Бізнес

Berlin — German Chancellor Olaf Scholz will hold meetings with his top two ministers to try to find common ground after they put forward contradictory plans to fix the nation’s ailing economy, a government source told Reuters on Sunday.  

A document leaked by Christian Lindner’s finance ministry raised eyebrows in Berlin last week, with its push for tax cuts and fiscal discipline widely interpreted as a challenge to the multibillion-euro investment plan put forward by Economy Minister Robert Habeck just days earlier.  

The stand-off is the latest escalation in a row over economic and industrial policy between the FDP, the Greens and Scholz’s Social Democrats that has fueled speculation of the coalition’s potential collapse, less than a year before elections are due.  

But a government source told Reuters that Scholz and the ministers would hold several meetings in the coming days, saying that “now that everyone has submitted their paper, we have to see how they fit with each other.”  

A worsening business outlook in Europe’s largest economy has widened divisions in Scholz’s ideologically disparate coalition over policy measures to drive growth, protect industrial jobs, and reinforce Germany’s position as a global industrial hub.  

While Habeck wants the creation of a fund to stimulate investment and to get around Germany’s strict fiscal spending rules, Lindner advocates tax cuts to spur the economy and an immediate halt on all new regulation.  

SPD leader Lars Klingbeil signaled openness to discussing Lindner’s proposals in a local newspaper interview, but said that some of them were untenable for his party, which released its own economic plan earlier in October.  

“Giving more to the rich, letting employees work longer and sending them into retirement later – it will come as no surprise to anyone that we think this is the wrong approach,” Klingbeil told the Augsburger Allgemeine newspaper. 
…

WASHINGTON — America’s employers added 12,000 jobs in October, a total that economists say was held down by the effects of strikes and hurricanes that left many workers temporarily off payrolls. The report provided a somewhat blurry view of the job market at the end of a presidential race that has pivoted heavily on voters’ feelings about the economy.

Last month’s hiring gain was down significantly from the 223,000 jobs that were added in September. But economists have estimated that hurricanes Helene and Milton, combined with strikes at Boeing and elsewhere, had the effect of pushing down net job growth by tens of thousands of jobs in October.

Friday’s report from the Labor Department also showed that the unemployment rate remained at 4.1% last month. The low jobless rate suggests that the labor market is still fundamentally healthy, if not as robust as it was early this year. Combined with an inflation rate that has tumbled from its 2022 peak to near prepandemic levels, the overall economy appears to be on solid footing on the eve of Election Day.

The government did not estimate how many jobs were likely removed temporarily from payrolls last month. But economists have said they think the storms and strikes caused up to 100,000 jobs to be dropped. Reflecting the impact of the strikes, factories shed 46,000 positions in October.

Health care companies added 52,000 jobs in October, and state and local governments tacked on 39,000.

The employment report for October also revised down the government’s estimate of the job gains in August and September by a combined 112,000, indicating that the labor market wasn’t quite as robust then as initially thought.

“The big one-off shocks that struck the economy in October make it impossible to know whether the job market was changing direction in the month,’’ Bill Adams, chief economist at Comerica Bank, wrote in a commentary. “But the downward revisions to job growth through September show it was cooling before these shocks struck.’’

Still, economists have noted that the United States has the strongest of the world’s most advanced economies, one that has proved surprisingly durable despite the pressure of high interest rates. This week, for example, the government estimated that the economy expanded at a healthy 2.8% annual rate last quarter, with consumer spending — the heart of the economy — helping drive growth.

Yet as voters choose between former President Donald Trump and Vice President Kamala Harris, large numbers of Americans have said they are unhappy with the state of the economy. Despite the plummeting of inflation, many people are exasperated by high prices, which surged during the recovery from the pandemic recession and remain about 20% higher on average than they were before inflation began accelerating in early 2021.

With inflation having significantly cooled, the Fed is set to cut its benchmark interest rate next week for a second time and likely again in December. The Fed’s 11 rate hikes in 2022 and 2023 managed to help slow inflation without tipping the economy into a recession. A series of Fed rate cuts should lead, over time, to lower borrowing rates for consumers and businesses.

In the meantime, there have been signs of a slowdown in the job market. This week, the Labor Department reported that employers posted 7.4 million job openings in September. Although that is still more than employers posted on the eve of the 2020 pandemic, it amounted to the fewest openings since January 2021.

And 3.1 million Americans quit their jobs in September, the fewest in more than four years. A drop in quits tends to indicate that more workers are losing confidence in their ability to land a better job elsewhere.
…

LONDON — The European Union is investigating Chinese online retailer Temu over suspicions it’s failing to prevent the sale of illegal products, the 27-nation bloc’s executive arm said on Thursday.

The European Commission opened its investigation five months after adding Temu to the list of “very large online platforms” needing the strictest level of scrutiny under the bloc’s Digital Services Act. It’s a wide-ranging rulebook designed to clean up online platforms and keep internet users safe, with the threat of hefty fines.

Temu started entering Western markets only in the past two years and has grown in popularity by offering cheap goods — from clothing to home products — that are shipped from sellers in China. The company, owned by Pinduoduo Incorporated, a popular e-commerce site in China, now has 92 million users in the EU.

Temu said it “takes its obligations under the DSA seriously, continuously investing to strengthen our compliance system and safeguard consumer interests on our platform.”

“We will cooperate fully with regulators to support our shared goal of a safe, trusted marketplace for consumers,” the company said in a statement.

European Commission Executive Vice President Margrethe Vestager said in a press release that Brussels wants to make sure products sold on Temu’s platform “meet EU standards and do not harm consumers.”

EU enforcement will “guarantee a level playing field and that every platform, including Temu, fully respects the laws that keep our European market safe and fair for all,” she said.

The commission’s investigation will look into whether Temu’s systems are doing enough to crack down on “rogue traders” selling “noncompliant goods” amid concerns that they are able to swiftly reappear after being suspended. The commission didn’t single out specific illegal products that were being sold on the platform.

Regulators are also examining the risks from Temu’s “addictive design,” including “game-like” reward programs, and what the company is doing to mitigate those risks.

Also under investigation is Temu’s compliance with two other DSA requirements: giving researchers access to data and transparency on recommender systems. Companies must detail how they recommend content and products and give users at least one option to see recommendations that are not based on their personal profile and preferences.

Temu now has the chance to respond to the commission, which can decide to impose a fine or drop the case if the company makes changes or can prove that the suspicions aren’t valid.

Brussels has been cracking down on tech companies since the DSA took effect last year. It has also opened an investigation into another e-commerce platform, AliExpress, as well as social media sites such as X and Tiktok, which bowed to pressure after the commission demanded answers about a new rewards feature.

Temu has also faced scrutiny in the United States, where a congressional report last year accused the company of failing to prevent goods made by forced labor from being sold on its platform.
…

China has told its automakers to halt big investment in European countries that support extra tariffs on Chinese-built electric vehicles, two people briefed about the matter said, a move likely to further divide Europe.

The new European Union tariffs of up to 45.3% came into effect on Wednesday after a year-long investigation that divided the bloc and prompted retaliation from Beijing.

Ten EU members including France, Poland and Italy supported tariffs in a vote this month, in which five members including Germany opposed them and 12 abstained.

Chinese automakers including BYD, SAIC, and Geely were told at a meeting held by the Ministry of Commerce on Oct. 10 that they should pause their heavy asset investment plans such as factories in countries that backed the proposal, said the people.

They declined to be named, as the meeting was not public.

Several foreign automakers also attended the meeting, where the participants were told to be prudent about their investments in countries that abstained from voting and were “encouraged” to invest in those that voted against the tariffs, the people said.

Geely declined to comment. SAIC, BYD and the commerce ministry did not immediately reply to requests for comment.

The move by Chinese authorities to suspend some investment in Europe would suggest the government is seeking leverage in talks with the EU over an alternative to tariffs, keen to avoid a sharp fall in EV exports to the key market.

Europe accounted for more than 40% of EVs shipped from China in 2023, according to Reuters’ calculations using data from the China Passenger Car Association.

Given 100% tariffs on Chinese-made EVs in the United States and Canada, a drop in EV exports to Europe would risk deepening overcapacity Chinese automakers face in their home market.

Investments in Europe

During a visit to China by Spanish Prime Minister Pedro Sanchez last month, a Chinese company agreed to build a $1 billion plant in Spain to make machinery used for hydrogen production. Spain was one of the 12 EU states that abstained.

Italy and France are among EU countries that have been courting Chinese automakers for investments, but they have also warned of the risks that a flood of cheap Chinese EVs pose to European manufacturers.

State-owned SAIC, China’s second-largest auto exporter, is choosing a site for an EV factory in Europe and has been separately planning to open its second European parts center in France this year to meet growing demand for its MG-brand cars.

An aide to France’s junior trade minister Sophie Primas said they had no comment to make ahead of her trip to China next week.

The Italian government is in talks with Chery, China’s largest automaker by exports, and other Chinese automakers, including Dongfeng Motors, about potential investments.

Italy’s industry ministry declined to comment. Dongfeng didn’t immediately respond, while Chery declined to comment.

BYD is building a plant in Hungary, which voted against the tariffs. The Chinese EV giant has also been considering relocating its European headquarters from the Netherlands to Hungary due to cost concerns, two separate people with knowledge of the matter said.

Even before Beijing issued its guidance, Chinese companies were cautious about independently setting up production sites in Europe, as it requires large sums of investment and a deep understanding of local laws and culture.

The automakers were also told at the Oct. 10 meeting that they should avoid separate investment discussions with European governments and instead work together to hold collective talks, the people said.

The directive follows a similar warning in July when the commerce ministry advised China’s automakers not to invest in countries such as India and Turkey, and to be cautious with investments in Europe.
…

U.S. Treasury Secretary Janet Yellen has joined several independent economists to express her frustration about low consumer spending and the property crisis in China. Some experts have expressed disappointment over Beijing’s limited measures to stimulate consumer spending, which is one of the biggest hurdles in the Chinese economy.

“Our view has been that raising consumer spending in China as a share of GDP (gross domestic product) is really important, along with measures to address problems in the property sector,” Yellen said recently. “So far, I would say, I haven’t really heard any policies on the Chinese side that address that.”

Yellen has criticized China for its focus on subsidizing large state-owned companies instead of working to revive the wider economy, the world’s second largest. Analysts have suggested that China should stop subsidizing manufacturing companies with the money of households.

The World Bank has predicted that China’s GDP growth will be 4.8% this year, short of the country’s 5% goal. It will slip further to 4.3% in 2025, the bank predicted.

Low consumer demand in China can bring down the rate of growth in the global economy and affect the prospects of businesses in the U.S. and other parts of the world.

“For U.S. companies like Apple, Nike, Microsoft, KFC, Starbucks, Coca-Cola, Tesla or General Motors, to name a few, China is a big market. Any increase or decrease in consumption in China can influence their bottom line,” Lourdes Casanova, director at Cornell University’s Emerging Markets Institute, told VOA.

There are serious fears about the U.S. and the European Union slipping into recession, said Francesco Sisci, an expert on China affairs and director of Appia Institute, an Italy-based think tank.

“In China, there’s deflation and no sign of getting out of it. If China doesn’t get out of deflation, it could multiply recessionary forces worldwide. It might actually happen,” Sisci said.

Tendency to save, not spend

China has taken several measures to revive the economy in recent weeks. They include lowering mortgage rates and cutting the reserve requirement ratios (RRR) to encourage banks to lend more money. The idea is to support households repaying home loans and encourage people to purchase more houses from the crisis-hit property business.

However, analysts are not convinced about the effectiveness of the move. “Housing demand is unlikely to see any meaningful revival just because of lower mortgage rates and down payment requirements, as experience shows,” the Peterson Institute for International Economics (PIIE) said in a commentary.

Casanova thinks low consumer demand is not an easy problem to resolve because the average Chinese believes in savings more than spending. Personal consumption expenditures (PCE) as a percentage of GDP stands at 68% in the United States, 53% in Europe and 39% in China. Americans represent 31% of global PCE, while China’s people represent just 11%.

“There is room for improvement in China but, you can’t change consumers’ habits overnight and, clearly, Chinese consumers are much thriftier than the American ones,” she said. Americans often keep their cars outside the garage because garages are full of household items, clothes, toys, garage tools and other things, she pointed out.

One way to increase consumer demand is to increase salaries and take additional social security measures. But for companies that would increase production costs and hurt exports, Sisci said.

“What China needs is transformative reforms that would have a political price, and the ruling Communist Party is not eager to pay it,” he said.

Contradicting the World Bank’s view, China’s Vice Minister of Finance Liao Min said the economy was responding positively to a series of stimulus measures taken by the government.

“These initiatives aim to leverage government spending to stimulate overall social investment and consumption, thereby increasing effective market demand,” Liao said.
…