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China’s President Xi Jinping has faced and survived many challenges in life. He spent years as a teenager toiling in the countryside after his father was persecuted. He worked his way up to the top echelons of power and carried out a massive anti-corruption campaign that earned him many enemies.

But as he’s about to get an unprecedented third term, Xi faces what may perhaps be his toughest challenge – fixing the serious problems that have metastasized in China following four decades of rapid, unbridled and wasteful economic growth, and putting the world’s second biggest and soon-to-be-biggest economy in order.

Experts say it won’t be easy, and Xi himself may be his biggest obstacle.

“China has essentially reached the peak of its growth period, much of it fueled by debt. The result is they’ll have difficulty unless he wants to reform the economy and he has no plans to do that,” said Andrew Collier, a Hong Kong-based expert in China’s macroeconomy.

Under the past four decades of China’s opening, its economy has grown 18 times bigger – from a GDP of $149.5 billion in 1978 to $17.7 trillion last year, making up about 18.5% of the world’s economy. Since Xi came into power in 2012, it has doubled in size, surpassing the European Union last year.

But a lot of that growth has been unhealthy, especially in the manufacturing and construction sectors, where excessive growth has turned out “ghost cities” and unnecessary infrastructure. Not only has this damaged the environment, but it also has created a lot of internal debt.

Property developers

A symptom of the problem exploded recently when overambitious property developers, funded by state banks, defaulted, leaving apartment buildings unfinished and angry homebuyers boycotting their mortgages and amassing in rare protests.

Xi seems unable to rein in these excesses. While he has famously said that “houses are for living in, not for speculation,” the property bubble has continued to balloon over the past decade that he’s been in power.

“It was a bubble before, but it has gotten much bigger, so obviously the talk has not been followed by action,” said Shanghai-based independent economist Andy Xie.

He estimated Chinese property developers owe at least $10 trillion in debt and says that’s a “very conservative estimate.”

While some companies may be bailed out, China simply cannot continue growing like this and Xi knows it.

In his speech at the opening of the 20th Party Congress on Sunday, he said, “Development was imbalanced, uncoordinated, and unsustainable, and the traditional development model could no longer keep us moving forward.”

He said the next five years will be “crucial” for building a “modern socialist country” by engaging in “high-quality” development.

State-owned emphasis

Analysts say that instead of continuing to put emphasis on state-owned enterprises, which are less efficient and less profitable, Xi should support the private sector. But they say he’s doing the opposite.

“He’s essentially doubled down on his existing policies to promote the state-owned system and … the crackdown on the tech sector that occurred in the past couple of years is very much part of his world view,” said Collier, managing director of Orient Capital Research.

Collier suggests allocating more bank loans to the private sector, shifting focus to boosting domestic consumption, and allowing more free market decision making.

But Collier notes, “That’s not part of his DNA.”

In a recent report, the World Bank also advised China to remove remaining barriers to market competition, spur innovation and productivity, and focus on the service and consumption sector by boosting spending on health and education, so that Chinese people wouldn’t feel the need to save so much.

But Xie asserts that Xi wants to control the market economy.

“The Chinese Communist Party is about keeping the party in charge, but the market is not about that, it’s about power decentralization; the market makes decisions on its own,” Xie said. “Coexistence has been uneasy. Now the market has been brought under control.”

Examples: One tech company’s planned IPO (initial public offering) was stopped in its tracks. Big tech firms have been pressured to make large donations to charities, and government intervention has caused the stock prices of some companies, like Alibaba, to plunge. Even the video game and private tutoring industries have been ordered to stop putting profits above children’s welfare.

Observers believe it would be better if China reformed and updated its tax system to adequately tax the country’s growing number of ultra-rich people, including property speculators, and narrow the wealth gap.

But contrary to Xi’s image as a strongman, he may not have that much control over economic matters.

While political power is centralized in the party, economically, China is very decentralized, Collier said.

“He can control state-owned firms, but at the end of the day, it’s up to provinces to try to generate growth,” said Collier.

With the property sector, for example, land sales and taxes from transactions contribute to 10% of the nation’s annual GDP and to more than half of many local governments’ revenue, so Xi’s hands may be tied.

Multiple challenges

So far, Xi seems to prefer a soft landing – slowing growth to avoid China’s economic bubble completely bursting, avoiding massive discontent and social unrest, which could threaten his party’s survival.

In his speech, Xi vowed to deepen reforms of state-owned enterprises and help them grow larger and more competitive, while also promising to encourage entrepreneurship and help private Chinese companies “become world-class outfits.”

He also pledged to accelerate China’s transition toward green, low-carbon development – meaning the world’s factory ostensibly will manufacture higher-end goods and in less polluting ways.

At the same time, he vowed to improve the income tax system, increase earnings for low-wage workers and expand the middle class.

With millions still living in poverty and youth unemployment very high, that’s a major challenge, especially as economic growth is forecast to fall from 8.1% last year to just 3.2% this year, the second lowest rate in nearly five decades.

If Xi fails to carry out necessary reforms in his third term, China’s economy — while still predicted to surpass that of the U.S. by 2030 because of its much bigger population and manufacturing sector — could reach a crisis point. Additionally, since China is the biggest market, trade partner, and also increasingly the key investor for many countries, that could have huge implications for the rest of the world.

“The world spins around China,” economist Xie said.
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Farmers are harvesting crops in the United States during a period of economic uncertainty due in large part to Russia’s war on Ukraine. As VOA’s Kane Farabaugh reports, farmers are trying to make the most of higher grain prices while managing external factors affecting their farming operations.
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The good news for Benjamin Rice is that the price for the corn and soybeans he grows on his Philo, Illinois, farm are up this year – a bright spot at a time of uncertainty and upheaval made worse for agricultural producers around the world by the war in Ukraine. 

“This year compared to two years [ago], we’re up in that 50 percent range [of higher prices],” he told VOA during a break in his work in the fields during the harvest.  

But market forces working in Rice’s favor will only benefit him if he can sell the yield from his crops in time. “We’re seeing swings every single day of easily 10, maybe 15 cents of corn and 30 to 70 cents in beans. So, if you can sell one day for 70 cents higher for what tomorrow is going to be, they aren’t small swings anymore,” he said. 

Contributing to price fluctuations are some factors farmers can’t control, like the weather and drought conditions lowering water levels on the Mississippi River, which prevents crop-carrying barges from easily navigating the important waterway leading to international shipping ports.    

While high crop prices are good news for farmers, this year they come with a downside.  The cost of doing business is also up.  

The price of diesel fuel that powers farm equipment is near an all-time high. So is the cost of nitrogen-rich anhydrous ammonia fertilizers, made using natural gas, which farmers rely on to boost crop yields.  

“It’s 40% above the cost last year,” Rice said. “And it’s over 100% the cost it was two years ago for the exact same product.”  

The U.S. Department of Agriculture reports that fertilizer prices account for a hefty segment of farm cash costs – nearly one-fifth. The proportion is even larger for producing wheat and corn.  

While his farm is far away from battle lines in eastern Europe, the effects of the war in Ukraine – and the resulting disruption to natural gas and other supplies – are rippling through Rice’s fields in the midwestern United States.   

“Ukraine and Russia combined export – I believe it’s somewhere in the 30%-to-40% range of the world’s use of anhydrous ammonia, and I know that they are also a big player in that natural gas market,” Rice said. “And as soon as that [war] started, the numbers just exploded on what our input costs were.”  

Those costs haven’t come down since.  

“They’re already taking a look at next year’s prices, where they are seeing triple predictions,” said DeAnne Bloomberg of the Illinois Farm Bureau (IFB), speaking with VOA from the group’s headquarters in Bloomington.

Even higher prices 

Bloomberg emphasized there’s no easy way to lower fertilizer costs.  “You can’t just rachet up fertilizer production,” she said. “It takes years for that.”  

So high input prices could go even higher – concerns the IFB is relaying to federal and state lawmakers, urging action where possible.  

“Gasoline prices, and being able to have the supply chain opened up and available, is one piece that we can look at because it is extremely regulated,” said Bloomberg. “So, any of those pieces that regulate those inputs is where government can come into play.”

What farmers aren’t asking for – yet, Bloomberg added – is a return to direct government payments to offset increased costs.

“They also want to work on free markets, and let the markets move through it,” she told VOA. “I don’t see that that’s been on their radar.”  

As the war in Ukraine drags on, food prices continue to rise and inflation weighs on economies across the globe.    

The economic headwinds come at a time when farmer Benjamin Rice is making tough decisions about fertilizer applications ahead of next year’s planting season.   

“I want to cut back and be responsible about it, but not too much to end up hurting next year’s crop,” he said. Acknowledging a delicate balancing act he may have to contend with for years to come, Rice added, “It’s been a roller coaster for sure.”
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Poor governance and corruption in Zimbabwe are responsible for the country’s economic decline, not U.S. and other Western sanctions imposed after reports of election rigging and human rights abuses, a top U.S. official said Wednesday. The country’s capital, Zimbabwe has scoffed at the claims, while some pro-government citizens protest the sanctions at the U.S. embassy in Harare.

James O’Brien, the U.S. State Department’s sanctions coordinator, told an online press briefing on October 19 that U.S. sanctions are not hurting Zimbabwe’s economy, as they do not affect banks, pointing to billions of dollars in reported annual illegitimate, illegal cross-border transactions as examples of what is hurting the country’s economy.

“Those cost the citizens of Zimbabwe a lot of their chance at having a more prosperous and free life. And so, we’d like our sanctions to be part of a policy answer that begins to improve the management of public services and public resources and makes things possible for the people of Zimbabwe to improve,” he said.

O’Brien said Washington is aware of concerns regional leaders have raised over the impact of the sanctions, including the Southern African Development Community and the African Union, saying that the impact of the sanctions is felt regionally and throughout the continent.

O’Brien said the U.S. would continue reviewing the sanctions list imposed in the early 2000s following reports of human rights abuses and election rigging by the current administration in Zimbabwe.

“We are not engaged in a comprehensive effort to close the Zimbabwean economy. We’re aware that because of the depth of the problems and the duration of this program, there probably are a lot of companies who believe that doing business in Zimbabwe is just too difficult. And that does cost opportunities for the people of Zimbabwe. Whether that’s the result of the underlying mismanagement and corruption, or whether our sanctions add to it. That’s something we are willing to talk about. We are focused on the people who benefit from corruption and human rights abuses in Zimbabwe. That’s the behavior we are attempting to change. Our sanctions are only one part of a policy to improve the situation there,” he said.

Some Zimbabweans disagree.

The chants are coming from pro-government members known as the Broad Alliance Against Sanctions. They are singing outside the U. S. embassy in Harare and ask, why do you hate Zimbabwe?

They have been camping here for months and continue to demand the removal of the sanctions.

Calvern Chitsunge, a member of the organization, told protesters and fellow government supporters the only thing we can do is demand that America remove sanctions it imposed on us today or yesterday.

He said as the Broad Alliance Against Sanctions, we sat down and agreed to write the Patriotic Act and we petitioned parliament. We appeared before the committee on foreign affairs and we said this law must prosecute those [Zimbabweans] who go abroad calling for sanctions, people who write lies. That’s what we are doing today: to correct mistakes made by the Americans and the British. Zimbabwe will never be a colony again. We are here to defend it, he said.

Zimbabwe officials refused to comment on O’Brien’s comments to journalists, saying President Emmerson Mnangagwa would address the nation Tuesday as the country marks what is known as “Anti-Sanctions Day,” when there will be government-organized protests in Harare.

Mnangagwa’s government called for the protests, alleging Zimbabwe is being punished for the land reform program under the late President Robert Mugabe in 2000, which forcefully displaced white commercial farmers and gave land to Black citizens.
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With its lush forests, abundant waterfalls and flamboyant birds, Guinea is the type of tropical paradise that draws tourists. But the West African country has few visitors and earns almost all its foreign revenue from mining, which can damage that environment. Now some are working to change that.

Guinean tour guide Mohammed Camara balances precariously on a slippery rock as water gushes around him and the three foreigners he’s leading on a hike. Below, the water slices through the cliff making way for a spectacular view of the forest.

He dreams of there one day being a boardwalk that spans the top of the waterfall so his clients don’t have to slip and slide to reach the view. Guinea’s government is more focused on developing the country’s mining industry than on creating ecotourism projects, he says.

“When people talk about mines, everyone talks about Guinea. But when people talk about tourism we don’t talk about Guinea,” Camara said. “And yet there is great potential for tourism in this country that could employ more people than mines and bring in much more money.”

Guinea is the world’s second largest producer of bauxite, the primary ore used to produce aluminum. The country is also rich in iron ore deposits as well as other minerals such as gold and diamonds.

Mining comprises about 25 percent of the country’s Gross Domestic Product, yet Guinea remains one of the poorest countries in the world with more than half the population living below the poverty line.

A 2018 report by Human Rights Watch found Guinea’s mining industry had destroyed ancestral farmlands, polluted water sources and blanketed villages and crops in dust. The environmental destruction of bauxite mining can be so severe it led Malaysia to implement an export ban in 2016.

François Kieffer is the operations manager for Belgian development agency Enabel in Guinea.

In September he helped launch an ecotourism project in Kindia – a forested region about 130 kilometers from Conakry with a high potential to attract tourists.

The project is focused on the construction of facilities that make sightseeing more accessible, such as boardwalks and trail signs, as well as the training of tour guides.

Kieffer said he hopes the projects will provide an alternative to environmentally destructive practices beyond mining, such as slash and burn agriculture and charcoal production.

“Today, human activity puts a lot of pressure on the environment and we realized that it’s the local people who are the first victims of these types of activities,” he said. “The potential for tourism here is incredible.”

Sites such as the breathtaking Mount Gangan and the pristine swimming holes beneath Kilissi Falls are largely unknown outside of Guinea.

From 2010 to 2017, the country saw an average of just 65,000 tourists per year – one-sixteenth the number who visited neighboring Senegal.

Sekou Camara is a local development officer in Guinea’s Linsan sub-prefecture.

“In Kindia, there are a lot of sites that are beloved by the locals. But because those sites aren’t developed, people are afraid to go,” said Sekou Camara, a local development officer in Guinea’s Linsan sub-prefecture. “If we succeed in developing them, Kindia could become attractive. But for now people are prioritizing the mines.”

He motions to the waterfalls plunging down the verdant face of Mount Gangan. That could be Guinea’s crown jewel, he says.
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China’s state banks stepped up their intervention to defend a weakening yuan on Monday, with banking sources telling Reuters these banks sold a high volume of U.S. dollars and used a combination of swaps and spot trades.

Six banking sources told Reuters the country’s major state-owned banks were spotted swapping yuan for U.S. dollars in the forwards market and selling those dollars in the spot market, a playbook move used by China in 2018 and 2019 as well.

The selling seemed to be aimed at stabilizing the yuan CNY=CFXS, with the swaps helping procure dollars as well as anchoring the price of yuan in forwards, said the sources, who have direct knowledge of market trades.

The yuan is down 11.6% versus the dollar this year. It was trading around 7.1980 per dollar on Monday.

One-year dollar/yuan forwards fell rapidly following the state bank actions, pushing the yuan to 6.95 per dollar. One of the sources noted the size of the dollar selling operation was “rather huge.”

“The big banks want to acquire dollar positions from the swap market to stabilize the spot market,” said another source.

State banks usually trade on behalf of the central bank in China’s FX market, but they can also trade for their own purposes or execute orders for their corporate clients.

A third source noted that the state banks’ trades appeared to be managed so that the country’s closely watched $3 trillion foreign exchange reserves will not be tapped for intervention.

At the same time, the move helps state banks to procure dollars at a time when rising U.S. yields have made dollars scarce and expensive.

China burned through $1 trillion of reserves supporting the yuan during the economic downturn in 2015, and the sharp reduction in the official reserves attracted much criticism.
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The International Monetary Fund (IMF) had bad news for the global economy this past week. It lowered the global growth rate to 2.7% for next year, warned of sovereign defaults on debts, and forecast recession and gloom for markets.

“It is tough, but we can deal with these challenges,” Kristalina Georgieva, managing director of the IMF, told an audience at the weeklong annual meeting of the IMF and World Bank multilateral lenders in Washington.

“For many people, 2023 will feel like a recession,” IMF chief economist Pierre Olivier Gourinchas tweeted Tuesday as he laid out some gloomy numbers for the global economic outlook.

World Bank President David Malpass, the IMF’s Kristalina Georgieva and many leading economists counted several factors for the global economic slowdown. The war in Ukraine, the pandemic, inflation, China’s slow economy, climate change and the strong U.S. dollar, they said, had triggered the risk of a recession, with chances that the “worst is yet to come,” The Financial Times reported on the multilateral lender’s latest global outlook.

Growing high-cost debt

The economists consider high-cost debt and many countries’ increasing hardships in repaying their debts bitter realities. They feared sovereign defaults and expected more debt restructuring requests in the emerging and developing economies.

Gita Gopinath, IMF’s first deputy managing director, said that about 60% of low-income countries were either in debt stress or facing a high risk of debt stress.

Elena Duggar, chairperson of Moody’s Macroeconomic Board, predicted that sovereign default rates would pick up over the next couple of years.

“We already have six sovereign defaults this year in 2022,” Duggar said. In a typical year, she said, one or two sovereign defaults could be expected. A sovereign default happens when a country fails to repay its debts.

“We do have many countries, several of whom are from sub-Sahara, where it [sovereign default] is a challenge,” Gopinath said.

As she spoke, chanting could be heard from some members in the hall, saying “cancel all debts, reparations now.” Some protesters outside the bank’s building also were calling for transparency in debt mechanisms.

The high cost of borrowing is of significant concern. IMF chief Georgieva said at the outset of the annual event that rising interest rates would start becoming an issue.

The United Nations underscored the global debt crisis in its report Tuesday and called for debt relief for 54 countries around the world. Pakistan, Tunisia, Chad, Sri Lanka and Zambia are viewed as facing the most immediate risk of sinking into a deepening debt crisis.

The IMF said Saturday it reached a staff level agreement with Tunisia under the Extended Fund Facility (EFF) for a $1.9 billion rescue package.

The IMF also resumed its support program for Pakistan and approved $1.7 billion for Islamabad in August.

The country’s finance minister Ishaq Dar told Reuters Friday he would seek rescheduling of some $27 billion in non-Paris Club debt most of which is owed to China.

Impact on prices

Gourinchas has anticipated a 9.5% global inflation rate for the remaining months of 2022. He expects it to decrease to 4.1% in 2024.

However, his predictions for next year are gloomy, and he calls it a year of recession for many people in the world.

“Inflation remains the most immediate threat to current and future prosperity by squeezing real income and undermining macro stability,” he tweeted Monday.

The inflation rate in many developing countries, however, does not match what the fund’s chief economist forecast for the globe. In September, grocery prices in the U.K. climbed to 13.9%, the Financial Times reported Tuesday.

On Tuesday, Egypt recorded a 15% jump, the highest level of inflation in the last four years, according to the state-run central agency for public mobilization and census.

The World Bank expects the inflation rate will rise to 23% in Pakistan next year, a country with around $130 billion of debt. 
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Workers at an Apple store in Oklahoma City voted to unionize, marking the second unionized Apple store in the U.S. in a matter of months, according to the federal labor board.

The vote on Friday signaled another win for the labor movement, which has been gaining momentum since the pandemic.

Fifty-six workers at the store, located at Oklahoma City’s Penn Square Mall, voted to be represented by The Communications Workers of America, while 32 voted against it, according to a preliminary tally by the National Labor Relations Board. The approximate number of eligible voters was 95, the board said.

The labor board said Friday that both parties have five business days to file objections to the election. If no objections are filed, the results will be certified, and the employer must begin bargaining in good faith with the union.

The union victory follows a vote to unionize an Apple store in Towson, Maryland, in June. That effort was spearheaded by the International Association of Machinists and Aerospace Workers in Maryland, which is preparing to begin formal negotiations.

In a statement emailed to The Associated Press on Saturday, Apple said, “We believe the open, direct and collaborative relationship we have with our valued team members is the best way to provide an excellent experience for our customers, and for our teams.”

Apple also cited “strong compensation and exceptional benefits,” and noted that since 2018, it has increased starting rates in the U.S. by 45% and made significant improvements in other benefits, including new educational and family support programs.

The Communications Workers of America could not be immediately reached for comment.

Worker discontent has invigorated the labor movements at several major companies in the U.S. in the wake of the COVID-19 pandemic, which triggered tensions over sick leave policies, scheduling, and other issues.

In a surprise victory, Amazon workers at a Staten Island warehouse voted in favor of unionizing in April, though similar efforts at other warehouses so far have been unsuccessful. Voting for an Amazon facility near Albany, New York, began on Wednesday and is expected to go through Monday. Well over 200 U.S. Starbucks stores have voted to unionize over the past year, according to the NLRB.
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Saudi Arabia rejected as “not based on facts” criticism of an OPEC+ decision last week to cut its oil production target despite U.S. objections and said on Thursday that Washington’s request to delay the cut by a month would have had negative economic consequences.

The White House pushed back, saying it presented the Saudis with an analysis that showed the cuts could hurt the world economy, and alleging the Saudis pressured other OPEC members on a vote. Officials from both countries are expected to discuss the situation shortly.

The back-and-forth has added to what has been a frosty period of relations for the two countries, who have had an energy-for-security alliance for decades.

OPEC+, the producer group comprising the Organization of the Petroleum Exporting Countries (OPEC) plus allies including Russia, last week announced a cut of 2 million barrels per day to its production target after weeks of lobbying by U.S. officials against such a move.

The move came even though fuel markets remain tight, with inventories in major economies at lower levels than when OPEC has cut output in the past.

The OPEC+ cut has raised concerns in Washington about the possibility of higher gasoline prices ahead of the November U.S. midterm elections, with the Democrats trying to retain their control of the House of Representatives and Senate.

U.S. President Joe Biden pledged earlier this week that “there will be consequences” for U.S. relations with Saudi Arabia after OPEC+’s move.

Asked on Thursday about the situation during a Los Angeles trip, Biden told reporters “We’re about to talk to them.”

The OPEC+ decision was adopted through consensus, took into account the balance of supply and demand and was aimed at curbing market volatility, the Saudi foreign ministry said in a statement on Thursday.

The Saudi foreign ministry statement referred to consultations with the United States before the October 5 OPEC+ meeting in which it was asked to delay the cuts by a month.

“The Kingdom clarified through its continuous consultations with the U.S. administration that all economic analyzes indicate that postponing the OPEC+ decision for a month, according to what has been suggested would have had negative economic consequences,” the Saudi foreign ministry statement said.

The United States accused Saudi Arabia of kowtowing to Moscow, which objects to a Western cap on the price of Russian oil in response to its invasion of Ukraine.

“We presented Saudi Arabia with analysis to show that there was no market basis to cut production targets, and that they could easily wait for the next OPEC meeting to see how things developed,” said White House spokesman Jack Kirby, in a statement, which added that other OPEC nations told the United States that they felt “coerced” to support the Saudi decision.

The Saudi foreign ministry statement, quoting an unnamed official, stressed the “purely economic context” of the oil cut. Oil demand has weakened worldwide, with OPEC, the U.S. Energy Department, and the International Energy Agency all lowering forecasts for 2023 demand this week.

However, the IEA on Thursday added that OPEC’s move could worsen demand, saying “higher oil prices may prove the tipping point for a global economy already on the brink of recession.”

The Saudi statement said the kingdom views its relationship with the United States as a “strategic one” and stressed the importance of mutual respect. The Gulf Cooperation Council (GCC) issued a statement in support of Saudi Arabia’s comments praising the kingdom’s efforts to protect the market from volatility.

In research last week, Goldman Sachs said in the last 25 years OPEC has never cut production when inventories in Organization for Economic Co-operation and Development countries, composed of 38 of the world’s richest economies, were so low. OECD stocks are 8% below their five-year average. However, they noted that OPEC reduced output during periods of weak demand. 
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Inflation in the United States accelerated in September, with the cost of housing and other necessities intensifying pressure on households, wiping out pay gains that many have received and ensuring that the Federal Reserve will keep raising interest rates aggressively.

Consumer prices rose 8.2% in September compared with a year earlier, the government said Thursday. On a month-to-month basis, prices increased 0.4% from August to September after having ticked up 0.1% from July to August.

Yet excluding the volatile categories of food and energy, so-called core inflation jumped last month — a sign that the Fed’s five rate hikes this year have so far done little to cool inflation pressures. Core inflation climbed 0.6% from August to September and 6.6% over the past 12 months. The yearly core figure is the biggest increase in 40 years. Core prices typically provide a clearer picture of underlying price trends.

Major U.S. markets swung sharply lower, with the Dow Jones Industrial Average futures moving from several hundred points up to a 400 point decline in seconds. Markets in Europe tumbled as well.

Thursday’s report represents the final U.S. inflation figures before the Nov. 8 midterm elections after a campaign season in which spiking prices have fueled public anxiety, with many Republicans casting blame on President Joe Biden and congressional Democrats.

Inflation has swollen families’ grocery bills, rents and utility costs, among other expenses, causing hardships for many and deepening pessimism about the economy despite strong job growth and historically low unemployment.

As the election nears, Americans are increasingly taking a dim view of their finances, according to a new poll by The Associated Press-NORC Center for Public Affairs Research. Roughly 46% of people now describe their personal financial situation as poor, up from 37% in March. That sizable drop contrasts with the mostly steady readings that had lasted through the pandemic.

The September inflation numbers aren’t likely to change the Fed’s plans to keep hiking rates aggressively in an effort to wrest inflation under control. The Fed has boosted its key short-term rate by 3 percentage points since March, the fastest pace of hikes since the early 1980s. Those increases are intended to raise borrowing costs for mortgages, auto loans and business loans and cool inflation by slowing the economy.

Minutes from the Fed’s most recent meeting in late September showed that many policymakers have yet to see any progress in their fight against inflation. The officials projected that they would raise their benchmark rate by an additional 1.25 percentage points over their next two meetings in November and December. Doing so would put the Fed’s key rate at its highest level in 14 years.

Along with lower gas prices, economists expect the prices of used cars to reduce or at least restrain inflation in the coming months. Wholesale used car prices have dropped for most of this year, though the declines have yet to show up in consumer inflation data. (Used vehicle prices had soared in 2021 after factory shutdowns and supply chain shortages reduced production.)

Large retailers, too, have started offering early discounts for the holiday shopping season, after having amassed excess stockpiles of clothes, furniture and other goods earlier this year. Those price cuts might have lowered inflation in September or will do so in the coming months.

Walmart has said it will offer steep discounts on such items as toys, home goods, electronics and beauty. Target began offering holiday deals earlier this month.

Yet prices for services — particularly rents and housing costs — are remaining persistently high and will likely take much longer to come down. Health care services, education and even veterinary services are still rising rapidly in price.

“Services price increases tend to be more persistent than increases in the prices of goods,” Raphael Bostic, president of the Federal Reserve Bank of Atlanta, noted in remarks last week.

Rising rental costs are a tricky issue for the Fed. Real-time data from websites such as ApartmentList suggest that rents on new leases are starting to decline.

But the government’s measure tracks all rent payments — not just those for new leases — and most of them don’t change from month to month. Economists say it could be a year or longer before the declines in new leases feed through to government data.
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The International Monetary Fund on Tuesday downgraded its 2023 world economic outlook, citing Russia’s ongoing war against Ukraine, widespread inflationary pressures and higher interest rates boosting borrowing rates for both businesses and consumers.

The 190-nation lending agency said it expects a meager 2.7% global growth rate next year, down from the 2.9% it projected in July. The IMF left its 2022 prediction unchanged, a modest 3.2% figure that would be only slightly more than half of last year’s 6% growth.

Aside from the peak of the COVID-19 pandemic in 2020, the IMF said it is “the weakest growth profile since 2001.The worst is yet to come, and for many people, 2023 will feel like a recession.”

More than a third of the global economy will see two consecutive quarters of negative growth in the coming year, the IMF predicted.

The downturn in the IMF forecast was no surprise. Growth is slowing in the world’s two biggest economies, the United States and China, while key economies in Europe are also facing economic headwinds. Russia is coping with debilitating sanctions imposed by the U.S. and its Western allies for its war against Ukraine, now in its eighth month.

IMF Managing Director Kristalina Georgieva, speaking as the IMF and the World Bank meet in Washington, warned that the “risks of recession are rising” around the world and that the global economy is facing a “period of historic fragility.”

With economic uncertainty and rapid consumer price increases in the U.S., the IMF cut its predicted growth for the American economy to 1.6% this year, down from the July projection of 2.3%. The IMF said it is expecting only 1% U.S. growth next year.

Throughout the world, the IMF is expecting consumer prices to increase by 8.8% this year, up from 4.7% in 2021.

The IMF said it foresees 3.2% growth in China this year, down sharply from 8.1% last year. China’s business growth has been disrupted by coronavirus controls and a crackdown on excessive real estate lending. China’s economy is predicted to grow by 4.4% next year, which is still modest compared to recent Chinese advances.

The IMF said it projects economic growth of just a half percentage point in the 19-nation European bloc that uses the euro currency. Its energy prices are sharply higher as it weans itself from fuel purchases from Russia in protest of Moscow’s invasion of Ukraine.

In the U.S., the Federal Reserve has imposed sharp increases in its key benchmark interest rate five times this year to curb inflationary pressures, on the theory that higher borrowing costs for businesses and consumers will cut their purchases and dampen the increase in consumer prices.
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Taiwan businessman Liao Chin-chang invested in factories in mainland China’s southern city of Dongguan for the last two decades, making everything from shoes to soccer balls and chemicals. Earlier this year, however, he decided it was time to go home to Taiwan.

Liao’s decision came as global tensions and their impact on trade, and the strict policies of Chinese President Xi Jinping, made doing business in China less predictable.

For Liao, the idea of leaving China gained momentum in 2021 when random and frequent power cuts started impacting factory production.

“Since last year, we’d lose power like three or four days a week,” he told VOA’s Mandarin service in an interview. “How can factories survive without power?”

He reached the limits of his patience following a two-month-long COVID-spurred lockdown in Shanghai, China’s biggest city, with a population of 26 million. The lockdown triggered a rare and loud pushback from the public that continues to this day as China sticks to what it calls a “zero-COVID policy.”

With Beijing’s strategy of dealing with COVID — on and off lockdowns around the country — China’s economy has slowed. It is only one of the reasons that a growing number of businesses have packed up or are considering leaving the world’s second-largest economy or redistributing their operations.

Other reasons include trade friction between the United States and China, increasing state control of private enterprises and Beijing’s military threats to Taiwan. China considers Taiwan a wayward province and has not ruled out an invasion.

Stay? Or go now?

A recent survey of more than 500 Taiwan companies released by the Center for Strategic and International Studies found that 25.7 percent of firms had already moved a part of their production or sourcing out of China, and 33.2 percent were thinking about doing so. About one-third said they were not moving.

According to the survey, a majority of those leaving China, 63.1 percent, were relocating to Southeast Asia. At 51.3 percent, Taiwan was the next most popular destination for companies relocating from mainland China.

“Taiwanese companies appear to be moving their businesses at numbers far higher than in the past,” the report found.

But they are not just moving out of China; a smaller percentage of firms are moving out of Taiwan, and some of those are heading to the mainland.

Surveys conducted by the European Chamber of Commerce and the American Chamber of Commerce in Beijing and Shanghai have highlighted similar trends.

The European Chamber of Commerce quoted Denis Depoux, global managing director of management consultant company Roland Berger, as saying, “It [China] is too big and too important to scale down.” The chamber found while doing business in China has become increasingly difficult for many foreign firms, two-thirds of European companies experienced revenue increases last year.

For Liao, it all traces back to Xi, his political ambitions, and tight social and economic policies.

“How can you still seal the whole city when the economy is so crushed? Liao asked. “There are so many ships anchored in the Shanghai harbor, the shipments can’t go in or out of the city. China’s economy froze in a matter of seconds. But Xi Jinping doesn’t care. He needs stability for his enthronement.”

On October 16, China will begin a nearly week-long party congress where Xi is expected to be given an unprecedented third five-year term as party chief. Xi’s third term will mark an end to a norm that began just about the time Liao first came to China — an end to a political cycle that steadied Beijing’s relationship with the world as it opened China for business and the nation became the second-largest economy.

The long journey west

Liao moved to China in 1995, when fierce competition pushed businesspeople from Taiwan to join an army of entrepreneurs who relocated there. Liao and others were lured by the prospect of cheap labor and the special status of being from Taiwan.

“The cost of hiring one worker in Taiwan would be enough to hire 50 workers in China,” Liao said. “I had to follow the flow to China because my competitors would do so to make their prices much more appealing.”

At one point, Dongguan’s Taiwan Business Investment Association had more than 3,000 member companies, making it the largest Taiwan business association in the world.

Liao said he remembers in the early days how the Chinese government had preferential policies for Taiwan entrepreneurs and local governments even set quotas for bringing in investments from the island.

“To be honest, Taiwanese businessmen were a very special class of people. They dared not upset us,” he said.

Over the last six years, he said, he saw his product prices drop more than 70%. He said the situation worsened when the power cuts and lockdowns started. During that time, Liao was also under increasing scrutiny from authorities when he discussed the issues on social media apps in China.

In the last few years in China, Liao said, he was invited to “have tea” with the police four times after his account on China’s WeChat social media platform was censored. To “have tea” is an indirect way for the Chinese police to question, interrogate, and sometimes threaten people they consider a danger to national security or social stability.

“They told me, we know in Taiwan you can criticize the president, but here in China it’s different, so please cooperate with us,” he said.

After returning to Taiwan, he began speaking out about his experiences on social media.

Liao observed that currently, people in China are eager to make money but nobody there feels secure.

Bo Gu in VOA’s Mandarin Service contributed to this story.
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As awareness grows around the world about the problem of food waste, one culprit in particular is drawing scrutiny: “best before” labels.

Manufacturers have used the labels for decades to estimate peak freshness. Unlike “use by” labels, which are found on perishable foods like meat and dairy, “best before” labels have nothing to do with safety and may encourage consumers to throw away food that’s perfectly fine to eat.

“They read these dates and then they assume that it’s bad, they can’t eat it and they toss it, when these dates don’t actually mean that they’re not edible or they’re not still nutritious or tasty,” said Patty Apple, a manager at Food Shift, an Alameda, California, nonprofit that collects and uses expired or imperfect foods.

To tackle the problem, major U.K. chains like Waitrose, Sainsbury’s and Marks & Spencer recently removed “best before” labels from prepackaged fruit and vegetables. The European Union is expected to announce a revamp to its labeling laws by the end of this year; it’s considering abolishing “best before” labels altogether.

In the U.S., there’s no similar push to scrap “best before” labels. But there is growing momentum to standardize the language on date labels to help educate buyers about food waste, including a push from big grocers and food companies and bipartisan legislation in Congress.

“I do think that the level of support for this has grown tremendously,” said Dana Gunders, executive director of ReFED, a New York-based nonprofit that studies food waste.

The United Nations estimates that 17% of global food production is wasted each year; most of that comes from households. In the U.S., as much as 35% of food available goes uneaten, ReFED says. That adds up to a lot of wasted energy — including the water, land and labor that goes into the food production — and higher greenhouse gas emissions when unwanted food goes into landfills.

There are many reasons food gets wasted, from large portion sizes to customers’ rejection of imperfect produce. But ReFED estimates that 7% of U.S. food waste — or 4 million tons annually — is due to consumer confusion over “best before” labels.

Date labels were widely adopted by manufacturers in the 1970s to answer consumers’ concerns about product freshness. There are no federal rules governing them, and manufacturers are allowed to determine when they believe their products will taste best. Only infant formula is required to have a “use by” date in the U.S.

Since 2019, the Food and Drug Administration — which regulates around 80% of U.S. food — has recommended that manufacturers use the labels “best if used by” for freshness and “use by” for perishable goods, based on surveys showing that consumers understand those phrases.

But the effort is voluntary, and the language on labels continues to vary widely, from “sell by” to “enjoy by” to “freshest before.” A survey released in June by researchers at the University of Maryland found at least 50 different date labels used on U.S. grocery shelves and widespread confusion among customers.

“Most people believe that if it says ‘sell by,’ ‘best by’ or ‘expiration,’ you can’t eat any of them. That’s not actually accurate,” said Richard Lipsit, who owns a Grocery Outlet store in Pleasanton, California, that specializes in discounted food.

Lipsit said milk can be safely consumed up to a week after its “use by” date. Gunders said canned goods and many other packaged foods can be safely eaten for years after their “best before” date. The FDA suggests consumers look for changes in color, consistency or texture to determine if foods are all right to eat.

“Our bodies are very well equipped to recognize the signs of decay, when food is past its edible point,” Gunders said. “We’ve lost trust in those senses and we’ve replaced it with trust in these dates.”

Some U.K. grocery chains are actively encouraging customers to use their senses. Morrisons removed “use by” dates from most store-brand milk in January and replaced them with a “best before” label. Co-op, another grocery chain, did the same to its store-brand yogurts.

It’s a change some shoppers support. Ellie Spanswick, a social media marketer in Falmouth, England, buys produce, eggs and other groceries at farm stands and local shops when she can. The food has no labels, she said, but it’s easy to see that it’s fresh.

“The last thing we need to be doing is wasting more food and money because it has a label on it telling us it’s past being good for eating,” Spanswick said.

But not everyone agrees. Ana Wetrov of London, who runs a home renovation business with her husband, worries that without labels, staff might not know which items should be removed from shelves. She recently bought a pineapple and only realized after she cut into it that it was rotting in the middle.

“We have had dates on those packages for the last 20 years or so. Why fix it when it’s not broken?” Wetrov said.

Some U.S. chains — including Walmart — have shifted their store brands to standardized “best if used by” and “use by” labels. The Consumer Brands Association — which represents big food companies like General Mills and Dole — also encourages members to use those labels.

“Uniformity makes it much more simple for our companies to manufacture products and keep the prices lower,” said Katie Denis, the association’s vice president of communications.

In the absence of federal policy, states have stepped in with their own laws, frustrating food companies and grocers. Florida and Nevada, for example, require “sell by” dates on shellfish and dairy, and Arizona requires “best by” or “use by” dates on eggs, according to Emily Broad Lieb, director of the Food Law and Policy Clinic at Harvard Law School.

The confusion has led some companies, like Unilever, to support legislation currently in Congress that would standardize U.S. date labels and ensure that food could be donated to rescue organizations even after its quality date. At least 20 states currently prohibit the sale or donation of food after the date listed on the label because of liability fears, Lieb said.

Clearer labeling and donation rules could help nonprofits like Food Shift, which trains chefs using rescued food. It even makes dog treats from overripe bananas, recovered chicken fat and spent grain from a brewer, Apple said.

“We definitely need to be focusing more on doing these small actions like addressing expiration date labels, because even though it’s such a tiny part of this whole food waste issue, it can be very impactful,” Apple said.
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Electric vehicle maker Tesla Inc sold 83,135 China-made vehicles in wholesale in September, smashing its record of monthly sales in China, according to a report released Sunday by the China Passenger Car Association (CPCA).

The number marks an 8% increase from August and outpaced the more than the 5% month-over-month growth of all wholesale electric vehicle sales in China, according to CPCA data.

It set a record for Tesla’s Shanghai factory since production began in December 2019, and topped the prior sales record of 78,906 in June, as the U.S. carmaker continues to invest in China production.

Globally, Tesla last week said it delivered 343,830 electric vehicles in the third quarter, a record for the world’s most valuable automaker, but less than the 359,162 analysts on average had expected, according to Refinitiv.

Tesla quickened its China deliveries after suspending most production at the Shanghai plant in July for an upgrade, which aimed to bring the factory’s weekly output to around 22,000 units compared with levels of around 17,000 in June, Reuters previously reported.

The plant, which manufactures Model 3s and Model Ys, reopened April 19 after a COVID lockdown, but only resumed full production in mid-June.

Production accelerated despite heatwaves and COVID curbs that hit its suppliers in the southwest region of the country.

China’s BYD continued to lead the domestic EV market with 200,973 wholesale sales in September, a nearly 15% jump from August, as CPCA said higher oil prices and government subsidies continue to encourage more consumers to choose electric vehicles.
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U.S. Treasury Secretary Janet Yellen said a decision by the OPEC+ grouping to cut oil production was “unhelpful and unwise” for the global economy, especially emerging markets, the Financial Times reported Sunday.

“We’re very worried about developing countries and the problems they face,” Yellen told the newspaper in an interview.

She also criticized allies for being slow to send financial aid to Ukraine.

“The pace of transferring money to Ukraine is far too slow,” Yellen added, pointing out that some countries that had pledged assistance had not got round to disbursing it.
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America’s employers slowed their hiring in September but still added a solid 263,000 jobs — potentially hopeful news that may mean the Federal Reserve’s drive to cool the job market and ease inflation is starting to make progress.

Friday’s government report showed that last month’s job growth was down from 315,000 in August and that the unemployment rate fell from 3.7% to 3.5%, matching a half-century low. Last month’s job gain was the smallest since April 2021.

September’s slightly more moderate pace of hiring may be welcomed by the Fed, which is trying to restrain the economy enough to tame the worst inflation in four decades without causing a recession. Slower job growth would mean less pressure on employers to raise pay and pass those costs on to their customers through price increases — a recipe for high inflation.

Still, the Fed would need to see more sustained evidence that hiring and pay gains are slowing before it would moderate its interest rate hikes as it fights inflation. In September, hourly wages rose 5% from a year earlier — the slowest year-over-year pace since December but still hotter than the Fed would want. The proportion of Americans who either have a job or are looking for one slipped slightly, a disappointment for those hoping that more people would enter the labor force and help ease worker shortages and upward pressure on wages.

Leisure and hospitality companies, including hotels, restaurants and bars, added 83,000 jobs last month. Health care and social assistance employers gained 75,000 jobs, factories 22,000. But governments cut jobs. Retailers, transportation and warehouse companies reduced employment modestly.

The public anxiety that has arisen over high prices and the prospect of a recession is carrying political consequences as President Joe Biden’s Democratic Party struggles to maintain control of Congress in November’s midterm elections.

In its epic battle to rein in inflation, the Fed has raised its benchmark interest rate five times this year. It is aiming to slow economic growth enough to reduce annual price increases back toward its 2% target.

It has a long way to go. In August, one key measure of year-over-year inflation, the consumer price index, amounted to 8.3%. And for now, consumer spending — the primary driver of the U.S. economy — is showing resilience. In August, consumers spent a bit more than in July, a sign that the economy was holding up despite rising borrowing rates, violent swings in the stock market and inflated prices for food, rent and other essentials.

Fed Chair Jerome Powell has warned bluntly that the inflation fight will “bring some pain,” notably in the form of layoffs and higher unemployment. Some economists remain hopeful that despite the persistent inflation pressures, the Fed will still manage to achieve a so-called soft landing: Slowing growth enough to tame inflation, without going so far as to tip the economy into recession.

It’s a notoriously difficult task. And the Fed is trying to accomplish it at a perilous time. The global economy, weakened by food shortages and surging energy prices resulting from Russia’s war against Ukraine, may be on the brink of recession. Kristalina Georgieva, managing director of the International Monetary Fund, warned Thursday that the IMF is downgrading its estimates for world economic growth by $4 trillion through 2026 and that “things are more likely to get worse before it gets better.”

Powell and his colleagues on the Fed’s policymaking committee want to see signs that the abundance of available jobs — there’s currently an average of 1.7 openings for every unemployed American — will steadily decline. Some encouraging news came this week, when the Labor Department reported that job openings fell by 1.1 million in August to 10.1 million, the fewest since June 2021.

Nick Bunker, head of economic research at the Indeed Hiring Lab, suggested that among the items on “the soft-landing flight checklist” is “a decline in job openings without a spike in the unemployment rate, and that’s what we’ve seen the last few months.”

On the other hand, by any standard of history, openings remain extraordinarily high: In records dating to 2000, they had never topped 10 million in a month until last year.

Economist Daniel Zhao of the jobs website Glassdoor argued that a single-minded focus on the job market might be overdone. Regardless of what happens with jobs and wages, Zhao suggested, the Fed’s policymakers won’t likely let up on their rate-hike campaign until they see proof that they’re actually hitting their target.

“They want to see inflation slowing down,” he said.
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U.S. President Joe Biden expressed his disappointment Thursday that OPEC+ nations intend to cut oil production targets by 2 million barrels a day but said the United States has alternatives and is exploring them.

“There’s a lot of alternatives. We haven’t made up our minds yet,” Biden told reporters at the White House, without elaborating.

Wednesday’s decision by the Organization of Petroleum Exporting Countries, along with Russia and other oil producers, to cut production targets could help Moscow fund its war in Ukraine and hurt Biden’s chances to further cut gasoline prices for American motorists ahead of next month’s nationwide congressional elections.

Opposition Republicans have blamed Biden and fellow Democrats for the higher gas prices as they try to wrest control from Democrats of one or both chambers of Congress.

In a July trip to the Mideast, Biden had pushed Saudi Arabia, the world’s second-biggest oil producer after the U.S., to hold the line against a production cut or even boost output to the global crude oil market to keep oil prices, which directly correlate to the price motorists pay for gasoline at service stations, from increasing.

Biden said, however, that he did not regret his stopover in Riyadh to meet with Saudi leaders.

“The trip was about the Middle East and about Israel and … rationalization of positions,” he said, while acknowledging the OPEC+ production cut “is a disappointment.”

Biden made the trip to Saudi Arabia even though during his presidential campaign in 2020 he branded the longtime U.S. ally as a “pariah” state for its role in the killing and dismemberment of dissident journalist Jamal Khashoggi, a Washington Post columnist, at the hands of Saudi agents in the country’s Istanbul Consulate in 2018.

One of Biden’s key congressional allies, Senator Dick Durbin of Illinois, voiced a more critical view of Saudi Arabia than Biden in the immediate aftermath of the oil production target cut.

“From unanswered questions about 9/11 & the murder of Jamal Khashoggi, to conspiring w/ Putin to punish the US w/higher oil prices, the royal Saudi family has never been a trustworthy ally of our nation,” Durbin said on Twitter. “It’s time for our foreign policy to imagine a world without their alliance.”

Durbin’s 9/11 reference was to the 2001 al-Qaida terrorist attacks on the U.S. that killed nearly 3,000 people. Fifteen of the 19 airline hijackers who carried out the attacks were Saudi nationals.

Three Democratic members of the House of Representatives, Tom Malinowski, Sean Casten and Susan Wild, called for an end to U.S. troop protection of Persian Gulf allies.

“If Saudi Arabia and the UAE want to help [Russian President Vladimir] Putin keep oil prices high, they should look to him for their defense,” the three lawmakers said.

Despite Biden’s diplomatic overtures in recent months to Saudi Arabia and the United Arab Emirates, they said, “they have now answered … with a slap in the face that will hurt American consumers and undermine our national interests.”

The OPEC+ coalition of 23 nations said the production cut, from 43.8 million barrels a day to 41.8 million, would take effect in November. It is the first time OPEC has cut oil production targets since the beginning of the coronavirus pandemic in March 2020, although the coalition of oil-producing countries has been undershooting its target by 3 million barrels a day this year.

With the production cut, the oil producers are hoping to curb the drop in world crude prices, which surged past $100 a barrel earlier this year but had fallen 32% in the last four months before increasing again in recent days in anticipation of the OPEC announcement.

With the drop in the price of crude over the summer months, gasoline station pump prices fell in the U.S., which in turn boosted Biden’s job approval rating as the country heads to the nationwide congressional elections on November 8.

A year ago in the U.S., gas prices averaged $3.20 a gallon (3.78 liters), and in some states fell to nearly that low in recent months. But now, with crude oil prices rising again, the national average is at $3.87 a gallon, according to the American Automobile Association.

While U.S. motorists are pinched by higher gas costs, Russia relies on gas and oil sales for a large portion of its budget to help fund its war in Ukraine. It supported the production cut, which will enable Moscow to sell oil for higher prices on the global market.
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