts to push back against accusations related to forced labor in Xinjiang, Human Rights Watch said global carmakers have a responsibility to identify, prevent, and mitigate the presence of forced labor in their supply chains under regulations mandated by the United Nations.

Some carmakers, including Volkswagen and Tesla, told HRW they have limited capacity to address their Chinese joint ventures’ supply chain links to Xinjiang.

Volkswagen, which holds 50% of the equity of its joint venture in China with Chinese automaker SAIC, claimed they are “not legally responsible” for human rights impacts in its joint venture’s supply chain because Germany’s supply chain law “only covers subsidiaries in which companies have decisive influence.”

When asked about the potential links between their Chinese joint venture and an aluminum producer in Xinjiang, Volkswagen admitted they have “no transparency about the supplier relationships” of their Chinese joint ventures.

Despite the difficulty of conducting audits in China and fear of retaliation from the Chinese authorities, Wormington from HRW said there are ways for carmakers to demand more information from Chinese suppliers about the supply chain.

“[While] some carmakers really fear retaliation, since Chinese carmakers want access to global markets, global carmakers can ask their suppliers to get more information on their supply chain,” he told VOA. “There are things that carmakers can do, but in the context where they can’t ask suppliers about human rights issues, that becomes extremely difficult.”

Some foreign jurisdictions, including the United States and European Union, have enacted or are planning to pass laws that require businesses to disclose their supply chains and identify potential links to human rights abuses. Some governments have also imposed import restrictions to prevent products connected to forced labor from entering their countries.

Despite efforts by governments to prevent supply chains from being exposed to elements of forced labor from Xinjiang, some analysts think businesses need to clearly express their concerns to Beijing.

“In an ideal world, businesses would make clear at the highest level to the Chinese government that this is going to be a problem unless businesses can have their staff conduct due diligence freely to ensure there isn’t forced labor in their supply chains,” said William Nee, research and advocacy coordinator at Chinese Human Rights Defenders, a U.S.-based activist network, in a telephone interview.

Yalkun Uluyol, a researcher at Sheffield Hallam University, said companies “must stop directly or indirectly sourcing anything made in the Uyghur region, in part or whole, to ensure their products are free of Uyghur forced labor.”

The companies should make public commitments to such a policy, he added in a written response to VOA.
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