China’s ‘Singles Day’ Shopping Bonanza Loses its Luster

China’s annual “Singles Day” sales bonanza wraps up at midnight Saturday, but consumers this year appear largely unswayed by its flashy deals and discounts as the world’s second-largest economy slows.

Conceived by tech giant Alibaba, “Singles Day” — which this year spanned well over a week — was launched in 2009 and has since ballooned into a yearly blockbuster retail period.

Sales for last year’s Singles Day reached $153 billion, according to a recent report by consultancy firm Bain.

But among consumers surveyed by Bain this year, 77% said that they did not plan to spend more than usual during the sales event.

“These days people are consuming less, people don’t really have much of a desire to buy lots of things,” recent graduate Zhang Chuwen, 23, told AFP.

She said her friends were instead using the sales to buy “everyday necessity products.”

Others say that this year’s Singles Day deals aren’t as good as in the past, and that some websites had raised prices beforehand, only to cut them for the holiday.

“The prices are not that different compared to other days,” Guan Yonghao, 21, told AFP.

“So I didn’t buy anything,” he added. “We will save a little because we are making less money.”

Jacob Cooke, co-founder and CEO of Beijing-based e-commerce consulting firm WPIC Marketing + Technologies, told AFP that Singles Day had “lost its luster” thanks to a combination of trends.

“The proliferation of livestreaming and secondary shopping festivals… means that the relative attraction of Singles Day as a time to load up on discounted goods has been reduced,” he said.

Slowing demand

Livestreamers — who draw in millions for e-commerce giants in China with marathon online sales pitches — also say they are noticing a downturn compared to previous iterations of the shopping event.

“This year’s Singles Day online sales are not as good as last year or two years ago,” Liu Kai, an e-commerce livestreamer, told AFP.

The name of the event riffs on a tongue-in-cheek celebration of singlehood inspired by the four ones in its date – Nov. 11, or 11/11.

But this year’s sales began on some platforms as early as late October.

Alibaba, like its main rival JD.com, withheld full sales figures for the shopping bonanza for the first time ever last year, saying instead that sales were flat from the year before.

The slowing sales follow an announcement this week that China slipped back into deflation in October, underscoring the work remaining for officials seeking to jumpstart demand.

Beijing has moved to shore up its ailing economy in recent months, unveiling a series of measures — particularly aimed at the ailing property sector — and announcing a huge infrastructure spending plan.

Moody’s Turns Negative on US Credit Rating, Draws Washington Ire

Moody’s on Friday lowered its outlook on the U.S. credit rating to “negative” from “stable” citing large fiscal deficits and a decline in debt affordability, a move that drew immediate criticism from U.S. President Joe Biden’s administration.

The action follows a rating downgrade by another ratings agency, Fitch, earlier this year, which came after months of political brinksmanship around the U.S. debt ceiling.

Federal spending and political polarization have been a rising concern for investors, contributing to a selloff that took U.S. government bond prices to their lowest levels in 16 years.

“It is hard to disagree with the rationale, with no reasonable expectation for fiscal consolidation any time soon,” said Christopher Hodge, chief economist for the U.S. at Natixis. “Deficits will remain large … and as interest costs take up a larger share of the budget, the debt burden will continue to grow.”

The ratings agency said in a statement that “continued political polarization” in Congress raises the risk that lawmakers will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability.”

“Any type of significant policy response that we might be able to see to this declining fiscal strength probably wouldn’t happen until 2025 because of the reality of the political calendar next year,” William Foster, a senior vice president at Moody’s, told Reuters in an interview.

Republicans, who control the U.S. House of Representatives, expect to release a stopgap spending measure on Saturday aimed at averting a partial government shutdown by keeping federal agencies open when current funding expires next Friday.

Moody’s is the last of the three major rating agencies to maintain a top rating for the U.S. government. Fitch changed its rating from triple-A to AA+ in August, joining S&P which has had an AA+ rating since 2011.

While it changed its outlook, indicating a downgrade is possible over the medium term, Moody’s affirmed its long-term issuer and senior unsecured ratings at Aaa, citing U.S. credit and economic strengths.

Immediately after the Moody’s release, White House spokesperson Karine Jean-Pierre said the change was “yet another consequence of congressional Republican extremism and dysfunction.”

“While the statement by Moody’s maintains the United States’ Aaa rating, we disagree with the shift to a negative outlook. The American economy remains strong, and Treasury securities are the world’s preeminent safe and liquid asset,” Deputy Treasury Secretary Wally Adeyemo said in a statement.

Adeyemo said the Biden administration had demonstrated its commitment to fiscal sustainability, including through over $1 trillion in deficit reduction measures included in a June agreement struck with Congress on raising the U.S. debt limit, and Biden’s proposal to reduce the deficit by nearly $2.5 trillion over the next decade.

Treasury yields have soared this year on expectations the Federal Reserve will keep monetary policy tight, as well as on U.S.-focused fiscal concerns.

The sharp rise in Treasury yields “has increased pre-existing pressure on U.S. debt affordability,” Moody’s said.

A Moody’s downgrade could exacerbate fiscal concerns, but investors have said they are skeptical it would have a material impact on the U.S. bond market, seen as a safe haven because of its depth and liquidity.

However, “it is a reminder that the clock is ticking and the markets are moving closer and closer to understanding that we could go into another period of drama that could lead ultimately to the government shutting down,” said Quincy Krosby, chief global strategist at LPL Financial.

Moody’s decision also comes as Biden, who is seeking reelection in 2024, has seen his support fall sharply in the polls. A New York Times/Siena poll released on Sunday showed him trailing former president Donald Trump, the leading Republican candidate, in five of six battleground states: Nevada, Georgia, Arizona, Michigan and Pennsylvania. Biden was ahead of Trump in Wisconsin. The outcome in those six states will help determine who wins the presidential election.

The Moody’s move will also heap pressure on congressional Republicans to advance funding legislation to avert a partial government shutdown.

U.S. House Speaker Mike Johnson has spent days in talks with members of his slim 221-212 Republican majority about several stopgap measures. The House and the Democratic-led Senate must agree on a vehicle that Biden can sign into law before current funding expires on Nov. 17.

“We cannot, in good conscience, continue writing blank checks to our federal government knowing that our children and grandchildren will be responsible for the largest debt in American history,” hardline Republican Representative Andy Harris said on X, formerly known as Twitter.

Infighting among House Republicans has led to flirtations with government shutdowns yet both parties have contributed to budget deficits.

Biden’s Democrats have backed a wide range of spending plans, while Republicans pushed through sharp tax cuts early in Donald Trump’s presidency that also fed the deficit. Neither party has seriously addressed rising costs of the Social Security and Medicare programs that represent a significant slice of federal spending.

UN Report Outlines War’s Devastating Impact on Palestinian Economy

A new U.N. report paints a stark picture of the collapse of the Palestinian economy after a month of war and Israel’s near total siege of Gaza.

The gross domestic product shrank 4% in the West Bank and Gaza in the war’s first month, sending more than 400,000 people into poverty, an economic impact unseen in the conflicts in Syria and Ukraine, or any previous Israel-Hamas war, the U.N. said.

Gaza’s Hamas rulers launched a surprise attack on Israel on Oct. 7 killing more than 1,400 people, mainly civilians, and kidnapping about 240 others.

More than two-thirds of Gaza’s population of 2.3 million have fled their homes since Israel launched weeks of intense airstrikes followed by an ongoing ground operation, vowing to obliterate Hamas. The Hamas-run Health Ministry in Gaza said Thursday that 10,818 Palestinians, including more than 4,400 children, have been killed so far.

The rapid assessment of the economic consequences of the Gaza war released Thursday by the U.N. Development Program and the U.N. Economic and Social Commission for West Asia was the first U.N. report showing the devastating impact of the conflict especially on the Palestinians.

If the war continues for a second month, the U.N. projects that the Palestinian GDP, which was $20.4 billion before the war began, will drop by 8.4%, a loss of $1.7 billion. And if the conflict lasts a third month, Palestinian GDP will drop by 12%, with losses of $2.5 billion and more than 660,000 people pushed into poverty, it projects.

U.N. Development Program Assistant Secretary-General Abdallah Al Dardari told a news conference launching the report that a 12% GDP loss at the end of the year would be “massive and unprecedented.” By comparison, he said, the Syrian economy lost 1% of its GDP per month at the height of its conflict, and it took Ukraine a year and a half of fighting to lose 30% of its GDP, an average of about 1.6% a month.

At the beginning of 2023, the Palestinian territories – the West Bank and Gaza – were considered a lower middle-income economy with a poverty level of $6 per day per person, Economic Commission Executive Secretary Rola Dashti said.

In January, Gaza was grappling with high unemployment of about 46%, 3½ times higher than the West Bank’s 13%, the report said.

But just weeks of war has destroyed hundreds of thousands of jobs.

“As the war hits the one-month mark, 61% of employment in Gaza, equivalent to 182,000 jobs, is estimated to have been lost,” it said. “Around 24% of employment in the West Bank has also been lost, equivalent to 208,000 jobs.”

Al Dardari pointed to the massive disruption to the economy in the West Bank, which is responsible for 82% of Palestinian GDP, explaining that this is supposed to be the season for olive and citrus farmers to collect their products, but they can’t because of the war. And “the tourism season is practically gone – and agriculture and tourism represent 40% of the GDP in the West Bank,” he said.

In addition, Al Dardari said, there are major disruptions to trade, to the transfer of money from Israel to the Palestinian Authority, which controls the West Bank, and no investment.

The Economic Commission’s Dashti said “the level of destruction is unimaginable and unprecedented” in Gaza.

“As of November 3, it is estimated that 35,000 housing units have been totally demolished and about 220,000 units are partially damaged,” she said. The report said at least 45% of Gaza’s housing units have been destroyed or damaged.

If this persists, the majority of Gazans will have no homes. Al Dardari added that even if fighting ended now there will be massive long-term displacement, “with all its humanitarian, economic development and security consequences.”

Al Dardari said it breaks his heart that the Palestinian territories had become lower middle income economies, “because all of that growth and development is going to regress between 11, 16, or even 19 years if the fighting continues. … We will go back to 2002.”

African Businesses Navigate Trade With US and China

African leaders are pushing for renewal of a preferential U.S. trade policy, set to expire in 2025, that allows them duty-free access to the U.S. market. Kate Bartlett spoke with U.S. trade representative Katherine Tai about U.S.-China competition at the annual summit of the African Growth and Opportunity Act in Johannesburg and visited a factory that does business with both countries. Camera — Zaheer Cassim.

Australian Leader Hails Landmark Meeting With Chinese President in Beijing

Australian Prime Minister Anthony Albanese has invited Chinese President Xi Jinping to Canberra after what he called a “positive” landmark summit in Beijing.

Albanese is the first Australian prime minister to visit mainland China since 2016, following years of friction. The Canberra government says his trip to China is an important step in the stabilization of diplomatic relations after various political and trade disputes.

Amid disagreements over various geopolitical issues, including human rights and the origins of COVID-19, Beijing imposed bans and tariffs on a range of Australian imports.

Albanese has sought a less-confrontational approach to China after an election win in May 2022, with the aim of stabilizing relations with Australia’s main trading partner while acknowledging areas of disagreement.

Albanese said his meeting Monday with Chinese President Xi Jinping was “one of goodwill.” He said he raised the case of the Australian writer and democracy activist Yang Hengjun, who has been detained by China for almost five years.

Australian government officials are hopeful that the last remaining Chinese restrictions on the country’s export commodities, including seafood and beef, will be scrapped by the end of the year. China has also said it would undertake a five-month review of duties it imposed on Australian wine.

Albanese told reporters in Beijing that his talks with the Chinese leader were broad.

“I did discuss international issues with President Xi and the importance of stability in the region and open channels of communication,” he said. “We also discussed our bilateral relationship. I raised consular and human rights issues during the meeting as well.”

But opposition Liberal Party Senator Simon Birmingham told the Australian Broadcasting Corp. Tuesday that the Canberra government must remain vigilant about China’s ambitions.

“We have seen Australia’s and other international security chiefs provide new warnings about the extent of Chinese cyber espionage,” he said. “We have seen the Chinese navy undertake aggressive action against the Philippines in the South China Sea. Whilst this visit might be positive, the Albanese government [must] not get any rose-colored glasses about the challenges that are there as well.”

China accounts for about a third of Australia’s global trade. Analysts say that China is highly dependent on Australian raw materials, including iron ore and liquefied natural gas, to help build its economy.

Albanese has invited Xi to visit Australia in the near future, while the Chinese president also asked the Australian prime minister to return to China and visit other parts of his country.

President Biden Hosts Latin American Leaders for Americas Economic Summit

On Friday, U.S. President Joe Biden hosted leaders from Latin America, the Caribbean, and Canada at the inaugural Americas Partnership for Economic Prosperity Leaders’ Summit, which aimed to enhance economic ties, fortify U.S. investments in the region, and tackle immigration challenges. Veronica Villafane narrates this report by Paula Diaz.

Offshore Wind Projects Face Economic Storm, Risks to Biden Clean Energy Goals

The cancellation of two large offshore wind projects in New Jersey is the latest in a series of setbacks for the nascent U.S. offshore wind industry, jeopardizing the Biden administration’s goals of powering 10 million homes from towering ocean-based turbines by 2030 and establishing a carbon-free electric grid five years later.

The Danish wind energy developer Ørsted said this week it’s scrapping its Ocean Wind I and II projects off southern New Jersey due to problems with supply chains, higher interest rates and a failure to obtain the amount of tax credits the company wanted.

Together, the projects were supposed to deliver over 2.2 gigawatts of power.

The news comes after developers in New England canceled power contracts for three projects that would have provided another 3.2 gigawatts of wind power to Massachusetts and Connecticut. They said their projects were no longer financially feasible.

In total, the cancellations equate to nearly one-fifth of President Joe Biden’s goal of 30 gigawatts of offshore wind power by 2030.

Despite the setbacks, offshore wind continues to move forward, the White House said, citing recent investments by New York state and approval by the Interior Department of the nation’s largest planned offshore wind farm in Virginia. Interior’s Bureau of Ocean Energy Management also announced new offshore wind lease areas in the Gulf of Mexico.

“While macroeconomic headwinds are creating challenges for some projects, momentum remains on the side of an expanding U.S. offshore wind industry — creating good-paying union jobs in manufacturing, shipbuilding and construction,” while strengthening the power grid and providing new clean energy resources for American families and businesses, the White House said in a statement Thursday.

Industry experts now say that while the U.S. likely won’t hit 30 gigawatts by 2030, a significant amount of offshore wind power is still attainable by then, roughly 20 to 22 gigawatts or more. That’s far more than the nation has today, with just two small demonstration projects that provide a small fraction of a single gigawatt of power.

Large, ocean-based wind farms are the linchpin of government plans to shift to renewable energy, particularly in populous East Coast states with limited land for wind turbines or solar arrays. Eight East Coast states have offshore wind mandates set by legislation or executive actions that commit them to adding a combined capacity of more than 45 gigawatts, according to ClearView Energy Partners, a Washington-based research firm.

“I think very few people would argue that the U.S. will have the gigawatts the Biden administration wants” by 2030, said Timothy Fox, a ClearView vice president. “But I do think eventually we will have it and will likely exceed it.”

Offshore wind developers have publicly lamented the global economic gales they’re facing. Molly Morris, president of U.S. offshore wind for the Norwegian company Equinor, said the industry is facing a “perfect storm.”

High inflation, supply chain disruptions and the rising cost of capital and building materials are making projects more expensive while developers are trying to get the first large U.S. offshore wind farms opened. Ørsted is writing off $4 billion, due largely to cancellation of the two New Jersey projects.

David Hardy, group executive vice president and CEO Americas at Ørsted, said it’s crucial to lower the levelized cost of offshore wind in the United States so Americans aren’t debating between affordability and clean energy. Hardy spoke at the American Clean Power industry group’s offshore wind conference in Boston last month on a panel with Morris.

“We’re probably a little bit too ambitious,” he said. “We came in hot; we came in fast, we thought we could build projects that were inexpensive, large projects right out of the gate. And it turns out that we probably still need to go through the same learning curve that Europe did, with higher prices in the beginning and a little slower pace.”

In May, there were 27 U.S. offshore wind projects that had negotiated agreements with states to provide power before the brunt of the cost increases hit, according to Walt Musial, offshore wind chief engineer at the National Renewable Energy Laboratory, an arm of the Energy Department. The delay between signing purchase agreements and getting final approval to build allowed unexpected cost increases to render many projects economically unfeasible, he said.

Musial called Ørsted’s announcement a setback for the industry but “not a fatal blow by any means.”

On Tuesday, the Biden administration announced approval of the nation’s largest offshore wind project. The Coastal Virginia Offshore Wind project will be a 2.6 gigawatt wind farm off Virginia Beach to power 900,000 homes. And even as Ørsted announced the New Jersey cancellations, it said it was investing with utility Eversource to move forward with construction of Revolution Wind, Rhode Island and Connecticut’s first utility-scale offshore wind farm, a 704-megawatt project.

The current outlook from S&P Global Commodity Insights is 22 gigawatts by 2030, though that will be revised due to the recent industry announcements.

New York state, meanwhile, recently announced the award of 4 gigawatts of offshore wind capacity as it seeks to obtain 70% of its electricity from renewable sources by 2030 and 9 gigawatts of offshore wind by 2035. That announcement came shortly after New York regulators rejected a request for bigger payments for four offshore wind projects worth a combined 4.2 gigawatts of power.

Any delay in offshore wind means continued reliance on fossil fuel-burning power plants, according to environmental advocates. “The quicker they come online, the quicker our air quality improves,” said Conor Bambrick, director of policy for Environmental Advocates NY.

New Jersey, under Democratic Gov. Phil Murphy, has established increasingly stringent clean energy goals, moving from 100% clean energy by 2050 to 100% by 2035. Murphy cast Ørsted’s decision as “outrageous” and an abandonment of its commitments, but the two-term Democrat said New Jersey plans to move forward with offshore wind.

The first U.S. commercial-scale offshore wind farms are currently under construction: Vineyard Wind off Massachusetts and South Fork Wind off Rhode Island and New York. 

US Takes Up China’s Infrastructure Mantel in Africa

This week, the U.S. State Department confirmed that Washington’s plan to refurbish and extend the Lobito Corridor — a railway that will run through mineral-rich Zambia and the Democratic Republic of Congo to an Atlantic port in Angola — is moving full steam ahead.

Such ambitious infrastructure investments by other powers in Africa have been derailed in the past. For years, China has tried with mixed results to increase its influence in Africa and boost trade connectivity by investing in ports and railways.

Debt-incurring or unfinished projects undertaken as part of Beijing’s Belt and Road Initiative, or BRI, have been criticized, prompting what analysts see as a new focus on what Chinese President Xi Jinping has called a “small and beautiful” approach.

Now the West is stepping in, with the U.S., European Union, the three African nations and two financial institutions signing a memorandum of understanding last month to develop the partially existing Lobito Corridor.

Plans were outlined in an online media briefing this week, and a six-month feasibility study is expected to start before the end of the year, said Helaina Matza, the acting special coordinator for the Partnership on the Global Infrastructure Investment, or PGII. The intention is to get the 800 kilometers (500 miles) of new track built within five years at an estimated cost of more than $1 billion, she said.

When asked how the U.S. plans to sustain the project long-term and avoid the mistakes made by other foreign powers pursuing infrastructure projects on the continent, Matza was optimistic.

“It’s not all concessional financing going directly to governments,” she said, noting that a private partner, the Africa Finance Corp., is involved and will be putting “forward a plan for operation and maintenance and putting forward a plan around capacity development.”

While not mentioning China directly, she said: “I think we’ve learned from mistakes and projects that over the years, frankly, we’ve helped bail out because they needed refurbishment a little too quickly.”

Liu Pengyu, China’s Embassy spokesperson in Washington told VOA in an emailed response that there is “broad space for cooperation in the field of global infrastructure, and there is no question of various relevant initiatives contradicting or replacing each other.”

Liu also denied the frequent criticism that Beijing is using BRI and its projects to create spheres of influence.

“Any calculation to advance geopolitics in the name of infrastructure development is not welcome and doomed to fail,” he said.

Lessons from the BRI?

One of China’s largest BRI investments was the $4.7 billion Standard Gauge Railway in Kenya, which started operating in 2017 and connects the capital, Nairobi, with the port city of Mombasa.

The railway was supposed to connect to neighboring Uganda, as a way of bringing critical minerals to the coast, but it never got that far, leaving the cargo side of the business struggling. This week the Kenyan government announced a sharp increase in fares for passengers, citing rising fuel prices.

The announcement came on the heels of President William Ruto’s visit last month to China, where he was seeking a $1 billion loan to complete unfinished infrastructure projects. Some Kenyans have also criticized the project for not hiring enough locals to operate the railway.

Asked whether the existence of the BRI will help inform the new US/EU initiative, Yunnan Chen, a researcher at the global think tank Overseas Development Institute, said it has already had an impact.

“While the BRI can be criticized on many areas, one success it’s certainly had is to raise the profile of infrastructure in development, and crowded in greater interest — and welcome competition — in this space,” she said, noting the G7 now has the Partnership for Global Infrastructure and Investment and the E.U. has the Global Gateway. The first Global Gateway forum was held last month in Brussels, where the Lobito Corridor memorandum of understanding was signed.

“The fact that U.S. has taken such a deep interest in Angola — a major BRI partner and one of the largest recipients of infrastructure lending from China — is a clear sign they want to ramp up the competition directly in China’s spheres of interest,” she said.

While some of the Chinese projects have faced “legitimate criticism,” Chen said, railway projects can be difficult to make profitable based on passengers and freight if they are not linked to the mining sector.

“The Lobito Corridor may do better than some of the East African projects, since they will likely be directly connected to minerals/mining projects that justifies the freight, but it will be a test to see how the U.S. and EU will tackle the challenges that rail construction brings,” she said.

These challenges include social and environmental impacts and management of the railway once completed, all problems the Chinese have faced. Chen said it will be interesting to see how the West now fares “given the emphasis on higher standards.”

Matza, the acting PGII coordinator, said, “Our ethos for any sort of infrastructure we invest in is that the project is transparent.”

She said the U.S. wants to ensure that “the whole corridor is successful and that people who live along that corridor can participate not only in commerce but in other activities that really benefit the economic development of themselves and their countries.”

View from Africa

So who do ordinary Africans trust more when it comes to infrastructure investment, the U.S. or China?

VOA put that question to Johannesburg residents this week to see what they think.

Musician Luyolo Yiba, 29, was cynical as he sipped a drink at a sidewalk cafe.

“Both are looking at taking minerals, so it’s tricky to say this one is better than that one,” he said, adding that he doubts the U.S. is primarily concerned with helping the African people and that he expected the money to be lost to government corruption in Africa.

Zoyisile Donshe, an entrepreneur in his 40s, said he doesn’t think there needs to be competition for influence in Africa at all.

“They see that Africa is the future,” he said. “I love America, I love China as well. They’re creating opportunities in Africa. … I think most Africans would prefer them to cooperate.”

Asked whether the Lobito Corridor could end up being linked to any Chinese-built railways in the region, Matza said it was too soon to say but did not rule it out.

“There’s a lot of work happening, there’s maybe a Tazara refurbishment,” she said, referring to a railway linking Zambia and Tanzania. 

“There’s a lot of talks about an additional rail line that can continue south and maybe out through Mozambique,” she said. “We’re taking this on one piece at a time knowing what we can finance, support and help design.”

Biden to Meet Latin Leaders on Economics, Migration

U.S. President Joe Biden will host leaders from Latin America and the Caribbean at the White House on Friday to discuss economic issues and migration as he seeks to bolster ties in the region to counter China and other global competitors.

Leaders from Barbados, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, Peru and Uruguay are expected to attend Friday’s gathering, as well as representatives from Mexico and Panama.

The inaugural Americas Partnership for Economic Prosperity, or APEP, Leaders’ Summit comes as Biden’s foreign policy agenda is dominated by the Israel-Hamas conflict in Gaza and Ukraine’s bid to repel Russian invaders.

The United States will announce new economic tools together with the Inter-American Development Bank and private donors to aid countries hosting migrants in the Western Hemisphere, with a goal of expanding economic cooperation and curbing migrant arrivals at the U.S-Mexico border, senior administration officials said.

“When the countries are working together on a common economic agenda … it has the potential to significantly shift the economic dynamics in a region that has been moving slower than its peers on the adoption of technology, on taking advantage of the nearshoring trends,” a senior administration official said.

Biden remained convinced that targeted economic investment in refugee and migrant host countries “is critical to stabilizing migration flows,” a second official said.

Six APEP countries — Costa Rica, Ecuador, Colombia, Peru, Chile and Panama — have offered legal status to millions of people displaced in the Western Hemisphere, the official said.

“They have stepped up in big ways, and we are stepping up for them. APEP is a big part of that,” the official said.

U.S. Treasury Secretary Janet Yellen hosted a breakfast meeting for the leaders at the Treasury on Friday, telling them that the U.S. would work closely with the IDB to support efforts to better integrate the region’s supply chains.

She said Treasury strongly supported efforts by Inter-American Development Bank President Ilan Goldfajn to reform its private sector arm, IDB Invest, and would work with the bank’s other shareholders to enable a “significant” capital increase for IDB Invest.

The IDB, the region’s largest development bank, will unveil a new financing platform to serve middle- and higher-income countries, potentially mobilizing billions of dollars for investment in renewable energy, officials said.

The effort was focused on bolstering the region’s ability to compete globally in the clean energy, semiconductor and medical supplies sectors, one of the officials said.

The summit follows a similarly themed meeting of Western Hemisphere leaders in Los Angeles last year, part of a broader push aimed at strengthening regional economic ties and reducing China’s influence in the region.

At the “Summit of the Americas,” the U.S. and 19 other countries signed a nonbinding declaration agreeing to a set of measures to confront the migration crisis.

Record numbers of migrants have crossed illegally through the U.S.-Mexico border in recent years, with hundreds of thousands of people heading north after traversing a perilous jungle region known as the Darien Gap between Colombia and Panama.

Biden to Host Inaugural Americas Economic Summit

U.S. President Joe Biden will tout his plan to deepen Western Hemisphere economic integration on Friday when he hosts leaders from 11 other nations at the White House for the nascent Americas Partnership for Economic Prosperity.

Analysts say the initiative, introduced last year, may not result in a substantial trade boost or pose a significant challenge to China’s economic dominance and ambitions, but it could address other hemispheric challenges, like irregular migration.

In marketing the initiative on Thursday, Biden emphasized what he sees as a pillar of his diplomatic approach: mutual benefit.

“Together, we’re expanding opportunities for working people in both our nations, I believe, including through our Americas Partnership for Economic Prosperity,” Biden said during a pre-summit meeting with Dominican Republic President Luis Abinader.

Treasury Secretary Janet Yellen said Thursday that this economic partnership could affect manufacturing in crucial sectors such as renewables, medical supplies and semiconductors.

She said this is an example of “friendshoring” — the move to diversify supply chains by working with close friends and allies.

Yellen said the economic partnership “offers our countries a key vehicle through which to deepen economic integration, increase the competitiveness of our region, drive private-sector investment and foster inclusive and sustainable development.”

Competition

The United States faces stiff competition. In recent years, China has significantly boosted investment in and economic relations with South America, making it that continent’s largest trading partner.

Because the U.S.-led initiative leans on private-sector investment, it can’t match China’s government-driven approach, said analyst Jason Marczak, senior director at the Atlantic Council’s Adrienne Arsht Latin America Center.

“I don’t expect the U.S. to be able to match China dollar for dollar,” he told VOA. “China is not a capitalist system, and so the ways in which Chinese financing goes in the region is state-owned enterprises. It’s government money, other sources, all of which are directed by the Chinese government.”

But the U.S. can leverage its leadership by choosing projects and investments wisely and investing “in those areas that are critical for the future economic growth of the people of the Americas, and in a way that hopefully ensures that it is the actual people who ultimately benefit from this investment,” Marczak said.

Like the administration’s still-developing Indo-Pacific Economic Framework, this initiative doesn’t include new market access commitments, said economic analyst Tori Smith of the American Action Forum.

“Market access negotiations could be less necessary in this context, given that the existing network of trade agreements have tariff barriers close to zero with most participants,” she wrote March 2 in an analysis of the partnership. She noted that the U.S. has existing free-trade agreements with eight of the 11 other countries.

The partnership “is unlikely to substantially increase trade flows between the United States and the participating countries because the forum focuses very little on trade policy,” she argued.

However, this still-evolving economic agreement could address other challenges in the hemisphere, Marczak said.

“Investing in the APEC member countries, providing sustainable financing — that is all tied to migration,” he said. “Because ultimately, a country that is sending migrants, there will be less migrants that will leave the country when the economy is even stronger.”

While APEP negotiations lag considerably behind those of the Indo-Pacific Economic Framework – even though the programs were announced at roughly the same time – the U.S. currently has an edge in this hemisphere, said Shannon O’Neil of the Council on Foreign Relations.

“The U.S. maintains an advantage in terms of more comprehensive ground rules, a longer history of investment, and more balanced and higher value-added trade,” she said.

Jorge Agobian contributed to this report. 

Debt-Laden Local Governments in China Encouraging Start Ups

Amid rising debts, authorities in China’s coastal province of Jiangsu are encouraging workers at state-owned enterprises to participate in “off-duty entrepreneurships” and take leave without pay to start their own businesses.

News of the new measure came ahead of China’s two-day Central Financial Work Conference, attended by President Xi Jinping, who pledged to set up a long-term mechanism to resolve debt risks tied to local authorities and signaled a willingness to expand central government borrowing.

China’s local government debt reached 92 trillion yuan ($12.58 trillion), equal to 76% of the country’s economic output in 2022, according to the Reuters news agency. That was up from 62.2% in 2019.

Participants in the meeting, which concluded Tuesday, included Li Qiang, Zhao Leji, Wang Huning, Cai Qi, Ding Xuexiang and Li Xi, members of the Central Committee of the Chinese Communist Party.

They also pledged to “optimize the debt structure of central and local governments” and provide more funds for innovation, high-tech manufacturing, green technology and small-to-medium size companies.

In 2022, the gross domestic product of Jiangsu province, neighboring Shanghai, amounted to approximately 12.29 trillion yuan, or $1.68 trillion, while it owed a debt of 2.069 trillion yuan, or $282.8 billion.

Amid the increasing local debt, the Jiangsu provincial government launched a program in early October to encourage 200,000 state-owned enterprise workers every year until 2025 to start their own businesses, especially those who would do so on leave without pay.

The program especially aims to support scientific researchers, including professional and technical personnel from universities, scientific research institutes and other state-owned enterprises, in starting businesses.

They are encouraged to apply the results of their scientific and technological research to other part-time or temporary jobs, collaborate on projects outside their regular jobs, and become entrepreneurs on a leave-without-pay basis from their institutions.

Jiangsu province will retain their employment relationships for three years and continue to pay for the entrepreneurs’ social insurance and occupational annuities at their original workplaces. They will also be promoted and receive salary increases at the normal pace.

Fang Tsung-yen is an assistant researcher at the Institute for National Defense and Security Research in Taipei. Fang said China cannot reverse the economic downturn in the short term, so the local governments have to reduce the financial burden in the hope of stimulating economic prosperity.

She said the local government cannot force people to quit their jobs, so it is seeking other ways to reduce its payroll.

“Keeping your jobs sounds nice, but it’s actually just because [the local government] can’t afford to pay you. So [it] will encourage you to start your own businesses in the hope of reducing its financial burden,” she said.

The news triggered heated discussions online. One netizen, whose online name is Techno, said on Zhihu, the Chinese equivalent of Quora, “[It] may cause a severe loss of state-owned assets.”

A netizen commented under the name of BigBrother, “There are more people eating public food than contributing to public food. They don’t have money to pay salaries.”

Some others suspect the program may become mandatory.

“They probably will have a quota for each enterprise,” someone commented under the name of Euphemia66.

Some think this is a way to lay off people and cut jobs.

“Now, they say, ‘We give you a chance to start your own businesses.’ In a few years, they will say, ‘Your enterprise has a quota of three entrepreneurs this year,’ ” a netizen commented under the name of Mulei, the Knight of Smoke.

“You think you would leave for three years, and during that time, you would take advantage of your background in politics to benefit your business, and you would be financially independent. When you are back to the state-owned enterprise, you can live an easy life in old age.

“But actually, three days after you leave your enterprise, they would eliminate your position. And three years later, the enterprise wouldn’t exist anymore.”

Jiangsu’s government is not the only one affected by the economic downturn. Multiple provinces, including Jiangxi and Fujian, have announced collective salary reductions for civil servants, according to Chinese news website Toutiao.

The central government restricted the ability of local governments in 12 heavily indebted regions to take on new debt and limited any new state-funded projects, according to Reuters, quoting three sources. The 12 regions have to get approval from the central government to launch specified projects.

Tan Yao-nan, chairman of the Hui-li International Policy Advisory Group in Taipei, told VOA that fiscal problems — and especially local debt — are the biggest challenges China currently faces. He said China needs more than just expanding domestic demand or imports and exports.

Chinese authorities on October 24 announced the issuance of 1 trillion yuan, or $137 billion, in government bonds, which will further expand the central government’s fiscal deficit to 4.88 trillion yuan, or $666.9 billion, this year.

Tan said that if the debt of all central and local public sectors is combined, it is nearly three times the size of China’s GDP, which makes the severity of China’s debt problem far greater than that of neighboring Japan.

“Who will hold these government bonds?” Tan asked. “It must be held by major state-owned financial institutions and even provincial governments, so it is actually just debt relief. It’s just a cycle, and it doesn’t solve the long-term problem.”

The meeting that ended on October 31 signaled Beijing is considering further measures to resolve several sources of financial risk, including local government debt. But it didn’t provide any specifics.

Some of China’s biggest banks have been offering local governments loans with long maturities and temporary interest relief to prevent a credit crunch since the second quarter.

Federal Reserve Keeps Same Rate, but Keeps Open Possibility of Hike

The Federal Reserve kept its key short-term interest rate unchanged Wednesday for a second straight time but left the door open to further rate hikes if inflation pressures should accelerate in the months ahead. 

In a statement after its latest meeting, the Fed said it would keep its benchmark rate at about 5.4%, its highest level in 22 years. Since launching the most aggressive series of rate hikes in four decades in March 2022 to fight inflation, the Fed has pulled back and has raised rates only once since May. 

The latest statement noted that recent tumult in the financial markets has sent longer-term interest rates up to near 16-year highs and contributed to higher borrowing rates across the economy. 

“Tighter financial and credit conditions for households and businesses,” it said, “are likely to weigh on economic activity.” 

That reference echoed recent comments by Fed officials that higher yields — or interest rates — on the 10-year Treasury note could impose a dampening impact on the economy, cool inflation, and substitute for an additional rate hike by the Fed. 

Speaking at a news conference, Chair Jerome Powell suggested that the surge in longer-term interest rates will slow the economy if those higher rates stay high for a prolonged period. But he cautioned that the Fed isn’t yet confident that its own benchmark rate is high enough to slow the economy over time. 

Long-term Treasury yields have soared since July, the last time the Fed raised rates, swelling the costs of auto loans, credit card borrowing, and many forms of business loans. Nationally, the average long-term fixed mortgage rate is nearing 8%, its highest level in 23 years.

Economists at Wall Street banks have estimated that sharp losses in the stock market and higher bond yields could have a depressive effect on the economy equal to the impact of three or four quarter-point rate hikes by the Fed. 

Those tighter credit conditions, though, have yet to cool the economy or slow hiring as much as the Fed had expected. Growth soared at a 4.9% annual pace in the July-September quarter, powered by robust consumer spending, and hiring in September was strong.

On Wednesday, the government said employers posted a sizable 9.6 million job openings last month, well below the peak of early last year but still sharply above pre-pandemic levels. 

Consumer inflation has dropped from a year-over-year peak of 9.1% in June 2022 to 3.7% last month. But recent data suggests that inflation remains persistently above the Fed’s 2% target. 

Powell and other Fed officials have responded to the surprising evidence of economic strength by saying the Fed will monitor incoming data for any hints that inflation will either further subside or remain chronically above its target level. In the meantime, most Fed watchers expect the central bank to keep rates unchanged in December as well. 

Market analysts say an array of factors have combined to force up long-term Treasury yields and couple with the Fed’s short-term rate hikes to make borrowing costlier for consumers and businesses. For one thing, the government is expected to sell potentially trillions of dollars more in bonds in the coming years to finance huge budget deficits even as the Fed is shrinking its holdings of bonds. As a result, higher Treasury rates may be needed to attract more buyers. 

And with the future path of rates murkier than usual, investors are demanding higher yields in return for the greater risk of holding longer-term bonds. 

What’s important for the Fed is that the yield on the 10-year Treasury has continued to zoom higher even without rate hikes by the central bank. That suggests that Treasury yields may stay high even if the Fed keeps its own benchmark rate on hold, helping keep a lid on economic growth and inflation. 

Other major central banks have also been dialing back their rates hikes with their inflation measures having appeared to improve. The European Central Bank kept its benchmark rate unchanged last week, and last month inflation in the 20 countries that use the euro fell to 2.9%, its lowest level in more than two years. 

The Bank of England also kept its key rate unchanged in September. The Bank of Japan, meanwhile, is inching toward higher borrowing costs, as it loosens control on longer-term rates.