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In lush fields southwest of Paris, farmers are joining Europe’s fight to free itself from Russian gas.

They’ll soon turn on the tap of a new facility where crops and agricultural waste are mashed up and fermented to produce “biogas.” It’s among energy solutions being promoted on the continent that wants to choke off funding for Russia’s war in Ukraine by no longer paying billions for Russian fossil fuels.

Small rural gas plants that provide energy for hundreds or thousands of nearby homes aren’t — at least anytime soon — going to supplant the huge flows to Europe of Russian gas that powers economies, factories, business and homes. And critics of using crops to make gas argue that farmers should be concentrating on growing food — especially when prices are soaring amid the fallout of the war in Ukraine, one of the world’s breadbaskets.

Still, biogas is part of the puzzle of how to reduce Europe’s energy dependence.

The European Biogas Association says the European Union could quickly scale up the production of bio-methane, which is pumped into natural gas networks. An investment of 83 billion euros ($87.5 billion) — which, at current market prices, is less than the EU’s 27 nations pay per year to Russia for piped natural gas — would produce a tenfold increase in bio-methane production by 2030 and could replace about a fifth of what the bloc imported from Russia last year, the group says.

The farmers around the Paris-region village of Sonchamp feel their new gas plant will do its bit to untie Europe from the Kremlin.

“It’s not coherent to go and buy gas from those people who are waging war on our friends,” said Christophe Robin, one of the plant’s six investors, who farms wheat, rapeseed, sugar beets and chickens.

“If we want to consume green (energy) and to avoid the flows and contribution of Russian gas, we don’t really have a choice. We have to find alternative solutions,” he said.

Biogas is made by fermenting organic materials — generally crops and waste. Robin likened the process to food left too long in a container.

“When you open it, it goes ‘Poof.’ Only here, we don’t open it. We collect the gas that comes from the fermentation,” he said.

The gas from their plant could meet the needs of 2,000 homes. It will be purified into bio-methane and injected into a pipeline to the nearby town of Rambouillet, heating its hospital, swimming pool and homes.

“It’s cool,” said Robin. “The kids will benefit from local gas.”

Like in the rest of Europe, the production of bio-methane in France is still small. But it is booming. Almost three bio-methane production sites are going online every week in France on average and their numbers have surged from just 44 at the end of 2017 to 365 last year. The volume of gas they produced for the national network almost doubled in 2021 compared to the previous year and was enough for 362,000 homes.

France’s government has taken several steps to quicken bio-methane development since Russia invaded Ukraine on Feb. 24. The industry says bio-methane met almost 1% of France’s needs in 2021 but that will increase to at least 2% this year and it could make up 20% of French gas consumption by 2030, which would be more gas than France imported last year from Russia.

The Sonchamp farmers took out 5 million euros ($5.3 million) in loans and received a 1-million-euro state subsidy to build their plant, Robin said. They signed a 15-year contract with utility firm Engie, with a fixed price for their gas. That will limit their ability to profit from high gas prices now but ensures them a stable income.

“We’re not going to be billionaires,” said Robin.

Workers are finishing the construction and the plant is almost ready to be connected to the network. Piles of agricultural waste — wheat husks, pulped sugar beets, onion peelings, even chicken droppings — have been prepared to be fed into the giant bubble-like fermentation tanks.

Winter barley specially grown to make gas will make up about 80% of the 30 tons of organic material that will be fed each day into the plant.

Robin insists that the barley won’t interfere with the growing of other crops for food, which critics worry about. Instead of one food crop per year, they’ll now have three harvests every two years — with the barley as extra, sandwiched in between, Robin said.

In Germany, the biggest biogas producer in Europe, the government is cutting down on crop cultivation for fuels. The share of corn permitted in biogas facilities will be lowered from 40% to 30% by 2026. Financial incentives will be provided so operators use waste products such as manure and straw instead.

Germany is estimated to have over 9,500 plants, many of them small-scale units supplying rural villages with heat and electricity.

Andrea Horbelt, a spokeswoman for the German biogas association, said the production of bio-methane could be doubled in a matter of years but also wouldn’t be cheap.

“Using biogas for electricity is more expensive than solar and wind, and will always remain so,” she said.

At the end of their gas-making process, the Sonchamp farmers will also get nitrogen- and potassium-rich wastes from the fermenters that they’ll use to fertilize their fields, reducing their consumption of industrial fertilizer.

“It’s a circular economy and it’s green. That pleases me,” Robin said. “It’s a superb adventure.”
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A UN report recently warned 97% of Afghanistan’s population could sink below the poverty line.
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America’s employers added 428,000 jobs in April, extending a streak of solid hiring that has defied punishing inflation, chronic supply shortages, the Russian war against Ukraine and much higher borrowing costs.

Friday’s jobs report from the Labor Department showed that last month’s hiring kept the unemployment rate at 3.6%, just above the lowest level in a half-century.

The economy’s hiring gains have been strikingly consistent in the face of the worst inflation in four decades. Employers have added at least 400,000 jobs for 12 straight months.

At the same time, the April job growth, along with steady wage gains, will help fuel consumer spending and likely keep the Federal Reserve on track to raise borrowing rates sharply to try to slow inflation. Early trading Friday in the stock market reflected concern that the strength of the job market will keep wages and inflation high and lead to increasingly heavy borrowing costs for consumers and businesses. Higher loan rates could, in turn, weigh down corporate profits.

“With labor market conditions still this strong — including very rapid wage growth — we doubt that the Fed is going to abandon its hawkish plans,″ said Paul Ashworth, chief U.S. economist at Capital Economics.

The latest employment figures contained a few cautionary notes about the job market. The government revised down its estimate of job gains for February and March by a combined 39,000. And the number of people in the labor force declined in April by 363,000, the first drop since September. Their exit slightly reduced the proportion of Americans who are either working or looking for work from 62.4% to 62.2%.

Still, at a time when worker shortages have left many companies desperate to hire, employers kept handing out pay raises last month. Hourly wages rose 0.3% from March and 5.5% from a year ago.

Across industries last month, hiring was widespread. Factories added 55,000 jobs, the most since last July. Warehouses and transportation companies added 52,000, restaurants and bars 44,000, health care 41,000, finance 35,000, retailers 29,000 and hotels 22,000. Construction companies, which have been slowed by shortages of labor and supplies, added just 2,000.

Yet it’s unclear how long the jobs boom will continue. The Fed this week raised its key rate by a half-percentage point — its most aggressive move since 2000 — and signaled further large rate hikes to come. As the Fed’s rate hikes take effect, they will make it increasingly expensive to spend and hire.

In addition, the vast economic aid that the government had been supplying to households has expired. And Russia’s invasion of Ukraine has helped accelerate inflation and clouded the economic outlook. Some economists warn of a growing risk of recession.

For now, the resilience of the job market is particularly striking when set against the backdrop of galloping price increases and rising borrowing costs. This week, the Labor Department provided further evidence that the job market is still booming. It reported that only 1.38 million Americans were collecting traditional unemployment benefits, the fewest since 1970. And it said that employers posted a record-high 11.5 million job openings in March and that layoffs remained well below pre-pandemic levels.

What’s more, the economy now has, on average, two available jobs for every unemployed person. That’s the highest such proportion on record.

And in yet another sign that workers are enjoying unusual leverage in the job market, a record 4.5 million people quit their jobs in March, evidently confident that they could find a better opportunity elsewhere.

Still, the nation remains 1.2 million jobs short of the number it had in February 2020, just before the pandemic tore through the economy.

Chronic shortages of goods, supplies and workers have contributed to skyrocketing price increases — the highest inflation rate in 40 years. Russia’s invasion of Ukraine in late February dramatically worsened the financial landscape, sending global oil and gas prices skyward and severely clouding the national and global economic picture.

In the meantime, with many industries slowed by labor shortages, companies have been jacking up wages to try to attract job applicants and retain their existing employees. Even so, pay raises haven’t kept pace with the spike in consumer prices.

That’s why the Fed, which most economists say was much too slow to recognize the inflation threat, is now raising rates aggressively. Its goal is a notoriously difficult one: a so-called soft landing.
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Experts warn that the Federal Reserve’s efforts to tamp down inflation in the United States could have damaging effects, perhaps lasting several years, on developing economies around the world by encouraging capital flight, raising the rates on sovereign debt and destabilizing their currencies.

On Wednesday, the central bank announced that the Federal Open Market Committee, which sets the benchmark federal funds rate, had voted to increase the target rate by one-half of 1%, to between 0.75% and 1%. Further, the Fed indicated that it aimed to impose a series of additional half-point increases through the remainder of the year.

“Inflation is much too high, and we understand the hardship it is causing, and we are moving expeditiously to bring it back down,” Fed Chair Jerome Powell said in a news conference after the committee meeting Wednesday.

When Powell said that increases of more than 50 basis points were not currently part of the central bank’s plan, he offered some relief to those wondering whether the Fed might be considering even larger increases. Nevertheless, the prospect of the Fed going into full inflation-fighting mode has many concerned about the impact its actions might have on developing countries.

Multiple concerns

There are a number of reasons emerging markets might suffer when U.S. interest rates rise.

One is the prospect of capital flight. Investors who have invested in emerging markets to take advantage of higher rates of return may find investment in the U.S. more attractive as rates rise, prompting them to move capital to the U.S.

Higher interest rates in the U.S. can also result in higher rates globally. In April, the International Monetary Fund issued a report that found that 60% of low-income developing countries were either already experiencing debt distress or were at high risk of doing so. The report warned, “Past episodes suggest that rapid interest rate increases in advanced economies can tighten external financial conditions for emerging market and developing economies.”

Another danger to emerging economies in a rising interest rate environment is currency depreciation, which reduces purchasing power and increases the difficulty of servicing debt denominated in foreign currencies, such as the U.S. dollar.

Historical perspective

Economic historian Jamie Martin, an assistant professor at Georgetown University, told VOA that there is a strong historical correlation between sharp interest rate increases in the U.S. and catastrophic economic consequences in the developing world.

In the years after World War I, a rise in rates orchestrated in part by the Fed and the Bank of England helped reverse a recession in major industrialized countries. However, it resulted in several years of curtailed growth in nonindustrialized countries.

Similarly, the Fed’s aggressive rate hikes in the early 1980s successfully tamed double-digit inflation in the U.S. but pushed global interest rates so high that numerous developing countries, particularly in Latin America, defaulted on their debts.

In 2013, when then-Fed Chair Ben Bernanke hinted that rate increases were on the horizon, the impact on emerging markets was instant, with capital rapidly flowing out and currency instability setting in.

“History should counsel extreme caution,” Martin said. “Because, over as long as a century, when the U.S. Fed and other kinds of globally systemic central banks have moved to aggressively tighten monetary policy, almost every time, it’s had dramatic global effects. Particularly in what we have come to call developing economies.”

Fed research supports concern

The impact of U.S. rate increases on the developing world has not always been well understood. Paul Volcker, the Federal Reserve chairman who orchestrated the increasing of interest rates to nearly 20% in the 1980s, would later say that his focus had been on the U.S. and that the impact on the developing world hadn’t been part of his calculus.

“Africa was not even on my radar screen,” he said.

Now, though, the connections between actions by the Fed and the broader global economy are better understood.

In a 2021 article published by the central bank, Fed economists Jasper Hoek and Emre Yoldas, and Steve Kamin of the American Enterprise Institute noted that there are multiple instances in which rate increases in the U.S. have been shown to “increase debt burdens, trigger capital outflows, and generally cause a tightening of financial conditions that can lead to financial crises.”

While they didn’t find that economic crises in emerging markets always resulted from U.S. rate hikes, one of their observations would seem to apply to the current circumstances: “If higher rates are driven mainly by worries about inflation or a hawkish turn in Fed policy … this will likely be more disruptive for emerging markets.”

Pushed ‘over the edge’

Organizations that track the indebtedness of developing countries warn that conditions across the developing world are already dire. In particular, the effects of the coronavirus pandemic as well as a global spike in food prices exacerbated by the war in Ukraine have already created severe economic disruption.

A recent debt default by Sri Lanka has some concerned that further defaults may be coming.

“Many lower income countries have already been pushed into (a) deep debt crisis by the pandemic and rising energy and food prices,” Jerome Phelps, head of advocacy for the London-based Jubilee Debt Campaign, told VOA in an email exchange.

“They are diverting crucial resources away from healthcare and the needs of communities to debt payments, often to U.S. and European banks who stand to make large profits if repaid in full,” Phelps wrote. “Rising U.S. interest rates will push many over the edge by making their debt payments suddenly more expensive, for no fault of their own. We need urgent debt cancellation so that countries can prioritize recovery from the multiple crises they face.”
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Asian equities tumbled Friday following a rout on Wall Street fueled by worries over rising interest rates and surging inflation, while the pound extended losses the day after taking a beating on fears of a U.K. recession.

Global markets have been battered this year by a series of crises including surging inflation, rising interest rates, China’s economic slowdown and the war in Ukraine.

There was some relief after the Federal Reserve on Wednesday lifted borrowing costs 50 basis points — the most since 2000 — but suggested a feared 75-point lift was not on the agenda for now.

However, U.S. traders ran for the hills Thursday as they contemplated a period of fierce monetary tightening by the U.S. central bank as it struggles to contain inflation running at a more than 40-year high.

The Nasdaq — dominated by tech firms particularly sensitive to higher rates — lost 5%, while the Dow and S&P 500 fell more than 3%.

“Valuations become even more sensitive, very sensitive, when rates are going up and that is what we are experiencing,” Kristina Hooper, at Invesco, told Bloomberg Television.

“It’s just getting exacerbated as we get into the thick of monetary-policy tightening in the U.S.”

That sell-off filtered through to Asia, where Hong Kong tanked more than 3% as tech firms took a hit. Meanwhile, the European Chamber of Commerce in the city called the finance hub’s stringent pandemic travel restrictions and frequent flight bans a “nightmare” for businesses.

The remarks come a week after the Australian Chamber of Commerce recommended that Hong Kong follow the lead of Singapore or Japan by lowering quarantine requirements for business travelers.

Shanghai, Sydney, Seoul, Singapore, Wellington, Taipei and Manila also tanked. However, Tokyo ended the morning slightly higher.

Adding to the selling pressure was ongoing weakness in China’s economy caused by strict lockdowns and other containment measures as officials struggle to bring a COVID flare-up under control by sticking to a zero-COVID policy.

Various districts in Beijing told residents on Thursday to work from home, while Shanghai, the biggest city in the country, remains essentially shut down.

On currency markets the pound continued to struggle a day after plunging more than 2% in reaction to the Bank of England’s updated forecast that warned annual inflation would top 10% and the economy would contract later this year.

Crude rose after key oil producers led by Saudi Arabia and Russia refused to lift output more than their planned marginal increase as they weighed tight supply concerns caused by the Ukraine war.

“OPEC’s inability to ramp up production when desperately needed by the market is compounding an already dangerous supply deficit,” said Stephen Innes, of SPI Asset Management.

“This means geopolitical tensions will remain high, and while there are some demand-side risks at the moment, it seems likely that the threat of supply disruption will be the dominant driver at this time,” he said.
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A sharp sell-off left the Dow Jones Industrial Average more than 1,000 points lower Thursday, wiping out the gains from Wall Street’s biggest rally in two years, as worries grow that the higher interest rates the Federal Reserve is using in its fight against inflation will derail the economy. 

The benchmark S&P 500 fell 3.6%, marking its biggest loss in nearly two years, a day after it posted its biggest gain since May 2020. The Nasdaq slumped 5%, its worst drop since June 2020. The losses by the Dow and the other indexes offset the gains from a day earlier. 

“Yesterday’s sharp rally was not rooted in reality, and today’s dramatic selloff is a reversal of that misplaced exuberance,” said Ben Kirby, co-head of investments at Thornburg Investment Management. 

Wall Street’s breakneck day-to-day reversal reflects the degree of investors’ uncertainty and unease over the array of threats the economy is facing, starting with inflation running at the highest level in four decades, and how effective the Federal Reserve’s bid to tame higher prices by jacking up interest rates will be. 

On Wednesday, the Federal Reserve announced a widely expected half-percentage point increase in its short-term interest rate. Stocks bounced around following the move but then sharply rose as bond yields fell after Fed Chair Jerome Powell reassured investors by saying the central bank wasn’t considering shifting to more aggressive, three-quarter point rate hikes as the Fed continues with further rate increases in coming months. 

But whatever relief Powell’s remarks gave stock investors vanished Thursday. Stocks slumped and bond yields climbed. The yield on the 10-year Treasury note rose to 3.04%. Rising yields are sure to put upward pressure on mortgage rates, which are at their highest level since 2009. 

Investors remain uneasy about whether the Fed can do enough to tame inflation without tipping the economy, which is showing signs of slowing, into a recession. In addition to high inflation and rising interest rates, investors are grappling with uncertainty over lingering supply chain disruptions and geopolitical tensions. 

“The biggest issue is there are just a lot of moving parts and the unanswered question is to what extent as the Fed attempts to tame inflation will that result in economic slowing, and perhaps, a recession,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. 

The S&P 500 fell 153.30 points to 4,146.87, while the Nasdaq slid 647.16 points to 12,317.69. The Dow briefly skidded 1,375 points before closing down 1,063.09 points, or 3.1%, to 32,997.97. 

Smaller company stocks also fell sharply. The Russell 2000 fell 78.77 points, or 4%, to 1,871.15. 

 
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The U.S. central bank, the Federal Reserve, raised its benchmark interest rate by a half percentage point on Wednesday and scaled back its support for the American economy, a pointed effort to curb surging inflation in the world’s largest economy.

The interest rate increase, pushing its federal-funds rate to a target range between 0.75% and 1%, was the largest since 2000, and could quickly ricochet through the U.S. economy, increasing borrowing rates for businesses and consumers alike, with the goal of curbing spending and cutting inflation. The Fed usually increases interest rates in quarter-point increments.

The cost of consumer goods has been spiraling for months in the U.S., and an 8.5% year-over-year increase was recorded in March, the biggest jump in four decades. U.S. consumers are paying sharply higher prices for food, housing and gasoline at service stations, squeezing family budgets.

Aside from increasing the interest rate, the Fed said that starting next month it would scale back its $9 trillion asset portfolio in another move to curb inflation.

After a two-day meeting in Washington, the Fed said in a statement, “The invasion of Ukraine by Russia is causing tremendous human and economic hardship. The implications for the U.S. economy are highly uncertain.”

It added, “The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions” in world trade.

After the meeting, Fed chairman Jerome Powell said at a news conference that “inflation is much too high, and we understand the hardship it is causing.”

But he said the Federal Reserve has various measures it can take over the coming months to bring the inflation rate to the Fed’s 2% average target, but not so fast that it sends the U.S. economy into a recession.

Ahead of this week’s meeting, policymakers had already said they could raise interest rates several more times through the end of 2022 to slow the surge in consumer prices.
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Cars stuck on the assembly line. Delays in the delivery of dishwashers, refrigerators and game consoles. Consumers and businesses are feeling the pinch of the semiconductor shortage. The war in Ukraine could make the situation worse. Michelle Quinn reports.
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The head of Egypt’s Suez Canal Authority says the canal received record high revenues of more than $620 million dollars during April. Analysts say that’s partly due to Persian Gulf countries sending more oil and gas to Europe, as the Russia-Ukraine conflict reduces exports from those two countries.

Egypt’s Suez Canal Authority reported record revenues of $629 million for April 2022 with 1,929 ships passing through the canal, representing a 6.3% rise in traffic over April of last year.

Canal Authority head Osama Rabieh told Egyptian TV Tuesday that the Russia-Ukraine conflict weighed on the canal’s revenues in April, but that the “positive effects were more powerful than the negative.”

He says that he knew that the Russia-Ukraine conflict would have both positive and negative repercussions on Suez Canal revenues after the conflict started, but that fortunately the positive outweighed the negative and an increase in oil and gas shipments from the Gulf to Europe has outweighed the decrease in traffic from Russia and Ukraine via the canal.

Egyptian political sociologist Said Sadek tells VOA that the Ukraine conflict had a clear “impact on gas supplies passing through the Suez Canal (as) Europe attempted to wean itself from Russian gas and the Gulf states — particularly Qatar — began pumping more liquified natural gas (LNG) via tankers crossing the canal.”

Sadek also points out that with tensions rising across the world and food, fuel and insurance prices increasing, “it was natural Suez Canal tariffs would also rise.” The Suez Canal Authority has raised rates, year-over-year, since 2021.

Paul Sullivan, a Washington-based Middle East analyst, notes that oil and gas traffic from the Gulf will be increasingly important as the conflict continues and Europe needs to diversify its oil and gas sources

“As the situation in Europe continues to play out, what I would expect is that more LNG traffic would be going through the (Suez) Canal from even farther locales, because right now there’s a debate in Europe about cutting off gas (from Russia) entirely, and the Russians are constantly threatening to do that, and also oil coming in from the Gulf and elsewhere is obviously going to be increasingly important,” he said.

Sullivan adds that both Saudi Arabia and the United Arab Emirates have excess pumping capacity, and he thinks it is likely that they “will pump more oil as the market gets tighter due to the Russia-Ukraine conflict, going forward.” He thinks that Saudi Arabia is now holding off production increases for business reasons rather than political reasons, as some analysts suggest.

Khattar Abou Diab, who teaches political science at the University of Paris, tells VOA that the Russia-Ukraine conflict “has contributed to the increase of oil and gas flow through the Suez Canal to Europe, but also the gradual end of the COVID-19 crisis is also revitalizing many supply lines across the world, increasing container traffic through the canal, as well.”

Abou Diab also points out that the U.S. has “succeeded in persuading countries like Qatar and Australia to increase gas production in the direction of Europe and away from Asia,” further adding to Suez Canal traffic. 
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The pandemic and China’s zero-COVID-19 policy has caused ripple effects throughout the global supply chain. The fruit industry in Southeast Asia has been feeling the impact. VOA’s video journalists talked to the people involved, from farmers to truck drivers. This is their story. VOA’s Vietnamese, Cambodian and Thai Services contributed to this story.
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When Tesla’s Shanghai plant and other auto factories were shut over the last two months by emergency measures to control China’s biggest COVID-19 outbreak, the burning question was how quickly they could restart to meet surging demand.

But with the Shanghai lockdown grinding into its fourth week, and similar measures imposed in dozens of smaller cities, the world’s largest boom market for electric cars has gone bust.

Other companies from luxury goods makers to fast-food restaurants have also offered a first read on the lost sales and shaken confidence of recent weeks, even as Beijing rolls out measures to help COVID-hit industries and stimulate demand.

Joey Wat, CEO of Yum China, which owns KFC and Taco Bell, said in a letter to investors that April sales had been “significantly impacted” by COVID-19 controls. In response, the company simplified its menu, streamlined staffing and promoted bulk orders for locked-down communities, she said.

The pressing question now is: how and when will Chinese consumers start buying everything from Teslas to tacos again?

In China’s once-hot EV market, the recent turmoil is a stark example of a one-two economic punch, first to supply and then to demand, from Beijing’s hard-line implementation of COVID-19 controls across the world’s second-largest economy.

Before Shanghai was locked down in early April to contain a COVID-19 outbreak, sales of electric vehicles had been booming. Tesla’s sales in China had jumped 56% in the first quarter, while sales for EVs from its larger rival in China, BYD, had quintupled. Then came the lockdowns.

Showrooms, stores and malls in Shanghai were shut and its 25 million residents were unable to shop online for much beyond food and daily necessities due to delivery bottlenecks. Analysts at Nomura estimated in mid-April that 45 cities in China, representing 40% of its GDP, were under full or partial lockdowns, with the economy at a growing risk of recession.

The China Passenger Car Association estimated retail deliveries of passenger cars in China were 39% lower in the first three weeks of April from a year earlier.

COVID-19 control measures cut into shipments, car dealers held back from promoting new models, and sales tumbled in China’s richest markets of Shanghai and Guangdong, the association said.

“Much will depend on how fast these restrictions can be lifted but the coming weeks may be difficult,” Helen de Tissot, chief financial officer at French spirits maker Pernod Ricard, told Reuters on Thursday. 

Kering, which owns luxury brands including Gucci and Saint Laurent, said a “significant chunk” of its stores had been shuttered in April.

“It’s very difficult to predict what will happen after the lockdown,” said Jean-Marc Duplaix, Kering’s chief financial officer. 

Apple also warned at its latest results over COVID-19-hit demand in China. 

City authorities from Beijing to Shenzhen are trying to stimulate some demand by giving out millions of dollars’ worth of shopping vouchers to encourage residents to spend.

On Friday, Guangdong, a manufacturing powerhouse with an economy larger than South Korea’s, rolled out its own incentives to try to restart sales of EVs and plug-in hybrids.

These include subsidies of up to $1,200 for a select range of what China classes as “new energy vehicles,” including from Volkswagen and BYD. Tesla, second in EV sales in China, was excluded from the subsidy program.

The U.S. automaker did not respond to a request for comment.

Chongqing, another major auto manufacturing hub, in March said it would offer cash of up to $300 for shoppers who exchange old cars for new models and set aside another $3 million for other measures to spur sales.

While noting such measures, Credit Suisse analysts still said they believe COVID-19 control measures have put both online and offline consumption on a downward spiral.

“We see the consumer sector as being at major risk if the prolonged pandemic and further tightening continue across China,” they said in an April 19 research note.
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Germany says it’s making progress on weaning itself off Russian fossil fuels and expects to be fully independent of Russian crude oil imports by late summer.

Economy and Climate Minister Robert Habeck said Sunday that Europe’s largest economy has reduced the share of Russian energy imports to 12% for oil, 8% for coal and 35% for natural gas. Germany has been under strong pressure from Ukraine and other nations in Europe to cut energy imports from Russia that are worth billions of euros, which help fill Russian President Vladimir Putin’s war chest.

“All these steps that we are taking require an enormous joint effort from all actors and they also mean costs that are felt by both the economy and consumers,” Habeck said in a statement. “But they are necessary if we no longer want to be blackmailed by Russia.”

The announcement comes as the whole European Union considers an embargo on Russian oil following a decision to ban Russian coal imports starting in August.

Germany has managed to shift to oil and coal imports from other countries in a relatively short time, meaning that “the end of dependence on Russian crude oil imports by late summer is realistic,” Habeck’s ministry said.

Weaning Germany off Russian natural gas is a far bigger challenge.

Before Russia invaded Ukraine on Feb. 24, Germany got more than half of its natural gas imports from Russia. That share is now down to 35%, partly due to increased procurement from Norway and the Netherlands, the ministry said.

To further reduce Russian imports, Germany plans to speed up the construction of terminals for liquified natural gas, or LNG. The Energy and Climate Ministry said Germany aims to put several floating LNG terminals into operation as early as this year or next. That’s an ambitious timeline that the ministry acknowledged “requires an enormous commitment from everyone involved.”

Germany has resisted calls for an EU boycott on Russian natural gas. It also watched with worry last week as Moscow immediately halted gas supplies to Poland and Bulgaria after they rejected Russian demands to pay for gas in rubles. European officials called those moves by Russia “energy blackmail.”

Germany’s central bank has said a total cutoff of Russian gas could mean 5 percentage points of lost economic output and higher inflation.
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Germany said Sunday it has made progress in sharply reducing its reliance on Russian energy, a strategic shift Europe’s biggest economy has embarked on since Russia invaded Ukraine.

Russian supplies now make up 12 percent of Germany’s oil imports compared to 35 percent previously, the economy ministry said in a statement.

Coal from Russia has also been slashed to eight percent compared to 45 percent of Germany’s purchases previously.

Dependence on gas remains substantial, but Europe’s biggest economy had also reduced its Russian sources to 35 percent of the total compared to 55 percent before Russia’s aggression in Ukraine.

The government had in March laid out plans to halve oil imports from Russia by June and to end coal deliveries by the autumn.

Germany is also expected to be able to largely wean itself off Russian gas in mid-2024. 

“All these steps that we have taken require an enormous effect from all players and they also mean costs that are being felt by the economy and consumers,” said Economy Minister Robert Habeck.

“But they are necessary if we no longer want to be blackmailed by Russia,” he stressed. 

The reliance of Europe’s biggest economy on Russian energy has been exposed as an Achilles’ heel as Western allies scramble to penalize Vladimir Putin for his attack on Ukraine.

The export giant has since been racing to find alternative energy suppliers to replace Russian contracts.
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Billionaire finance guru Warren Buffett, who complained recently that he did not know where to put his money, said Saturday he has invested billions of dollars so far this year, even as he took jabs at Wall Street.

Buffett, 91, took questions for five hours at the much-anticipated annual shareholder meeting of his holding company Berkshire Hathaway in Omaha, Nebraska, its first in-person gathering since before the COVID-19 pandemic. He did so along with his right-hand man Charlie Munger, who is 98.

The event, dubbed a “Woodstock for Capitalists,” draws thousands of shareholders from around the world to hear the investment wisdom of Buffett, revered among investors as the “Oracle of Omaha.”

As markets vacillated since the start of the year, Berkshire Hathaway spotted bargains and bought shares worth more than $51 billion from January through March.

For example, it raised its investment in oil company Chevron from $4.5 billion in late 2021 to $26 billion in late March. Chevron is now among the top four of the holding’s investments, along with American Express, Apple and Bank of America. Berkshire Hathaway also acquired a 14% stake in Occidental Petroleum.

It bought an 11% stake in computer maker HP, as well, and increased its share of video game maker Activision — which is being acquired by Microsoft — to 9.5%.

Berkshire sold shares worth $10 billion over the same January to March period.

Bottom line, Berkshire’s war chest of cash on hand dropped from $147 billion to $106 billion.

But Buffett said investors need not worry because Berkshire “will always have a lot of cash” to weather hard times.

Joining him and Munger on the podium were vice president Greg Abel — at 59, he is Buffett’s designated successor — and company executive Ajit Jain.

Profits down

Buffett took some pot shots at Wall Street, saying, “They make a lot more money when people are gambling than when they are investing.”

He said the fact that his company acquired 14% of Occidental Petroleum in just two weeks shows that “overwhelmingly large companies in America, they became poker chips.”

Of cryptocurrencies, he said: “Whether it goes up or down in the next year or five or 10 years, I don’t know. But the one thing I’m pretty sure of is it doesn’t produce anything.”

The question of succession at Berkshire Hathaway is a big one because of the age of Buffett and Munger, but neither said anything about retiring.

Before the meeting, Berkshire said its net profit plunged by 53% in the first quarter due to a drop in the paper value of its investments.

Berkshire listed net profits of $5.5 billion, down sharply from the $11.7 billion of the year-earlier period.

Operating profits of companies owned by the conglomerate — ranging from insurance companies to energy providers and even frozen desserts — remained essentially unchanged, at $7.04 billion.

A drop in profits from insurance companies was compensated by profits from rail lines, energy firms, manufacturing, services and retail sales, said a statement from Berkshire Hathaway.

But the value of its investments, which can be volatile from one quarter to the next, plunged amid the year’s market weakness, leading to a paper loss of $1.58 billion.

Buffett regularly advises his shareholders to ignore quarterly fluctuations, whether positive or negative.

The value of Berkshire shares themselves has held up well— rising 7% since the beginning of the year, while the S&P 500 index, representing the 500 biggest Wall Street-traded firms, lost more than 13%. 
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Prices for Russian credit default swaps — insurance contracts that protect an investor against a default — plunged sharply overnight after Moscow used its precious foreign currency reserves to make a last-minute debt payment Friday.

The cost for a five-year credit default swap on Russian debt was $5.84 million to protect $10 million in debt. That price was nearly half the one on Thursday, which at roughly $11 million for $10 million in debt protection was a signal that investors were certain of an eventual Russian default.

Russia used its foreign currency reserves sitting outside of the country to make the payment, backing down from the Kremlin’s earlier threats that it would use rubles to pay these obligations. In a statement, the Russia Finance Ministry did not say whether future payments would be made in rubles.

Despite the insurance contract plunge, investors remain largely convinced that Russia will eventually default on its debts for the first time since 1917. The major ratings agencies Standard & Poor’s and Moody’s have declared Russia is in “selective default” on its obligations.

Russia has been hit with extensive sanctions by the United States, the EU and others in response to its Feb. 24 invasion of Ukraine and its continuing military operation to take over Ukrainian territory.

The Credit Default Determination Committee — an industry group of 14 banks and investors that determines whether to pay on these swaps — said Friday that they “continue to monitor the situation” after Russia’s payment. Their next meeting is May 3.

At the beginning of April, Russia’s finance ministry said it tried to make a $649 million payment due April 6 toward two bonds to an unnamed U.S. bank — previously reported as JPMorgan Chase.

At that time, tightened sanctions imposed for Russia’s invasion of Ukraine prevented the payment from being accepted, so Moscow attempted to make the debt payment in rubles. The Kremlin, which repeatedly said it was financially able and willing to continue to pay on its debts, had argued that extraordinary events gave them the legal footing to pay in rubles, instead of dollars or euros.

Investors and rating agencies, however, disagreed and did not expect Russia to be able to convert the rubles into dollars before a 30-day grace period expired next week.
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Nepal has banned imports of cars, alcohol and other luxury goods to conserve foreign exchange reserves as spiraling prices of fuel and food imports stemming from the war in Ukraine strain an economy already battered by the COVID-19 pandemic.

The Himalayan nation between India and China is the second South Asian country, after Sri Lanka, to face a foreign exchange crunch.

The goods that will not be imported include expensive televisions and mobile phones, the government said this week. The ban will remain in force until mid-July.

To conserve fuel, which Nepal imports, the work week in government offices has been shortened to five days.

“This is a short-term measure taken to prevent the economic condition of the country from going bad,” said Narayan Prasad Regmi, a senior official in the Industry, Commerce and Supplies Ministry.

Nepal’s central bank has said foreign exchange reserves are sufficient to cover just over six months of imports, down from 10 months in mid-2021. The landlocked nation of 29 million is heavily dependent on imports.

The government hopes the measures will help stave off a crisis like the one roiling Sri Lanka, where acute foreign exchange shortages have resulted in massive supply shortfalls, runaway price increases of fuel and food and a suspension of payments of its foreign debt.

Experts however call Nepal’s temporary ban on luxury goods and the shortening of the work week “desperate measures” that will not address the root cause of the problem that the economy faces.

“All this is only a quick fix and a Band-Aid over essentially what is a very big crack. The basic problem is that our imports far exceed our exports, so we face a huge balance of payments problem,” according to Santosh Sharma Poudel, co-founder of Nepal Institute for Policy Research.

Nepal’s foreign exchange crunch began during the COVID-19 pandemic. With tourism hit, earnings from foreign visitors plummeted in a country where more than a million tourists used to come before the pandemic.

Remittances sent by an estimated 3 million to 4 million Nepali migrants employed mostly in the Middle East and India have also taken a hit – before the pandemic they added up to as much as one-fourth of the country’s gross domestic product.

The war in Ukraine has added to its woes, as prices of both crude oil and food spiral in global markets — Nepal’s imports most of its essential needs, such as fuel, and food, such as cooking oil.

While Nepal’s economy is not as fragile as Sri Lanka’s, there is apprehension of what lies in store in one of the world’s poorest nations. The World Bank warned this week that the war in Ukraine is set to cause the “largest commodity shock” since the 1970s and “households across the world are feeling the cost-of-living crisis.”

They are households like that of Vijay Thapa, who works as a cook in New Delhi to support his family in a village in Nepal. “They can no longer manage in what I send. Prices of everything have spiked, whether it is cooking oil or wheat. Taxi fares have gone up by 50%.”

The situation is more worrisome for small countries, experts say.

“This is the second example in South Asia of how the war just after the pandemic is affecting us,” said Dhanajay Tripathi, a professor at the South Asian University in New Delhi.

“There are real worries for countries like Nepal because with smaller incomes it is harder for them to absorb the shock of high imports compared to larger countries such as India where the huge economy makes it possible to manage,” he said.

Analysts also warn that fixing the economy could be more difficult because Nepal also has some of the political problems that contributed to Sri Lanka’s crisis.

“We also have crony capitalism; corruption is high and there is political instability. That makes it harder to put long-term efficient policies in place,” Poudel said.

Economic mismanagement that led to the crisis in Sri Lanka has been blamed on the powerful Rajapaksa political dynasty that controls the government. Although some family members have resigned as ministers, President Gotabaya Rajapaksa and his brother Mahinda, who is prime minister, still hold the top posts.

In Nepal constant infighting among political parties has resulted in short-lived governments for the last three decades.  For much of last year, the country was mired in political turmoil and is presently ruled by a fragile five-party coalition.

Plummeting COVID-19 cases, though, have encouraged the country to lift restrictions on tourists. Tourism earnings are up, although still far below prepandemic levels. And as Middle East countries increase crude output after the pandemic, when demand had plunged, jobs are coming back for Nepalese nationals, which could mean remittances will again pick up.
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Chris Mei has been stuck in his Shanghai flat for a month save for PCR testing and occasional volunteer work delivering food to neighbors. That will change in a couple of days when he boards his flight for a long-scheduled trip home to Portland, Oregon.

He uses Zoom to do factory inspections for his 2-year-old import-export firm, Shanghai Fanyi Industry, but he can’t complete all the orders for clients overseas. He’s locked down like most of the 26 million people in the city, along with some of the factories where he normally sources goods, such as artificial plants and solar lights.

“In terms of how’s business, it’s definitely affected us,” Mei said. “Clients abroad always have deadlines, especially for some of our products.” He continued, “For example, for a shipment that recently went out, we had a portion of the order canceled due to the fact that the factory, they were on lockdown as well, so we basically could only produce what they could, and then the remaining part of the order basically passed the client’s deadline in South America.”

Leaving a city in lockdown has become an expensive, multistep process. Mei, a U.S. citizen, applied for permission to leave Shanghai by getting a pass from his neighborhood committee. He then found a driver with special permission to take him to the airport during lockdown – for about six times the usual price of that ride.

Shanghai’s residents have been ordered to stay home since early April in response to a spike in COVID-19 infections. Last week, authorities began easing restrictions in parts of the city to restore economic activity.

Mei’s case is typical, analysts who follow China say. Large numbers of foreign businesspeople in China are planning on leaving the country, for now or for good. The lockdowns have hammered an economy already hobbled by the 4-year-old Sino-U.S. trade dispute, capital outflows and last year’s crackdown on tech giants.

On March 18, That’s Shanghai, a local magazine, reported the results of an online survey saying 85% of foreigners in the city would “rethink their future in China” because of the lockdowns. The survey found that 48% of respondents plan to leave China over the next year and that 37% would wait in case anti-pandemic measures improve.

Risk seems to be increasing

Shipments through seaports in Shanghai and the Chinese tech hub Shenzhen, which locked down in March, have slowed because of a lack of workers and a shortage of truckers who are allowed to move imports and exports around the country.

Larger businesses can afford to wait in case lockdowns ease and China resumes its robust economic growth, said Doug Barry, communications vice president with the U.S.-China Business Council, a 265-member advocacy group in Washington.

Smaller companies are having more trouble because they depend on China’s advanced contract manufacturing ecosystem and cannot easily relocate, Barry said. He said some businesses have closed temporarily because so many workers can’t report to their jobs.

Others have spent money to help feed workers and even let them stay overnight at workplaces so they can report to their jobs the next day.

Overseas-based company leaders are staying away from their China projects because of quarantine rules, he said.

“Business in some cases has come to a complete stop,” Barry said. “The risk seems to be increasing, and the unknowns are also increasing and you’re looking at bottom lines and the future of things, and you’re wondering what to do.”

While foreign businesspeople are thinking of leaving, the significance of China to outside companies can be seen in the numbers. Foreign businesses invested $173.5 billion in China last year, up from $163 billion in 2020 and $140 billion a year earlier, according to the United Nations Conference on Trade and Development’s latest report.

Just more than 1 million foreign companies were registered in China at the end of 2020.

Companies normally relocate in China for contract manufacturing – which is seen as professional yet inexpensive – or to sell cars, coffee, phones and fashion apparel to the massive consumer market.

Incentives to stay

Mei will be back in Shanghai after a couple of months at home. By then, he expects there will be a “more solid” response to COVID-19 with clarity about people’s mobility.

Some people he knows have been called back to work in May, he said.

William Frazier, a 58-year-old U.S.-born owner of a business advisory firm in Shanghai, has lived in the city continuously since 2002.  He has no plans to leave the city even though he’s been locked down since March 16. Frazier has a spacious flat in a high-end compound, making life tolerable as he works though emails, phone and video conferences. The economic chaos has caused more clients to call him for information.

“No real significant impact, I would say, not for me,” Frazier said. “I don’t see hiccups. I see opportunities.”

Local officials in China want foreign investors to stay in the country, the U.S.-China Business Council has found. They are willing to meet and hear out American businesspeople, Barry said, though no government body has offered them any economic stimulus.

Sticking around will keep companies competitive after China returns to normal, he said.

If lockdowns in Shanghai end in May, more businesspeople are likely to stay in the city, said Yan Liang, professor and chair of economics at Willamette University in Salem, Oregon. Local and central government policymakers have the economic aftershocks of COVID-19 “on their radar,” she said.

“It’s just so important to be able to have a foothold in a large market like this,” Liang said. “And I think some of the sentiments (are) also that even though there are some maybe temporary or maybe more permanent slowdowns, the Chinese economy is still a really bright spot when you compare with other countries in the world.”

That makes the lure of the largest market in the world worth waiting for, for businesses that can afford to hold out until cities open again.
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