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Container ships anchored off the coasts of the United States have been told they could face a four-week delay before being allowed to dock and unload goods consumers are eagerly awaiting and the parts needed by American manufacturers.

Across the Atlantic in Britain, too, empty supermarket shelves, and frustrated drivers forming long lines at gas stations to fill up, tell a similar story of an unprecedented strain on cross-border global supply chains. 

The pandemic has wreaked havoc on the world’s traditional supply chains. Congestion at ports, factory closures, soaring freight charges and an acute shortage of transport workers is likely to get worse, the International Chamber of Shipping and allied transport groups have warned.

In a letter to the United Nations General Assembly last week, they warned of a “crumbling” global supply chain.

Before the pandemic, synchronized cross-border supply chains could be relied on to move goods, raw materials, and parts just before they were needed by stores and factories.

But the chains are snapping.

The continent of Europe is also facing disrupted supply chains, although not as critical at this stage as Britain, where post-pandemic delivery challenges have been intensified by trade disruption consequences of Brexit.

Labor shortage 

“The logistics sector lacks qualified personnel such as lorry drivers but also trained locomotive drivers, inland navigation workers, terminal workers, as well as management people,” Frank Huster, director of Germany’s main haulage association, told European broadcasters.

The EU transport industry reckons it has a shortfall of more than 300,000 qualified truck drivers.

From Los Angeles to London, Beijing to Berlin, countries are seeing a supply crunch rarely experienced outside wartime. According to the American freight industry the average time it takes now for a package to be sent from Asia to the U.S. has increased by 43% since last year.

The supply crunch is a consequence of a sudden surge in demand for goods, labor and energy as national economies emerge from the slowdown of the pandemic, say economists. That surge has strained the supply chains from assembly to delivery.

Factories in China and other Asian industrial hubs that have been trying to gear up rapidly amid soaring prices for energy, struggling with blackouts as they do so. Stores and supermarkets in Western countries are struggling to find sufficient shop staff. Transport companies are scrambling to find delivery drivers.

Now retailers in America and Europe are warning of increasing shortages as the logjams of container ships are prolonged and amid a labor shortage in the retail, leisure and entertainment sectors.

And the problem is likely to get worse before it gets better, say economists and business owners.

The U.S. and Europe are heading into the high consumer spending months of Thanksgiving and Christmas and retailers are already warning of insufficient supplies of electronic and sporting goods and even of Turkeys and Christmas trees.

Local factors have worsened the crunch in some cases. In America, Republican lawmakers say pandemic-related increases in unemployment benefits have contributed to the lack of workers. Others say low wages have prompted people to rethink their careers and for some approaching retirement age to drop out of the workforce.

Brexit fallout 

In Britain, the impact of Brexit — which has complicated the movement of goods and food between the U.K. and the 27 member states of the European Union — has become a source of contention between government ministers and business leaders.

The latter blame the government for having ill-planned Britain’s departure from the EU. Conservative cabinet ministers blame industry for empty shelves and gas shortages saying businesses should have prepared for a post-Brexit economy. They contend that the country’s supply crunch is a failure of the free market, and not the state. 

“When you talk about some of the supply chain issues, that’s really a function of the world economy, particularly the UK economy, coming back to life after COVID,” said British Prime Minister Boris Johnson Monday. “There is a shortage of lorry drivers actually around the world, from Poland to the United States, and even in China they are short of lorry drivers,” he added.

Local factors aside, though, some logistics experts say a global supply crunch has long been in the offing. They say supply chains, as they have developed, have lacked resilience and were overly vulnerable to economic shocks.

John Manners-Bell, chief executive of Transport Intelligence, a market research company that advises the World Bank and the United Nations on global logistics, says businesses and governments have neglected supply chains and failed to invest enough in them or update them. Transport and freight workers have for too long been poorly paid, he says.

“Whilst all attention is naturally focused on present supply chain disruption, there will be positives to come out of the chaos [hopefully],” he tweeted this week. Among them: “Governments will invest more in transport infrastructure and overhaul outdated working practices [especially in ports and shipping]” and “Companies will invest more in technologies that improve the current [poor] efficiency of transport assets especially trucking.”

He also hopes manufacturers will “recognize that single sourcing from China is not a good idea.” 
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With time ticking down on his term as chairman of the U.S. Federal Reserve Board, Jerome Powell’s reappointment to the post looks less certain than it did just a few weeks ago, as left-leaning Democrats hammer away at a series of scandals involving senior Fed personnel. 

On Monday, Powell’s chief antagonist in Congress, Senator Elizabeth Warren, released a letter to the head of the Securities and Exchange Commission asking the agency to investigate “ethically questionable” securities transactions by the presidents of two of the Federal Reserve’s district banks, and the Fed Board’s vice chairman. 

The letter came less than a week after Warren castigated Powell during a Senate Banking Committee hearing over what she sees as his lax regulatory approach toward large financial institutions.

“Your record gives me grave concerns,” Warren said, addressing Powell directly at the hearing. “Over and over, you have acted to make our banking system less safe, and that makes you a dangerous man to head up the Fed. And it’s why I will oppose your renomination.” 

Renomination still likely 

Powell’s four-year term as leader of the U.S. central bank will expire in February, and it has been broadly assumed that President Joe Biden would renominate him to another term. Experts say they still expect Powell to be renominated but feel less certain of that outcome than they did a few weeks ago. 

“I think he’s much more likely than not (to be renominated),” David Wessel, director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution, told VOA. “But it did move the needle a little bit, and not in his direction.”

“I still think it’s reasonable to assume that Powell is renominated, because he has enjoyed, for the most part, bipartisan support,” Mark Hamrick, senior analyst and Washington bureau chief for Bankrate.com, told VOA. 

“The Federal Reserve was relatively quick in responding to the dire financial conditions that were created by the pandemic lockdowns, and it fairly effectively and fairly quickly restored order to markets,” he said.

However, the questionable investing by Fed officials on his watch may be eroding what had been substantial support for Powell, even among generally progressive Democrats. 

In a note to clients last week, Karen Petrou, managing partner of Federal Financial Analytics, wrote, “One of Mr. Powell’s strengths in the renomination battle has been divisions among Democratic progressives, making this resonant scandal particularly costly to his otherwise-strong position within the Biden Administration.” 

Questionable trading 

Last month, the Fed announced an investigation of the central bank’s ethics policies after reports surfaced that the presidents of the Federal Reserve Banks of Boston and Dallas had been actively trading in the stock market and in real estate at the same time that they were helping to set the nation’s monetary policies. Both said their investment activities complied with all applicable laws and Fed guidelines, and both announced their retirement on September 27. 

On Friday, Bloomberg reported that Federal Reserve Board Vice Chairman Richard Clarida bought between $1 million and $5 million in stock the day before Powell made a major speech on efforts to help the U.S. economy recover from the pandemic.

When Bloomberg reported Clarida’s trading activity, the Fed issued a statement sayingthe transactions were part of a “a pre-planned rebalancing to his accounts” that were pre-cleared by the Fed’s ethics officials, and that the timing was coincidental. 

Powell addressed the trading activity of the two bank presidents during congressional hearings last week, noting that while the trading activity was technically within the rules established by the Fed, the appearance of the activity was “just obviously unacceptable.” 

“[T]he problem is that the rules, the practices and the disclosure needs to be improved,” Powell said during congressional testimony, adding, “We will rise to this moment.” 

Investigation demanded 

In her letter to the SEC, Warren called out Powell by name. 

“It is not clear why Chair Powell did not stop these activities, which corrode the trust and effectiveness of the Fed. The Fed officials’ trades clearly run afoul of Fed guidelines stating that officials should ‘avoid any dealings or other conduct that might convey even an appearance of conflict between their personal interests, the interests of the System, and the public interest,'” she said. 

While Warren may not ultimately succeed in derailing a renomination of Powell, a Republican who was appointed to his first term by former President Donald Trump, her efforts may still have a major impact on the Fed. The Biden administration has a number of important central bank appointments to make, in addition to the chair.

‘Personnel is policy’ 

“She’s clearly using this as a way to make it difficult for the administration to reappoint Powell,” Wesel said, adding, “It’s pretty clear that the Biden White House cares a lot about what Elizabeth Warren thinks. And it’s pretty clear that Elizabeth Warren has figured out that personnel is policy.” 

The Federal Reserve Board is made up of seven governors who are appointed by the president and serve overlapping terms of 14 years each. From among the sitting board members, the president also appoints the Fed’s chair, vice chair, and vice chair for supervision to four-year terms. 

There is currently one empty board seat, and another will open up when Clarida’s term expires in January. The four-year-term of the current vice chair for supervision will end October 13. 

Warren and others on the left have made it clear that they would prefer to see sitting Fed Governor Lael Brainard replace Powell as Fed chair. But if Biden were to make her the vice chair for supervision and promise to add more left-leaning members to the board, that might help assuage their concerns about a Powell reappointment, according to analysts.

“There’s going to be some horse trading around this,” said Jesse Van Tol, president of the National Community Reinvestment Coalition. “I can still see a scenario where the administration decides it’s in their interest to trade to get a few other Fed governors confirmed and leave Powell in place, if they believe they can trust him and work with him.” 

 
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The top United States trade negotiator said China is failing to live up to its trade commitments from last year and that Washington would soon have “frank conversations” with Beijing.  

In a speech Monday in Washington, U.S. Trade Representative Katherine Tai said, “China made commitments intended to benefit certain American industries, including agriculture, that we must enforce.” 

China committed to adding an extra $200 billion in purchases of U.S. exports as part of the Phase One trade deal negotiated during former President Donald Trump’s administration. 

Tai said China has fallen short of its purchase promises and said she would seek a meeting with her Chinese counterpart, Vice Premier Liu He, to review the matter. 

“Above all else, we must defend — to the hilt — our economic interests,” Tai said at Monday’s event, hosted by the Center for Strategic and International Studies. 

Continuing Trump’s approach   

William Adams, a senior vice president and senior economist with PNC Financial Services Group, characterized the overall message of Tai’s speech as “one of continuity with the Trump administration’s approach to U.S.-China trade relations.” 

U.S. President Joe Biden has kept the tariffs imposed by Trump in place while Tai conducted a months-long review of U.S. trade policy with China.    

Tai said Monday that going forward, the Biden administration would exclude some Chinese imports from tariffs imposed by Trump. Most previous tariff exclusions expired at the end of last year. 

While she rejected the idea of Phase Two talks, as envisioned by Trump, to discuss China’s domestic subsidies and other matters, she said such issues would still be part of U.S. talks with China going forward.  

U.S. trade groups, which had been pushing the Biden administration to move quickly in laying out its China trade policy, largely welcomed Tai’s remarks.

“We applaud her readiness to engage in discussions with her Chinese counterparts” on trade issues, and “we agree with Ambassador Tai that China must be held accountable for their commitments under the Phase One agreement,” Doug Barry, spokesman for US-China Business Council, told VOA.   

However, Barry said that his organization was still concerned about the possibility of more tariffs and that exclusions to tariffs were particularly important for farmers in the Midwest. 

Tai did not rule out opening new investigations under Section 301 of the Trade Act of 1974, which could lead to new sanctions against China.  

‘Zero-Sum Dynamic’

One source of tension is the subsidies China gives to industries including steel, solar and semiconductors which make it harder for U.S. companies to compete on the global market.  

Tai described the situation as a “zero-sum dynamic” where “China’s growth and prosperity come at the expense of workers and economic opportunity here in the U.S. and other market-based democratic economies.” 

In the past, Chinese President Xi Jinping has said it is important to the country’s national security to make Chinese goods essential to global supply chains.  

“The dependence of the international industrial chain on our country has formed a powerful countermeasure and deterrent capability for foreign parties to artificially cut off supply,” Xi said in a speech in 2020. 

In recent weeks as China has cracked down on its tech sector, Chinese Vice Premier Liu He sought to reassure business leaders that government support for industry will continue. “Guidelines and policies for supporting the private economy have not changed… and will not change in the future,” Liu said according to a report from Xinhua news agency. 

‘May Not Change’ 

Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, told VOA in an interview that Tai was “very critical” of Chinese subsidies and that her zero-sum view of China is “very much in the thinking of the Trump administration.”   

Tai’s speech also highlighted the Biden’s administration’s goal of working closer with allies to confront China, a difference from the Trump administration’s approach.    

“The core of our strategy is a commitment to ensuring we work with our allies to create fair and open markets,” Tai said.    

Tai said the United States would also focus on investing in U.S. workers and infrastructure across the country to “give American workers and businesses the boost needed to embrace their global competitiveness.” 

She described the U.S.-China trade relationship as “one of profound consequence” and said the objective of engaging with China is “not to inflame trade tensions.” 

“As the two largest economies in the world, how we relate to each other does not just affect our two countries. It impacts the entire world and billions of workers,” she said.  

A senior Biden administration official told reporters Monday that China is “increasingly explicit that it is doubling down on its authoritarian, state-centric approach and is resistant to addressing our structural concerns.”   

The official said, “We recognize that China simply may not change, and that we have to have a strategy that deals with China as it is rather than as we might wish it to be.” 

Yinan Wang, Lin Yang and Forest Cong of the Mandarin Service contributed to this report. 
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World leaders, politicians and pop stars are among the thousands of individuals revealed to be concealing huge wealth through a network of anonymous companies.

The documents, known as the Pandora Papers and published Sunday, are part of a leak of almost 12 million files from the archives of several legal firms, which shed light on the secret world of offshore finance. They are being analyzed by a team of more than 600 journalists.

Among the most startling revelations in the Pandora Papers is the hidden wealth of the president of Azerbaijan, Ilham Aliyev, and his family. The leaks show the Aliyevs and their associates traded property in Britain worth $544 million over the past 15 years.

“Since this family took power in 1993, they have taken control of many of the country’s vital industries and its natural resources and used that to amass wealth,” said Rachel Davies Teka, head of advocacy at the anti-corruption campaign group Transparency International UK. “And this is being done at the expense of the people of that country. There are people who are suffering because their leaders are taking resources which should be shared out amongst those countries’ citizens,” Davies Teka told VOA.

Jordanian king’s property empire 

The leaked documents show that King Abdullah II of Jordan has a secret property empire in the United States and Britain worth more than $100 million, using anonymous offshore companies incorporated in the British Virgin Islands in the Caribbean. In a statement, the Jordanian royal palace said that the foreign properties were not disclosed for security and privacy reasons, adding that they were purchased using the monarch’s private wealth. 

During a meeting with tribal elders Monday, Abdullah rejected allegations he had tried to conceal his wealth. “Unfortunately, there is a campaign against Jordan; there are still people who want to sow discord and build doubt between us. There is nothing I have to hide from anyone, but we are stronger than this, and this is not the first time Jordan gets targeted,” the king said. 

Pakistani Cabinet ministers and their families, including close allies of Prime Minister Imran Khan, are revealed to own offshore companies worth millions of dollars. Khan said they would be investigated.

Czech Prime Minister Andrej Babiš, the country’s second-richest person, used anonymous offshore companies to finance the purchase of an $18 million property in France. Babiš is competing in a general election this week. In a televised debate with rival candidates, he defended his actions.

“The money was sent out of a Czech bank. The money was taxed. It was my money and it returned back to the Czech Republic,” he told the television audience in Prague on Sunday. 

Kenyan President Uhuru Kenyatta and six members of his family are linked to more than a dozen offshore companies, one with assets worth at least $30 million. There is no evidence that the Kenyatta family stole any state assets.

In a statement issued by the office of the president, Kenyatta welcomed the publication of the Pandora Papers. 

“These reports will go a long way in enhancing the financial transparency and openness that we require in Kenya and around the globe. The movement of illicit funds, proceeds of crime and corruption thrive in an environment of secrecy and darkness. The Pandora Papers and subsequent follow up audits will lift that veil of secrecy and darkness for those who cannot explain their assets or wealth,” the statement read.

Music stars, including Shakira and Elton John, and Indian cricket legend Sachin Tendulkar are also revealed to have set up offshore companies. There is no suggestion of wrongdoing concerning any of their financial activities.

Much of the activity revealed by the Pandora Papers, including use of offshore companies, is legal. Governments must do more to reveal hidden wealth, argues Davies Teka.

“This investigation and what these journalists have uncovered is vital because, unfortunately, governments, particularly in the West, are not doing enough to bring transparency to where all this money is moving to — where this money is being hidden,” she told VOA.

Role of London 

One thread that is common to many of the revelations is London. The capital and the British Overseas Territories linked to it, such as the British Virgin Islands, offer a hidden network of legal structures designed to conceal who really owns the money, says Davies Teka.

“You can buy property anonymously if you use a company that’s registered and formed in an overseas territory where there is currently secrecy. We also have luxury services on offer to the global elite, and, unfortunately, we have a concerning amount of professionals, accountants, lawyers, estate agents who are happy to help corrupt and criminal actors launder and hide and manage their wealth.”

The British government has put forward legislation to prevent individuals from using offshore companies to conceal ownership. “However, for three years now they have hesitated to lay this legislation down in parliament and actually pass it, which raises questions about how serious they really are about tackling this problem,” Davies Teka said. 

Britain’s ruling Conservative Party has become embroiled in the accusations after the leaks revealed party donors were linked to alleged corruption. Speaking at the start of the weeklong Conservative Party conference Monday, Prime Minister Boris Johnson rejected accusations that his party had accepted corrupt money.

“All I can say on that one is that all these donations are vetted in the normal way,” he told reporters.

British Chancellor Rishi Sunak denied that London’s reputation on tax avoidance was “shameful” and said the government had a strong track record on tackling global corruption. 
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Trading in shares of heavily indebted China Evergrande was suspended on Monday, days after some bondholders said the property developer at the center of jitters over China’s financial system had missed a second key bond interest payment. 

Shares of its unit Evergrande Property Services Group were also suspended, the Hong Kong stock exchange said. The bourse didn’t say why trading in the companies’ stock had been halted, and it was unclear who had initiated the suspension. 

Evergrande did not immediately respond to a request for comment. 

With liabilities stretching into hundreds of billions of dollars, equal to 2% of China’s gross domestic product, Evergrande has sparked concerns its woes could spread through the financial system and reverberate around the world. Initial worries have eased somewhat after China’s central bank vowed to protect homebuyers’ interests. 

Monday’s share trading suspension sent a shiver through broader financial markets, which remain nervous about contagion, knocking the offshore yuan a little lower and weighing on the Hang Seng benchmark index and especially financials and other developers. Guangzhou R&F Properties Co Ltd fell 7%, Sunac China Holdings and Country Garden each fell 4%. 

Shares in Evergrande have plunged 80% so far this year, while its property services unit has dropped 43% as the group scrambles to raise funds to pay its many lenders and suppliers.   

Stock in its electric vehicle unit, China Evergrande New Energy Vehicle Group, fell as much as 8% early on Monday before paring losses. 

The cash-strapped group said on Sept. 30 that its wealth management unit had made a 10% repayment of wealth management products, which are largely owned by onshore retail investors, that were due by the same date. 

Once China’s top-selling property developer and now expected to be the subject of one of the largest-ever restructurings in the country, Evergrande has been prioritizing domestic creditors over offshore bondholders. 

The two offshore payments, which bondholders said failed to arrive by their due date, come as the company, which has nearly $20 billion in offshore debt, faces deadlines on dollar bond coupon payments totaling $162.38 million in the next month. 

Beijing is prodding government-owned firms and state-backed property developers to purchase some of Evergrande’s assets, sounding them out either directly or indirectly about asset purchases, people with knowledge of the matter told Reuters last Week. 

Meanwhile Chinese property group Hopson Development said in a statement on Monday it had suspended trading in its shares, pending an announcement related to a major acquisition by Hopson of a Hong Kong-listed firm and a possible mandatory offer. 

It was unclear whether the deal was related to Evergrande Group, and Hopson did not respond to a request for further comment. 

Shares of Hopson, which has a market value of $7.8 billion, have jumped 40% so far this year. 
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British Prime Minister Boris Johnson said on Sunday he would not return to “uncontrolled immigration” to solve fuel, gas and Christmas food crises, suggesting such strains were part of a period of post-Brexit adjustment. 

At the start of his Conservative Party’s conference, Johnson was again forced to defend his government against complaints from those unable to get petrol for their cars, retailers warning of Christmas shortages, and gas companies struggling with a spike in wholesale prices. 

The British leader had wanted to use the conference to turn the page on more than 18 months of COVID-19 and to refocus on his 2019 election pledges to tackle regional inequality, crime and social care. 

Instead, the prime minister finds himself on the back foot nine months after Britain completed its exit from the European Union — a departure he said would give the country the freedom to better shape its economy. 

“The way forward for our country is not to just pull the big lever marked uncontrolled immigration, and allow in huge numbers of people to do work … So, what I won’t do is go back to the old, failed model of low wages, low skills supported by uncontrolled immigration,” he told BBC’s Andrew Marr Show. 

“When people voted for change in 2016 and … again in 2019 as they did, they voted for the end of a broken model of the UK economy that relied on low wages and low skill and chronic low productivity, and we are moving away from that.” 

It was the closest the prime minister has come to admitting that Britain’s exit from the EU had contributed to strains in supply chains and the labor force, stretching everything from fuel deliveries to potential shortages of turkeys for Christmas. 

“There will be a period of adjustment, but that is I think what we need to see,” he said. 

But he was clear he would not open the taps of immigration to fill such gaps, again shifting the responsibility to businesses to lift wages and attract more workers. 

Shortages of workers after Brexit and the COVID-19 pandemic have sown disarray in some sectors of the economy, disrupting deliveries of fuel and medicines and leaving more than 100,000 pigs facing a cull due to a lack of abattoir workers. 

Conservative Party chair, Oliver Dowden, said that the government was taking measures to hire more truck drivers in general and that the government had started training military tanker personnel to start fuel deliveries on Monday. 

“We will make sure that people have their turkey for Christmas, and I know that for the Environment Secretary George Eustice this is absolutely top of his list,” he told Sky News. 

Rather than the reset Johnson hoped to preside over in the northern English city of Manchester, the conference looks set to be overshadowed by the supply-chain crises and criticism of the government’s withdrawal of a top-up to a state benefit for low-income households. 

Johnson may also come under fire for breaking with the Conservatives’ traditional stance as the party of low taxes after increasing them to help the health and social care sectors. 

“We don’t want to raise taxes, of course, but what we will not do is be irresponsible with the public finances,” he said. 

“If I can possibly avoid it, I do not want to raise taxes again, of course not.” 

 
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Life in the United States in 2021 seems more normal than the year before. The arrival of vaccines means the relaxing of rules for restaurant goers and sports enthusiasts. Even the impact of the delta variant is much less on the U.S. economy than in 2020 when shutdowns forced small businesses to close temporarily or permanently. Yet during the peak of the 2020 pandemic, a few people opened businesses, including these in California, and persevered through the odds.

Camera: Michelle Quinn, Roy Kim
Contributor: Mike O’Sullivan
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U.S. President Joe Biden said on Saturday he was going to “work like hell” to get both an infrastructure bill and a multi-trillion-dollar social spending bill passed through Congress and plans to travel more to bolster support with Americans.

Biden visited the Capitol on Friday to try to end a fight between moderates and left-leaning progressives in his Democratic Party that has threatened the two bills that make up the core of his domestic agenda.

The president on Saturday acknowledged criticism that he had not done more to gin up support for the bills by traveling around the country. He noted there were many reasons for that, including his focus on hurricane and storm damage during recent trips, among other things.

Biden said he would be going around the country “making the case why it’s so important” and making it clearer to people what is in the two bills.

He said he wanted with the bills to make life more livable for ordinary Americans by making child care affordable, for example.

“There’s nothing in any of these pieces of legislation that’s radical, that is unreasonable,” Biden said. “I’m going to try to sell what I think the people, the American people, will buy.”

Biden expressed confidence that both bills would get passed but declined to set a deadline, such as the November Thanksgiving holiday, for when that would happen.

“I believe I can get this done,” Biden said.

Moderate Democratic lawmakers wanted an immediate vote on a $1 trillion infrastructure bill in the House of Representatives that has already passed the Senate, while progressives want to wait until there is agreement on a sweeping $3.5 trillion bill to bolster social spending and fight climate change.

Biden, a former senator who is deeply familiar with how the legislative process works, told his caucus on Friday that they could delay a vote on the smaller bill and sharply scale back the larger one to around $2 trillion.

Meanwhile the president said on Saturday he hoped Republicans would not use a filibuster in the Senate to block efforts to raise the debt ceiling.

“That would be totally unconscionable,” he said.

The Treasury Department estimates that it has until about Oct. 18 for the government’s $28.4 trillion borrowing limit to be raised by Congress or risk a debt default with potentially catastrophic economic consequences.
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Since China’s government declared all cryptocurrency transactions illegal last week and banned citizens from working for crypto-related companies, the price of bitcoin went up despite being shut out of one of its biggest markets.

Experts say large-scale Chinese miners of cryptocurrency — the likes of Bitcoin and Ethereum — will take their high-powered, electricity-guzzling servers offshore. Exchanges of the digital money and the numerous Chinese startups linked to the trade also are expected to rebase offshore after dropping domestic customers from their rosters.

The shift highlights how virtual currencies can evade government regulation.

“The exchanges have been pushing offshore anyways, and with the exchange business you need cloud infrastructure, you need developers, you need management to move things in the right direction, and so whether that is sitting in Taipei, San Francisco, Singapore or Shanghai, it doesn’t really matter — those businesses are very virtual,” said Zennon Kapron, Singapore-based founder the financial consulting firm Kapronasia.

“The real impact we’ve probably seen though is in the miners, and most of those miners [are in] the process of shifting overseas or [have] already completed moving overseas,” he said.

Strongest anti-crypto action to date

On Sept. 24, the People’s Bank of China, Beijing’s monetary authority, released a statement saying cryptocurrencies lack the status of other monetary instruments. The notice, issued in tandem with nine other government agencies, including the Bureau of Public Security, declared all related business illegal and warned that cryptocurrency transactions originating outside China will also be treated as crimes.

Explaining the ban, China’s official Xinhua News Agency reported Friday that cryptocurrencies have disrupted the controlled economy’s financial systems and contributed to crimes such as money laundering.

Cryptocurrencies — digital commerce tools that aren’t linked to a centralized banking authority — first appeared in China around 2008. Chinese banks began to prohibit the use of digital currencies in 2013 and stepped up regulations after 2016.

China was the world’s biggest Bitcoin miner and supported the largest exchange by volume, according to the news website CryptoVantage. It says many of those who suddenly made millions when Bitcoin prices soared four years ago were in China.

Chinese miners and traders head to Singapore

The Chinese ban carries penalties for international exchanges that do business with people inside China, and news reports indicate international crypto exchanges are trying to cut ties with Chinese clients in recent days. But the companies themselves are largely staying quiet.

A spokesperson for digital currency exchange Coinbase said Wednesday it does not “have anything to share at this time” about the crackdown in China. U.S.-based Worldcoin Global, a new type of cryptocurrency, did not reply to a request for comment.

China’s growing pressure on crypto over the past few years had prompted stakeholders to leave the country, Kapron said, adding that less than a quarter of the country’s original cryptocurrency peer-to-peer lending startups — small firms that connect individual lenders and borrowers — remain in China.

Mining for digital currency — the process of using computers to enter bitcoins into circulation and verify cryptocurrency transactions in exchange for a payout — should get easier overseas as Chinese exit the market, Kapron said.

Smaller operators, he added, may be able to mine more easily without the competition of giant Chinese operations.

Singapore looms as a prime go-to place for operations that need not be physically onshore. The country had accepted about 300 cryptocurrency license applications as of July. From China, e-commerce giant Alibaba as well as digital financial firms Yillion Group and Hande Group have applied, news reports in Asia say.

Other Asian countries lack the legal welcome mat that Singapore has extended, said Jason Hsu, vice president of the Taiwan Fintech Association industry group.

“Where would that money flow to? I think it’s a question that needs to be answered,” Hsu said. “I think in Asia, Singapore would be a destination for them to go to. Singapore obviously has the clearest regulations and also wants to attract more digital fintech [financial-technology] companies.”

Outside Asia, Amsterdam and Frankfurt are “establishing their footprint as international centers” for financial technology, said Rajiv Biswas, Asia Pacific chief economist with market research firm IHS Markit. Financial technology covers cryptocurrency.

Western Europe ranked this year as the world’s biggest crypto economy in the world with inflows of more than $1 trillion or 25% of all global trade, activity, news and data service Chainalysis says. Europe’s surge follows similarly rapid growth in 2020.

Eventual resurgence for crypto in China?

Authorities in China are targeting crypto now as part of a wider “crackdown on overnight riches” and to “clean out the wild, wild West,” Hsu said, referring to largely unregulated market sectors. The trade will go underground for now, he forecasts, and China will eventually come out with an official digital currency issued through major banks.

Several countries are considering adopting new digital currencies that would allow people to exchange money without an intermediary, such as a bank. Proponents argue these currencies could capture the benefits of cryptocurrencies that make exchanging money easy, but without the price volatility of decentralized digital assets like bitcoin.

Chinese authorities may eventually swing to a more tolerant view of non-state-sanctioned digital currencies, though subject to strict criteria on what’s legal or otherwise, said Song Seng Wun, economist in the private banking unit of Malaysian bank CIMB. Blockchain, the core technology behind the public transaction ledger that makes crypto commerce transparent, could continue to develop in China for other ends, he added. 

 
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During the three-day World Internet Conference held in Wuzhen, China, this week, the country’s biggest tech tycoons rushed to show their support for Beijing’s “common prosperity” initiative.

Their enthusiasm for the initiative comes amid a yearlong crackdown on the country’s tech industry, where several high-profile companies have faced investigations and fines. Formerly high-flying celebrity CEOs are now keeping a low profile.

Daniel Zhang, CEO at e-commerce giant Alibaba group, said his company’s donation of $15 billion to the initiative over the next five years represented its willingness to help China achieve its goal of prosperity for all.

Zhou Hongyi, billionaire entrepreneur and chairman and CEO of the country’s largest Internet security firm, Qihoo 360, said his company will donate an as yet undisclosed sum to the initiative and step up to help smaller firms thrive.

Stressing the need to develop these enterprises, Zhou said, “Our success depends on our country’s policies. … We must take the initiative to align our development with our national strategies and serve our country with science and technology.”

Lei Jun, CEO of consumer electronics manufacturer Xiaomi, said that technological development must be used to achieve social good and that tech companies should help build a good life for everyone.

Other tech giants, such as technology conglomerate Tencent, online agricultural marketplace Pinduoduo and food delivery platform Meituan, answered Beijing’s call before the Sept. 26-28 gathering, pledging financial support for social causes.

‘Common prosperity’ initiative

During his first eight years in office, Chinese President Xi Jinping occasionally mentioned the term “common prosperity.” Since February, when he declared China had eliminated poverty, “common prosperity” has become one of his favorite themes.

At a meeting of the Communist Party’s Central Committee for Financial and Economic Affairs on Aug. 17, Xi stressed that those who are already rich need to guide and help others achieve prosperity.

“Common prosperity means prosperity for all, not just a few people,” Xi said, according to a meeting note published by China’s state-run Xinhua News Agency. “We can allow some to get rich first, but we must then launch a scientific public policy to make sure every citizen can have their fair share.”

Central to achieving common prosperity is a concept known as the three distributions, first introduced by the Chinese economist Li Yining in the 1990s.

According to the explanation from China’s National Development and Reform Commission, the first distribution of wealth comes through market competition. The second is achieved through the state via taxes, subsidies and social welfare programs. The third distribution taps enterprises and individuals to redistribute their wealth through voluntary donations.

‘Third distribution’

“The target of this round of the common prosperity initiative is the wallet of wealthy domestic entrepreneurs,” said Lu Jun, founder of the influential nongovernmental organization Beijing Yirenping Center, in a phone interview with VOA Mandarin. His NGO focuses on eliminating discrimination and defending the rights of disadvantaged groups.

Wang Hsin-Hsien, a political science professor and chair of the East Asian Studies Institute at National Cheng-Chi University in Taiwan, told VOA Mandarin that businesses are essentially forced to make charity donations under the current system.

“China’s current common prosperity initiative is controlled by the party-state. That means large enterprises must make donations in order to show that they are choosing the right side. So I don’t think these donations will be voluntary,” he told VOA Mandarin via phone.

“This is not the charitable donation we see in Western countries, because eventually the money will be returned to the state for redistribution,” he added.

Meanwhile, analysts say this new wave of donation will not likely help boost China’s civil society.

NGOs under microscope

China has been tightening its grip on NGOs since 2016, demanding they provide specific funding sources and membership information or face being banned.

This year, China announced a new wave of crackdowns targeting NGOs. In May, the Ministry of Civil Affairs started to target “illegal NGOs with measures such as limiting their access to conference venues, publicity resources and manpower,” according to the state-owned news outlet China Daily.

“The moves were part of a sweeping campaign launched last month by the ministry and 21 other central agencies to clamp down on the unregistered NGOs, which have masqueraded as foundations, industrial associations and other nongovernmental groups to rake in money from the public,” China Daily said.

Lu told VOA Mandarin that the NGOs that can survive or get funding will be those that align their goals with the government’s agenda — unlike many NGOs outside China, whose views diverge from those of the government.

“I don’t think this is necessarily good news for NGOs, as I believe the money donated by private companies will go to the government-run or government-affiliated NGOs,” he said of the third distribution.

“Beijing won’t allow companies to donate to independent NGOs freely, let alone the ones they don’t like, such as NGOs working on human rights, labor rights and women’s rights.”  

 
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Fitch Ratings said Friday the United States’ AAA sovereign credit rating could be pressured if federal lawmakers fail to address the debt ceiling in a timely manner, noting that political brinkmanship and reduced financing flexibility could increase the risk of a default.

A two-year suspension of the debt ceiling expired in July, and Democrats and Republicans in Congress remain at odds. The credit rating agency said it believes action will be taken to raise or suspend the debt ceiling in time to avert a default. But it said the failure of the latest efforts to address the matter “indicates that the current stand-off could be among the most protracted since 2013.”

U.S. Treasury Secretary Janet Yellen has warned that the government could run out of cash by October 18 if the debt ceiling is not raised or suspended, leading to its first-ever default.

“We view reaching the Treasury’s X-date [October 18] without the debt limit having been raised as the principal tail risk to the U.S. sovereign’s willingness and capacity to pay,” Fitch said in a report. “If this appeared likely we would review the U.S. sovereign rating, with probable negative implications.”

As for a default, Fitch said it “would downgrade only the affected instruments to a default rating level, while non-defaulted instruments that continued to perform would retain their then-current ratings.”

It added that the United States would still have a limited capacity to make payments beyond October 18, but that would depend on “volatile revenue and expenditure flows” and that prioritization could reduce the immediate risk of a missed payment.

Fitch has had a negative outlook on the AAA rating since July 2020.
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U.S. consumer spending increased more than expected in August, but a downward revision to July data kept intact expectations that economic growth slowed in the third quarter as a resurgence in COVID-19 infections curbed demand for services.

The Commerce Department said Friday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, rebounded 0.8% in August, shrugging off declining motor vehicle sales caused by a global shortage of semiconductors, which is undercutting the production of automobiles.

Data for July was revised down to show spending dipping 0.1% instead of gaining 0.3% as previously reported. Economists polled by Reuters had forecast consumer spending increasing 0.6% in August. Spending was likely boosted by back-to-school shopping and child tax credit payments from the government.

Though spending is shifting back to services from goods, the flare-up in coronavirus cases in the summer, driven by the Delta variant, crimped demand for air travel and hotel accommodation as well as sales at restaurants and bars.

Services account for the bulk of consumer spending. Growth in consumer spending is expected to decelerate sharply in the third quarter and regain steam for the remainder of the year. Infections are trending down, which already is leading to a rise in demand for travel and other high-contact services.  

Consumer spending grew at a robust 12.0% annualized rate in the second quarter, accounting for much of the economy’s 6.7% growth pace, which raised the level of gross domestic product above its peak in the fourth quarter of 2019. Growth estimates for the third quarter are below a 5.0% rate.

“Consumer momentum should improve in the months ahead, driving the economy closer to a full post-pandemic recovery and keeping inflation hot,” said David Kelly, chief global strategist at JPMorgan Funds in New York.

Inflation maintained its upward trend in August. The personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, climbed 0.3% after increasing by the same margin in July.

In the 12 months through August, the so-called core PCE price index increased 3.6%, matching July’s gain.

The core PCE price index is the Federal Reserve’s preferred inflation measure for its flexible 2% target. The Fed last week upgraded its core PCE inflation projection for this year to 3.7% from 3.0% back in June.

The U.S. central bank said it would likely begin reducing its monthly bond purchases as soon as November and signaled interest rate increases may follow more quickly than expected. Fed Chair Jerome Powell told lawmakers Thursday that he anticipated some relief from high inflation in the months ahead.
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About two centuries ago, American local, state and federal governments poured millions of dollars into building canals to move the nation’s people and goods. By 1840, there were 3,000 miles of canals in the United States. But, within 20 years, the rise of the railroads would make canals practically obsolete. In the 1840s, several U.S. states ended up defaulting on the loans they took to build canals and railroads.

The defaults are an example of what can happen when governments spend on infrastructure — because trying to guess the future can be like shooting at a moving target. 

“You try to foresee a future. You try to guess what you’re going to need 10, 20, 30 years down the line,” says Richard White, professor emeritus of American history at Stanford University in California. “It takes a long time to construct this kind of infrastructure. And secondly, you’re going to be paying for it in the future…so very often you can be paying for something you no longer need well into the future.” 

Yet, not spending on infrastructure can be costly. 

“If we continue to not invest, Americans — between now and 2039 —— will lose on average $3,300 per year in lost disposable income,” says Greg DiLoreto, past president of the American Society of Civil Engineers (ASCE). “That’s money they’ll lose because they’re spending it on fixing their cars because it ran into a pothole, for example. That’s wasted gas stuck in traffic. Or, this past year where I live, we have the big freeze. People were investing in generators so they would have power. Or that’s when a water line breaks and you go out and you buy bottled water.” 

Every four years, the ASCE grades America’s Infrastructure. The assessment looks at several categories including energy, waste water, drinking water, aviation, roads, bridges, dams and rail. The 2021 Report Card gives the nation’s infrastructure a low C grade — essentially the lowest passing grade possible. 

President Joe Biden has made infrastructure funding a signature piece of his agenda. In August, the U.S. Senate passed a $1 trillion bipartisan infrastructure plan that focuses on transportation, utilities, including high-speed internet for rural communities, and pollution cleanup. The proposal, which would be the largest federal investment in infrastructure in more than a decade, must still pass in the House of Representatives. 

DiLoreto says it’s hard to prioritize one infrastructure category area over the other because they all hinge together. 

“You’ve got to have strong electric to have strong water and wastewater and broadband,” DiLoreto says. “You’ve got to have a strong road system if you’re going to feed your ports. You’ve got to have strong ports if you’re going to ship your goods and get your goods into this country. And, without the roads to support that, what happens when [goods] wind up on the ports and can’t go anywhere [because] congestion is a problem?” 

While it’s challenging to predict the future, White sees several places where infrastructure money would be wasted. That includes places like coastal Louisiana, the San Francisco Bay and large parts of Florida and the Atlantic coastline, which could be impacted by climate change and rising sea levels.

“Do we really want to build infrastructure in places where we’re no longer going to be able to inhabit?” White says. “Are we really going to want to build a huge amount of infrastructure to protect coastlines that we really cannot protect? Are we going to want to set up sewage systems that, in fact, will be overwhelmed by ocean rise? We have a whole series of things which are going to be controversial because people live there now and they’re going to want that infrastructure to protect them.” 

Another potentially unpopular move would be to refrain from spending money on more fire-prone areas of the country, primarily in the West. From January 1, 2021, through September 29, 2021, more than 46,000 wildfires burned through almost 2.4 million hectares of land across the United States.

“We should not be building up infrastructure that encourages people to move into places where these kinds of fires are going to ravage them, force them out, [and] we’re going to have to spend huge public resources trying to protect them,” White says. “It seems to me the writing’s on the wall. It’s not that hard to figure out, but none of these things are necessarily going to be particularly popular.” 

Local governments own most of the nation’s infrastructure, but any ambitious infrastructure plans require at least some federal funding. 

“There’s no question that all the spending increases happen because of bold elected officials, and elected officials are only bold when the people they represent tell them to be. So we need bold leadership to make this happen,” DiLoreto says. “We also need to design these projects both sustainably and to be resilient.” 
…

First-time claims for U.S. unemployment compensation edged higher again last week, the Labor Department reported Thursday, as the delta variant of the coronavirus continues to play havoc with the world’s largest economy.

A total of 362,000 jobless workers filed for assistance, up 11,000 from the revised figure of the week before, the third straight week the figure moved higher. The increase last week was at odds with projections of economists, who had predicted a declining number.

Still, the claims figures for the last month have been on the whole the lowest since the pandemic swept through the U.S. in March 2020, although they remain well above the 218,000 average in 2019.

The increase in unemployment compensation claims comes as the U.S. government in early September ended extra $300-a-week payments to jobless workers on top of often less generous state benefits.

The jobless claims total has fallen steadily but unevenly since topping 900,000 in early January. Filings for unemployment compensation have often been seen as a current reading of the country’s economic health, but other statistics are also relevant barometers.

Even as the U.S. said last month that its world-leading economy grew by an annualized rate of 6.6% in the April-to-June period, in August it only added a disappointing 235,000 jobs, a figure economists said was partly reflective of the surging delta variant of the coronavirus inhibiting job growth. The September jobs figure is due out in a week.

The August total was down sharply from the more than 2 million combined figure added in June and July. The unemployment rate dipped to 5.2%, which is still nearly two percentage points higher than before the pandemic started in March 2020.

About 8.7 million workers remain unemployed in the U.S. There are nearly 11 million available jobs in the country, but the skills of the available workers often do not match what employers want, or the job openings are not where the unemployed live.

The size of the U.S. economy – nearly $23 trillion – now exceeds its pre-pandemic level as it recovers faster than many economists had predicted during the worst of the business closings more than a year ago. Policy makers at the Federal Reserve, the country’s central bank, have signaled that in November they could start reversing the bank’s pandemic stimulus programs and next year could begin to increase its benchmark interest rate.

How fast the U.S. economic growth continues is unclear, with the delta variant of the coronavirus posing a threat to the recovery. In recent weeks, about 120,000 or more new cases have been identified each day in the U.S. and on some days more than 2,000 people have been dying from COVID-19.  

Political disputes have erupted in numerous states between conservative Republican governors who have resisted imposing mandatory face mask and vaccination rules in their states at schools and businesses, although some education and municipal leaders are advocating tougher rules to try to prevent the spread of the delta variant.

U.S. President Joe Biden has ordered workers at companies with 100 or more employees to get vaccinated or be tested weekly for the coronavirus. In addition, he is requiring 2.5 million national government workers and contractors who work for the government to get vaccinated if they haven’t already been inoculated.

Many companies imposed their own vaccination mandates before Biden acted and are now starting to fire workers who have balked at getting vaccinated.

Nearly 67% of U.S. adults have now been fully vaccinated against the coronavirus, and overall, 55.5% of the U.S. population of 332 million, according to the Centers for Disease Control and Prevention.

 
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U.S. lawmakers have less than three weeks to avert a default on the country’s sovereign debt by raising the limit on the amount of money the Treasury Department can borrow. Failure to do so would result in the United States purposely defaulting on its debts for the first time in history. 

By now, the extent of the damage that economists predict the U.S. economy would suffer in the event of default triggered by bitter conflict between Congressional Democrats and Republicans has been widely reported.

An estimate from Moody’s Analytics earlier this month predicted that in a prolonged default scenario, the U.S. would slide into recession, with the Gross Domestic Product falling by almost 4%. Some six million jobs would be lost, driving the unemployment rate up to 9%. The resulting stock market sell-off would erase $15 trillion in household wealth. In the short term, interest rates would spike, and in the long term, they would never fall back to pre-default lows. 

But the damage from a U.S. default would not be contained to the United States itself. Securities issued by the U.S. have been so trustworthy for so long that they are treated as essentially risk-free in financial markets, and are used to underpin a vast number of financial contracts worldwide. 

“The U.S. Treasury market is the world’s anchor asset,” said Jacob Kirkegaard, a senior fellow with the Peterson Institute for International Economics. “If it turns out that that asset is not actually risk free, but that it can actually default, that would basically detonate a bomb in the middle of the global financial system. And that will be extremely messy.” 

Immediate fallout 

In the event of a default, it is generally assumed that there would be a broad sell-off of Treasury securities, known as Treasuries. This would happen for multiple reasons — from individual investors being spooked by the default, to companies that had collateralized loans with Treasuries being forced to replace them with something the lender sees as more secure. 

The sell-off would make it more expensive for the U.S. to borrow in the future, driving up interest rates in the United States and driving down the value of the dollar against other world currencies. 

Here are five ways those effects would echo through the global economy. 

Reduced global trade 

If a default drove the U.S. into recession, U.S. consumers and businesses would reduce the amount of goods and services they purchase from outside the country. 

While this would impact virtually all countries to some extent, emerging market countries that rely on exports to the United States for much of their income would be particularly hard-hit. 

The expected devaluation of the dollar would have a similar impact — making it more expensive for U.S firms to purchase supplies overseas, resulting in trade being reduced even further. 

Dollarized economies would suffer 

The U.S. dollar is a common currency in much of the world. Some countries have adopted it as the official currency, while in others it exists side-by-side with a local currency that is often “pegged” to the dollar to keep its value stable. 

In the event that a default drove down the value of the dollar, countries with highly dollarized economies would see the buying power of existing currency stock diminished.

“Emerging markets would suffer greatly from this, because they wouldn’t have a domestic currency that’s very credible,” said Kirkegaard. 

Business contracts affected 

Around the world, many cross-border transactions carry requirements that they be settled in U.S. dollars. In ordinary times, this is seen as a practical way to be sure that sudden swings in the value of a local currency don’t dramatically disadvantage one party in a transaction that is to be settled in the future. 

A sudden and sharp decline in the value of the dollar would mean that individuals and companies anticipating payment on existing contracts in dollars would effectively be receiving less than they had expected for their goods and services. 

More sophisticated trade contracts may contain anti-default clauses that require agreements to be renegotiated in the event of a default that drives down the value of a reserve currency. While this would keep both parties to a contract whole, it would also complicate and likely slow down many transactions. 

Capital flows away from the U.S. 

One of the economic advantages the United States has long enjoyed is that it is a magnet for global capital. When the global economy is strong, investors seeking growth funnel money to U.S. firms. When times are bad, investors seek shelter in U.S. Treasuries. Either way, global markets are directing capital into the U.S. 

But when interest rates go up for the wrong reason — because investors don’t trust the U.S. government to pay its debts — that system is broken. 

The result is that to some degree, investors seeking shelter would be more cautious about assuming that Treasury securities are the go-to investment to protect the value of their assets. The logical move would be for them to begin directing at least some of their investments to securities issued by other governments and denominated in different currencies. 

New reserve currency 

A side effect of those new capital flows could be a challenge to the dollar as the world’s “reserve currency.” 

A reserve currency is money held by a country’s central bank and large financial institutions in order to facilitate global trade for domestic companies, to meet international debt obligations, and to influence domestic currency exchange rates, among other reasons. 

The stability of the dollar has made it the dominant global reserve currency since the end of World War II. This has generated constant global demand for dollars, making it possible for the U.S. government to borrow at lower interest rates than other large nations.

The United States’ global competitors, including China and Russia — but even allies, like the European Union — have for years suggested that it would be better if the dollar’s dominance were not as complete as it is. 

There has been little movement to unseat the dollar in recent decades, but a shock like a default on U.S. debts could persuade some countries to hedge their bets by taking on other currencies, like the euro or renminbi, as additions to their reserve holdings. 

“If you are China or, for that matter, the euro area, you have been wanting to replace or supplant the dollar’s dominant role in the global economy with either the renminbi or the euro,” said Kirkegaard. “You couldn’t ask for a better thing.” 

 
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The U.S. Commerce Department on Wednesday asked a group of anonymous domestic solar manufacturers for additional information before it would consider a request to impose duties on panels produced in three Southeast Asian countries.

The move delays the department’s decision, which had been expected this week. The case is the latest dispute between the U.S. solar project builders that rely on cheap imports for most of their supplies and the tiny domestic manufacturing sector that says it can’t compete effectively with the flood of low-priced imports from Asia.

U.S. solar project developers have lobbied forcefully against any Commerce investigation into new tariffs, saying the probe alone would spook the foreign solar producers they rely on and cripple a sector that is critical to meeting the nation’s climate change goals.

The anonymous group seeking the tariffs last month asked the Commerce Department to investigate whether imports from Malaysia, Thailand and Vietnam were unfair. It accuses Chinese producers of shifting manufacturing to those nations to avoid U.S. duties on solar cells and panels made in China.

On Wednesday, the Commerce Department sent the group’s attorney, Timothy Brightbill, a letter that set an Oct. 6 deadline for the so-called American Solar Manufacturers Against Chinese Circumvention to respond to a series of questions.

One question asks members of the group to identify themselves. The group said in filings with Commerce that its members wished to remain anonymous because they feared retribution in the marketplace, a claim the department has also asked it to explain.

The department said it would issue a decision within 45 days of receiving a response.

Brightbill did not immediately respond to a request for comment.

The U.S. Solar Energy Industries Association, the trade group that opposes the tariff request, said that it was disappointed the department did not dismiss the group’s petition outright, but that the additional information would show that the petitioners “have no case.” 

 
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A Malawi Magistrate’s Court in the capital, Lilongwe, has sentenced a Chinese national, described by some as one of the biggest African wildlife trafficking kingpins, to 32 years in prison after convicting him on three wildlife crimes. The court, however, said the sentences will run concurrently for 14 years and then there is a plan to deport him. But the convict is looking to appeal the sentence.

Judge Justice Violet Chipao on Tuesday sentenced Lin Yunhua to 14 years in prison for trading in rhino horn, 14 years for possession of rhino horn and an additional six years for money laundering. Justice Chipao however said the sentences will run concurrently, meaning that Lin will serve a total of 14 years. 

Lin, a Chinese national and the leader of wildlife trafficking syndicate Lin-Zhang gang — named after the husband-and-wife leaders — has been operating out of Malawi for at least a decade. Malawi’s authorities arrested him in August 2019 following a three-month manhunt. 

Prosecution lawyer, Andy Kaonga says Lin would face another punishment after completing the sentence. 

“Once he serves the sentence, our colleagues at the DPP [Director of Public Prosecution] office will probably take it to the minister of homeland security and then start the process of his deportation because the court has recommended that he should be deported from the country,” he said.  

The sentencing of Lin brings the number of wildlife trafficking syndicate members sent to prison to 14. These include four Malawian and 10 Chinese nationals, including Lin’s wife currently serving an 11-year prison term. Lin’s daughter was also arrested in December 2020 for alleged money laundering offences. Her trial is ongoing. 

Brighton Kumchedwa, Malawi’s director of the Department of National Parks & Wildlife, warned that the crackdown on members of the Lin-Zhang gang should send a message to other wildlife trafficking syndicates. 

“We are now starting to deal with the sponsors, the king pins. My message to these syndicates is ‘they should watch out; Malawi is not a playing ground. We eventually will get to them. So, they better stop,” he said.

Kumchedwa says the crackdown is a result of new strategies the government put in place toward combating wildlife crimes. 

“From 2015 thereabout we changed completely the game of handling wildlife crimes. So, we used [our] own intelligence combined with police intelligence. We also used sniffer dogs in the process. So, it’s different strategies that have seen us going this far,” he said. 

Mary Rice is the executive director of the London-based Environmental Investigation Agency (EIA), an organization campaigning against environmental crimes and abuse. Speaking to VOA via a messaging app from London, Rice says the crackdown shows Malawi’s commitment to bring high-level wildlife criminals to justice,

“It was not an easy road. But the tenacity and resilience of the investigators, the lawyers and the judge who made some very, very interesting comments in the sentencing, they are all to be applauded for their work. We know there have been many, many obstacles along the way. So, I think it’s a great result,” she said.

Defense lawyer Chrispine Ndalama told VOA Tuesday his client is considering appealing against the sentence. 

“Of course, over the phone, the client indicated that he would want to appeal but I will have to look at the judgment first, to see and understand the reasoning of the court so that I can advise my client properly as to whether we need to appeal or not,” he said.

Ndalama says he expected the court to give Lin a lesser sentence because he pleaded guilty to charges of possession of wildlife products. 

The court has given the defense 30 days to appeal the sentence. 
…