ReportWire

Tag: China government

  • Congress would target China with new restrictions in massive defense bill

    WASHINGTON (AP) — The Trump administration may have softened its language on China to maintain a fragile truce in their trade war, but Congress is charging ahead with more restrictions in a defense authorization bill that would deny Beijing investments in highly sensitive sectors and reduce U.S. reliance on Chinese biotechnology companies.

    Included in the 3,000-page bill approved Wednesday by the House is a provision to scrutinize American investments in China that could help develop technologies to boost Chinese military power. The bill, which next heads to the Senate, also would prohibit government money to be used for equipment and services from blacklisted Chinese biotechnology companies.

    In addition, the National Defense Authorization Act would boost U.S. support for the self-governing island of Taiwan that Beijing claims as its own and says it will take by force if necessary.

    “Taken together, these measures reflect a serious, strategic approach to countering the Chinese Communist Party,” said Rep. Raja Krishnamoorthi, the top Democrat on the House Select Committee on the Chinese Communist Party. He said the approach “stands in stark contrast to the White House’s recent actions.”

    Congress moves for harsher line toward China

    The compromise bill authorizing $900 billion for military programs was released two days after the White House unveiled its national security strategy. The Trump administration dropped Biden-era language that cast China as a strategic threat and said the U.S. “will rebalance America’s economic relationship with China,” an indication that President Donald Trump is more interested in a mutually advantageous economic relationship with Beijing than in long-term competition.

    The White House this week also allowed Nvidia to sell an advanced type of computer chip to China, with those more hawkish toward Beijing concerned that would help boost the country’s artificial intelligence.

    The China-related provisions in the traditionally bipartisan defense bill “make clear that, whatever the White House tone, Capitol Hill is locking in a hard-edged, long-term competition with Beijing,” said Craig Singleton, senior director of the China program at the Foundation for Defense of Democracies, a Washington-based think tank.

    If passed, these provisions would “build a floor under U.S. competitiveness policy — on capital, biotech, and critical tech — that will be very hard for future presidents to unwind quietly,” he said.

    The Chinese embassy in Washington on Wednesday denounced the bill.

    “The bill has kept playing up the ‘China threat’ narrative, trumpeting for military support to Taiwan, abusing state power to go after Chinese economic development, limiting trade, economic and people-to-people exchanges between China and the U.S., undermining China’s sovereignty, security and development interests and disrupting efforts of the two sides in stabilizing bilateral relations,” said Liu Pengyu, the embassy spokesperson.

    “China strongly deplores and firmly opposes this,” Liu said.

    US investments in China

    U.S. policymakers and lawmakers have been working for several years toward bipartisan legislation to curb investments in China when it comes to cutting-edge technologies such as quantum computing, aerospace, semiconductors and artificial intelligence. Those efforts flopped last year when Tesla CEO Elon Musk opposed a spending bill.

    Musk has extensive business interests in China, including a Tesla gigafactory in the eastern city of Shanghai.

    The provision made it into the must-pass defense policy bill, welcomed by Rep. John Moolenaar, a Michigan Republican who chairs the House Select Committee on the Chinese Communist Party.

    “For too long, the hard-earned money of American retirees and investors has been used to build up China’s military and economy,” he said. “This legislation will help bring that to an end.”

    Biosecurity protections

    Congress last year failed to pass the BIOSECURE Act, which cited national security in preventing federal money from benefiting a number of Chinese biotechnology companies. Critics said then that it was unfair to single out specific companies, warning that the measure would delay clinical trials and hinder development of new drugs, raise costs for medications and hurt innovation.

    The provision in the NDAA no longer names companies but leaves it to the Office of Management and Budget to compile a list of “biotechnology companies of concern.” The bill also would expand Pentagon investments in biotechnology.

    Moolenaar lauded the effort for taking “defensive action to secure American pharmaceutical supply chains and genetic information from malign Chinese companies.”

    Support for Taiwan

    The defense bill also would authorize an increase in funding, to $1 billion from $300 million this year, for Taiwan-related security cooperation and direct the Pentagon to establish a joint drone and anti-drone program.

    Another provision supports Taiwan’s bid to join the International Monetary Fund, which would provide the self-governing island with financial protection from China.

    It comes amid mixed signals from Trump, who appears careful not to upset Beijing as he seeks to strike trade deals with Chinese President Xi Jinping. The Chinese leader has urged Trump to handle the Taiwan issue “with prudence,” as Beijing considers its claim over Taiwan a core interest.

    In the new national security strategy, the White House says the U.S. does not support any unilateral change to the status quo in the Taiwan Strait and stresses that the U.S. should seek to deter and prevent a large-scale military conflict.

    “But the American military cannot, and should not have to, do this alone,” the document says, urging Japan and South Korea to increase defense spending.

    Source link

  • Takeoff of China’s flying taxis hits turbulence

    HONG KONG (AP) — An unmanned, oval-shaped craft from flying taxi maker EHang hovers, whirring noisily like a mini-helicopter over a riverside innovation zone on the outskirts of the southern Chinese business hub of Guangzhou, part of a trial of a mini-flying taxi that once might have been found only in sci-fi films.

    In nearby Shenzhen, food-delivery drones already are part of daily life and a novelty attraction for tourists, even if such services cost more. In the waterfront park surrounded by high-rises, Polish tourist Karolina Trzciańska and her friends ordered bubble tea and lemon tea by phone, just to give it a try. Their drinks arrived via a drone buzzing through the drizzle about 30 minutes later.

    “This is the first time I’m seeing something like this, so it was super fun to see the food being delivered by the drone,” she said.

    Such businesses are growing quickly with support from the government, though the take off of the so-called “low-altitude economy” faces obstacles such as strict airspace controls and battery limitations.

    Activities in airspace below 1,000 meters (about 3,280 feet) accounted for business turnover worth 506 billion yuan ($70 billion) in 2023, about 0.4% of China’s economy. By 2035, it’s expected to hit 3.5 trillion yuan (about $490 billion), said Zhang Xiaolan, a researcher at the State Information Center, a think tank affiliated with China’s main planning agency.

    Flying cars are in the making

    Guangdong province, home to drone giant DJI with an estimated 70% of the global commercial drone market, leads in development of the low-altitude economy, followed by wealthy eastern coastal provinces Jiangsu and Zhejiang, near Shanghai, according to a report by a research unit of the Chinese Academy of Sciences, Peking University, and other institutions.

    Other big players in Guangdong include EHang, logistics company SF Express’s drone arm Phoenix Wings, and automaker XPENG’s flying car unit ARIDGE.

    In October, Guangdong announced it plans to speed up construction of flight service stations and platforms to facilitate airspace operations and will support locally issued discount vouchers for low-altitude tourism.

    Its technology and financial hub Shenzhen has launched a 15-million-yuan ($2.1 million) award for companies that earn certifications required for passenger eVTOLs, short for “electric vertical take-off and landing” vehicles that lift off the ground like helicopters, among other incentives.

    China’s Civil Aviation Administration has granted certificates allowing EHang to offer commercial passenger services with its pilotless eVTOL, a low-altitude aircraft that can reach speeds of 130 kph (81 mph) with a maximum range of 30 kilometers (19 miles).

    EHang hasn’t launched commercial routes, but its vice president, He Tianxing, says it aims to start with aerial sightseeing services. The company has been building takeoff and landing sites in 20 Chinese cities over the past two years. He expects aircraft of various companies will be flying multiple routes, possibly after five years.

    He envisions eventual citywide networks using the rooftops of malls, schools and parks as terminals.

    “It can’t just be a research product, nor an engineer’s toy,” he said.

    Accidents, battery limitations and airspace controls

    The biggest challenge for developing eVTOL aircraft is maintaining longer flights and overcoming battery capacity limitations, said Guo Liming, co-founder of Shenzhen-based Skyevtol, whose single-seat manned eVTOL aircraft, priced at around $100,000, can only fly 20 to 30 minutes before it must be charged.

    It also has not all been smooth skies.

    In September, two XPENG’s eVTOL aircraft collided after a rehearsal for an exhibition and one of them caught fire while landing. The company said no one was hurt, but another expo canceled flying demonstrations a week later.

    Undeterred, XPENG has continued to showcase its flying cars, including a six-wheeled ground vehicle with a detachable eVTOL aircraft. Having invested over $600 million, the company said it has more than 7,000 global orders for its “Land Aircraft Carrier” and has begun preparing for mass production.

    A trial run of sightseeing flights in Dunhuang, a key ancient Silk Road destination famous for its Buddhist caves and dunes, is planned for next July.

    It’s unclear how quickly such aircraft might begin carrying paid passengers regularly. Some companies elsewhere have burned through their funding before reaching the commercial launch stage. In Germany, air taxi makers Lilium and Volocopter filed for bankruptcy, though the latter was later bought by Diamond Aircraft Group, a subsidiary of a Chinese firm.

    After years of commercialization, drone applications are not that widespread in China.

    Even though the country leads in drone technology and manufacturing, policy constraints including limited airspace access, may mean overseas markets are more promising, said Frank Zhou, managing director at GBA Low Altitude Technology Co., which provides technological software to clients.

    “Perhaps for some Southeast Asian countries, if I introduce these applications to them, their demand could explode,” he said.

    Less than one-third of China’s low-altitude airspace was accessible for general aviation use in 2023 and there were problems with uneven distribution and a lack of internet connectivity, Zhang, the State Information Center researcher, said in a report. The number of registered general aviation aerodromes in China, excluding private airports, was just about a tenth of those in the U.S., she said.

    Officials are easing their grip, but there’s turbulence ahead

    Chinese policymakers are gradually working to close the gap. The military generally commands use of most Chinese airspace but has pledged to simplify approval procedures and shorten review times in Shenzhen and five other provinces.

    Proposed revisions of the civil aviation law include a chapter on development and promotion of civilian activities, addressing low-altitude airspace allocation and supervision.

    It’s still early days, said Gary Ng, a senior economist at Natixis Corporate and Investment Banking.

    He expects progress toward commercialization to materialize around 2030, with passenger-carrying eVTOLs for tourism or industrial purposes starting before flying taxi services. Some of the aerial products could become key exports, he said.

    China is a latecomer to the industry but now leads in developing small drones and low-altitude airspace investments, said Chen Wen-hua, director at the Hong Kong Polytechnic University’s Research Centre for Low Altitude Economy.

    One advantage is the ruling Communist Party’s ability to mobilize regulators, industry players and universities to work toward the same goal, he said. But development of the technologies involved and safety concerns and public acceptance will determine how quickly different applications of drones and low-flying vehicles are adopted.

    The future for the low altitude economy is bright, Chen said, “however, the road leading to that bright future might be treacherous.”

    ____

    Associated Press video producer Olivia Zhang and researcher Yu Bing in Beijing contributed to this report.

    Source link

  • US has warned others to avoid loans from Chinese state banks. But it’s the biggest recipient of all

    WASHINGTON (AP) — For years, Washington has been warning others not to trust loans from Chinese state banks fueling its rise as a superpower. But a new report reveals an ironic twist: The United States is the biggest recipient of all — by far. And the security and technology implications have yet to be fully understood.

    China’s state lenders have funneled $200 billion into U.S. businesses for a quarter of a century, but many of the loans have been kept secret because the money was first routed through shell companies in the Cayman Islands, Bermuda, Delaware and elsewhere that helped obscure their origins, according to AidData, a research lab at the College of William & Mary in Virginia.

    More alarming, much of the lending was to help Chinese companies buy stakes in U.S. businesses, many tied to critical technology and national security, including a robotics maker, a semiconductor company and a biotech firm.

    The report found a far more widespread and sophisticated lending network than previously thought — a web of financial obligations extending beyond developing countries to rich ones, including the U.K., Germany, Australia, the Netherlands and other U.S. allies.

    “China was playing chess while the rest of us were playing checkers,” said former White House investment adviser William Henagan, who worries the hidden lending has given China a chokehold on technologies. “Wars will be won or lost based on whether you can control products critical to running an economy.”

    China money gets a closer look

    While the U.S. still welcomes most foreign investment — and President Donald Trump has courted it — money from China has drawn particular scrutiny as the world’s two biggest economies with opposing ideologies battle for global supremacy.

    Deals financed by China’s state-owned banks, the ones studied in the AidData report, are especially problematic. The lenders are controlled by China’s central government and the Communist Party’s Central Financial Commission, and they are directed to advance China’s strategic goals.

    In total, the AidData report found China lent more than $2 trillion from 2000 through 2023 around the world, double the highest previous estimates and a surprise to even longtime analysts of China’s rise. And much of the lending to wealthy countries was focused on critical minerals and high-tech assets — rare earths and semiconductors needed for fighter jets, submarines, radar systems, precision-guided missiles and telecom networks.

    “The U.S., under both (former President Joe) Biden and Trump, have been beating this drum for more than a decade that Beijing is a predatory lender,” said Brad Parks, executive director of AidData. “The irony is very rich.”

    Shell games

    Until now, a full accounting of China’s state lending has never been published because much of the financing is buried beneath layers of secrecy, masked by Western-sounding shell companies and mislabeled by international databases as ordinary private financing.

    “There is a complete lack of transparency that speaks to the lengths to which China goes, whether through shell companies or confidentiality agreements or redactions, to make it extremely difficult to come up with this full picture,” said Scott Nathan, the former head of the U.S. International Development Finance Corp., an agency set up in the first Trump term to invest in foreign projects deemed in the U.S. national interest.

    Since the report’s last documented loan in 2023, U.S. scrutiny has gotten better. Screening mechanisms, such as the interagency Committee on Foreign Investment in the U.S., got beefed up in 2020 to protect sensitive sectors in the economy.

    But China has gotten better, too, in part by setting up banks and branches overseas — more than 100 in recent years — that then lend to offshore entities, further clouding the origins of the money.

    “In places where there are more cops on the beat,” Parks said, “it has found ways to work around barriers to entry.”

    Where the loans ended up

    Chinese state bank financing has touched projects across the U.S., particularly in the Northeast, the Great Lakes region, the West Coast and along the Gulf of Mexico, which Trump has renamed the Gulf of America. Many loans targeted critical high-tech industries, according to the report.

    — In 2015, for instance, Chinese state-owned banks lent $1.2 billion to a private Chinese business to buy an 80% stake in Ironshore, a U.S. insurer whose clients included the Central Intelligence Agency and Federal Bureau of Investigation officials and undercover agents who might need help paying legal bills in case they got into trouble in their jobs.

    U.S. regulators were unaware of the Chinese government involvement because the financing was funneled through a Cayman Island business with no obvious ties to China, according to the report. U.S. officials later realized the Chinese government could access information and ordered the Chinese buyer to divest.

    — That same year, the Chinese government published “Made in China 2025,” a list of 10 high-tech areas, such as semiconductors, biotechnology and robotics, where it wanted to reach 70% self-sufficiency within a decade. The next year, in 2016, the Export–Import Bank of China, a policy bank, provided $150 million in loans to help a Chinese company buy a robotics equipment company in Michigan.

    After China’s adoption of the manufacturing master plan, the percentage of projects targeting sensitive sectors such as robotics, defense, quantum computing and biotechnology rose from 46% to 88% of China’s portfolio for cross-border acquisition lending, according to AidData.

    — In 2017, a Delaware private equity firm using a Cayman Islands company tried to buy a U.S. chip maker; the deal was blocked when investigators discovered both companies were owned by a Chinese state-owned enterprise. That same Delaware company successfully bought a U.K. semiconductor maker that had to be divested when British authorities found out.

    — And in 2022, the U.K. forced a Chinese company to divest another sensitive British firm in the industry, a designer of chips in Apple phones but potentially adaptable for military systems. The Chinese company had bought it through a company in the Netherlands that they owned. That Dutch firm is now accused of withholding semiconductors vital to automakers in the U.S.-China trade war.

    Following the money

    To trace China’s hidden lending, AidData dug through regulatory filings, private contracts and stock exchange disclosures in more than 200 countries written in multiple languages.

    The effort to track China’s state loans and investment started more than a decade ago when Beijing launched its Belt & Road Initiative to build infrastructure in developing countries. The project expanded sharply three years ago when the AidData team, which eventually grew to 140 researchers, realized many of the loans were landing in advanced economies such as the U.S., Australia, the Netherlands and Portugal, where acquisitions could allow it to access technology that Beijing considers essential to its global rise.

    The report says the findings show a shift in the use of state credit from promoting economic development and social welfare to gaining geo-economic advantages.

    “There’s global concern that this is part of a concerted effort to gain control over economic chokepoints and use this leverage,” said Brad Setser, an adviser to the U.S. Trade Representative in the Biden administration. “It’s important that we understand what they’re doing, and they don’t make it easy.”

    ___

    Condon reported from New York.

    Source link

  • Japan protests China’s travel advisory over Taiwan remarks

    BEIJING (AP) — Japan raised objections Saturday after China advised its citizens to avoid visiting Japan, as a feud over the new Japanese leader’s remarks on Taiwan showed no signs of dying down.

    The government in Tokyo lodged a protest and its top spokesperson, Chief Cabinet Secretary Minoru Kihara, urged China to take “appropriate measures,” Japan’s Kyodo News Service reported.

    China advised its citizens Friday to refrain from traveling to Japan in the near future. It cited earlier attacks against Chinese in Japan and what it called Prime Minister Sanae Takaichi ‘s “erroneous remarks” on Taiwan, which it said undermined the atmosphere for China-Japan exchange.

    Kihara told reporters that it is precisely because of the differences between the two governments that multilayered communication is essential, a Kyodo report said.

    China has repeatedly recommended its nationals take security precautions when in Japan over the past year, but the latest announcement appeared to be stronger in advising against travel, according to notices posted on the website of its embassy in Tokyo.

    Japan is an immensely popular destination for Chinese tourists, providing a much-needed economic boost but also sparking an anti-China and anti-foreigner backlash from some. It’s unclear what impact the advisory will have on the willingness of Chinese to visit Japan, but several Chinese airlines offered no-penalty refunds on previously sold tickets to Japan following the government’s announcement.

    The dispute suggests that Japan’s already fragile relations with China could turn rocky under Takaichi, who supports building up the military to counter potential threats from Beijing and its claims to contested territory in nearby waters in the western Pacific.

    Stay up to date with the news and the best of AP by following our WhatsApp channel.


    Follow on

    Takaichi, who became prime minister last month, said in parliament that a Chinese attack on Taiwan could constitute “an existential threat” to Japan, requiring the use of force by its military.

    The remark prompted strong objections from China, including a social media post from its consul general in Osaka last weekend saying “we have no choice but to cut off that dirty neck that has been lunged at us.”

    His comment, which was later taken down, sparked a Japanese diplomatic protest that was followed by a back-and-forth that continued all week.

    China claims Taiwan, a self-governing island off its coast, as its territory and has staged threatening military drills in the surrounding waters in recent years.

    Neither the United States nor Japan has official diplomatic relations with Taiwan, but the U.S. is the main supplier of defense equipment to the island’s military and opposes resolution of the China-Taiwan situation by force.

    Japan is a military ally of the United States and hosts American troops at several U.S. bases on its territory, including a major Navy base south of Tokyo.

    Source link

  • China rolls out its version of the H-1B visa to attract foreign tech workers

    HONG KONG (AP) — Vaishnavi Srinivasagopalan, a skilled Indian IT professional who has worked in both India and the U.S., has been looking for work in China. Beijing’s new K-visa program targeting science and technology workers could turn that dream into a reality.

    The K-visa rolled out by Beijing last month is part of China’s widening effort to catch up with the U.S. in the race for global talent and cutting edge technology. It coincides with uncertainties over the U.S.’s H-1B program under tightened immigrations policies implemented by President Donald Trump.

    “(The) K-visa for China (is) an equivalent to the H-1B for the U.S.,” said Srinivasagopalan, who is intrigued by China’s working environment and culture after her father worked at a Chinese university a few years back. “It is a good option for people like me to work abroad.”

    The K-visa supplements China’s existing visa schemes including the R-visa for foreign professionals, but with loosened requirements, such as not requiring an applicant to have a job offer before applying.

    Stricter U.S. policies toward foreign students and scholars under Trump, including the raising of fees for the H-1B visa for foreign skilled workers to $100,000 for new applicants, are leading some non-American professionals and students to consider going elsewhere.

    “Students studying in the U.S. hoped for an (H-1B) visa, but currently this is an issue,” said Bikash Kali Das, an Indian masters student of international relations at Sichuan University in China.

    China wants more foreign tech professionals

    China is striking while the iron is hot.

    The ruling Communist Party has made global leadership in advanced technologies a top priority, paying massive government subsidies to support research and development of areas such as artificial intelligence, semiconductors and robotics.

    “Beijing perceives the tightening of immigration policies in the U.S. as an opportunity to position itself globally as welcoming foreign talent and investment more broadly,” said Barbara Kelemen, associate director and head of Asia at security intelligence firm Dragonfly.

    Unemployment among Chinese graduates remains high, and competition is intense for jobs in scientific and technical fields. But there is a skills gap China’s leadership is eager to fill. For decades, China has been losing top talent to developed countries as many stayed and worked in the U.S. and Europe after they finished studies there.

    The brain drain has not fully reversed.

    Many Chinese parents still see Western education as advanced and are eager to send their children abroad, said Alfred Wu, an associate professor at the National University of Singapore.

    Still, in recent years, a growing number of professionals including AI experts, scientists and engineers have moved to China from the U.S., including Chinese-Americans. Fei Su, a chip architect at Intel, and Ming Zhou, a leading engineer at U.S.-based software firm Altair, were among those who have taken teaching jobs in China this year.

    Many skilled workers in India and Southeast Asia have already expressed interest about the K-visa, said Edward Hu, a Shanghai-based immigration director at the consultancy Newland Chase.

    Questions about extra competition from foreign workers

    With the jobless rate for Chinese aged 16-24 excluding students at nearly 18%, the campaign to attract more foreign professionals is raising questions.

    “The current job market is already under fierce competition,” said Zhou Xinying, a 24-year-old postgraduate student in behavioral science at eastern China’s Zhejiang University.

    While foreign professionals could help “bring about new technologies” and different international perspectives, Zhou said, “some Chinese young job seekers may feel pressure due to the introduction of the K-visa policy.”

    Kyle Huang, a 26-year-old software engineer based in the southern city of Guangzhou, said his peers in the science and technology fields fear the new visa scheme “might threaten local job opportunities”.

    A recent commentary published by a state-backed news outlet, the Shanghai Observer, downplayed such concerns, saying that bringing in such foreign professionals will benefit the economy. As China advances in areas such as AI and cutting-edge semiconductors, there is a “gap and mismatch” between qualified jobseekers and the demand for skilled workers, it said.

    “The more complex the global environment, the more China will open its arms,” it said.

    “Beijing will need to emphasize how select foreign talent can create, not take, local jobs,” said Michael Feller, chief strategist at consultancy Geopolitical Strategy. “But even Washington has shown that this is politically a hard argument to make, despite decades of evidence.”

    China’s disadvantages even with the new visas

    Recruitment and immigration specialists say foreign workers face various hurdles in China. One is the language barrier. The ruling Communist Party’s internet censorship, known as the “Great Firewall,” is another drawback.

    A country of about 1.4 billion, China had only an estimated 711,000 foreign workers residing in the country as of 2023.

    The U.S. still leads in research and has the advantage of using English widely. There’s also still a relatively clearer pathway to residency for many, said David Stepat, country director for Singapore at the consultancy Dezan Shira & Associates.

    Nikhil Swaminathan, an Indian H1-B visa holder working for a U.S. non-profit organization after finishing graduate school there, is interested in China’s K-visa but skeptical. “I would’ve considered it. China’s a great place to work in tech, if not for the difficult relationship between India and China,” he said.

    Given a choice, many jobseekers still are likely to aim for jobs in leading global companies outside China.

    “The U.S. is probably more at risk of losing would-be H-1B applicants to other Western economies, including the UK and European Union, than to China,” said Feller at Geopolitical Strategy.

    “The U.S. may be sabotaging itself, but it’s doing so from a far more competitive position in terms of its attractiveness to talent,” Feller said. “China will need to do far more than offer convenient visa pathways to attract the best.”

    ___

    AP writer Fu Ting in Washington and researchers Yu Bing and Shihuan Chen in Beijing contributed.

    Source link

  • Deal between the US and China is undoing damage from a self-inflicted trade war

    BUSAN, South Korea (AP) — Three-digit tariffs are off the table, but import duties on each other are higher than in January.

    Rare earth materials will flow more smoothly, but China has put in place an export permitting regime that it can tighten or loosen as needed.

    Port fees will go away, but only for one year.

    And Beijing is again buying U.S. soybeans after it had abruptly cut off American farmers.

    After months of posturing, arguing and threatening, U.S. President Donald Trump and Chinese leader Xi Jinping have essentially turned back the clock. While the meeting between the two leaders was hailed by Trump as a “roaring success,” the agreement that came out of it may only serve to undo some of the damages Trump inflicted with his trade war upon his return to the White House.

    “It is hard to see what major gains the U.S. has made in the bilateral relationship relative to where things stood before Trump took office,” said Eswar Prasad, an economist at Cornell University.

    On the Senate floor, Minority Leader Chuck Schumer on Thursday denounced the deal out of South Korea as leaving the U.S. as “no better off.”

    “If anything, things are worse: Prices have gone up and China has agreed to nothing of substance that will improve trade between our nations,” the Democrat senator said, adding that Trump “started a trade war, created a giant mess for businesses, consumers, and soybean farmers, and then he celebrates for trying to clean up the very mess he created in the first place.”

    Stay up to date with the news and the best of AP by following our WhatsApp channel.


    Follow on

    Nevertheless, the deal has injected a degree of stability, giving the world’s two largest economies — as well as the rest of the world — time and room to readjust.

    Washington and Beijing still need to finalize their agreements, a process that always has the potential for fresh disputes. But for now, Xi appears interested in moving past the latest tensions.

    In an official statement, Xi referred to “recent twists and turns” that “offered some lessons for both sides.” He said they should be “focusing on the benefits of cooperation rather than falling into a vicious cycle of mutual retaliation.”

    Both sides reduce tariffs, resume soybean sales to China

    Trump fired the first shot in the trade war in February when he imposed an additional 10% tariff on Chinese goods over the allegation that Beijing failed to stem the flow of chemicals used to make fentanyl. That soared to as much as 145% after China retaliated, but Trump walked it back following market meltdowns.

    The two sides in May slashed their massive tariffs to 10% on each other, while Washington retained the 20% fentanyl-related tariff, and China its retaliatory tariffs of 10% or 15% on U.S. farm goods.

    Now, Trump said he has removed one 10% fentanyl tariff in exchange for Beijing’s cooperation in fighting the illicit drug.

    U.S. Secretary of Agriculture Brooke Rollins said China would also withdraw the retaliatory tariffs on U.S. agricultural products. A spokesperson for the Chinese Ministry of Commerce said Beijing would “adjust accordingly” its countermeasures without giving details.

    In addition, China has agreed to buy 12 million metric tons of U.S. beans through January, and will buy at least 25 million metric tons annually for next three years, Rollins said on Thursday.

    That compares to China buying 17 million metric tons of U.S. soybeans in the first eight months of this year but importing zero in September. In 2024, China bought 22 million metric tons of U.S. soybeans, according to state media.

    Although China did not confirm the details of the latest soybean deal, the spokesperson for the Chinese commerce ministry said the two sides have reached “consensus” to expand agricultural trade.

    One-year truce on export controls and port fees

    In April, China used its monopoly power in the processing of critical minerals to institute a permitting requirement for the export of several rare earth elements. On October 9, Beijing expanded the export rules, apparently in response to the U.S. decision to extend export controls to businesses affiliated with already-blacklisted foreign companies.

    Furious, Trump threatened to impose a new 100% tariff on China, but the two sides managed to cool down in time for Trump to meet Xi in South Korea.

    Beijing on Thursday said it would pause for a year the rare earth export rules from October to “conduct research to refine specific plans,” while the U.S. will suspend its affiliate rule for one year.

    The delay by Beijing “provides just enough time for the United States to accelerate investment in capabilities and innovation for rare earths and permanent magnets,” said Wade Senti, president of the U.S. permanent magnet company AML. “This needs to be on warp speed and at a scale never seen before since the COVID-19 response,” he said.

    Another fresh thorn was the U.S. introduction of port fees in October targeting China-linked vessels, as part of a plan to restore America’s shipbuilding capabilitie s. Beijing answered with countermeasures against the U.S.

    The port fees on each other are not removed but will be suspended for one year, the Chinese commerce ministry said.

    The future is still uncertain

    Whether Trump accepts a return to the status quo or pushes to address fundamental issues that have persisted for years between the U.S. and China remains unclear. Nothing about Thursday’s meeting — the first between Trump and Xi in six years — affects Chinese manufacturing dominance that Trump has blamed for the loss of American blue collar jobs.

    Sean Stein, president of the U.S.-China Business Council, called the latest developments “very encouraging” and added: “We hope that future negotiations will address long-standing market access barriers, help level the playing field for U.S. companies, and bring long-term predictability to the bilateral trade relationship.”

    There are more opportunities on the horizon to keep working on these challenges. Trump said he will go to China in April and Xi will visit the U.S. after that.

    If Trump isn’t successful, this period could be remembered for a lot of sound and fury but no change in the basic trajectory of China’s ascendant economy.

    “Generally, Trump grows impatient with anything beyond the immediate, and it is the Chinese that play for longer term advantage,” said Kurt Campbell, a former deputy secretary of state in the Biden administration and now chairman of The Asia Group.

    ___

    Tang and Wiseman reported from Washington. AP writer Josh Funk in Omaha, Neb., contributed to the report

    Source link

  • China says it will work with US to resolve issues related to TikTok

    President Donald Trump’s meeting Thursday with China’s top leader Xi Jinping produced a raft of decisions to help dial back trade tensions, but no agreement on TikTok’s ownership.

    “China will work with the U.S. to properly resolve issues related to TikTok,” China’s Commerce Ministry said after the meeting.

    It gave no details on any progress toward ending uncertainty about the fate of the popular video-sharing platform in the U.S.

    The Trump administration had been signaling that it may have finally reached a deal with Beijing to keep TikTok running in the U.S.

    Treasury Secretary Scott Bessent had said on CBS’s “Face the Nation” on Sunday that the two leaders will “consummate that transaction on Thursday in Korea.”

    Wide bipartisan majorities in Congress passed — and President Joe Biden signed — a law that would ban TikTok in the U.S. if it did not find a new owner to replace China’s ByteDance. The platform went dark briefly on a January deadline but on his first day in office, Trump signed an executive order to keep it running while his administration tries to reach an agreement for the sale of the company.

    Three more executive orders followed, as Trump, without a clear legal basis, extended deadlines for a TikTok deal. The second was in April, when White House officials believed they were nearing a deal to spin off TikTok into a new company with U.S. ownership. That fell apart when China backed out after Trump announced sharply higher tariffs on Chinese products. Deadlines in June and September passed, with Trump saying he would allow TikTok to continue operating in the United States in a way that meets national security concerns.

    Trump’s order was meant to enable an American-led group of investors to buy the app from China’s ByteDance, though the deal also requires China’s approval.

    Stay up to date with the news and the best of AP by following our WhatsApp channel.


    Follow on

    However, TikTok deal is “not really a big thing for Xi Jinping,” said Bonnie Glaser, managing director of the German Marshall Fund’s Indo-Pacific program, during a media briefing Tuesday. “(China is) happy to let (Trump) declare that they have finally kept a deal. Whether or not that deal will protect the data of Americans is a big question going forward.”

    “A big question mark for the United States, of course, is whether this is consistent with U.S. law since there was a law passed by Congress,” Glaser said.

    About 43% of U.S. adults under the age of 30 say they regularly get news from TikTok, higher than any other social media app, including YouTube, Facebook and Instagram, according to a Pew Research Center report published in September.

    A recent Pew Research Center survey found that about one-third of Americans said they supported a TikTok ban, down from 50% in March 2023. Roughly one-third said they would oppose a ban, and a similar percentage said they weren’t sure.

    Among those who said they supported banning the social media platform, about 8 in 10 cited concerns over users’ data security being at risk as a major factor in their decision, according to the report.

    The security debate centers on the TikTok recommendation algorithm — which has steered millions of users into an endless stream of video shorts. China has said the algorithm must remain under Chinese control by law. But a U.S. regulation that Congress passed with bipartisan support said any divestment of TikTok would require the platform to cut ties with ByteDance.

    American officials have warned the algorithm — a complex system of rules and calculations that platforms use to deliver personalized content — is vulnerable to manipulation by Chinese authorities, but no evidence has been presented by U.S. officials proving that China has attempted to do so.

    ___

    Associated Press Writer Fu Ting contributed to this story from Washington.

    Source link

  • China’s C919 jet faces turbulent skies as US-China trade tensions add to delays

    HONG KONG (AP) — China’s ambition to challenge Boeing and Airbus with its own homegrown passenger jet is running into turbulence, with deliveries of finished aircraft likely to fall far short of its target announced for this year.

    The C919 jet — a single-aisle passenger plane aiming to rival Boeing’s 737 and Airbus’ A320 – is made by state-owned aircraft manufacturer COMAC. Beijing is showcasing it as evidence of China’s technological advancement and progress in self-reliance, though it uses many Western sourced components.

    Trade friction with Washington threatens to prevent COMAC from securing core parts for the program that has been supported by huge Chinese government subsidies.

    “COMAC faces significant risk from the volatile policy environment, with its supply chains vulnerable to export restrictions and tit-for-tat measures between the U.S. and China,” said Max J. Zenglein, Asia-Pacific senior economist at The Conference Board think tank.

    The C919 has 48 major suppliers from the U.S. — including GE, Honeywell and Collins — 26 from Europe and 14 from China, according to analysts at the Bank of America. Trump threatened to impose new export controls on “critical” software to China after Beijing imposed stricter export controls on rare earths.

    “Existing choke points are being exploited in the deal making process between governments,” Zenglein said. “This is likely to continue as critical dependencies have become political bargaining chips.”

    Beijing has high hopes for the C919, which made its maiden commercial flight in 2023. The mid-sized jet is meant to help fill vast domestic demand for new aircraft over the next few decades. China hopes to expand sales beyond its borders and fly globally, including in Southeast Asia, Africa and Europe.

    COMAC delivered 13 C919s to Chinese carriers last year and only seven as of October this year, despite plans to ramp up production and deliver 30 jets in 2025, according to the aviation consultancy Cirium.

    China’s biggest state-owned airlines — Air China, China Eastern and China Southern — are the only commercial airlines currently flying a total of around 20 C919s.

    Trade tensions between the U.S. and China have “directly affected” delivery schedules for the C919, said Dan Taylor, head of consulting at aviation consultancy IBA. For one, output plans were disrupted when the U.S. suspended export licenses for the jet’s LEAP-1C engines around May, resuming them in July, he said.

    U.S.-controlled technology that needs export licensing for the LEAP-1C engines — jointly built by the U.S.’s GE Aerospace and France’s Safran -— means the C919’s engines require U.S. export clearance, Taylor said, making it “inherently sensitive to political shifts.”

    “Engine and avionics dependence on Western suppliers continues to expose the program to policy decisions beyond COMAC’s control,” Taylor explained.

    Geopolitical tensions alone are not the only cause for slower than expected production of the C919s. The program has been “marked by caution and prioritizing quality and safety, so there also may be some operational reasons for the slower production ramp up,” said Zenglein from The Conference Board.

    While “it has always been the aim to reduce the reliance on foreign components as quickly as possible” for the C919, Zenglein said, many analysts say it is a challenging process. China’s own engine alternative — the CJ-1000A under development by state-owned Aero Engine Corporation of China (AECC) — is still under testing, according to IBA.

    Several airlines outside of China, including AirAsia, have expressed interest in flying the C919, but a lack of international certification has so far prevented the C919 from flying beyond China. Certifications from the U.S. and the European Union’s aviation regulators could take years.

    For the C919 to succeed, it “needs to have each one of three things: good economics, a prompt global product support network, and certification from safety agencies”, said Richard Aboulafia, managing director of AeroDynamic Advisory. “Any one of these three alone doesn’t mean much,” he said.

    China will need 9,570 new passenger aircraft between 2025 and 2044, according to Airbus’ latest market forecast, more than 80% of them single-aisle jets like the C919.

    COMAC’s faces a growing challenge from Airbus, which is expanding its manufacturing capacity in China. A second assembly line is due to begin operating in 2026, allowing Airbus to increase its production of A320 single-aisle jets in China – an aircraft model similar to the C919.

    Analysts expect that it will take years for COMAC to break the Boeing-Airbus duopoly in global aircraft share. By the late 2020s, COMAC will likely grow within China and possibly establish regional exports, said IBA’s Taylor.

    In the near term, a lack of international certification will be “delaying any meaningful Western-market entry” for the jet and export control volatility will likely continue to undermine its global expansion plans, Taylor added.

    Source link

  • Nvidia’s CEO says it’s in talks with Trump administration on a new chip for China

    BANGKOK (AP) — Nvidia CEO Jensen Huang said Friday that the company is discussing a potential new computer chip designed for China with the Trump administration.

    Huang was asked about a possible “B30A” semiconductor for artificial intelligence data centers for China while on a visit to Taiwan, where he was meeting Nvidia’s key manufacturing partner, Taiwan Semiconductor Manufacturing Corp., the world’s largest chip maker.

    “I’m offering a new product to China for … AI data centers, the follow-on to H20,” Huang said. But he added that “That’s not our decision to make. It’s up to, of course, the United States government. And we’re in dialogue with them, but it’s too soon to know.”

    Such chips are graphics processing units, or GPUs, a type of device used to build and update a range of AI systems. But they are less powerful than Nvidia’s top semiconductors today, which cannot be sold to China due to U.S. national security restrictions.

    The B30A, based on California-based Nvidia’s specialized Blackwell technology, is reported to operate at about half the speed of Nvidia’s main B300 chips.

    Huang praised the the Trump administration for recently approving sales of Nvidia’s H20 chips to China after such business was suspended in April, with the proviso that the company must pay a 15% tax to the U.S. government on those sales. Chip maker Advanced Micro Devices, or AMD, was told to pay the same tax on its sales of its MI380 chips to China.

    As part of broader trade talks, Beijing and Washington recently agreed to pull back some non-tariff restrictions. China approved more permits for rare earth magnets to be exported to the U.S., while Washington lifted curbs on chip design software and jet engines. After lobbying by Huang, it also allowed sales of the H20 chips to go through.

    Huang did not comment directly on the tax when asked but said Nvidia appreciated being able to sell H20s to China.

    He said such sales pose no security risk for the United States. Nvidia is also speaking with Beijing to reassure Chinese authorities that those chips do not pose a “backdoor” security risk, Huang said.

    “We have made very clear and put to rest that H20 has no security backdoors. There are no such things. There never has. And so hopefully the response that we’ve given to the Chinese government will be sufficient,” he said.

    The Cyberspace Administration of China, the country’s internet watchdog, recently posted a notice on its website referring to alleged “serious security issues” with Nvidia’s computer chips.

    It said U.S. experts on AI had said such chips have “mature tracking and location and remote shutdown technologies” and Nvidia had been asked to explain any such risks and provide documentation about the issue.

    Huang said Nvidia was surprised by the accusation and was discussing the issue with Beijing.

    “As you know, they requested and urged us to secure licenses for the H20s for some time. And I’ve worked quite hard to help them secure the licenses. And so hopefully this will be resolved,” Huang said.

    Unconfirmed reports said Chinese authorities were also unhappy over comments by U.S. Commerce Secretary Howard Lutnick suggesting the U.S. was only selling outdated chips to China.

    Speaking on CNBC, Lutnick said the U.S. strategy was to keep China reliant on American chip technology.

    “We don’t sell them our best stuff,” he said. “Not our second best stuff. Not even our third best, but I think fourth best is where we’ve come out that we’re cool,” he said.

    China’s ruling Communist Party has made self-reliance in advanced technology a strategic priority, though it still relies on foreign semiconductor knowhow for much of what it produces.

    ___

    AP Videojournalist Taijing Wu in Taipei contributed to this report.

    Source link

  • What to know about China’s new regulations on rare earths

    BANGKOK (AP) — China released new interim measures Friday tightening controls on mining and processing of rare earths that are used in many high-tech products including electric vehicles, smartphones and fighter jets.

    The rules released Friday by the Ministry of Industry and Information Technology apply both to rare earths originating in China and those that are sent to China for refining.

    They require companies to comply with quotas for various minerals. Companies must have government approval to deal with rare earths and must accurately report the amount of rare earths products being handled. Violators will face legal penalties and also have their quotas for rare earths reduced.

    Here’s what to know.

    Why China has tightened controls on rare earths

    The 17 rare earth elements, including such minerals as germanium, gallium and titanium, aren’t actually rare. But they’re hard to find in a high enough concentration to make mining them worth the investment. China has been gradually tightening restrictions on exports of such materials, partly in response to U.S. controls on its access to American advanced technology.

    In April, just after U.S. President Donald Trump announced a raft of tariffs on dozens of U.S. trading partners, Beijing announced permitting requirements for seven more rare earths: samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium, citing the need to “better safeguard national security and interests and to fulfill global duties of non-proliferation.”

    Those limits raised worries that manufacturers in the U.S. and elsewhere would run short of vital materials needed for production, an issue in China-U.S. trade talks. In response to U.S. concessions on access to computer chip design software and jet engines, Beijing announced in June that it was speeding up approvals of rare earths exports.

    In July, China’s Ministry of State Security said it was cracking down on alleged smuggling of rare earths materials that it said threatened national security, indicating Beijing was moving to exert more control.

    China’s dominant role in the rare earths sector

    Over the past several decades, China has come to dominate rare earths processing. It now supplies nearly 90% of the world’s rare earths, even though it mines only about 70% of such materials.

    China holds nearly half of the world’s known reserves of rare earths, but it also imports significant amounts of rare earths from neighboring Myanmar for processing and export.

    Since it controls technologies used for refining rare earth elements and has banned exporting that know-how, China holds a near-monopoly on smelting and separating them.

    In 2024, the United States obtained 70% of the rare earths it used from China; 13% from Malaysia; 6% from Japan and 5% from Estonia. Some of the elements obtained from non-Chinese intermediate sources came from mineral concentrates processed in China and Australia, according to the U.S. Geologic Survey.

    The impact of the new rules on rare earths trade is unclear

    China has agreed to issue some permits for rare earth exports but not for military uses, and much uncertainty remains about their supply.

    The rules released Friday spell out tighter controls on licensing of companies dealing in rare earths and centralize controls on mining, exports and processing. They also impose more stringent environmental standards for the industry.

    Trump has made it a priority to try to reduce American reliance on China for rare earths, while pushing for Beijing to ease its controls.

    China has opted to dial up or down the approval process as needed, while tightening overall controls on the industry.

    The new regulations don’t spell out the quotas for production and export or specific rare earths elements, but strongly suggest Beijing is serious about exerting stronger control over the industry.

    Source link

  • US and China extend trade truce another 90 days, easing tension between world’s largest economies

    WASHINGTON (AP) — President Donald Trump extended a trade truce with China for another 90 days Monday, at least delaying once again a dangerous showdown between the world’s two biggest economies.

    Trump posted on his Truth Social platform that he signed the executive order for the extension, and that “all other elements of the Agreement will remain the same.” Beijing at the same time also announced the extension of the tariff pause, according to the Ministry of Commerce.

    The previous deadline was set to expire at 12:01 a.m. Tuesday. Had that happened the U.S. could have ratcheted up taxes on Chinese imports from an already high 30%, and Beijing could have responded by raising retaliatory levies on U.S. exports to China.

    President Donald Trump speaks with reporters in the James Brady Press Briefing Room at the White House, Monday, Aug. 11, 2025, in Washington. (AP Photo/Alex Brandon)

    The pause buys time for the two countries to work out some of their differences, perhaps clearing the way for a summit later this year between Trump and Chinese President Xi Jinping, and it has been welcomed by the U.S. companies doing business with China.

    Sean Stein, president of the U.S.-China Business Council, said the extension is “critical” to give the two governments time to negotiate a trade agreement that U.S. businesses hope would improve their market access in China and provide the certainty needed for companies to make medium- and long-term plans.

    “Securing an agreement on fentanyl that leads to a reduction in U.S. tariffs and a rollback of China’s retaliatory measures is acutely needed to restart U.S. agriculture and energy exports,” Stein said.

    China said Tuesday it would extend relief to American companies who were placed on an export control list and an unreliable entities list. After Trump initially announced tariffs in April, China restricted exports of dual-use goods to some American companies, while banning others from trading or investing in China. The Ministry of Commerce said it would stop those restrictions for some companies, while giving others another 90-day extension.

    Reaching a pact with China remains unfinished business for Trump, who has already upended the global trading system by slapping double-digit taxes – tariffs – on almost every country on earth.

    The European Union, Japan and other trading partners agreed to lopsided trade deals with Trump, accepting once unthinkably U.S. high tariffs (15% on Japanese and EU imports, for instance) to ward off something worse.

    Trump’s trade policies have turned the United States from one of the most open economies in the world into a protectionist fortress. The average U.S. tariff has gone from around 2.5% at the start of the year to 18.6%, highest since 1933, according to the Budget Lab at Yale University.

    But China tested the limits of a U.S. trade policy built around using tariffs as a cudgel to beat concessions out of trading partners. Beijing had a cudgel of its own: cutting off or slowing access to its rare earths minerals and magnets – used in everything from electric vehicles to jet engines.

    In June, the two countries reached an agreement to ease tensions. The United States said it would pull back export restrictions on computer chip technology and ethane, a feedstock in petrochemical production. And China agreed to make it easier for U.S. firms to get access to rare earths.

    “The U.S. has realized it does not have the upper hand,’’ said Claire Reade, senior counsel at Arnold & Porter and former assistant U.S. trade representative for China affairs.

    In May, the U.S. and China had averted an economic catastrophe by reducing massive tariffs they’d slapped on each other’s products, which had reached as high as 145% against China and 125% against the U.S.

    Those triple-digit tariffs threatened to effectively end trade between the United States and China and caused a frightening sell-off in financial markets. In a May meeting in Geneva they agreed to back off and keep talking: America’s tariffs went back down to a still-high 30% and China’s to 10%.

    Having demonstrated their ability to hurt each other, they’ve been talking ever since.

    “By overestimating the ability of steep tariffs to induce economic concessions from China, the Trump administration has not only underscored the limits of unilateral U.S. leverage, but also given Beijing grounds for believing that it can indefinitely enjoy the upper hand in subsequent talks with Washington by threatening to curtail rare earth exports,’’ said Ali Wyne, a specialist in U.S.-China relations at the International Crisis Group. “The administration’s desire for a trade détente stems from the self-inflicted consequences of its earlier hubris.”

    It’s unclear whether Washington and Beijing can reach a grand bargain over America’s biggest grievances. Among these are lax Chinese protection of intellectual property rights and Beijing’s subsidies and other industrial policies that, the Americans say, give Chinese firms an unfair advantage in world markets and have contributed to a massive U.S. trade deficit with China of $262 billion last year.

    Reade doesn’t expect much beyond limited agreements such as the Chinese saying they will buy more American soybeans and promising to do more to stop the flow of chemicals used to make fentanyl and to allow the continued flow of rare-earth magnets.

    But the tougher issues will likely linger, and “the trade war will continue grinding ahead for years into the future,’’ said Jeff Moon, a former U.S. diplomat and trade official who now runs the China Moon Strategies consultancy.

    ___

    Associated Press Staff Writers Josh Boak and Huizhong Wu contributed to this story.

    Source link

  • Stock market today: Wall Street falls from its records as oil prices tumble and tech stocks drop

    Stock market today: Wall Street falls from its records as oil prices tumble and tech stocks drop

    NEW YORK (AP) — Wall Street pulled back from its records on Tuesday after the price of crude oil tumbled and technology stocks faltered.

    The S&P 500 fell 0.8%, a day after setting an all-time high for the 46th time this year. The Dow Jones Industrial Average dropped 324 points, or 0.8%, and the Nasdaq composite sank 1%.

    Exxon Mobil dropped 3%, and energy stocks fell to some of Wall Street’s sharpest losses after oil prices tumbled more than 4%. A barrel of Brent crude, the international standard, has fallen back below $75 from more than $80 last week.

    Crude prices have been weakening as China’s flagging economic growth raises concerns about demand for oil. At the same time, worries have receded about Israel possibly attacking Iranian oil facilities as part of its retaliation against Iran’s missile attack early this month. Iran is a major producer of crude, and a strike could upend its exports to China and elsewhere.

    Markets are off to a mixed start. More from AP’s Seth Sutel.

    Nvidia was the heaviest weight on the S&P 500 and fell 4.5%. It’s a cooldown for the chip company, whose stock is still up 166.2% for the year so far on euphoria about the profits created by the boom around artificial-intelligence technology.

    Stocks for companies across the chip industry fell after Dutch supplier ASML reported its latest quarterly results. CEO Christophe Fouquet said AI continues to offer strong upside potential, but “other market segments are taking longer to recover,” and ASML’s stock trading in the United States fell 16.3%.

    Also dragging on the U.S. stock market was UnitedHealth Group. The insurer dropped 8.1% despite reporting better results for the latest quarter than analysts expected. It lowered the top end of its forecasted range for profit over the full year.

    Helping to keep the S&P 500 and Dow close to their records set on Monday were gains for several financial companies following better-than-expected profit reports for the summer.

    Charles Schwab jumped 6.1%. More customers opened brokerage accounts at the company, helping to bring its total client assets to a record $9.92 trillion. Bank of America added 0.5%, and CEO Brian Moynihan said his company benefited from higher average loans and fees for investment banking and asset management.

    Walgreens Boots Alliance was another winner, up 15.8%, after topping analysts’ forecasts. The drugstore chain also said it will close about 1,200 locations over the next three years as it tries to turn around its struggling U.S. business.

    Chipmaker Wolfspeed jumped 21.3% to trim its loss for the year to 68.3% after the Biden-Harris administration announced plans to provide up to $750 million in direct funding to the company. The money will support its new silicon carbide factory in North Carolina that makes the wafers used in advanced computer chips.

    In the bond market, trading of Treasurys resumed after a holiday on Monday, and yields sank following a weaker-than-expected report on manufacturing in New York state.

    The yield on the 10-year Treasury fell to 4.03% from 4.10% late Friday. Manufacturing has been one of the areas of the U.S. economy hurt most by high interest rates caused by the Federal Reserve in its efforts to slow the economy enough to stamp out high inflation.

    Now, though, the Fed has begun cutting interest rates as it’s widened its focus to include keeping the economy humming instead of just fighting high inflation. It looks set to continue cutting rates through next year, which would ease the brakes further off the economy.

    Recent reports showing the U.S. economy remains stronger than expected have raised optimism that the Fed can pull off a perfect landing where it gets inflation down to 2% without causing a recession that many had thought would be necessary.

    Because of expectations for continued growth for the U.S. economy, as well as the boost that lower rates can give to corporate profits and prices for stocks, strategists at UBS raised their forecast for how high the S&P 500 could go this year and next.

    Led by Jonathan Golub, they’re calling for the S&P 500 to rise to 5,850 by the end of the year, up from their prior forecast of 5,600.

    The S&P 500 finished Tuesday at 5,815.26 after falling 44.59 points. The Dow dropped 324.80 to 42,740.42, and the Nasdaq composite sank 187.10 to 18,315.59.

    In stock markets abroad, Chinese stocks fell sharply as doubts continue about whether the government will offer enough fiscal stimulus to prop up the world’s second-largest economy.

    Stocks in Shanghai fell 2.5%, and Hong Kong’s Hang Seng index dropped 3.7%.

    Indexes were mixed elsewhere in Asia and in Europe.

    ___

    AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

    Source link

  • Australia’s treasurer will visit China this week in the latest sign that bilateral ties are mending

    Australia’s treasurer will visit China this week in the latest sign that bilateral ties are mending

    MELBOURNE, Australia (AP) — Treasurer Jim Chalmers will this week become the first Australian government minister in that key economic role to visit China in seven years, in the latest sign that strained bilateral relations are mending.

    Chalmers flies to Beijing on Thursday for a two-day visit. The last Australian treasurer to visit China was Scott Morrison in 2017.

    Morrison rose to become prime minister a year later and bilateral relations further soured under his rule until his conservative government was replaced by Prime Minister Anthony Albanese’s center-left Labor Party after the 2022 general election.

    Chalmers said Wednesday that the main purpose of his visit was to co-chair the Australia-China Strategic Economic Dialogue on Thursday with Zheng Shanjie, chair of China’s National Development and Reform Commission.

    Discussions will focus on growing trade and investment with China and opportunities for Australian and Chinese businesses to cooperate, government documents say.

    “This is another really important step towards stabilizing our economic relationship with China,” Chalmers told reporters in Brisbane.

    “It will be part of the Albanese government‘s methodical and coordinated efforts to reestablish dialogue with China, Australia’s largest trading partner,” Chalmers added.

    The dialogue was last held in 2017.

    The bilateral relationship plumbed new depths in 2020 after the Morrison government called for an independent investigation into the origins of and responses to the COVID-19 pandemic.

    China imposed a series of official and unofficial bans in 2020 on Australian products, including coal, cotton, wine, barley, beef, lobsters and wood that cost Australian exporters up to 20 billion Australian dollars ($13 billion) a year.

    Most of those trade obstacles have been removed since the conservative government was ousted after nine years in office.

    In November, Albanese became the first Australian prime minister to visit China in seven years. In June, Li Qiang became the first Chinese premier to visit Australia in seven years.

    But Australia remains wary of China as a trading partner despite improving relations and is keen forge closer economic ties to the world’s most populous nation, India.

    Indian Commerce and Industry Minister Piyush Goyal met with his Australian counterpart Don Farrell in Australia on Wednesday to discuss progress on a new bilateral free trade deal that furthers a 2022 pact.

    “As a testimony of the importance that the Australia relationship is to India, we are looking at significantly upscaling our partnerships in trade, investment, tourism and technology and therefore one of the first announcements I’d like to make is that we shall shortly be setting up in Sydney an office covering all these four areas,” Goyal told reporters in Farrell’s hometown of Adelaide.

    Australia has had a free trade agreement with China since 2015.

    Source link

  • China announces sanctions on US companies selling arms to self-ruled Taiwan

    China announces sanctions on US companies selling arms to self-ruled Taiwan

    BEIJING (AP) — China on Wednesday announced sanctions on American companies selling arms to the self-ruled island of Taiwan, which Beijing claims as its own territory and threatens to annex by force.

    Chinese state media made the announcement, citing the Foreign Ministry, but gave no details on the companies involved. Taiwan is awaiting deliveries of F-16 fighter jets, Abrams tanks and a range of missiles from the U.S.

    China has been upping its threats to attack Taiwan, whose 23 million citizens overwhelmingly favor their current status of de-facto independence. Despite their lack of formal diplomatic ties, the U.S. has long been a key provider of armaments and is legally bound to ensure the island can defend itself.

    Along with buying weapons from the U.S., Taiwan has also been reviving its domestic arms industry. A fleet of submarines is underway, while mandatory military service for men has been extended to one year.

    China has previously demanded U.S companies end cooperation with Taiwan’s armed forces, with no apparent effect.

    Source link

  • Congress targets Chinese influence in health tech. It could come with tradeoffs

    Congress targets Chinese influence in health tech. It could come with tradeoffs

    WASHINGTON (AP) — A California biotechnology company that helps doctors detect genetic causes for cancer is among those that could be cut out of the U.S. market over ties to China, underscoring the possible tradeoffs between health innovation and a largely bipartisan push in Congress to counter Beijing’s global influence.

    The competition between the world’s superpowers is hitting Complete Genomics, whose employees, some in white lab coats stitched with U.S. flag arm patches, spin samples in test tubes and huddle around computers in San Jose. Its founder and chief scientific officer said he’s frustrated that geopolitics is interfering with science.

    “It’s just a loss for the research and for the industry,” Radoje Drmanac said.

    The U.S. House this week overwhelmingly passed the BIOSECURE Act, which cites national security in preventing federal money from benefiting Complete Genomics and four other companies linked to China. They work with U.S. drugmakers to develop new medications or help doctors diagnose diseases.

    It is part of a sweeping package of bills aimed at countering China’s influence and power, especially in technology, that Congress largely backed this week. The biotech measure, which cleared the House with a 306-81 vote, now heads to the Senate.

    Supporters say the legislation is necessary to protect Americans’ health care data, reduce reliance on China in the medical supply chain and ensure the U.S. gains an edge in the biotech field, which both countries call crucial to their economy and security.

    Opponents say the bill, which would ban China-linked companies from working with firms that receive U.S. government money, would delay clinical trials and hinder development of new drugs, raise costs for medications and hurt innovation.

    Rep. Brad Wenstrup, an Ohio Republican and the bill’s sponsor, said House approval was the first step in protecting Americans’ genetic data and reversing the trend of relying on Beijing for gene testing and basic medical supplies.

    “For too long, U.S. policy has failed to recognize the twin economic and national security threats posed by China’s domination of particular markets and supply chains,” he said.

    Rep. James Comer, a Kentucky Republican who chairs the House Oversight Committee, said it’s necessary to protect U.S. interests before these companies “become more embedded in the U.S. economy, university systems and federal contracting base.”

    Rep. Jim McGovern, D-Mass., argued that the legislation, which he opposed, should not name specific companies without due process, saying, “If one of these five companies does not belong on the list, too bad, Congress doesn’t like you, and that’s that.”

    Drmanac of Complete Genomics, a subsidiary of China-based company MGI, said the privacy of Americans’ personal information is not a concern because his company’s instruments are only connected to local U.S. servers.

    The company also has argued that Congress should broadly apply data protection standards and requirements rather than targeting a small subset of companies.

    Some analysts see the issue as more about industry competition than protecting people’s personal information from the Chinese government.

    “You want to make sure that American pharmaceutical companies and biotechnology companies are on an even footing in terms of their ability to compete both inside the U.S. market and then also abroad,” said Andrew Reddie, a public policy professor at the University of California, Berkeley, who studies the intersection of technology, politics and security and founded the Berkeley Risk and Security Lab.

    Complete Genomics is listed in the legislation along with BGI, MGI, WuXi AppTec and WuXi Biologics. MGI is a spinoff of BGI, a heavyweight genomics company based in China that offers genetic sequencing services for research purposes in the U.S.

    BGI Group called the bill “a false flag targeting companies under the premise of national security” and said, “We strictly follow rules and laws, and we have no access to Americans’ personal data in any of our work.”

    MGI said the bill would “serve only to stifle competition and foster a monopoly in DNA testing.”

    WuXi AppTec and WuXi Biologics work as contractors providing research, development and manufacturing services for U.S. drugmakers. Such services are considered crucial for American pharmaceutical companies to develop and make new drugs.

    WuXi AppTec said it and others in the industry are concerned about the bill’s impact on biotechnology innovation, drug development, patient care and health care costs. It urged the Senate not to move forward without addressing “these serious consequences.”

    In filings with the U.S. Securities and Exchange Commission, dozens of U.S. biotech companies have flagged the BIOSECURE Act as a concern, saying it could have major effects on the pharmaceutical supply chain because of the industry’s extensive partnerships with Chinese companies.

    Drugmaker Eli Lilly says its third-party suppliers are “sometimes the sole global source for a component” but it has been working to move some development and manufacturing closer to home, which typically takes several years “due to scientific and regulatory complexity and the need to ensure process and product quality.”

    BIO, the largest advocacy group for U.S. biotech companies and research institutions, supports the bill, saying it reinforces the industry’s national security imperative.

    The bill, which gives U.S. companies eight years to break ties with Chinese firms, has provided “a reasonable timeframe” for the decoupling, group CEO John Crowley said.

    ___

    Daley reported from San Jose.

    Source link

  • Teen vaping hits 10-year low in the US

    Teen vaping hits 10-year low in the US

    WASHINGTON (AP) — Fewer adolescents are vaping this year than at any point in the last decade, government officials reported Thursday, pointing to a shrinking number of high school students who are using Elf Bar and other fruity, unauthorized e-cigarettes.

    The latest survey numbers show the teen vaping rate fell to under 6% this year, down from 7.7% in 2023. More than 1.6 million students reported vaping in the previous month — about one-third the number in 2019, when underage vaping peaked with the use of discrete, high-nicotine e-cigarettes like Juul.

    This year’s decline was mainly driven by a half-million fewer high school students who reported using e-cigarettes in the past month, officials said. Vaping was unchanged among middle schoolers, but remains less common in that group, at 3.5% of students.

    “This is a monumental public health win,” FDA’s tobacco director Brian King told reporters. “But we can’t rest on our laurels. There’s clearly more work to do to further reduce youth use.”

    King and other officials noted that the drop in vaping didn’t coincide with a rise in other tobacco industry products, such as nicotine pouches.

    Sales of small, flavored pouches like Zyn have surged among adults. The subject of viral videos on social media platforms, the pouches come in flavors like mint and cinnamon and slowly release nicotine when placed along the gumline. This year’s U.S. survey shows 1.8% of teens are using them, largely unchanged from last year.

    “Our guard is up,” King said. “We’re aware of the reported growing sales trends and we’re closely monitoring the evolving tobacco product landscape.”

    The federal survey involved more than 29,000 students in grades 6 through 12 who filled out an online questionnaire in the spring. Health officials consider the survey to be their best measure of youth tobacco and nicotine trends. Thursday’s update focused on vaping products and nicotine pouches, but the full publication will eventually include rates of cigarette and cigar smoking, which have also hit historic lows in recent years.

    Officials from the FDA and Centers for Disease Control and Prevention attributed the big drop in vaping to recent age restrictions and more aggressive enforcement against retailers and manufacturers, including Chinese vaping companies who have sold their e-cigarettes illegally in the U.S. for years.

    Use of the most popular e-cigarette among teens, Elf Bar, fell 36% in the wake of FDA warning letters to stores and distributors selling the brightly colored vapes, which come in flavors like watermelon ice and peach mango. The brand is part of a wave of cheap, disposable e-cigarettes from China that have taken over a large portion of the U.S. vaping market. The FDA has tried to block such imports, although Elf Bar and other brands have tried to find workarounds by changing their names, addresses and logos.

    Teen use of major American e-cigarettes like Vuse and Juul remained significant, with about 12% of teens who vape reporting use of those those brands.

    In 2020, FDA regulators banned fruit and candy flavors from reusable e-cigarettes like Juul, which are now only sold in menthol and tobacco. But the flavor restriction didn’t apply to disposable products, and companies like Elf Bar stepped in to fill the gap.

    Other key findings in the report:

    — Among students who current use e-cigarettes, about 26% said they vape daily.

    — Nearly 90% of the students who vape used flavored products, with fruit flavors as the overwhelming favorite.

    — Zyn is the most common nicotine pouch among teens who use the products.

    ___

    The Associated Press Health and Science Department receives support from the Howard Hughes Medical Institute’s Science and Educational Media Group. The AP is solely responsible for all content.

    Source link

  • Japan and Australia agree to increase joint military training

    Japan and Australia agree to increase joint military training

    MELBOURNE, Australia (AP) — Japan and Australia agreed on Thursday to increase joint military training exercises as their government ministers shared concerns over China’s recent incursions into Japanese airspace and territorial waters.

    Japanese Foreign Minister Yoko Kamikawa and Japanese Defense Minister Minoru Kihara met for a regular summit with their Australian counterparts, Foreign Minister Penny Wong and Defense Minister Richard Marles in the Australian coastal town of Queenscliff.

    They discussed greater security cooperation in the context of the ministers’ shared support for peace and stability in the Taiwan Strait and concerns over China’s increasingly aggressive territorial claims in the South and East China Seas, Wong said.

    The ministers agreed on more engagement in training exercises involving the two air forces after F-35A Lighting II stealth fighters from both countries joined in combat training over Japan last year in Exercise Bushido Guardian, Marles said.

    Next year, Australia will participate for the first time in Orient Shield, the largest annual field training exercise between the U.S. Army and Japan Ground Self-Defense Force.

    Australia and Japan also plan to involve the Japanese Amphibious Rapid Deployment Brigade, a marine unit of the Japan Self-Defense Forces, in annual training rotations of U.S. Marines in the northern Australian city of Darwin.

    Chinese Foreign Ministry spokesperson Mao Ning said Japan and Australia’s cooperation should not disadvantage any third country.

    “China believes that defense and security cooperation between countries should be conducive to maintaining regional peace and stability and enhancing mutual trust among regional countries, and should not target third parties,” Mao said at a daily briefing in Beijing.

    China’s increasingly assertive activity around Japanese waters and airspace has caused unease among Japanese defense officials, who are also concerned about the growing military cooperation between the Chinese and Russian air forces.

    Japan lodged a formal protest through the Chinese Embassy in Tokyo against what it called an incursion by a Chinese survey ship in its waters last weekend.

    This followed Tokyo’s protest after a Chinese military aircraft briefly entered Japan’s southwestern airspace on Aug. 26. It was the first time the Japan Self-Defense Forces detected a Chinese military aircraft in Japan’s airspace.

    Chinese Foreign Ministry spokesperson Lin Jian said later his country had “no intention” to violate any country’s airspace.

    Kihara confirmed the incidents were discussed with the Australian counterparts.

    “We have shared very strong concern over these incidents and, for the East China Sea and South China Sea, any attempts to unilaterally change the status quo by force or by coercion, we have put forward our strong opposition,” Kihara told reporters through an interpreter.

    Marles said he and Wong “did express our support for Japanese sovereignty in that moment.”

    “It really underlined our shared commitment to asserting the rules-based order in the Indo-Pacific, in our neighborhood,” Marles said.

    “The countries of the region and indeed the world want to be in a world where disputes are resolved not by power and might but by reference to international law,” Marles added.

    Source link

  • Milken Institute discusses report on China’s ‘best-performing’ cities

    Milken Institute discusses report on China’s ‘best-performing’ cities

    Share

    Perry Wong, managing director of research at the Milken Institute, discusses its report “Best-performing cities China 2023–2024: the nation’s most successful economies,” including the underperforming ones, saying “debt is not the most severe factor.”

    Source link

  • Canada imposes a 100% tariff on imports of Chinese-made electric vehicles, matching the US

    Canada imposes a 100% tariff on imports of Chinese-made electric vehicles, matching the US

    TORONTO (AP) — Canada announced Monday it is launching a 100% tariff on imports of Chinese-made electric vehicles, matching U.S. tariffs imposed over what Western governments say are China’s subsidies that give its industry an unfair advantage.

    The announcement came after encouragement by U.S. national security advisor Jake Sullivan during a meeting with Canadian Prime Minister Justin Trudeau and Cabinet ministers Sunday. Sullivan is making his first visit to Beijing on Tuesday.

    Trudeau said Canada also will impose a 25% tariff on Chinese steel and aluminum. “Actors like China have chosen to give themselves an unfair advantage in the global marketplace,” he said.

    One of the Chinese-made EVs imported into Canada is from Tesla, made at the company’s Shanghai factory, though the U.S. company could avoid the tariff by switching to supplying Canada from factories in the U.S. or Germany.

    Chinese brands are not yet a player in Canada. However, Chinese EV giant BYD established a Canadian corporate entity last spring and has indicated it intends to try and enter the Canadian market as early as next year.

    Chinese officials are likely to raise concerns about the American tariffs with Sullivan as Beijing continues to repair its economy after the COVID-19 pandemic. U.S. President Joe Biden in May slapped major new tariffs on Chinese electric vehicles, advanced batteries, solar cells, steel, aluminum and medical equipment.

    “The U.S. does believe that a united front, a coordinated approach on these issues benefits all of us,” Sullivan told reporters on Sunday.

    Biden has said Chinese government subsidies for EVs and other consumer goods ensure that Chinese companies don’t have to turn a profit, giving them an unfair advantage in global trade.

    Chinese firms can sell EVs for as little as $12,000. China’s solar cell plants and steel and aluminum mills have enough capacity to meet much of the world’s demand. Chinese officials argue their production keeps prices low and would aid a transition to the green economy.

    “We’re doing it in alignment, in parallel, with other economies around the world that recognize that this is a challenge that we are all facing,” Trudeau said of the new tariffs. “Unless we all want to get to a race to the bottom, we have to stand up.”

    Deputy Prime Minister Chrystia Freeland said Canada also will launch a 30-day consultation about possible tariffs on Chinese batteries, battery parts, semiconductors, critical minerals, metals and solar panels.

    “China has an intentional state-directed policy of overcapacity and oversupply designed to cripple our own industry,” Freeland said. “We simply will not allow that to happen to our EV sector, which has shown such promise.”

    The Chinese Embassy said Ottawa disregarded Beijing’s repeated objections and said the move will damage trade and economic cooperation.

    “This move is typical trade protectionism and politically-motivated decision, which violates the World Trade Organization(WTO) rules and goes against Canada’s traditional image as a global champion for free trade and climate change mitigation,” the embassy said in an emailed statement. “China will take all necessary measures to safeguard the legitimate rights and interests of Chinese enterprises.”

    Canada “had to go with the U.S. position, when you think about the economic integration that we have with the U.S. More than 75% of our exports go to the U.S.,” said a former Canadian ambassador to China, Guy Saint-Jacques.

    Saint-Jacques said Canada can expect retaliation from China in other industries, adding that barley and pork are candidates because the Chinese can get it from other countries.

    “China will want to send a message,” he said.

    ___

    This story has been corrected to say Tesla is one of the Chinese-made EVs imported into Canada, not the only one.

    Source link

  • Facing budget crunches, Chinese tax collectors descend on companies

    Facing budget crunches, Chinese tax collectors descend on companies

    BEIJING (AP) — Chinese authorities are chasing unpaid taxes from companies and individuals dating back decades, as the government moves to plug massive budget shortfalls and address a mounting debt crisis.

    More than a dozen listed Chinese companies say they were slapped with millions of dollars in back taxes in a renewed effort to fix local finances that have been wrecked by a downturn in the property market that hit sales of land leases, a main source of revenues.

    Policies issued after a recent planning meeting of top Communist Party officials called for expanding local tax resources and said localities should expand their “tax management authority and improve their debt management.”

    Local government debt is estimated at up to $11 trillion, including what’s owed by local government financing entities that are “off balance sheet,” or not included in official estimates. More than 300 reforms the party has outlined include promises to better monitor and manage local debt, one of the biggest risks in China’s financial system.

    That will be easier said than done, and experts question how thoroughly the party will follow through on its pledges to improve the tax regime and better balance control of government revenues.

    “They are not grappling with existing local debt problems, nor the constraints on fiscal capacity,” said Logan Wright of the Rhodium Group, an independent research firm. “Changing central and local revenue sharing and expenditure responsibilities is notable but they have promised this before.”

    The scramble to collect long overdue taxes shows the urgency of the problems.

    Chinese food and beverage conglomerate VV Food & Beverage reported in June it was hit with an 85 million yuan ($12 million) bill for taxes dating back as far as 30 years ago. Zangge Mining, based in western China, said it got two bills totaling 668 million RMB ($92 million) for taxes dating to 20 years earlier.

    Local governments have long been squeezed for cash since the central government controls most tax revenue, allotting a limited amount to local governments that pay about 80% of expenditures such as salaries, social services and investments in infrastructure like roads and schools.

    Pressures have been building as the economy slowed and costs piled up from “zero-COVID” policies during the pandemic.

    Economists have long warned the situation is unsustainable, saying China must beef up tax collection to balance budgets in the long run.

    Under leader Xi Jinping, the government has cut personal income, corporate income, and value-added taxes to curry support, boost economic growth and encourage investment — often in ways that favored the rich, tax scholars say. According to most estimates, only about 5% of Chinese pay personal income taxes, far lower than in many other countries. Government statistics show it accounts for just under 9% of total tax revenues, and China has no comprehensive nationwide property tax.

    Finance Minister Li Fo’an told the official Xinhua News Agency that the latest reforms will give local governments more resources and more power over tax collection, adjusting the share of taxes they keep.

    “The central government doesn’t have a lot of responsibility for spending, so it doesn’t feel the pain of cutting taxes,” said Cui Wei, a professor of Chinese and international tax policy at the University of British Columbia.

    The effectiveness of the reforms will depend on how they’re implemented, said Cui, who is skeptical that authorities will carry out a proposal to increase central government spending. That “will require increasing central government staffing, and that’s an ‘organizational’ matter, not a simple spending matter,” he said.

    “I wouldn’t hold my breath,” Cui said.

    Sudden new tax bills have hit some businesses hard, further damaging already shaky business confidence. Ningbo Bohui Chemical Technology, in Zhejiang on China’s eastern coast, suspended most of its production after the local tax bureau demanded 500 million yuan ($69 million) in back taxes on certain chemicals. It is laying off staff and cutting pay to cope.

    Experts say the arbitrary way taxes are collected, with periods of leniency followed by sudden crackdowns, is counterproductive, discouraging companies from investing or hiring precisely when they need to.

    “When business owners are feeling insecure, how can there be more private investment growth in China?” said Chen Zhiwu, a finance professor at the University of Hong Kong’s business school. “An economic slowdown is inevitable.”

    The State Taxation Administration has denied launching a nationwide crackdown, which might imply past enforcement was lax. Tax authorities have “always been strict about preventing and investigating illegal taxation and fee collection,” the administration said in a statement last month.

    As local governments struggle to make ends meet, some are setting up joint operation centers run by local tax offices and police to chase back taxes. The AP found such centers have opened in at least 23 provinces since 2019.

    Both individuals and companies are being targeted. Dozens of singers, actors, and internet celebrities were fined millions of dollars for avoiding taxes in the past few years, according to a review of government notices.

    Internet livestreaming celebrity Huang Wei, better known by her pseudonym, Weiya, was fined 1.3 billion yuan ($210 million) for tax evasion in 2021. She apologized and escaped prosecution by paying up, but her social media accounts were suspended, crippling her business.

    The hunt for revenue isn’t limited to taxes. In the past few years, local authorities have drawn criticism for slapping large fines on drivers and street vendors, similar to how cities like Chicago or San Francisco earn millions from parking tickets. Despite pledges by top leaders to eliminate fines as a form of revenue collection, the practice continues, with city residents complaining that Shanghai police use drones and traffic cameras to catch drivers using their mobile phones at red lights.

    Outside experts and Chinese government advisors agree that structural imbalances between local and central governments must be addressed. But under Xi, China’s most authoritarian leader in decades, decision-making has grown more opaque, keeping businesses and analysts guessing, while vested interests have pushed back against major changes.

    “They have a hermetically sealed process that makes it difficult for people on the outside to know what is going on,” says Martin Chorzempa, senior fellow at the Peterson Institute for International Economics.

    Beijing has been reluctant to rescue struggling local governments, wary it might leave them dependent on bailouts. So, the central government has stepped in only in dire cases, otherwise leaving local governments to resolve debt issues on their own.

    “In Chinese, we have a saying: You help people in desperate need, but you don’t help the poor,” said Tang Yao, an economist at Peking University. “You don’t want them to rely on soft money.”

    Economists say intervention may be required this time around and that the central government has leeway to take on more debt, with a debt-to-GDP ratio of only around 25%. That’s much lower than many other major economies.

    Accumulated total non-financial debt, meanwhile, is estimated at nearly triple the size of the economy, according to the National Institution for Finance and Development and still growing.

    “This is a huge structural problem that needs a huge structural solution that is not forthcoming,” said Logan Wright of the Rhodium Group, an independent research firm. “There’s really no way around this. And it’s getting worse, not better.”

    ___

    Fu Ting reported from Washington.

    Source link