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WASHINGTON — President Joe Biden said Thursday the Federal Reserve’s decision to lower interest rates was “an important signal” that inflation has eased as he characterized Donald Trump’s economic policies as a failure in the past and sure to “fail again” if revived. 

“Lowering interest rates isn’t a declaration of victory,” Biden told the Economic Club of Washington. “It’s a declaration of progress, to signal we’ve entered a new phase of our economy and our recovery.” 

The Democratic president emphasized that there was more work left to do, but he used his speech to burnish his economic legacy even as he criticized Trump, his Republican predecessor who is running for another term. 

“Trickle down, down economics failed,” Biden said. “He’s promising again trickle down economics. It will fail again.” 

Biden said Trump wants to extend tax cuts that disproportionately benefit the wealthy, costing an estimated $5 trillion, and implement tariffs that could raise prices by nearly $4,000 per family, something that Biden described as a “new sales tax.” 

A spokesman for Trump’s campaign did not immediately respond to a request for comment. But Trump has routinely hammered Biden and Vice President Kamala Harris, the Democratic candidate this year, over higher costs. 

“People can’t go out and buy cereal or bacon or eggs or anything else,” Trump said during last week’s debate. “The people of our country are absolutely dying with what they’ve done. They’ve destroyed the economy.” 

Biden dismissed Trump’s claims that he supports workers, saying “give me a break.” Biden’s administration created more manufacturing jobs and spurred more factory construction, and it reduced the trade deficit with China. 

Trump’s economic record was undermined by the coronavirus outbreak, and Biden blamed him for botching the country’s response. 

“His failure in handling the pandemic led to hundreds of thousands of Americans dying,” he said. 

Biden struggled to demonstrate economic progress because of inflation that spread around the globe as the pandemic receded and supply chain problems multiplied. 

He expressed hope that the rate cut will make it more affordable for Americans to buy houses and cars. 

“I believe it’s important for the country to recognize this progress,” he said. “Because if we don’t, the progress we made will remain locked in the fear of a negative mindset that dominated our economic outlook since the pandemic began.” 

He said businesses should see “the immense opportunities in front of us right now” by investing and expanding. 

Biden defended the independence of the Federal Reserve, which could be threatened by Trump if he is elected to another term. Trump publicly pressured the central bank to lower rates during his presidency, a break with past customs. 

“It would do enormous damage to our economy if that independence is ever lost,” Biden said. 

During his speech, Biden inaccurately said he had never met with Jerome Powell, chair of the Federal Reserve, while he’s been president. 

Jared Bernstein, who chairs the White House Council of Economic Advisers, said at a subsequent briefing that Biden intended to say that he had never discussed interest rates with Powell. 

“That’s what he meant,” Bernstein said.
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Brussels — Teresa Ribera will have to square up to Big Tech, banks and airlines if confirmed as Europe’s new antitrust chief, while juggling calls for looser rules to help create EU champions.

Nominated Tuesday by European Commission President Ursula von der Leyen for the high-profile antitrust post, Ribera has been Spain’s minister for ecological transition since 2018.

The 55-year-old Spanish socialist, one of Europe’s most ambitious policymakers on climate change, will have to secure European Parliament approval before taking up her post.

As competition commissioner, she will be able to approve or veto multi-billion euro mergers or slap hefty fines on companies seeking to bolster their market power by throttling smaller rivals or illegally teaming up to fix prices.

One of her biggest challenges will be to ensure that Amazon, Apple, Alphabet’s Google, Microsoft and Meta comply with landmark rules aimed at reining in their power and giving consumers more choice.

Apple, Google and Meta are firmly in outgoing EU antitrust chief Margrethe Vestager’s crosshairs for falling short of complying with the Digital Markets Act.

Another challenge will be how to deal with the increasing popularity of artificial intelligence amid concerns about Big Tech leveraging its existing dominance.

Ribera may ramp up a crackdown on non-EU state subsidies begun by Vestager aimed at preventing foreign companies from acquiring EU businesses or taking part in EU public tenders with unfair state support.

Recent rulings from Europe’s highest court, which backed the Commission’s $14.5 billion tax order to Apple, and its $2.7 billion antitrust fine against Google, could embolden Ribera to take a tough line against antitrust violations.

That would mean she would be in no hurry to ease up on antitrust rules, despite Mario Draghi’s call to boost EU industrial champions so that they are able to compete with U.S. and Chinese competitors.

Ribera was also named on Tuesday as executive vice president of a clean, just and competitive energy transition, tasked with ensuring that Europe achieves its green goals.

Her credentials include negotiating deals last year among EU countries on emissions limits for trucks and a contentious upgrade of EU power market rules.

 
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CHENNAI, India — Police on Monday detained 104 striking workers protesting low wages at a Samsung Electronics plant in southern India as they were planning a protest march without permission, with the dispute disrupting output at the key factory for the past week.

The detention marks an escalation of a strike by workers at a Samsung home appliance plant near Chennai in the state of Tamil Nadu. Workers want higher wages and have stopped work at the plant that contributes roughly a third of Samsung’s annual India revenue of $12 billion.

The Samsung protests have cast a shadow on Indian Prime Minister Narendra Modi’s plan of courting foreign investors to “Make in India” and his goal of tripling electronics production to $500 billion within six years.

Lured by cheap labor, foreign companies are increasingly using India for manufacturing to diversify their supply chain beyond China.

On Monday, the workers planned to start a protest march, but were detained as no permission was given since there are schools, colleges and hospitals in that area, said senior police officer of the Kancheepuram district K. Shanmugam.

“It is the main area which would become totally paralyzed and [the protest would] disturb public peace,” he said.

“We have detained them in wedding halls as all of them can’t be in stations,” he said.

Samsung workers since last week have been protesting at a makeshift tent near the plant, demanding higher wages, recognition for a union backed by influential labor group the Centre of Indian Trade Unions (CITU), and better working hours.

Samsung is not keen to recognize any union backed by a national labor group such as the CITU, and talks with workers, as well as state government officials, have not yielded resolution.

The CITU Tamil Nadu Deputy General Secretary, S. Kannan, condemned the police action, saying “This is an archaic move by the state government.”

Despite Monday’s police action, 12 union groups, including one affiliated with the ruling party of Tamil Nadu, said in a public notice dated Sept. 11 that they will stage a protest in support of the striking workers in Chennai on Wednesday, a move that could intensify the tensions between the company and the workers.

“We are going ahead with Wednesday’s protest … no changes to the plan,” said A. Jenitan, a deputy district secretary for the CITU.

The protests add to Samsung’s challenges in India, a key growth market.

The South Korean company is planning job cuts of up to 30% of its overseas staff in some divisions, including in India. And India’s antitrust body has found Samsung and other smartphone companies colluded with e-commerce giants to launch devices exclusively, violating competition laws, Reuters has reported.

Samsung did not respond to a request for comment on Monday, but on Friday said it has initiated discussions with workers at the Chennai plant “to resolve all issues at the earliest.”

Video footage from Reuters partner ANI showed dozens of Samsung workers wearing the company uniform of blue shirts being transported in a bus to a hall.

The Samsung plant employs roughly 1,800 workers and more than 1,000 of them have been on strike. The factory makes appliances such as refrigerators, TVs and washing machines. Another Samsung plant that makes smartphones in the northern state of Uttar Pradesh has had no unrest.

The police also detained one of CITU’s senior leaders, E. Muthukumar, who was leading the Samsung protests at the factory near Chennai, according to the CITU’s Jenitan.

Kancheepuram police official Shanmugam said there was no timeline as to how long the workers will be detained.
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OTTAWA, Ontario — Air Canada and the union representing its pilots have come to terms on a labor agreement that is likely to prevent a shutdown of Canada’s largest airline. 

Talks between the company and the Air Line Pilots Association produced a tentative, four-year collective agreement, the airline announced in a statement early Sunday. 

The prospective deal recognizes the contributions of the pilots flying for Air Canada and Air Canada Rouge while setting a new framework for company growth. The terms will remain confidential until ratification by union members and approval by the airline’s board of directors over the next month, the airline said. 

The pilots’ association said its Air Canada Master Executive Council voted to approve the tentative agreement on behalf of more than 5,400 Air Canada pilots. After review and ratification by a majority of members, the deal is expected to generate an additional $1.9 billion for the pilots over the period of the agreement, the union said in a statement. 

“While it has been an exceptionally long road to this agreement, the consistent engagement and unified determination of our pilots have been the catalyst for achieving this contract,” Charlene Hudy, the executive council’s chair, said in the statement. “After several consecutive weeks of intense round-the-clock negotiations, progress was made on several key issues including compensation, retirement, and work rules.” 

Federal Labor Minister Steven MacKinnon confirmed the agreement Sunday and lauded the company and the union. 

“Thanks to the hard work of the parties and federal mediators, disruptions have been prevented for Canadians,” MacKinnon said in a statement. “Negotiated agreements are always the best way forward and yield positive results for companies and workers.” 

The airline and its pilots have been in contract talks for more than a year. The pilots have sought wages competitive with their U.S. counterparts, but Air Canada continues to post record profits while expecting pilots to accept below-market compensation, the union said. 

The two sides could have issued a 72-hour notice of a strike or lockout beginning Sunday. The airline said the notice would have triggered its three-day wind down plan and started the clock on a full work stoppage as soon as Sept. 18. 

Air Canada spokesperson Christophe Hennebelle previously said the airline was committed to negotiations but faced union wage demands that the company could not meet. 

The airline was not seeking federal intervention, but cautioned the government should be prepared to help avoid major disruptions from the possible shutdown of an airline carrying more than 110,000 passengers daily, Hennebelle said. 

Business leaders had urged the federal government to intervene in the talks earlier in the week, but MacKinnon said there was no reason the sides should not have been able to reach a collective agreement. 

In August, the Canadian government asked the country’s industrial relations board to issue a back-to-work order to end a railway shutdown. 

Leaders of numerous business groups including the Canadian Chamber of Commerce and the Business Council of Canada convened in Ottawa on Thursday to call for action, including binding arbitration, to avoid the widespread economic disruptions of an airline shutdown. 

NDP Leader Jagmeet Singh said Thursday his party would not support efforts to force pilots back to work. 

“If there’s any bills being proposed on back to work legislation, we’re going to oppose that,” he said. 
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Washington — The Federal Reserve is gearing up to announce its first interest rate cut for more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the U.S. presidential election.   

Senior officials at the U.S. central bank including Fed chair Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool.   

The Fed, which has a dual mandate from Congress to act independently to ensure both stable prices and maximum sustainable employment, has repeatedly stressed it will make its decision on rate cuts based solely on the economic data.  

But a cut on Wednesday could still cause headaches for Powell, as it would land shortly before the election, in which former Republican president Donald Trump is running against the current Democratic vice president, Kamala Harris. 

“As much as I think the Fed tries to say that they’re not a political animal, we are in a really wild cycle right now,” Alicia Modestino, an associate professor of economics at Northeastern University, told AFP.   

How big a cut? 

The debate among policymakers on Tuesday and Wednesday this week will likely center on whether to move by 25 or 50 basis points.   

However, a rate cut of any size would be the Fed’s first since March 2020, when it slashed rates to near-zero in order to support the US economy through the Covid-19 pandemic.  

The Fed started hiking rates in 2022 in response to a surge in inflation, fueled largely by a post-pandemic supply crunch and the war in Ukraine.   

It has held its key lending rate at a two-decade high of between 5.25 and 5.50 percent for the past 14 months, waiting for economic conditions to improve.   

Now, with inflation falling, the labor market cooling, and the US economy still growing, policymakers have decided that conditions are ripe for a cut.   

Policymakers are left with a choice: making a small 25 basis point cut to ease into things, or a more aggressive cut of 50 basis points, which would be helpful for the labor market but could also risk reigniting inflation.   

“I think that in advance of the November meeting, there’s not quite enough data to say we’re in jeopardy on the employment side,” said Modestino, who was previously a senior economist at the Federal Reserve Bank of Boston.    

Analysts see the smaller cut as a safe bet.   

“We expect the Fed to cut by 25bp [basis points],” economists at Bank of America wrote in a recent note to clients.   

“The Fed likes predictability,” Modestino from Northeastern said. “It’s good for markets, good for consumers, good for workers.”   

“So a 25 basis point cut now, followed up by another 25 basis point cut in November after the next round of economic data, offers a somewhat smoother glide path for the economy,” she added.    

How many cuts?  

While analysts overwhelmingly expect the Fed to start cutting in September, there is less clarity about what comes next.   

Economists at some banks, including Goldman Sachs, expect cuts totaling 75 basis points over the last three meetings of the year, while others see more aggressive cuts, like economists at Citi, who have 125 basis points of easing as their base case.   

“The continued softening of the labor market is likely to provoke larger-sized cuts if not at this FOMC meeting then in November and December,” the Citi economists wrote in a recent note to clients, referring to the rate-setting Federal Open Market Committee (FOMC).   

The Fed will shed some light on the issue on Wednesday, when it publishes the updated economic forecasts of its 19-member FOMC — including their rate cut expectations.  

In June, FOMC members sharply reduced the number of cuts they had penciled in for this year from a median of three down to just one amid a small uptick in inflation.     

But as inflation has fallen and the labor market has weakened, expectations of more cuts have grown.  

Traders also see a greater-than 99 percent chance of at least four more cuts in 2025, which would bring the Fed’s key lending rate down to between 3.5 and 3.75 percent — 175 basis points below current levels. 
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BEIJING — China’s economy softened in August, extending a slowdown in industrial activity and real estate prices as Beijing faces pressure to ramp up spending to stimulate demand.

Data published by the National Bureau of Statistics Saturday showed weakening activity across industrial production, retail sales and real estate this month compared to July.

“We should be aware that the adverse impacts arising from the changes in the external environment are increasing,” said Liu Aihua, the bureau’s chief economist in a news conference.

Liu said that demand remained insufficient at home, and the sustained economic recovery still confronts multiple difficulties and challenges.

China has been grappling with a lagging economy post-COVID, with weak consumer demand, persistent deflationary pressures and a contraction in factory activity.

Chinese leaders have ramped up investment in manufacturing to rev up an economy that stalled during the pandemic and is still growing slower than hoped.

Beijing also has to deal with increasing pressure to implement large-scale stimulus measures to boost economic growth.

While industrial production rose by 4.5% in August compared to a year ago, it declined from July’s 5.1% growth, according to the bureau’s data released.

Retail sales grew 2.1% from the same time last year, slower than the 2.7% increase last month.

Fixed asset investment rose by 3.4% from January to August, down from 3.6% in the first seven months.

Meanwhile, investment in real estate declined by 10.2% from January to August, compared to last year.

The figures released Saturday come after trade data for August saw imports grow just 0.5% compared to a year ago.

The consumer price index rose 0.6% in August, missing forecasts according to data released Monday. Officials attributed the higher CPI to an increase in food prices due to bad weather.

But the core CPI, which excludes food and energy prices, rose by just 0.3% in August, the slowest in over three years.
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Taipei, Taiwan — The U.S.-China technology war is playing out in the smartphone market in China, where global rivals Apple and Huawei released new phones this week. Industry experts say Apple, which lacks home-field advantage, faces many challenges in defending its market share in the country.

The biggest highlight of the iPhone 16 is its artificial intelligence system, dubbed Apple Intelligence, while the Huawei Mate XT features innovative tri-fold screen technology.  But at a starting price of RMB 19,999, about $2,810, the Mate XT will cost about three times as much as the iPhone 16.

According to data from VMall, Huawei’s official shopping site, nearly 5.74 million people in China preordered the Mate XT as of late Thursday, 5½ days after Huawei began accepting preorders.

But in a survey conducted on the Chinese microblogging site Weibo by Radio France International, half of the 9,200 respondents said they would not purchase a Mate XT because the price is prohibitive. An additional 3,500 said they are not in the market for a new phone now.

“I suggest that Huawei release some products that ordinary people can afford,” a Weibo user wrote under the name “Diamond Man Yang Dong Feng.”

The iPhone 16 is not available for preorder until Friday, but some e-commerce vendors in China have promised to deliver the new devices to consumers within half a day to two days of sale.

In the competition between Apple and Huawei, iPhone 16 has some inherent disadvantages, said Shih-Fang Chiu, a senior industry analyst at the Taiwan Institute of Economic Research.

“Apple’s strength is information security and privacy, but this is difficult to achieve in the Chinese market, where the government can control the data in China’s market to a relatively high degree. In the era of AI mobile phones, this will bring challenges to Apple’s development in the Chinese market,” Chiu said.

Apple’s AI service on its iPhone 16 will roll out at a gradual pace in different languages, first in English and other languages later this year. The Chinese version will not be available until 2025.

There are other challenges Apple faces as well, Chiu added, such as regulatory controls, consumer sentiment favoring local brands and weakening spending power amid China’s economic slowdown.

According to Counterpoint Research’s statistics, Huawei held a market share of 15% in the second quarter of 2024, surpassing Apple’s 14% market share. That compares with Apple’s 17.3% share in 2023 as reported by the industry research firm International Data Corporation China, or IDC China.

Ryan Reith, the program vice president for IDC’s Mobile Device Tracker suite, said in a written response to VOA that the iPhone 16 has not made significant hardware upgrades and that AI applications alone are not attractive because consumers have GPT and other AI solutions.

AI applications are also another hurdle. Analyst Chih-Yen Tai said iPhone 16’s AI services involve personal data collection, information application and cloud computing, which will require collaboration with Chinese service providers.

That, along with the ban on Chinese civil servants and employees at state-owned enterprises from using their iPhone at work in recent years, will affect the sales of Apple products, said Tai, the deputy director of the Center for Science and Technology Policy Evaluation at Chung-Hua Institution for Economic Research in Taipei.

“China’s patriotism has led to a strong number of preorders” for Huawei’s tri-fold phones, Tai said.

“The competitors in China will sell the idea [to consumers] that iPhones will soon be edged out of the premium smartphone market. So, in the next stage, the affordable iPhone versions will be the key to whether it [Apple] can return to China or its previous glorious sales era,” Tai said.

Tzu-Ang Chen, a senior consultant in the digital technology industry in Taipei, said use of Huawei’s HarmonyOS operating system surpassed that of Apple’s iOS in China in the first quarter of this year, representing China’s determination to “go its own way” and create “one world, two systems.”

“The U.S.-China technology war has extended to smartphones,” Chen said. “IPhone sales in China will get worse and worse, obviously because Huawei is doing better, and coupled with patriotism, Apple’s position in the hearts of 1.4 billion people will never return.”

He said that as China seeks to develop pro-China markets among member countries of the Belt and Road Initiative in Southeast Asia, the Middle East and Africa, China-made mobile phones may become their first choice.

VOA’s Adrianna Zhang contributed to this report.
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Washington — The White House said on Thursday it is acting on Democratic lawmakers’ demands to close what they see as a legal loophole that allows manufacturers — most from China — to dodge tariffs on low-priced goods and flood the U.S. with illegal and unsafe products.

The Biden administration is targeting the “de minimis” exemption, which allows parcels valued at less than $800 to enter the U.S. duty free. More than 1 billion such parcels entered the U.S. in fiscal 2023, U.S Customs and Border Protection said.

White House officials attribute the more than fivefold increase from several years ago to the growth of Chinese e-commerce platforms such as Shein and Temu, and administration officials name-checked both of those popular fast-fashion retailers in a briefing with journalists on Thursday.

Daleep Singh, deputy national security adviser for international economics, said these moves to close the loophole would have a big effect on Chinese apparel, and “will drastically reduce the number of shipments entering through the de minimis exemption.”

This would likely hamper Americans’ ability to score items like an $8 T-shirt – available in a range of colors – that features a gunslinging, pants-wearing cartoon cowboy duck who proclaims, “you just yee’d your last haw.” Or a $6 crop top that reads, in English, LIVE LAUGH LOBOTOMY. Or an $8 bra made of two fuzzy, dead-eyed cat faces shorn of their noses, mouths, whiskers and facial expressions, strung together and tied halter-style around the neck. Or an $8 item that can only be described as a business-formal bra, as it is made entirely of ties. It is available in a patchwork of leopard-, zebra- and tiger-print ties, presumably for a formal office that is animal themed.

Singh added that the administration also seeks to tighten information collection requirements and consumer safety standards – and block products that don’t make the cut. And further, he said, the White House is calling on Congress to pass a law this year to “comprehensively reform the de minimis exemption.”

In a Wednesday letter, 126 House Democrats urged the president to use his executive authority, saying they could not act “amid interminable stagnation in Congress that has precluded legislation from passing.”

“While lawmakers would rather see the de minimis issue dealt with legislatively, the Democrats on the call said their patience was wearing thin,” the letter read. “Despite the fact that the concept of de minimis reform has engendered broad bipartisan support, politicking has precluded a concrete resolution.”

Congresswoman Rosa DeLauro of Connecticut, one of the initiative’s leaders, expressed concerns over fast fashion’s documented use of forced labor to make their cut-rate clothing. Rights group Amnesty International has reported that Shein, in particular, upholds “questionable labor and human rights standards.”

Shein’s model, the group says, leans on subcontracting the making of garments, which leaves no room for transparency or accountability for worker conditions, and gives workers no right to unionize or assemble.

Navtej Dhillon, deputy director of the National Economic Council, also said the moves address concerns over fentanyl shipments and for declining U.S. industry.

“Some foreign companies are attempting to use this pathway to ship illegal and dangerous products for our health, avoid our health and safety and consumer protection laws, and evade tariffs to undermine American manufacturers,” he said. “Textile and apparel manufacturing supports tens of thousands of jobs in key states like Georgia and North Carolina. These American workers and manufacturers deserve to compete on a level playing field.”

The congressional group pushing the administration cited approval from law enforcement and industry groups.

“The de minimis loophole is severely exacerbating our nation’s opioid crisis,” said Bill Johnson, executive director of the National Association of Police Organizations. “Closing it would help staunch the flow of fentanyl and other narcotics coming across our borders and help safeguard the lives of our children, families, and friends.”

And Kim Glas, president and CEO of the National Council of Textile Organizations, said the industry group “strongly supports closing the de minimis loophole,” noting the closure of 18 textile plants in the U.S. in the past year.

“De minimis is a free trade agreement for the world at the expense of U.S. manufacturers, retailers, and consumers,” she said in a statement. “Shockingly, it has now become a black market for dangerous products facilitating fentanyl, precursors and pill presses. De minimis is destruction.”

Shein said last year that they support “responsible reform” of the policy but did not give precise recommendations.

“The de minimis exemption needs a complete makeover to create a level playing field for all retailers,” SHEIN Executive Vice Chairman Donald Tang said in a statement. “At the same time, American consumers deserve to know that the products they purchase are authentic and ethically produced. We believe de minimis reform can and should achieve both.”
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HONG KONG — China must reprioritize economic growth and reforms and boost investor confidence by leveling the playing field for all companies in the country, a European business group said Wednesday. 

With “business confidence now at an all-time low” over lagging domestic demand and overcapacity in certain industries, the annual European Business in China Position Paper called on China to open its economy and allow a more free market to determine resource allocation. It also recommended introducing policies to boost domestic demand. 

Profit margins in China are at or below the global average for two-thirds of the companies surveyed earlier in the year, according to the paper published Wednesday by the European Chamber of Commerce in China. 

In August, China filed a complaint with the World Trade Organization over European Union tariffs on electric vehicles made in China. It also launched anti-dumping and subsidies investigations of European dairy products, brandy and pork exports. The tit-for-tat actions have raised fears that a trade war may break out. 

Many European businesses are deciding that the returns on investments in the world’s second-largest economy are not worth the risks, due to issues including China’s economic slowdown and a politicized business environment. 

“For some European headquarters and shareholders, the risks of investing in China are beginning to outright the returns, a trend that will only intensify if key business concerns are left unaddressed,” Jens Eskelund, president of China’s European Union Chamber of Commerce, said in a message at the beginning of the paper. 

The European Chamber’s paper proposes over 1,000 recommendations for China to resolve challenges and problems faced by European businesses operating in the country and boost investor confidence. Among them are calls for China to refrain from punishing companies for the actions of their home governments. Others include ensuring that policy packages for attracting foreign investment are followed by implementation, and refraining from “erratic policy shifts.” 

The report also recommended that the EU proactively engage with China and keep its responses “measured and proportionate” when disagreements arise. 
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KARAWANG, Indonesia — Rahmat Hidayat lost his job when the shoe factory he worked for closed down last year in the industrial town of Karawang in Indonesia’s West Java.  

The 44-year-old now earns less than half of what he used to make by selling grilled meatballs. Unable to afford his wife’s diabetes medication, Rahmat picks herbs to make a tonic instead. 

Like Rahmat, millions of working to middle class Indonesians have become poorer, largely due to an increase in layoffs and a drop in the number of job opportunities since the pandemic. 

This trend bodes ill for the outlook for Southeast Asia’s biggest economy — household consumption accounts for over half of gross domestic product — as well as the widely held investment thesis that an expanding middle class will drive Indonesia’s ambition to become a high-income nation by 2045. 

It also poses a challenge for the incoming administration of President Prabowo Subianto, who won a February election by a landslide on promises to boost economic growth and create 19 million of jobs. Prabowo takes office on Oct. 20. 

“Pushing the economy to grow higher with weak consumption is difficult,” said Mohammad Faisal, an economist at the Jakarta-based Center of Reform on Economics. 

The government classifies those who spend between $132 to $643 a month as middle class, based on a World Bank criteria. This group is key to economic growth as their spending accounts for nearly 40% of private consumption, and more than 80% if combined with the aspiring middle class, who spend $57 to $132.  

The size of the middle class, however, has dropped from 21.5% of the total population in 2019 to 17.1% in 2024, according to official data released last month. 

Even though Indonesia’s economy has bounced back after the pandemic, with growth of around above 5% a year since 2022 amid generally low inflation, this shrinking middle class is likely to pressure future growth, as the government will have to contend with lower tax revenues and a possibly more subsidies, said Jahen Rezki, an analyst from the University of Indonesia.  

“In the long run, if the middle class dwindles, it will certainly be a big burden for the state,” he said. 

Big state spending 

One of the main reasons for the demise of the middle class is the changing labour market. 

A large portion of the foreign investment coming into Indonesia has targeted industries such as mining, which are becoming much less labour intensive as more cutting-edge technology is deployed. 

Also, stronger competition from lower cost destinations such as China, especially in the textile sector, has squeezed factories, leading to lay offs that the textile association said were the worst in the last decade.  

Prabowo’s brother and adviser Hashim Djojohadikusumo said the incoming government will help the middle class by creating millions of new jobs from projects like the $28 billion free meals programme and the building of millions of homes.  

“We want to create a lot of small, medium and micro entrepreneurs, for example through our housing program. We want to build 3 million units of houses, in villages and cities. That’s to create middle class,” he told Reuters recently.  

However, how much the next government is able to spend on welfare schemes might be limited, especially next year when a large amount of government debt is due to mature, said Teguh Yudo Wicaksono, an economist at Islam Internasional Indonesia University. 

For former factory worker Rahmat, the best help the government can give is a handout he can use to expand his food business, as it has become increasingly difficult to find a job. 

His wife Fatimah said her children often ask for their favorite spicy meat dish, but she can only afford to feed them instant noodles with eggs most of the time. 

“I could only tell my kids to please wait until dad got his fair compensation from the factory, we will cook a delicious meal again,” she said.  
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Nairobi, Kenya — Central banks in Africa are turning to gold to protect themselves from economic and geopolitical instability and to diversify their financial portfolios.

In September 2023, the price of gold per ounce was $1,900. A year later, it is selling for $2,500. According to the World Gold Council, an international trade association for the gold industry, demand for the metal is expected to increase in the next 10 months despite the soaring prices.

Some experts, such as Carlos Lopes, a professor at the Nelson Mandela School of Public Governance in South Africa, attribute the African central banks’ gold rush to the need to protect their local currencies.

“In the last few years, because of inflation and all these movements for stimulation packages and the rest, the returns are extremely low,” Lopes said. “On the other hand, gold is going up in terms of price because these big banks are also going after gold as a protection. So, it is a very good investment to go to gold.”

It helps that African gold production has grown by 60% since 2010, according to the World Gold Council, higher than a global increase of 26%.

In 2022, Zimbabwe launched a gold-backed currency to curb inflation and volatility in foreign exchange rates.

Ghana and Uganda have been buying gold from artisanal miners to bolster their shrinking foreign currency reserves.

Ghana, Africa’s largest gold producer, plans to buy oil from other countries and pay them in gold to ease pressure on local currency and lower high fuel prices.

Some economists say gold cannot solve the economic problems of some African countries.

According to the World Gold Council, countries should hold onto gold for its long-term value, performance during crises and its role as an effective portfolio diversifier.

Bright Oppong Afum, a senior lecturer at the University of Mines and Technology in Ghana, said some African countries want to use gold to reduce their reliance on the global financial system.

“If sanctions are laid on you, an African country, we know the devastating effects that it will have,” he said. “The African countries are developing, or they are young, and they do not want to receive some harsh sanctions that will negatively or strongly impact the economics. And because of that, they are strategically reducing their dependencies on these external countries.”

Afum said that although some Africans know and understand the value of gold, many trade away the metal to satisfy their daily needs.

“So, they just find a mere buyer who will … exploit them,” he said.

The African Continental Free Trade Area introduced the Pan-African Payment and Settlement System, enabling countries to trade in local currencies. Experts say some continental payment systems, if implemented, can ease the economic pressures some countries are grappling with.

That, in turn, might make them less dependent on gold.
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London — Google lost its final legal challenge on Tuesday against a European Union penalty for giving its own shopping recommendations an illegal advantage over rivals in search results, ending a long-running antitrust case that came with a whopping fine. 

The European Union’s Court of Justice upheld a lower court’s decision, rejecting the company’s appeal against the $2.7 billion penalty from the European Commission, the 27-nation bloc’s top antitrust enforcer. 

“By today’s judgment, the Court of Justice dismisses the appeal and thus upholds the judgment of the General Court,” the court said in a press release summarizing its decision. 

The commission’s punished the Silicon Valley giant in 2017 for unfairly directing visitors to its own Google Shopping service to the detriment of competitors. It was one of three multibillion-dollar fines that the commission imposed on Google in the previous decade as Brussels started ramping up its crackdown on the tech industry. 

“We are disappointed with the decision of the Court, which relates to a very specific set of facts,” Google said in a brief statement. 

The company said it made changes in 2017 to comply with the commission’s decision requiring it to treat competitors equally. It started holding auctions for shopping search listings that it would bid for alongside other comparison shopping services. 

“Our approach has worked successfully for more than seven years, generating billions of clicks for more than 800 comparison shopping services,” Google said. 

At the same time, the company appealed the decision to the courts. But the EU General Court, the tribunal’s lower section, rejected its challenge in 2021 and the Court of Justice’s adviser later recommended rejecting the appeal. 

European consumer group BEUC hailed the court’s decision, saying it shows how the bloc’s competition law “remains highly relevant” in digital markets. 

“Google harmed millions of European consumers by ensuring that rival comparison shopping services were virtually invisible,” director general Agustín Reyna said. “Google’s illegal practices prevented consumers from accessing potentially cheaper prices and useful product information from rival comparison shopping services on all sorts of products, from clothes to washing machines.” 
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beijing — Chinese President Xi Jinping on Monday urged visiting Spanish Prime Minister Pedro Sanchez to play a “constructive role” in improving strained ties between Bejing and the European Union. 

Sanchez for his part said he hoped the EU could avoid a trade war with China, even as Brussels weighs imposing tariffs on China-manufactured electric vehicles.

In their meeting, Xi also talked up deepening commercial ties between China and Spain in sectors such as artificial intelligence, digital economy, new energy and other high-tech fields.

The Chinese leader said Beijing wanted to work with Brussels to further develop a China-EU relationship where the two maintain their independence and autonomy but also succeed together and bring benefit to the world, a Chinese readout said. 

“It is hoped Spain will continue to play a constructive role in this regard,” Xi added. 

Sanchez responded: “Spain wants to work constructively so that relations between the two are closer, richer and more balanced.” 

Beijing in June said that frictions with the EU over its plans to impose tariffs of up to 36.3% on its electric vehicles (EVs) could trigger a trade conflict, days after China announced a retaliatory anti-dumping probe into European pork imports. 

China in August then raised the stakes by opening an investigation into the bloc’s dairy subsidies. 

Prior to meeting Xi, Sanchez said at business events that Spain would work for a negotiated consensus to the EV dispute within the World Trade Organization and that a “trade war would benefit no one,” a government source said.  

Spain in 2023 exported $1.5 billion worth of the pork products that China will investigate, Chinese customs data showed, dwarfing the outbound shipments from the Netherlands and Denmark, which rank second and third. 

Spain also sold just under $50 million worth of targeted dairy products to China last year. 

But in a promising sign for Spain’s pork producers, a separate source with direct access to Xi’s meeting with Sanchez said the two leaders had “found harmony and understanding,” when asked about possible curbs on Spain’s outbound pork shipments. 

“The meeting went extremely well,” the source said, adding that both defended their positions while seeking agreements. 

Fair trade 

“We want to build bridges together to defend a trade order that’s fair,” Sanchez told China’s second-ranking official, Premier Li Qiang, before meeting Xi.  

Spain had a trade deficit of 17.27 billion euros ($19.07 billion) in the first half of this year, according to government statistics.  

Sanchez will also want reassurance that China will not strike back at Brussels by raising its own tariffs on imported large-engined gasoline-powered vehicles, as state Chinese media have suggested it might.  

Spain could also be impacted by the Chinese EV tariffs. Last week SEAT-CUPRA’s CEO said that an electric vehicle made in China and designed in Spain by CUPRA, which is owned by Germany’s Volkswagen, would be “wiped out” if the European Commission followed through with planned import tariffs on Chinese-made vehicles.  

Sanchez on Tuesday is expected to meet representatives of SAIC Motor, one of the Chinese automakers most affected by the EU tariffs, and sign a Memorandum of Understanding with greentech company Envision, which is building an EV battery plant in Spain. 

“In this increasingly geopolitical and economic context, as you have pointed out, we must work together to resolve differences through negotiation,” Sanchez told Xi. 

In an advisory vote in July, Spain, France and Italy supported the European Commission’s proposal to adopt additional duties on Chinese-made EVs on top of the bloc’s standard 10% tariff.  

But Beijing has been urging the EU’s member states to reject the curbs at a final vote on it in October.  

The tariffs would be implemented in addition to the EU’s standard 10% import tariff unless a qualified majority of 15 EU members representing 65% of the EU population vote against them.
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A lack of opportunities has resulted in underrepresentation of Black designers, stylists and other creatives in the fashion industry. It’s also created a new wave of Black entrepreneurs who are passing on lessons of the business. Tina Trinh reports. (Camera and Produced by: Tina Trinh)
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