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A little-publicized clause in the U.S. Inflation Reduction Act has companies scrambling to recycle electric vehicle batteries in North America, putting the region at the forefront of a global race to undermine China’s dominance of the field.

The IRA includes a clause that automatically qualifies EV battery materials recycled in the U.S. as American-made for subsidies, regardless of their origin. That is important because it qualifies automakers using U.S.-recycled battery materials for EV production incentives.

Reuters interviewed more than a dozen industry officials and experts who say that is kicking off a U.S. factory building boom, encouraging automakers to research more recyclable batteries, and could eventually make it harder for buyers in developing countries to buy old used EVs.

China handles virtually all EV battery recycling in a global market projected to grow from $11 billion in 2022 to $18 billion by 2028, according to research firm EMR. As more EVs are introduced and age out of the vehicle fleet, that business will grow.

The minerals in those batteries – primarily lithium, cobalt and nickel – are worth on average between 1,000 euros ($1,123) to 2,000 euros per car, BMW sustainability chief Thomas Becker told Reuters.

Those materials could be in short supply within a few years as automakers boost EV production, but “can be recycled infinity times and not lose their power,” said Louie Diaz, vice president at Canadian battery recycling firm Li-Cycle, which received a $375 million U.S government loan for a New York plant slated to open later this year. That funding helped bring forward the investment decision for the plant, Diaz said.

JB Straubel, CEO of Redwood Materials, which was awarded a $2 billion U.S. government loan in February to build out a battery material recycling and remanufacturing complex in Nevada, said the IRA treats recycled battery materials as locally “urban mined,” or materials recovered from scrap rather than obtained from mining.

That has encouraged U.S. companies to move faster on recycling efforts than their counterparts in the European Union, which has focused instead on mandates, including minimum amounts of recycled materials in future EV batteries.

Recycling firms Ascend Elements, Li-Cycle and others are planning European plants in the next few years, but access to funding and the made-in-America incentive means several U.S. plants are already being built.

“What it (the IRA) does is change the demand equation for battery materials,” said Mike O’Kronley, CEO of Ascend Elements, which already has one recycling plant open in Georgia and has received nearly $500 million in Energy Department grants under the infrastructure law for a plant in Kentucky slated to open in late 2023. “We need to keep those valuable materials… so we can put them right back into EVs.”

The race is on to build “closed-loop supply chains” where recycled minerals are put into locally produced new batteries, said Christian Marston, chief technology officer at Altilium Metals, which is building a plant in Bulgaria and plans one in the UK by 2026.

“Everybody wants to control their own supply chain and nobody wants to be reliant on the Chinese,” he said.

However, China still leads the race, announcing tougher standards and increased research support for recyclers last month. After passage last year of the U.S. Inflation Reduction Act, Chinese officials described the legislation as “anti-globalization” and accused the U.S. of “unilateral bullying.”

Rapid growth

Globally, there are at least 80 companies involved in EV recycling, with more than 50 startups attracting at least $2.7 billion, virtally all in the last six years, from corporate investors including automakers, battery makers and mining giants like Glencore, according to PitchBook.com data.

The volume of EV batteries available for recycling should grow over tenfold by 2030, said consultant Circular Energy Storage. Around 11.3 Gigawatt hours (GWh) of batteries reached end of life in 2022, and that should rise to 138 GWh by 2030 – equivalent to roughly 1.5 million EVs – CES said.

Electric vehicle batteries can last for 10 years or more.

Some industry officials anticipate rapid growth means 40% of battery materials used in new EVs could come from recycled stocks by 2040.

There is little existing U.S. recycling capacity today, and virtually none in Europe.

At a facility in Poole in southern England, car breaker Charles Trent Ltd has built two lines where workers deconstruct wrecked or old vehicles to recycle everything. It has built special containers for EV batteries, which are sold for research or used by retrofitters electrifying fossil-fuel cars, partly because there is nowhere to recycle them.

In Europe, EV batteries are currently shredded into “black mass” that is shipped to China for recycling.

‘Lose nothing’

The race is on to squeeze the best price out of that black mass.

“The one who gets the highest yield at the lowest cost … will win this game,” said Bruno Thompson, CEO of Cambridge, England-based startup The Battery Recycling Company, which plans its first plant in 2024.

Dallas, Texas-based Ecobat, which shreds batteries in Europe and the U.S. for recycling elsewhere, has improved its recovery process so around 70% of battery-cell lithium is available for recycling, said chief commercial officer Thea Soule.

Eventually, Soule said, yields should reach levels close to 90% to 100%.

Getting better yields matters because the EU will mandate minimum amounts of recycled lithium, cobalt and nickel in EV batteries within eight years. The EU will also impose tough conditions on recycling outside Europe.

Those conditions will effectively keep recycling local, said Kurt Vandeputte, senior vice president at Belgian materials firm Umicore.

There are also industry concerns about finding old EVs for recycling. Today, anywhere up to 30% of Europe’s old fossil-fuel cars disappear overseas – to new owners in developing countries or for scrap. Some automakers are trying to figure out how to keep tabs on those EVs.

Nissan has turned to leasing EVs in Japan to maintain control of batteries, while Chinese EV maker Nio leases batteries to customers to retain ownership.

Keeping those minerals in Europe would cut off a cheaper source of transportation for developing countries.

BMW’s sustainability chief Becker said the value of battery materials will hopefully make recycling more attractive than selling vehicles abroad, but Europe must focus on ensuring those EV batteries do not slip away.

“We’ve got to make sure we lose nothing,” Becker said.
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India and Sri Lanka boosted their economic partnership by signing a series of agreements on energy, trade and connectivity projects following talks between Indian Prime Minister Narendra Modi and Sri Lankan President Ranil Wickremesinghe in New Delhi on Friday.

Wickremesinghe was on his first visit to India since he took charge a year ago after an economic crisis engulfed the country and led to the resignation of his predecessor.

He came to New Delhi as both sides reset a relationship that has been set back by growing Chinese influence in the strategic island nation that lies on India’s southern tip. Before Sri Lanka’s economy collapsed, Beijing had poured in billions of dollars to build infrastructure projects that India feared could affect its security.

India provided aid last year

Ties between Colombo and New Delhi received fresh momentum last year, though, after India extended $4 billion in aid to help the beleaguered country.

Addressing reporters along with Wickremesinghe, Modi said that being a close friend, India had stood “shoulder-to-shoulder” with its neighbor during the crisis and that a prosperous Sri Lanka was key to regional stability.

“Sri Lanka has an important place in our ‘neighborhood first’ policy,” Modi said. “We believe that the security interests and development of India and Sri Lanka are intertwined.”

Wickremesinghe said that his visit had “reinforced trust and confidence for our future prosperity in the modern world.”

In a signal of deepening bilateral ties, the two countries unveiled an economic partnership vision that focused on enhancing connectivity and investments.

Modi said the two sides will conduct feasibility studies on laying a petroleum line between the two countries that would give Sri Lanka access to affordable energy. They also will explore the possibility of building a land bridge. The closest points between the two countries are just 50 kilometers apart.

The two countries also will work to connect their electricity grids and cooperate in the renewable energy sector. New Delhi will develop a port and an economic hub at Trincomalee, on Sri Lanka’s northeastern coast.

The two leaders also expressed support to implement a plan for the Sri Lankan government to share power with the country’s ethnic minority Tamil population that lives in the island’s north and east provinces. The Tamils of Sri Lanka have long had close ties with Tamils living in southern India.

“We hope that the government of Sri Lanka will fulfill the aspirations of the Tamils,” Modi said.

Optimistic about recovery

Wickremesinghe expressed optimism about economic recovery in his country, which secured a $3 billion bailout package from the International Monetary Fund in March.

“I have set Sri Lanka firmly on a path of economic reform,” he said.

For Sri Lanka, a top priority is to get countries like India and China to agree to a debt restructuring plan. Last year, the country defaulted on its $46 billion foreign debt.

But balancing ties with India and China still poses a challenge. Last year, Sri Lanka allowed a Chinese research vessel, Yuan Wang 5, to dock in a port built by Beijing — despite objections by New Delhi, which feared it was a spy ship.

Wickremesinghe’s visit to India, however — his first overseas trip since becoming president — underscores that ties between the two neighbors are again set on a growth trajectory.
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Hybrid work is here to stay, and if cities are to thrive, they must adapt to the new reality that workers will be downtown less often. That’s according to a new report that analyzes the COVID-19 pandemic’s lasting impact on office and retail space.

“What has fundamentally changed is just the broad uptake and the persistence of hybridity,” says Ryan Luby, an associate partner at McKinsey & Company, a management consulting firm that released the report. “And that has knock-on implications for demand for office, for residential, for retail, what kind of space is demanded, where it is demanded, and that has real implications for urban vitality, vibrancy and the kinds of buildings that we demand.”

Now that they aren’t making their daily commutes to downtown offices, people are doing their eating out and shopping elsewhere. The report finds that foot traffic near stores in urban areas is still 10% to 20% lower than pre-pandemic levels, and office attendance is still down by about 30% on average in major cities across the world.

The New York City metropolitan area lost 5% of its population from mid-2020 to mid-2022, while the San Francisco area lost 6%. The numbers suggest that many of the people who left big cities during the pandemic are not moving back, the report said, which presents another challenge for cities trying to bounce back from pandemic-driven losses.

In Washington, the daytime population plunged 82% from February 2020 to February 2021. And a 2023 poll finds that two-thirds of Washington-area workers whose jobs can be done remotely prefer to work from home a majority of the time. Thirty-eight percent of people surveyed said they’d like to work from home all of the time.

City leaders and planners are preparing for a future that adjusts to this new reality.

“About 50 percent of our population can still remote work,” says Salah Czapary, director of the D.C. Mayor’s Office of Nightlife and Culture. “Some neighborhoods have not returned to pre-COVID levels of economic activity. … Our short-term strategy is activating the space, attracting festivals and making it easier for people to close streets — whether it’s for a farmers market or a music festival downtown — doing that to support what has traditionally been our economic engine of the city, which has been downtown.”

Luby, one of the report’s authors, says the most resilient cities have a mixture of office, residential and retail real estate.

“People are coming into those areas for reasons other than work,” he says. “I think the imperative, as we think about it from the public policy perspective, is really to encourage or incentivize what we think about as mixed-use development, in which folks will be present in these areas for reasons other than just work.”

Washington’s city leaders, for example, are looking for ways to meet the moment.

“Our long-term strategy is really attracting new residents to downtown by changing the buildings from commercial to residential,” Czapary says. “That will eventually attract grocery stores and other types of nightlife and restaurants and things that make neighborhoods attractive to live in.”

By 2030, demand for office space will be an average of 13% lower in major cities around the world than it was in 2019, according to the report. San Francisco is the most affected city in the United States in terms of demand for office space, with sale prices per square foot down 24% compared with 2019, while the asking price for rents is 28% lower than in 2019. The report also predicts that demand for retail space in San Francisco will be 17% lower in 2030 than in 2019.

Adjusting to this new reality could take time, Luby says, because people who own office space in major cities are still expecting prices to rebound as they did in pre-pandemic times.

“Because a commercial real estate office, in particular, tends to be on a five- to-10-year lease, you’ve got a slow-motion dynamic playing out,” Luby says. “And until you get buyers and sellers in the market to agree that we’re in a new normal and adjusting prices downwards, it’s really going to be difficult to get at-scale adjust
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The labor movement in the United States is having an unusually active moment, with as many as four high-profile strikes possible and a level of coordination among separate unions that experts say has been lacking in recent years. 

In May, the Writers Guild of America, which represents film and television screenwriters, went on strike, followed last week by the Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA). The combination of the two has brought production of film and television programs in the U.S. to a near-complete halt. 

While labor action in Hollywood has garnered plenty of headlines, its day-to-day impact on average Americans has been limited. That will not be the case if two other major unions, both in contract negotiations right now, wind up on the picket lines. 

The United Auto Workers union (UAW) is negotiating with automakers General Motors, Ford and Stellantis — the so-called Big Three — to try to avert a strike that could result in hundreds of thousands of autoworkers walking off the job. At the same time, the Teamsters union is in discussions with shipping giant United Parcel Service over its contract with delivery drivers. A strike by either or both would be deeply felt across the U.S. 

Changing atmosphere 

The labor movement in the United States has been in a period of protracted decline for several decades. In the mid-20th century, fully one-third of U.S. workers belonged to unions, and it was not uncommon in any given year to see thousands of strikes, with workers in the millions across multiple industries walking off the job for some period of time. 

In 1974, at the peak of labor job actions, the federal government counted 6,074 individual strikes across the country, according to data gathered by Judith Stepan-Norris and Jasmine Kerrissey for their recent book, Union Booms and Busts: The Ongoing Fight Over the U.S. Labor Movement. 

That began to decline in the 1980s, as legal protections for employers became stronger and the courts became less friendly to labor. Strikes increasingly ended with little or no benefits for the workers involved, while many lost a major source of income for the duration of their work stoppages. Union membership fell, and by 2014, the U.S. saw only 68 strikes in total. Today, union members make up only about 6% of working Americans.

Possible turnaround 

Stepan-Norris, an emerita professor of sociology at the University of California-Irvine, told VOA there are multiple factors that appear to be animating the movement in 2023. She said the coronavirus pandemic and a trend of people leaving the workforce, called by many the “Great Resignation,” changed the dynamic significantly.  

“That gave workers more power. You had more of a strong labor market with low unemployment,” Stepan-Norris said.  

In addition, she said, they have had the example of some recent successful strikes. Last year, for example, academic workers led a massive strike against the University of California system, which resulted in major concessions in workers’ favor.  

“Other workers are looking around and seeing that these strikes are starting to show some progress for people, and so other workers are getting a taste that they can do it, too,” she said. “Not to say that any of these new strikes are directly related to that — it’s just sort of the atmosphere [of success] that surrounds them.” 

Horizontal solidarity 

Susan Schurman, who teaches labor studies and employment relations at Rutgers University, told VOA that in recent labor actions, she has seen a dynamic at play that has not been present recently: cross-union cooperation. 

“The last time the Writers Guild went on strike, SAG-AFTRA didn’t even show up,” Schurman said. “This time, I went to a couple of rallies in New York and the stage actors — Actors Equity —  were there. The stagehands [the International Alliance of Theatrical Stage Employees] were there. The Teamsters were there. The Communication Workers [of America] were there. The building trades were there.  

“We call this ‘horizontal labor solidarity’ across unions,” Schurman said. “This is when labor really makes gains. It’s important that you have what we call ‘vertical solidarity,’ within your own union. You have to have that in order to engage in a strike. But it’s not enough. You have to have the support of other unions.” 

Horizontal solidarity was commonplace in the mid-20th century, she said, but has not been a notable factor in labor job actions in several decades.  

“We have not seen that, like we’re seeing this summer, in a very long time,” she said.

Autoworkers dispute 

The UAW has a long history of striking in order to achieve better contracts for its members, and the current contracts with GM, Ford and Stellantis are all scheduled to expire in September. 

Shawn Fain, the leader of the UAW, announced last week that his 160,000 members are prepared to put down their tools and that blame for any work stoppage will lie with the companies’ management. 

“If the Big Three don’t give us our fair share, then they’re choosing to strike themselves, and we’re not afraid to take action,” he told reporters last week. 

In a sign of how acrimonious the discussions have become, Fain broke with tradition and refused to meet company executives for a public handshake as negotiations got under way, as other UAW leaders have done in the past.  

The automakers themselves have said they want to reach a deal but point out that they are trying to remake their companies for a world in which electric vehicles are expected to replace many of the gasoline-powered cars and trucks they currently produce. They warn that the transition will lead to inevitable disruption for their workforce. 

Teamsters and UPS 

The Teamsters union represents 340,000 UPS workers poised to strike on August 1. The contract negotiations, which broke down in early July and restarted just this week, are focused on compensation for workers. 

One key point is that as the job market has tightened over the past year, the company has been forced to raise the starting salaries it offers in order to attract more workers. However, it did not also raise the wages of many of its more experienced workers. This means that some UPS employees with years of seniority are earning wages equivalent to those of new hires. 

A strike by UPS workers could be damaging economically, with the think tank Anderson Economic Group estimating that a 10-day stoppage would cost upward of $7 billion when workers’ lost pay, the company’s lost profits and damage to UPS customers are combined. 

In a statement that accompanied the announcement that it would return to the bargaining table, the delivery company emphasized the need for a prompt resolution to the problem. 

“We are prepared to increase our industry-leading pay and benefits, but need to work quickly to finalize a fair deal that provides certainty for our customers, our employees and businesses across the country,” it said.
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After Russia withdrew from a deal allowing Ukraine to export grain through ports on the Black Sea, the Kremlin launched attacks on Ukrainian ports and grain hubs. Anna Kosstutschenko spoke with Ukrainian farmers about how this will impact them. VOA footage by Pavel Suhodolskiy
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Nigeria’s weak electric grid had led many of its citizens to rely on gasoline-fueled generators for power. But the president’s controversial removal of a costly fuel subsidy in May saw gasoline prices triple, spurring Nigerians to switch to generators fueled by cheaper and cleaner propane.

Rasheed Ayodeji, a lawyer in Abuja, is one of more than 10,000 Nigerians who have switched to generators powered by liquefied petroleum gas.

The switch to LPG, also known as propane, is in response to the cost of gasoline, which has tripled since authorities ended a fuel subsidy in May.

Ayodeji said that powering his generator with cooking gas is less expensive.

“I was skeptical at first, so I said let me just give it a try because I am someone that, I’m not resistant to change. … With my experience so far with this one week, my fuel expenses have been cut by 50% for now, and with the gas I still have left, I’m very sure it will still cut up to 60%.”

In 2013, Philip Obin started importing hybrid carburetors that converted gasoline generators to run on LPG. For years, demand was slow.

A decade later, however, his sales reached a new peak. He said that following the fuel subsidy removal, he sold more than 10,000 units in less than three weeks.  

“The product is selling like wildfire, and that’s because of the cost of petrol, which has moved from 190 or 180 to 550 or 540 per liter across Nigeria…We call them hybrid in the sense that it allows you to run either on petrol or cooking gas LPG,” he said.  

Obin said the switch is easy and simple to make.

“Essentially, you have to pull out the existing carburetor from your generator and install the hybrid carburetor, then you plug in the gas cylinder with your regulator, of course, and then you power up your generator, it’s as simple as that,” he said.

Some people are concerned about the safety of using cooking gas in generators that were originally designed to work with gasoline.

Obin said there has never been a single incident with the carburetor over the past decade.

“We’ve not had a single case of explosion arising from someone using our hybrid carburetor to run generators,” he said.

However, Chuks Edison, an Abuja-based electrical expert and generator repairman, recommends that people exercise caution during installation.

“If you must go into it, you must be very careful. Put so much measure in place, and make sure that your generator is in good condition, that it doesn’t have some kind of leakage, or the plug head must be there because the plug head is the most important one…you must keep your cylinder very far from the generator,” he said.

Authorities from Lagos State are also assessing the safety of the product. 
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Canada’s recently launched immigration work permit program is no longer accepting new applications since receiving an overwhelming response and reaching its cap of 10,000 applicants in two days.

Aiming to attract highly skilled technology professionals from the United States with H-1B work visas, Canada unveiled the initiative in late June.

Within 48 hours of its July 16 launch, the system reached capacity.

“Status: Closed. You can no longer apply,” said a message on the Immigration, Refugees and Citizenship Canada (IRCC) website. “We reached the cap of 10,000 applications for this initiative on July 17, 2023.”

H-1B visas are for nonimmigrant foreign workers with specialized skills, and the move is part of the country’s new Tech Talent Strategy.

“The Government of Canada is embracing Canada’s emerging role as a leader in global tech talent recruitment and attraction to ensure Canada is not only filling in-demand jobs today, but also attracting the skills and business talent to create the jobs of tomorrow,” said an IRCC statement issued last month.

The statement followed a November announcement in which the government set a goal to tackle an impending labor shortage.

By 2025, the country wants to welcome 1.45 million immigrants, focusing on people trained in health care and other in-demand job skills, and securing a skilled workforce for key sectors of its economy.

Canada’s population of 38.25 million represents about 11.5% of the 331.9 million in the United States, where the H-1B visa category currently allows more than 85,000 highly skilled foreigners to work in the country for at least three years.

The U.S. Citizenship and Immigration Services reported that for fiscal year 2024, the agency received 780,884 applications from employers and approved 110,791 applications. In fiscal 2023, applications totaled 483,927, and 127,600 people were selected.

Canada’s new work program does not lead to permanent residence, but spouses and dependents of the 10,000 H-1B visa holders will be eligible to apply for study or work permits or temporary resident visas.

In the U.S., holders of H-1B visas can apply for legal permanent residence, but only the spouses of those with a pending residence application are eligible for employment authorization.

It remains to be seen how successful Canada will be in poaching workers from the U.S.
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The U.S. Department of Agriculture is seeking to lower food prices and boost competition by joining with 31 states and Washington, D.C., to target price fixing and other anticompetitive behavior in the food and agriculture sectors. 

The USDA on Wednesday said it would coordinate with the bipartisan group of attorneys general on antitrust enforcement amid concerns about industry practices. 

Farmers and ranchers have for decades complained of poor prices and unfair contracts from the biggest buyers and processors in the highly consolidated agriculture sector. 

Months of food price inflation, only recently abating, have also raised questions from farm groups and lawmakers about whether companies were artificially hiking prices. 

“We can ensure a more robust and competitive agricultural sector,” said Agriculture Secretary Tom Vilsack in a statement. 

The USDA partnership with states will focus on anticompetitive practices including price fixing and gouging, as well as create new research programs to study the issue, the department said. 

In the coming months, USDA will also finalize new rules under the Packers and Stockyards Act, a century-old antitrust law meant to protect farmers from anticompetitive conduct, a senior administration official said in a call with reporters. 

USDA has already proposed two of three expected rules. 

The agency will also disburse additional grants to expand meat and poultry processing capacity that would increase the number of options for ranchers, the official said. 

President Joe Biden, a Democrat who has pledged to tackle anticompetitive conduct across the economy, is scheduled to meet with Vilsack and other members of his competition council later Wednesday. 
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U.S. Treasury Secretary Janet Yellen this week said that if the Biden administration issues expected new rules limiting outbound U.S. investment in China, they will not be highly disruptive to trade between the two countries, and will focus on national security concerns.

“We are looking carefully at outbound investment controls, and they would serve as a complement to the export controls that we have in place, to make sure that we’ve covered all the channels by which technologies can be transferred to China that we think pose national security concerns,” Yellen said.

The rules, expected from the Biden administration sometime this summer, would focus on semiconductors, quantum computing and artificial intelligence, the Treasury secretary said. Yellen added that they will be “narrowly scoped” and “would not be broad controls that would affect U.S. investment broadly in China, or in my opinion, have a fundamental impact on affecting the investment climate for China.”

Yellen’s remarks came in an interview with Bloomberg Television on Monday, from the sidelines of a meeting of the finance ministers of the world’s largest economies in Gandhinagar, India.

Yellen indicated that she had spoken to Chinese officials about the rules, saying, “What I tried to explain to our Chinese counterparts is that our desire is to make these U.S. policies clearly national-security focused, transparent and narrow, and that we’re not attempting to stifle economic progress in China. We have, and want to continue to have, deep economic ties.”

Yellen was careful in her language to suggest that a final decision about whether to issue the outbound investment rules has not been made.

Addition to export controls

The Biden administration’s effort over the past two years to prevent China from obtaining certain technologies, and a years-long effort by the U.S. to block certain Chinese technology firms from participating in essential infrastructure, like 5G broadband systems, have angered China.

Most recently, the administration has put measures in place to block Chinese companies from purchasing cutting-edge microchips and the equipment to manufacture them.

These policies have led to accusations by China that the aim of the U.S. is to block China’s economic progress in order to prevent it from playing a larger role in the global economy and in international relations.

Those concerns were repeated after Yellen’s recent remarks.

China replies

In a press conference on Monday, Chinese Foreign Ministry spokesperson Mao Ning commented on the coming restrictions.

“China opposes U.S. politicizing and weaponizing of trade and tech issues,” she said. “It is in no one’s interest to place arbitrary curbs on normal technology cooperation and trade, violate the market economy principles and destabilize global industrial and supply chains.”

She added, “We hope that the U.S. will follow through on President Biden’s commitment of not seeking to ‘decouple’ from China, halt China’s economic development or contain China and create a sound environment for China-U.S. economic cooperation and trade.”

In her remarks Monday, Yellen stressed the administration’s desire to improve relations with China, saying, “We now have a new economic team in China that we need to establish relationships with. We need to get our relationship back in a more stable place with a floor under it, and try to promote general understanding between our countries.”

Chinese economic woes

In the background of the discussion of U.S. restrictions on outbound investment in China is increasing evidence that the Chinese economy is struggling. Economic growth has slowed sharply, and the yuan has been losing value against other global currencies.

On Monday, official numbers released by Beijing said that the economy had grown by just 0.8% from the end of the first quarter of 2023 through the end of the second quarter, a rate much lower than expected.

Also this week, the country’s troubled real estate conglomerate, Evergrande, revealed that in 2021 and 2022, it lost more than $81 billion, and still carries obligations worth $340 billion, including some $140 billion to raw materials suppliers and many thousands of Chinese who paid in advance for homes that were never built. Evergrande has become a symbol of the country’s deeply troubled real estate sector, which is awash in bad debt.

In her remarks on Monday, Yellen noted China’s struggles, and said that there is some danger of weakness in its economy having an impact around the world.

“China has seen slower growth than they expected upon opening up from COVID,” Yellen said. “Consumer spending has been relatively weak. It looks like consumers are more focused on building back their savings buffers, and so growth has been slow when, as you know, youth unemployment is quite high there.”

She said that she expects a slowdown in China to have only a small impact on the U.S.

“Countries do depend on strong Chinese growth to promote growth in their own economies, particularly countries in Asia, and slow growth in China can have some negative spillover to the United States,” she said. “Our growth is slowed but our labor market continues to be quite strong. I don’t expect a recession.”
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Consensus eluded a meeting of finance ministers and central bank governors of the Group of 20 countries that ended Tuesday in India as members failed to bridge their differences on Russia’s war in Ukraine.

“We still don’t have a common language on the Russia-Ukraine war,” Indian Finance Minister Nirmala Sitharaman told reporters after the two-day meeting wrapped up in Gandhinagar city without issuing a joint statement.

Instead, India, which is the president of the group this year, issued what is called a chair summary and an outcome document in which it summed up the talks and noted disagreements.

According to the chair summary, China and Russia objected to paragraphs referring to the war that said it was causing “immense human suffering” and “exacerbating existing fragilities in the global economy.”

The failure to reach an accord was not unexpected. As the war in Ukraine is a matter of sharp diplomatic differences, India has not been able to forge a consensus document at any of the key G20 events held so far.

Several G20 members also condemned Russia for refusing to extend a deal to allow critical Ukrainian grain exports through the Black Sea, India’s finance minister said at a press conference.

Several members condemned it saying that shouldn’t have happened,” Sitharaman said. “Food passing through the Black Sea shouldn’t have been stopped or suspended.”

Russia’s quitting the deal has sparked fears about the impact on low-income countries in Asia and Africa, where high food prices already have pushed more people into poverty.  

While India has remained mostly neutral on the Ukraine war, it has expressed concern about the impact of the conflict on developing countries. It said its priority during its presidency is to focus on the need to help nations grappling with a debt crisis in the wake of the COVID-19 pandemic and the Ukraine conflict.

Sitharaman said members discussed the overall global economic outlook, specifically food and energy issues, climate financing and how to improve assistance to debt-distressed countries. She indicated that progress had been made on key issues.

More than half of all low-income countries are near or in debt distress, twice as many as in 2015, according to U.S. Treasury Secretary Janet Yellen. Before the meeting began, she said that ending the war in Ukraine is “the single best thing we can do for the global economy.”

The chief of the International Monetary Fund, Kristalina Georgieva, emphasized the need for a more effective and speedier debt restructuring process at the meeting.

“The costs of delays in reaching agreement on needed debt treatments are borne acutely by borrower countries and their people, who are least able to bear this burden,” she said.

Global growth is slowing and divergence in the economic fortunes of countries was a persistent concern, Georgieva said. “The world today is more shock-prone and fragile, with climate change, pandemics and Russia’s invasion of Ukraine all causing widespread turmoil.”

World Bank President Ajay Banga echoed similar fears. He spoke of “mistrust that is quietly pulling the Global North and South apart at a time when we need to be uniting,” and said that that “lack of progress was in danger of splitting the global economy to the detriment of the world’s poorest.”

India, which wants to emerge as the voice of what it calls the “Global South” has also been urging the G20 to forge a consensus on reforms for multilateral development banks.

A G20 panel has said in a report that international development banks must create a new funding mechanism and triple sustainable lending by 2030 to eliminate poverty and achieve climate goals. It also called for big changes in their operations.

The summit meeting of the G20 is scheduled to be held in September.
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Britain’s financial watchdog on Monday proposed toughening up safeguards against the illegal marketing of financial products on social media by applying a stringent “consumer duty” that is being rolled out to banks, funds and insurers on July 31.

The Financial Conduct Authority has said its new duty will be a step change in protecting retail investors after years of mis-selling scandals, by forcing firms to demonstrate how they are giving consumer good outcomes.

“Where applicable, the Consumer Duty will raise our expectations of firms communicating financial promotions on social media above the requirement… to be ‘clear, fair and not misleading’,” the FCA said in proposals out to public consultation.

“Firms advertising using social media must consider how their marketing strategies align with acting to deliver good outcomes for retail customers.”

In the fourth quarter of last year, nearly 70% of amended or withdrawn financial marketing following FCA intervention involved a promotion on websites or social media, the FCA said.

The watchdog is targeting so-called ‘finfluencers’ or widely followed people on social media who promote financial products.

“Consumers exhibit high levels of trust in finfluencers, but their advice can often be misleading,” the FCA said.

“Promoting a regulated financial product or service without approval of an FCA authorized person, or providing financial advice without FCA authorisation, may be a criminal offense.”

Promotions should also include risk warnings, it added.
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China’s economic growth missed forecasts in the second quarter of the year, adding to worries over surging youth unemployment and a weak property sector and raising the likelihood the government will double down on support for the faltering post COVID-19 recovery.

The world’s second largest economy grew at a 6.3% annual pace in the April-June quarter, much slower than the 7% plus growth analysts had forecast given the anemic pace of activity the year before.

Unemployment of youths aged 16 to 24 rose to a record 21.3% in June, up from 20.8% the month before.

Investment in property development, a vital driver of both industrial and consumer demand, sank 7.9% in the first half of the year compared to a year earlier in a troubling sign of persisting weakness in an industry that slowed even before the pandemic as the government moved to rein in excessive borrowing.

Officials have acknowledged that the economy is facing stiff headwinds, but said they expected growth to still reach the ruling Communist Party’s official target for this year of about 5%.

The government will adjust policies to stabilize growth, National Bureau of Statistics spokesman Fu Linghui said at a news conference Monday.

Quarterly growth, the usual measure for other major economies, was 0.8%, according to government data released Monday, in line with expectations but down sharply from 2.2% in January-June.

Analysts have been far less optimistic than the Chinese government about the outlook for the year, given weakening demand for Chinese exports in other major economies.

The numbers are a “worrying result,” said Moody’s Analytics economist Harry Murphy Cruise.

“China’s recovery is going from bad to worse,” he said. “After a sugar injection in the opening months of 2023, the pandemic hangover is plaguing China’s recovery.”

Government spending is likely to help key industries like real estate and construction, but won’t be a “silver bullet,” he said in a commentary.

The 6.3% growth in China’s gross domestic product from April to June outpaced a 4.5% expansion in the previous quarter.

The still robust growth is largely due to the economy growing just 0.4% a year earlier in April-June of 2022 amid strict lockdowns in Shanghai and other cities during COVID-19 outbreaks.

Apart from more government spending, regulators may cut interest rates and take other measures to free up credit, Marcella Chow, global market strategist at J.P. Morgan Asset Management wrote in a report.

“The weak economic readings suggest an urgency in escalating policy support so as to stabilize expectations,” Chow said.

Earlier this year, growth was boosted as people flocked to shopping malls and restaurants after nearly three years of “zero-COVID” restrictions were removed in late 2022.

The government’s growth target of “around 5%” was seen as a conservative goal. It can only be met if the economy maintains close to its current level of growth.

Data released earlier showed exports declined 12.4% in June from a year earlier as global demand faltered after central banks in U.S. and Europe raised interest rates to curb inflation.

Retail sales, an indicator of consumer demand, in June rose 3.1% from the same period in 2022. That’s seen as a strong point, but not strong enough, analysts said.

Industrial output, which measures activity in the manufacturing, mining and utilities sectors, beat analyst’s expectations, rising by 4.4% in June compared to the same month a year earlier.

China’s policymakers are not having to fight inflation, but may end up having to contend with its opposite, deflation, or falling prices due to weak demand. In recent months, the authorities have tried to spur lending and spending, with mixed success.

Fixed-asset investment — spending on factory equipment, construction and other infrastructure projects to drive growth — rose by a still tepid 3.8% for the first half of 2023 compared to the same period of 2022.
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Redoubling support for war-stricken Ukraine is the “single best” way to aid the global economy, U.S. Treasury Secretary Janet Yellen said Sunday, along with boosting emerging economies and tackling debt distress.Yellen also said on the sidelines of a G20 finance ministers’ summit in India she would “push back” on criticism there was a tradeoff between aid to Ukraine and developing nations.

“Ending this war is first and foremost a moral imperative,” she told reporters in Gandhinagar. “But it’s also the single best thing we can do for the global economy.”

Yellen also pointed to efforts to tackle debt distress faced by struggling economies, bank reform and a global tax deal, and warned it was “premature” to talk of lifting tariffs on China.

Russia’s invasion of Ukraine — both countries are global breadbaskets that together exported almost a quarter of the world’s wheat supply — triggered shockwaves in economies worldwide by sending prices for food and fuel shooting up.

Japan’s Finance Minister Shunichi Suzuki, speaking after a G7 meeting of ministers, “reconfirmed the G7’s unshakeable support” to Ukraine.

“We confirmed that Russia-owned assets that are under the G7’s supervision would not be transferred until Russia pays damages to Ukraine,” Suzuki said, adding that Moscow should also “pay long-term reconstruction costs.”

Any discussion on Ukraine is awkward for G20 host India, which has not condemned Russia’s invasion but is also part of the Quad grouping alongside Australia, the United States and Japan.

Yellen also cited debt restructuring progress in Zambia, which she discussed with Chinese officials in Beijing last week, and said she expected Ghana and Sri Lanka debt treatments would be finalized soon.

She said it was still too soon to lift restrictions placed on China during a trade war launched by former U.S. President Donald Trump.

“Tariffs were put in place because we had concerns with unfair trade practices on China’s side, and our concerns with those practices remain, they really haven’t been addressed,” Yellen said. “Perhaps over time this is an area where we could make progress, but I’d say it is premature to use this as an area for de-escalation.”

Yellen pointed to other work tackling debt distress and the reform of multilateral development banks, including the World Bank and other regional lenders, in efforts she said could unlock $200 billion over the next decade.

More than half of all low-income countries are near or in debt distress, double the case in 2015, she said.

G20 finance chiefs and central bank heads are due to meet Monday and Tuesday in Gandhinagar in Gujarat, the state where India’s independence leader Mahatma Gandhi was born.

World Bank chief Ajay Banga warned of a “deep mistrust… quietly pulling the Global North and South apart” over issues such as the climate change crisis, post-pandemic recovery efforts, the war in Ukraine and a lack of progress in the fight against poverty.

“The Global South’s frustration is understandable,” Banga said in an op-ed. “In many ways they are paying the price for the prosperity of others. When they should be ascendant, they’re concerned promised resources will be diverted to Ukraine’s reconstruction; they feel aspirations are being constrained because energy rules aren’t applied universally, and they’re worried a burgeoning generation will be locked into a prison of poverty.”

The International Monetary Fund said finding common efforts to tackle the weak global economy would be crucial.

The world will be looking for joint action to address rising economic fragmentation, slowing growth, and high inflation,” the IMF said in a statement ahead of the meeting.

The G20 will also discuss cryptocurrency regulations, as well as making access to financing to mitigate and adapt to the impacts of climate change easier for developing nations.”In the Global North, climate change means emissions reductions,” Banga said.  

“But in the Global South, it is a matter of survival, because hurricanes are stronger, heat-resistant seeds are in short supply, drought is destroying farms and towns, and floods are washing away decades of progress.”

A newly agreed first step on a fairer distribution of tax revenues from multinational firms reached by 138 countries Wednesday is also set to be delivered during the G20 talks.
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Elon Musk says Twitter is still losing cash because advertising has dropped by half.

In a reply to a tweet offering business advice, Musk tweeted Saturday, “We’re still negative cash flow, due to (about a) 50% drop in advertising revenue plus heavy debt load.”

“Need to reach positive cash flow before we have the luxury of anything else,” he concluded.

Ever since he took over Twitter in a $44 billion deal last fall, Musk has tried to reassure advertisers who were concerned about the ouster of top executives, widespread layoffs and a different approach to content moderation. Some high-profile users who had been banned were allowed back on the site.

In April, Musk said most of the advertisers who left had returned and that the company might become cash-flow positive in the second quarter.

In May, he hired a new CEO, Linda Yaccarino, an NBCUniversal executive with deep ties to the advertising industry.

But since then, Twitter has upset some users by imposing new limits on how many tweets they can view in a day, and some users complained that they were locked out of the site. Musk said the restrictions were needed to prevent unauthorized scraping of potentially valuable data.

Twitter got a new competitor this month when Facebook owner Meta launched a text-focused app, Threads, and gained tens of millions of sign-ups in a few days. Twitter responded by threatening legal action.
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On the heels of a trip to Beijing, U.S. Treasury Secretary Janet Yellen is back in India for the third time in nine months, this time to meet finance ministers from the Group of 20 nations about global economic challenges like the increased threat of debt defaults facing low-income countries.

Yellen will use her time in Gandhinagar to try to foster warming relations between the U.S. and India. She also plans a stop in Hanoi, Vietnam, to address supply chain reliability, clean energy transition and other matters of economic resilience.

Yellen’s goals for her time in India: press for debt restructuring in developing countries in economic distress, push to modernize global development banks to make them more climate-focused and deepen the ever-growing U.S.-India relationship.

Yellen’s frequent stops in the country signal the importance of that relationship at a time of of tensions with China.

India’s longstanding relationship with Russia also will loom as the Kremlin’s invasion of Ukraine continues despite U.S. and allied countries’ efforts to sanction and economically bludgeon Russia’s economy. India has not taken part in the efforts to punish Russia and maintains energy trade with that country despite a Group of Seven agreed-upon price cap on Russian oil, which has seen some success in slowing Russia’s economy.

Still, the U.S. increasingly relies on India and has courted its leaders.

President Joe Biden hosted a White House state visit honoring Indian Prime Minister Narendra Modi in June, designed to highlight and foster ties. The two leaders pronounced the U.S.-India relationship never stronger and rolled out new business deals between the nations.

Raymond Vickery Jr., a policy expert on U.S.-India relations at the Center for Strategic and International Studies, said Yellen’s coming to India shortly after visiting China is meaningful in that Indian officials “are going to want to know in great detail what happened in the meetings with her Chinese counterparts and see where it fits with their perspective on economic relations with China.”

“They’re going to want to know whether or not the United States is serious about moving some of its sourcing activity from China to India.”

A senior Treasury official, speaking on condition of anonymity to preview Yellen’s trip, said there was hope that debt treatments for Ghana and Sri Lanka will be discussed and completed quickly at the meetings.

Sri Lanka and Ghana defaulted on their international debts last year, roughly two years after Zambia defaulted. And more than half of all low-income countries face debt distress, which hurts their long-term ability to function and develop.

Last month, Zambia and its government creditors, including China, reached a deal to restructure $6.3 billion in loans, on the sidelines of a global finance summit in Paris.

The agreement covers loans from countries such as France, the U.K., South Africa, Israel and India as well as China — Zambia’s biggest creditor at $4.1 billion of the total. The deal may provide a roadmap for how China will handle restructuring deals with other nations in debt distress.

Yellen’s trip comes shortly after she spent a week in China, meeting the nation’s finance ministry and discussing mutual trade restrictions and national security concerns.

Harold W. Furchtgott-Roth, a senior fellow at the Hudson Institute, said Yellen’s trip to India “is a reflection of a naturally developing alliance.”

“India has a great deal of tension with China — they have constant border disputes,” he said.” And India wants to develop and has developed into sort of an Indian Ocean naval power, which is also a region that China wants to develop.”
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On a recent cross-border shopping trip, four friends from Fray Bentos, Uruguay, visited the nearby Argentine city of Gualeguaychú, where they could afford to live lavishly and snap up eye-popping bargains.

Thanks to a huge disparity in the two South American countries’ currencies, Stella Ferreira and a friend treated themselves to a low-cost pampering at a hair salon, while two other friends looked for stylish but inexpensive pants.

With its economy faltering, Argentina’s peso has plunged against the U.S. dollar and its annual inflation is 115.6%, one of the highest rates in the world. In contrast, Uruguay’s economy is more stable, with low inflation and a stronger currency.

The result has been a huge flow of shoppers from Uruguay throwing an economic lifeline to struggling Argentine stores and restaurants in cities like Gualeguaychú, Concordia and Colón.

But there’s a downside for Uruguayan businesses along the border: In the provinces of Salto, Paysandú, Río Negro and Soriano, municipal authorities say 170 stores closed in the first five months of this year. Businesses still open complain they hardly have any customers.

With about $100 apiece, the four friends planned to get their hair done, buy clothing, gasoline and other goods and eat out in Gualeguaychú, in Entre Rios province, which for more than a year has been a shopping mecca for Uruguayans looking for deals. Back in Uruguay, Ferreira, 29, said that same $100 would “get your hair done and not much else.”

Uruguayan businesses just across the border are finding it hard to compete with such bargains.

“Everything is very quiet,” said Susana Guerrero, owner of a shop that sells cheese and sweets in Salto. “I lost an employee, and I did not replace him.”

Guerrero went to Gualeguaychú on an exploratory trip and now sees why Uruguayans are going there to shop. The price differences between the two countries can be staggering. A liter of sunflower oil that costs $5 in Uruguay is 50 cents in Argentina. A jar of skin-care cream that costs $10 in Uruguay can be had for a dollar across the border. And a liter of gasoline in Uruguay is close to $2. In the Argentine province of Entre Rios it is 52 cents.

“Yes, it’s cheap and we can’t fight it,” Guerrero said.

Fray Bentos storefronts, meanwhile, are covered with signs offering specials in a bid to attract customers.

“This year, sales have dropped by 40% or more,” said Alicia Nedor, who works in a pharmacy. She said the sector is seeing its worst crisis in decades.

Nedor, 70, said several small businesses have closed in Fray Bentos and the big ones have laid off staff.

Cross-border bargain hunters also hail from neighboring Chile, Paraguay and Brazil. In Uruguay, industry representatives have called the phenomenon a “border pandemic” and even the country’s president has acknowledged the problem.

“The prices of goods in Argentina are extremely cheap, and naturally its neighbors consume where it is cheaper for them,” President Luis Lacalle Pou said in early May. “This creates an imbalance. We have applied measures, but it is not enough.”

The government then introduced additional measures, including tax breaks for Uruguayan businesses and a 5-kilogram limit on what Uruguayans returning from Argentina can bring with them. But business leaders say the controls are not applied and are demanding a “zero-kilo” border policy, something that Lacalle Pou has rejected.

Lacalle Pou said the government will seek to make sure contraband doesn’t cross the border but added that “it is impossible to solve the exchange rate problem with Argentina.”

The Catholic University of Uruguay has developed a Border Price Indicator for the Argentine city of Concordia, about 200 kilometers (125 miles) north of Gualeguaychú. According to its latest data from May, it is 59% cheaper to buy a basket of food, drinks, clothing and household products in Concordia than in the Uruguayan town of Salto.

The price gap reflects the devaluation of the Argentine peso, which has lost 47% of its value against the U.S. dollar at the official rate so far this year.

Argentina has struggled with inflation multiple times over the last century. Its current crisis started in 2018 but has worsened in the past year and a half, said María Castiglioni, director of C&T Asesores Económicos. The inflation problem arose from several factors, she said, including government overspending and problems in monetary policy.

The country doesn’t have funds to solve its overspending because it has lost access to the international debt market after multiple defaults on its loans. The loss of access means other countries do not feel confident lending money to Argentina.

As this debt crisis arose, the government turned to the country’s central bank for assistance. In an effort to sustain the economy, the central bank hasn’t stopped printing pesos, which has led to the devaluing of the peso. The increase in the flow of pesos also led to ballooning inflation that Argentinians experience every day.

On holidays and weekends, long lines of cars wait to cross the General San Martín International Bridge that crosses the Uruguay River and joins Argentina’s Gualeguaychú with Fray Bentos in Uruguay.

Between June 30 and July 4, which included the first days of the southern winter vacation for Uruguayans, more than 100,000 people left Uruguay for Argentina, most of them through the three border crossings in Entre Ríos. The majority were Uruguayans, although there were other nationalities. Uruguay has a population of about 3.4 million people.

Claudio Gatt, who owns the hair salon Ferreira and her friends went to, said that the flow of Uruguayans into Argentina has been like oxygen.

“If they were not here, sales would drop by a minimum of 50%,” he said.

Signs reading “dollars accepted” hang in store windows in Gualeguaychú and its main streets are filled with visitors from different parts of Uruguay. Half of the purchases of medicines and cleaning supplies in the city are by Uruguayans, according to a local business chamber.

For Alejandro Ramos, a 49-year-old Argentine teacher who lives in Gualeguaychú, the problem is not the Uruguayans, because “they come and buy legally.”

The problem “is us,” he said. “We first have to realize that we are an economic disaster in this country.”
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The chief executives of Intel Corp and Qualcomm Inc are planning to visit Washington next week to discuss China policy, according to two sources familiar with the matter.

The executives plan to hold meetings with U.S. officials to talk about market conditions, export controls and other matters affecting their businesses, one of the sources said. It was not immediately clear whom the executives would meet.

Intel and Qualcomm declined to comment, and officials at the White House did not immediately return a request for comment.

The sources said other semiconductor CEOs may also be in Washington next week. The sources declined to be named because they were not authorized to speak to the media.  

U.S. officials are considering tightening export rules affecting high-performance computing chips and shipments to Huawei Technologies Co Ltd, sources told Reuters in June. The rules would respectively affect Intel, which is preparing a new artificial intelligence chip that could be shipped to China, and Qualcomm, which has a license to sell chips to Huawei.

The Biden administration last October issued a sweeping set of rules designed to freeze China’s semiconductor industry in place while the U.S. pours billions of dollars in subsidies into its own chip industry.

The possible rule tightening would hit Nvidia particularly hard. The company’s strong position in the AI chip market helped boost its worth to $1 trillion earlier this year.

The chip industry has been warmly received in Washington in recent years as lawmakers and the White House work to shift more production to the U.S. and its allies, and away from China. Intel CEO Pat Gelsinger and Qualcomm CEO Cristiano Amon have met often with government officials.

Next week’s meetings, which one of the sources said could include joint sessions between executives and U.S. officials, come as Nvidia Corp NVDA.O and other chip companies fear a permanent loss of sales for an industry with large amounts of business in China while tensions escalate between Washington and Beijing.

One of the sources familiar with the matter said the executives’ goals for the meetings would be to ensure that government officials understand the possible impact of any further tightening of rules around what chips can be sold to China.

Many U.S. chip firms get more than one-fifth of their revenue from China, and industry executives have argued that reducing those sales would cut into profits that they reinvest into research and development.
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