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Tag: exports and imports

  • OPEC Fast Facts | CNN

    OPEC Fast Facts | CNN

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    CNN
     — 

    Here’s a look at the Organization of the Petroleum Exporting Countries, headquartered in Vienna, Austria.

    The purpose of OPEC is to “coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.”

    OPEC members collectively supply about 28.89% of the world’s crude oil production.

    Together, OPEC members control about 79.49% of the world’s total proven crude reserves.

    OPEC member countries monitor the market and decide collectively to raise or lower oil production in order to maintain stable prices and supply.

    A unanimous vote is required on raising or lowering oil production.

    Each member country controls the oil production of its country, but OPEC aims to coordinate the production policies of member countries.

    Oil and energy ministers from OPEC member countries usually meet twice a year to determine OPEC’s output level. They also meet in extraordinary sessions whenever required.

    Read More: Oil and Gasoline Fast Facts

    Algeria – 1969-present
    Congo – 2018-present
    Equatorial Guinea – 2017-present
    Gabon – 1975-1995; 2016-present
    Iran – 1960-present
    Iraq – 1960-present
    Kuwait – 1960-present
    Libya – 1962-present
    Nigeria – 1971-present
    Saudi Arabia – 1960-present
    United Arab Emirates – 1967-present
    Venezuela – 1960-present

    Angola – 2007-2024
    Ecuador – 1973-1992; 2007-2020
    Indonesia – 1962-2009; 2016
    Qatar – 1961-2019

    September 14, 1960 – OPEC is formed in Baghdad, Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.

    November 6, 1962 – OPEC is registered with the United Nations Secretariat (UN Resolution No. 6363).

    1973-1974 – Due to United States support of Israel in the Arab-Israeli conflict, the members of OPEC decide to raise the cost of oil from $3/barrel to around $12/barrel.

    October 1973 – OPEC issues an embargo against the United States, halting oil exports. Customers in the United States experience long lines at gas stations and shortages.

    March 18, 1974 – At an OPEC meeting, seven members lift the ban on exports to the United States: Algeria, Saudi Arabia, Kuwait, Qatar, Bahrain, Egypt and Abu Dhabi. Libya and Syria refuse to drop the ban, and Iraq boycotts the talks.

    December 31, 1974 – Libya lifts its oil embargo against the United States.

    November 2007 – Ecuador rejoins OPEC after a 15-year absence.

    May 2008 – Indonesia announces that it will leave OPEC in 2009.

    January 1, 2009 – Indonesia suspends its membership in OPEC.

    January 1, 2016-November 30, 2016 – Indonesia rejoins OPEC, but suspends its membership after 11 months.

    July 2016 – Gabon rejoins OPEC.

    May 25, 2017 – Equatorial Guinea joins OPEC.

    June 22, 2018 – OPEC announces that the Republic of the Congo has joined the organization.

    December 3, 2018 – Qatar’s state oil company, Qatar Petroleum, announces that the country will leave OPEC on January 1, 2019. One of OPEC’s oldest members, Qatar says it plans to focus on natural gas production.

    January 1, 2020 – Ecuador leaves OPEC.

    March 2020 – To offset the collapse in demand caused by the coronavirus pandemic, OPEC unveils a plan to reduce output among its members by 1 million barrels per day, and says it will seek an additional 500,000 barrels per day in cuts from longstanding allies, including Russia.

    April 1, 2021 – OPEC and allied producers announce that they have agreed to gradually increase their output over the next three months. The move follows a sharp increase in oil prices, and a call from the United States to keep energy affordable.

    October 5, 2022 – OPEC and its allies, known as OPEC+, announce they will cut oil production by 2 million barrels per day, the biggest cut since the start of the pandemic.

    January 1, 2024 – Angola leaves OPEC. Oil minister Diamantino Azevedo said earlier that membership was not serving Angola’s interests.

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  • China’s narrowing trade slump boosts recovery prospects, but challenges persist | CNN Business

    China’s narrowing trade slump boosts recovery prospects, but challenges persist | CNN Business

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    Beijing
    Reuters
     — 

    China’s exports and imports shrank at a slower pace for a second month in September, customs data showed on Friday, adding to the recent signs of a gradual stabilization in the world’s second-biggest economy thanks to a raft of policy support measures.

    The trade report should provide some encouragement to authorities, although stiff challenges remain in an economy facing persistent deflationary pressure, a long-running property crisis, a slowdown in global growth and geopolitical tensions.

    Outbound shipments in September declined 6.2% from a year ago, following a drop of 8.8% in August, and beating economists’ forecast for a 7.6% fall in a Reuters poll.

    The figures were backed up by new export orders in an official factory survey two weeks ago which showed improvement last month, partly because of a peak export shipping season for Christmas products and favorable base effects.

    “There’s increasing evidence that the cyclical upturn in the global electronics sector is driving a bottoming-out of global trade and China’s trade data is the latest sign,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.

    “This gives reason for optimism about a rosier trade picture in 2024,” he said.

    South Korean exports to China, a leading indicator of China’s imports, fell at their slowest pace in 11 months in September. Semiconductors make up the bulk of their trade, signaling improving appetite among Chinese manufacturers for components to re-export in finished goods.

    Global trade activities, represented by the Baltic Dry Index, also reported notable growth in September.

    However, Lv Daliang, spokesperson of the General Administration of Customs, said at a press conference earlier on Friday that China’s trade still faces a complex and severe external environment.

    Thanks to gradual recovery in domestic demand, imports also fell at a slower pace, down 6.2%. They missed the 6.0% decline forecast in the poll, but came in better than a 7.3% contraction in August.

    That resulted in a broader trade surplus of $77.71 billion in September, compared with a $70 billion surplus expected in the poll and $68.36 billion in August.

    Overall, economists say it’s too early to make a call on how domestic demand will pan out in coming months as the crisis-hit property sector, uncertainties in employment and household income growth, as well as weak confidence among some private firms, pose risks to a durable economic rebound.

    The $18 trillion economy started losing steam from the second quarter after a brief post-Covid bounce, prompting policymakers to roll out several measures to shore up the recovery in the face of a sluggish housing market, high youth unemployment and mounting local debt repayment pressure.

    China’s consumer prices faltered and factory-gate prices shrunk slightly faster than expected last month compared with a year earlier, inflation data released earlier on Friday showed, indicating that deflationary pressures persist in the economy.

    Yet, authorities can take some comfort from recent data including upbeat factory activity and retail sales while the past Golden Week holiday travel edged up 4.1% from pre-pandemic 2019 levels.

    In order to help the economy meet the government’s annual growth target of around 5%, China is considering issuing at least 1 trillion yuan ($137.00 billion) of additional sovereign debt to fund infrastructure projects, as Beijing prepares to bring a new round of stimulus, Bloomberg News reported on Tuesday, citing people familiar with the matter.

    Most analysts have been reiterating in recent months that policymakers will need to go further than introducing piecemeal measures in order to bolster the economic recovery.

    “Whatever does emerge from Beijing over the coming months, it likely won’t be quick enough to make any meaningful difference to 2023,” said Robert Carnell, regional head of research Asia-Pacific at ING in a note.

    “At best, it should be viewed as a pain management tool for the transition to a less leveraged economy.”

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  • Climate change has ravaged India’s rice stock. Now its export ban could deepen a global food crisis | CNN Business

    Climate change has ravaged India’s rice stock. Now its export ban could deepen a global food crisis | CNN Business

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    Harayana, India
    CNN
     — 

    Satish Kumar sits in front of his submerged rice paddy in India’s Haryana state, looking despairingly at his ruined crops.

    “I’ve suffered a tremendous loss,” said the third generation farmer, who relies solely on growing the grain to feed his young family. “I will not be able to grow anything until November.”

    The newly planted saplings have been underwater since July after torrential rain battered northern India, with landslides and flash floods sweeping through the region.

    Kumar said he has not seen floods of this scale in years and has been forced to take loans to replant his fields all over again. But that isn’t the only problem he’s facing.

    Last month, India, which is the world’s largest exporter of rice, announced a ban on exporting non-basmati white rice in a bid to calm rising prices at home and ensure food security. India then followed with more restrictions on its rice exports, including a 20% duty on exports of parboiled rice.

    The move has triggered fears of global food inflation, hurt the livelihoods of some farmers and prompted several rice-dependent countries to seek urgent exemptions from the ban.

    More than three billion people worldwide rely on rice as a staple food and India contributed to about 40% of global rice exports.

    Economists say the ban is just the latest move to disrupt global food supplies, which has suffered from Russia’s invasion of Ukraine as well as weather events such as El Niño.

    They warn the Indian government’s decision could have significant market reverberations with the poor in Global South nations in particular bearing the brunt.

    And farmers like Kumar say market price rises caused by poor harvests doesn’t result in a windfall for them either.

    “The ban is going to have an adverse effect on all of us. We won’t get a higher rate if rice isn’t exported,” Kumar said. “The floods were a death blow to us farmers. This ban will finish us.”

    Satish Kumar with whatever is left of his rice crops.

    The abrupt announcement of the export ban triggered panic buying in the United States, following which the price of rice soared to a near 12-year high, according to the United Nations Food and Agriculture Organization.

    It does not apply to basmati rice, which is India’s best-known and highest quality variety. Non-basmati white rice however, accounts for about 25% of exports.

    India wasn’t the first country to ban food exports to ensure enough supply for domestic consumption. But its move, coming just one week after Russia pulled out of the Black Sea grain deal — a crucial pact that allowed the export of grain from Ukraine — contributed to global concerns about the availability of grain staples and whether millions would go hungry.

    “The main thing here is that it is not just one thing,” Arif Husain, chief economist at the United Nations World Food Programme (WFP) told CNN. “[Rice, wheat and corn crops] make up bulk of the food which poor people around the world consume.”

    Workers in India sift through rice grains in capital New Delhi.

    Nepal has seen rice prices surge since India announced the ban, according to local media reports, and rice prices in Vietnam are the highest they have been in more than a decade, according to customs data.

    Thailand, the world’s second largest rice exporter after India, has also seen domestic rice prices jump significantly in recent weeks, according to data from the Thai Rice Exporters Association.

    Countries including Singapore, Indonesia and the Philippines, have appealed to New Delhi to resume rice exports to their nations, according to local Indian media reports. CNN has reached out to India’s Ministry of Agriculture but has not received a response.

    The International Monetary Fund (IMF) has encouraged India to remove the restrictions, with the organization’s chief economist, Pierre-Olivier Gourinchas, telling reporters last month that it was “likely to exacerbate” the uncertainty of food inflation.

    “We would encourage the removal of these types of export restrictions because they can be harmful globally,” he said.

    Now, there are fears that the ban has the world market bracing for similar actions by rival suppliers, economists warn.

    “The export ban is happening at a time when countries are struggling with high debt, food inflation, and declining depreciating currencies,” Husain from the WFP said. “It’s troubling for everyone.”

    Indian farmers account for nearly half of the country’s workforce, according to government data, with rice paddy mainly cultivated in central, southern, and some northern states.

    Summer crop planting typically starts in June, when monsoon rains are expected to begin, as irrigation is crucial to grow a healthy yield. The summer season accounts for more than 80% of India’s total rice output, according to Reuters.

    This year, however, the late monsoon arrival led to a large water deficit up until mid-June. And when the rains finally arrived, it drenched swathes of the country, unleashing floods that caused significant damage to crops.

    The heavy floods have affected the country's farmers.

    Surjit Singh, 53, a third generation farmer from Harayana said they “lost everything” after the rains.

    “My rice crops have been ruined,” he said. “The water submerged about 8-10 inches of my crops. What I planted (in early June) is gone… I will see a loss of about 30%.”

    The World Meteorological Organization last month warned that governments must prepare for more extreme weather events and record temperatures, as it declared the onset of the warming phenomenon El Niño.

    El Niño is a natural climate pattern in the tropical Pacific Ocean that brings warmer-than-average sea-surface temperatures and has a major influence on weather across the globe, affecting billions of people.

    The impact has been felt by thousands of farmers in India, some of whom say they will now grow crops other than rice. And it doesn’t just stop there.

    India's rice stock is piling up as a result of the ban.

    At one of New Delhi’s largest rice trading hubs, there are fears among traders that the export ban will cause catastrophic consequences.

    “The export ban has left traders with huge amounts of stock,” said rice trader Roopkaran Singh. “We now have to find new buyers in the domestic market.”

    But experts warn the effects will be felt far beyond India’s borders.

    “Poor countries, food importing countries, countries in West Africa, they are at the highest risk,” said Husain from the WFP. “The ban is coming on the back of war and a global pandemic… We need to be extra careful when it comes to our staples, so that we don’t end up unnecessarily rising prices. Because those increases are not without consequences.”

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  • China’s top chipmaker may be in hot water as US lawmakers call for further sanctions after Huawei ‘breakthrough’ | CNN Business

    China’s top chipmaker may be in hot water as US lawmakers call for further sanctions after Huawei ‘breakthrough’ | CNN Business

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    Editor’s Note: Sign up for CNN’s Meanwhile in China newsletter which explores what you need to know about the country’s rise and how it impacts the world.


    Hong Kong
    CNN
     — 

    Shares in SMIC, China’s largest contract chipmaker, plunged on Thursday, after two US congressmen called on the White House to further restrict export sales to the company.

    The comments came after Huawei Technologies introduced the Mate 60 Pro, a Chinese smartphone powered by an advanced chip that is believed to have been made by SMIC.

    Last week’s launch shocked industry experts who didn’t understand how SMIC, which is headquartered in Shanghai, would have the ability to manufacture such a chip following sweeping efforts by the United States to restrict China’s access to foreign chip technology.

    TechInsights, a research organization based in Canada specializing in semiconductors, revealed shortly after the launch that the smartphone contained a new 5G Kirin 9000s processor developed specifically for Huawei by SMIC.

    This is a “big tech breakthrough for China,” Jefferies analysts said Tuesday in a research note.

    The development has fueled fears among analysts that the US-China tech war is likely to accelerate in the near future.

    US representative Mike Gallagher, chair of the US House of Representatives committee on China, called on the US Commerce Department on Wednesday to end all technology exports to Huawei and SMIC, according to Reuters.

    Gallagher was quoted as saying SMIC may have violated US sanctions, as this chip likely could not be produced without US technology.

    “The time has come to end all US technology exports to both Huawei and SMIC to make clear any firm that flouts US law and undermines our national security will be cut off from our technology,” he said.

    Shares in SMIC, which stands for Semiconductor Manufacturing International Corporation, sank 8.3% in Shanghai and 7.6% in Hong Kong on Thursday. Hua Hong Semiconductor, China’s second largest chip foundry, tumbled 5.8%.

    Texas Republican Michael McCaul, who chairs the House Foreign Affairs Committee, was quoted by Reuters as saying he was concerned about the possibility of China trying to “get a monopoly” in the manufacture of less-advanced computer chips.

    “We talked a lot about advanced semiconductor chips, but we also need look at legacy,” he reportedly said, referring to older computer chip technology which does not fall under export controls.

    “I think China is trying to get a monopoly on the market share of legacy semiconductor chips as well. And I think that’s a part of the discussion we’ll be having,” he said.

    Chinese state media have touted the development as a sign the country had successfully “broken US sanctions” and “achieved technological independence” in advanced chipmaking.

    Meme makers on the Chinese internet have even crowned US Commerce Secretary Gina Raimondo the unofficial brand ambassador for the Mate 60 series.

    The memes poke fun at the idea that that US sanctions, which are implemented and enforced by the US Commerce department, may have indirectly led to the launch of the new phone as China’s homegrown firms had to work with the available technology.

    Raimondo visited China last week, when the phone was launched. The memes have gone viral online and been reported on by state broadcaster CCTV.

    Before Thursday, SMIC’s shares in Hong Kong had rallied more than 20% within two weeks due to investor optimism. Huahong Semiconductor jumped 11%.

    CNN has reached out to Gallagher’s and McCaul’s offices for comment, but has yet to receive a response.

    Huawei was added to a blacklist in May 2019 by the US Commerce Department over national security concerns. That means companies have to apply for US export licenses to supply technology to Huawei.

    SMIC was also put on the same list in 2020, as US officials were concerned it could use American technology to aid the Chinese military. SMIC has denied having any relationship with the Chinese military.

    “The fact that China has achieved a big breakthrough in [semiconductor] tech will likely create more debate in the US about the effectiveness of sanctions,” said the Jefferies analysts.

    They expect the Biden administration to tighten chips ban on China, which was introduced in October 2022, in the next few months, further limiting China’s access to advanced US semiconductors.

    “Overall the US-China tech war is likely to escalate,” they said.

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  • China is huge for chip designer Arm. That’s a risk for its new investors | CNN Business

    China is huge for chip designer Arm. That’s a risk for its new investors | CNN Business

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    Hong Kong
    CNN
     — 

    As British chip designer Arm prepares to raise about $5 billion in an initial public offering (IPO) on Thursday, its China business has become a serious point of concern.

    The SoftBank-owned firm used many pages of its IPO prospectus to warn investors of risks related to its exposure to China at a time of rising tension between Washington and Beijing over chip technology.

    Its regulatory filing last month revealed that a quarter of its sales come from China, through an unusual relationship with an entity it does not control and with which it has a complex history.

    Arm China is “an entity that operates independently of us and is our single largest customer,” the company said in its prospectus. “Neither we nor SoftBank Group control the operations of Arm China.”

    Arm, which is based in Cambridge, added that the scale of its business in China made it “particularly susceptible to economic and political risks,” which could be worsened by tensions between the country and the United States or the United Kingdom.

    The company has long been vulnerable in this area, which may have already contributed to a lower market valuation than SoftBank was expecting.

    Arm blamed an economic slowdown in China as well as “factors related to export control and national security matters” for slower growth in royalty revenues from China in its fiscal year to March. Total revenue from China did increase in that period, however.

    Royalties are hugely significant for Arm, which gets a fee from each chip developed using its products. The company relies on royalties and licensing for most of its income.

    Arm said Wednesday it priced its shares at $51 each, raising as much as $4.9 billion. The tally could rise to $5.2 billion if banks exercise an option to buy additional shares, valuing the chip designer at as much as $54.5 billion.

    That’s less than the $64 billion valuation implied when SoftBank bought a remaining 25% stake in the company from its Vision Fund unit just last month.

    Arm has declined to comment.

    Concerns about China are likely to have been “built into IPO pricing expectations already, although a worst-case scenario of increased US sanctions [or] trade restrictions probably is not,” Kirk Boodry, an investment advisor at Astris Advisory, a Japanese investment research firm, told CNN.

    Arm was publicly listed until 2016, when Japan’s SoftBank bought it for $32 billion.

    Four years later, SoftBank tried to sell Arm to Nvidia for $40 billion, in what would have been the biggest chip deal of all time. But it didn’t pass muster with global antitrust regulators, and was called off in February 2022.

    Now, Arm’s return to the stock market is being closely watched as it promises to be the biggest US IPO since 2021.

    SoftBank CEO Masayoshi Son has touted it as an AI company that could have “exponential growth,” and promised that ChatGPT-like services will eventually be offered on Arm-designed machines.

    “The value of chips, and Arm’s technology, has maybe never been more in demand from the global economy,” said Kyle Stanford, lead venture capital analyst at PitchBook.

    But Arm is a middleman in the semiconductor industry, which is a key source of tension in US-China relations. Both countries are racing to boost their prowess in the sector, and each side has recently enacted export controls aimed at limiting the other’s capacity.

    “Chip tensions will never go away,” Stanford argued. “Political and regulatory pressure is likely to increase.”

    On Tuesday, former US Securities and Exchange Commission Chairman Jay Clayton told US lawmakers that large public companies with major exposure to China should be prompted to disclose specific risks associated with the country, “and what type of scenario planning they have done in the event of abrupt decoupling.”

    Although US officials have insisted that America is not seeking to decouple from China, they have pointed to the importance of reducing its reliance on the world’s second largest economy.

    In its filing, Arm said it held just a “4.8% indirect ownership interest in Arm China,” through a 10% non-voting stake in a SoftBank-controlled entity that owns less than half of the Chinese company.

    While such convoluted corporate structures aren’t unique in China, “in my view, it is very problematic,” said Ivana Delevska, founder and chief investment officer of asset manager Spear Invest.

    “Investors of other companies are just waking up to this fact in light of increased tensions,” she added.

    Arm has had trouble with Arm China before. In its filing, it said the business has a record of late payments.

    “Although these historical issues did not have a material impact on our operations, any future failure to pay us the amounts we are owed … could have a material adverse effect on our business,” Arm said.

    Arm China has also been subject to a legal battle with its former CEO, Allen Wu.

    Since April 2022, Wu and entities effectively controlled by him have lodged several lawsuits in Chinese courts against Arm China, “seeking to challenge certain aspects of Arm China’s corporate governance and the actions of Arm China’s board of directors,” Arm said in its filing.

    As of August, the cases had been resolved in favor of Arm China, it said, but the outcome could still be appealed. potentially hurting the British firm in the future.

    That hasn’t stopped many of the biggest names in global tech from jumping on board.

    Companies including Apple (AAPL), Google (GOOGL), Nvidia (NVDA), AMD (AMD), Samsung and TSMC (TSM) have indicated interest in acting as cornerstone investors in the offering, according to a filing last week.

    Delevska said the interest reflected Arm’s strong position in the industry and had helped to prop up its overall valuation.

    “I believe it is good timing for the IPO,” she added. “Investors will just have to price in the China risk.”

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  • US says it has no evidence that Huawei can make advanced smartphones ‘at scale’ | CNN Business

    US says it has no evidence that Huawei can make advanced smartphones ‘at scale’ | CNN Business

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    Hong Kong
    CNN
     — 

    Commerce Secretary Gina Raimondo says the US government has no evidence that Huawei can produce smartphones with advanced chips “at scale,” as it continues to investigate how the sanctioned Chinese manufacturer made an apparent breakthrough with its latest flagship device.

    On Tuesday, Raimondo told US lawmakers that she was “upset” by news of the launch of Huawei’s Mate 60 Pro during her visit to China last month.

    “The only good news, if there is any, is we don’t have any evidence that they can manufacture 7-nanometer [chips] at scale,” she told a US House of Representatives hearing.

    “Although I can’t talk about any investigations specifically, I promise you this: every time we find credible evidence that any company has gone around our export controls, we do investigate.”

    Analysts who have examined the smartphone said it represented a “milestone” achievement for China, suggesting Huawei may have found a way to overcome American export controls.

    US officials have long argued that the company poses a risk to US national security, using it as grounds to restrict trade with the company. Huawei has vehemently denied the claims.

    TechInsights, a research organization that specializes in semiconductors and took the phone apart for analysis, says it includes a 5G Kirin 9000s processor developed by China’s leading chipmaker, Semiconductor Manufacturing International Corporation (SMIC).

    That surprised many because SMIC, a partially state-owned Chinese company, has also been subject to US export restrictions for years. It has not responded to previous requests for comment from CNN.

    TechInsights also found two chips belonging to SK Hynix, a South Korean chipmaker, inside the handset.

    A SK Hynix spokesperson told CNN earlier this month that it was aware of the issue and investigating how that was possible, since the South Korean firm “no longer does business with Huawei” because of US export controls.

    Huawei declined to comment on the capabilities and components of its phone.

    Raimondo said Tuesday that US officials were “trying to use every single tool at our disposal … to deny the Chinese an ability to get intellectual property to advance their technology in ways that can hurt us.”

    In 2019, Huawei was added to the US “entity list,” which restricts exports to select organizations without a US government license. The following year, the US government expanded on those curbs by seeking to cut Huawei off from chip suppliers that use US technology.

    That left the company, once the world’s second largest smartphone seller, in bad shape.

    As of the second quarter of 2023, Huawei was no longer in the top five of mobile phone vendors in China, let alone globally, according to Counterpoint Research.

    But its new phone is a big help for the company — and may pose a challenge to Apple’s (AAPL) market share in China, according to Ivan Lam, a senior analyst at Counterpoint.

    Huawei is scheduled to hold a product launch event next Monday, where new phones are expected to be the main focus, according to Toby Zhu, a Canalys mobility analyst.

    Other devices, like tablets or earphones, may also be shown off. Huawei has not publicly released details of the event.

    In the coming months, the firm plans to release another 5G phone, possibly under Nova, its mid-range lineup, Chinese news outlet IT Times reported Tuesday, citing unidentified industry sources. Huawei declined to comment.

    Zhu said the phone was widely expected to come with 5G capability, powered either by the “Kirin 9000s chip or another chip.”

    If it does, the new model could become even more popular than the Mate 60 Pro, which starts at 6,999 yuan (about $959), because of its relative affordability, he added.

    While Raimondo was unhappy with the timing of Huawei’s launch, analysts say it was unlikely to have been arranged to coincide with her presence in China.

    It was likely “a marketing campaign aimed at winning over customer interest before the iPhone 15 hits the market,” analysts at Eurasia Group wrote in a report.

    The move helped the Shenzhen-based company capture the second spot in China’s smartphone market in the first week of September, ahead of Apple’s big event, said Lam of Counterpoint.

    — Rashard Rose and Mengchen Zhang contributed to this report.

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  • The world will pay a high price if China cuts off supplies of chipmaking materials | CNN Business

    The world will pay a high price if China cuts off supplies of chipmaking materials | CNN Business

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    Hong Kong
    CNN
     — 

    Just one month after China announced it would curb exports of germanium and gallium, both essential for making semiconductors, its overseas shipments of the materials fell to zero.

    Beijing says it has since approved some export licenses but the restrictions are a stark warning that China has a powerful weapon it can deploy in the escalating trade war over the future of tech. The curbs came after the United States, Europe and Japan restricted sales of chips and chipmaking equipment to China to cut off its access to key technology that can be used by the military.

    “It is still early to tell how tight the restrictions would be. [But] if China ends up blocking a large amount of exports, it will cause a disruption in the supply chain for the immediate consumers,” said Xiaomeng Lu, director for geotechnology at Eurasia Group.

    China enjoys a near monopoly on the production of the two elements. Last year, it accounted for 98% of the global production of gallium and 68% of refined germanium production, according to the US Geological Survey (USGS).

    While there are alternatives for the United States and its allies, constructing an independent supply chain for gallium and germanium processing could require a “staggering” investment of over $20 billion, according to Marina Zhang, an associate professor at University of Technology Sydney. And it could take years to develop.

    “Refining technologies and facilities for processing gallium and germanium cannot be built overnight, particularly considering the environmental implications of their extraction and mining,” she wrote in July.

    But there may be no other option but to do so.

    Although the minerals account for only “several hundred million dollars” in global trade, according to Zhang, they are critical to the supply chains of the international semiconductor, defense, electrical vehicle and communications industries, which are each worth hundreds of billions of dollars.

    China has dominated the production of both elements for at least a decade.

    Gallium is a soft, silvery metal and is easy to cut with a knife. It’s commonly used to produce compounds that can make radio frequency chips for mobile phones and satellite communication.

    Germanium is a hard, grayish-white and brittle metalloid that is used in the production of optical fibers that can transmit light and electronic data.

    Neither is found on their own in nature. They are usually formed as a byproduct of mining more common metals: primarily aluminum, zinc and copper.

    The processing of the elements can be “costly, technically challenging, energy-intensive and polluting,” according to Ewa Manthey, a commodities strategist at ING Group.

    “China dominates production of these two metals not because they are rare, but because it has been able to keep their production costs fairly low and manufacturers elsewhere haven’t been able to match the country’s competitive costs,” he said.

    From 2005 to 2015, China’s production of low-purity gallium exploded from 22 metric tons to 444 metric tons, according to data compiled by the Center for Strategic and International Studies in Washington.

    Analysts from the think tank said China’s leading position in the aluminum industry has allowed it to establish a dominant share of global gallium production.

    Moreover, China’s government has implemented strategic policies to boost production, including a requirement for the country’s aluminum producers to create the capacity to extract gallium.

    This is why, over the past 10 years, manufacturing gallium has become essentially economically nonviable outside China.

    Between 2013 and 2016, Kazakhstan, Hungary, and Germany all ceased primary production of gallium. (Germany announced in 2021 it would restart production because of rising prices.)

    There are alternative suppliers, though.

    According to the USGS, Russia, Japan, and Korea produced a combined 1.8% of global gallium in 2022. For germanium, Canada’s Teck Resources is one of the world’s largest producers. American company Indium Corporation is also a top global manufacturer of germanium compounds and alloys.

    And Canada’s 5NPlus and Belgium’s Umicore produce both elements.

    But “it would take time to bring online alternative sources of supply,” Chris Miller, author of “Chip War” and an economic historian, told CNN.

    It could also be expensive.

    Global mining companies can get into the business of selling germanium and gallium if China seeks to choke off supply, said Gregory Allen, director of Wadhwani Center for AI & Advanced Technologies at CSIS.

    “This would not be instantaneous, but some global mining and refining firms have signaled their intent to do so.”

    In July, Russian state owned conglomerate Rostec told Reuters that it’s ready to boost output of germanium for domestic use after China announced curbs on exports.

    Netherlands-based Nyrstar also said it was looking at potential germanium and gallium projects in Australia, Europe and the United States.

    “Even if users run out of supplies of these minerals, gallium can be swapped for silicon or indium in the wafer making process,” Lu from Eurasia Group said.

    Zinc selenide is a lesser but functional substitute for germanium in certain applications, she added.

    Recycling is another option.

    Last year, the US Defense logistics Agency introduced a program to recycle optical-grade germanium used in weapon systems.

    “Factory floor scrap has already accounted for a source of supply. Germanium scrap is also recovered from decommissioned tanks and other military vehicles,” Lu said.

    In August, China didn’t sell any germanium or gallium outside its borders. The numbers could bounce back in September, as the Commerce Ministry said it had approved some export licenses for Chinese companies.

    Initially, prices for the two elements are likely to rise, Manthey said.

    Prices of gallium stood at 1,965 yuan ($269) per metric ton on Tuesday, up more than 17% from June 1, according to ebaiyin.com, a Chinese metal trading service website.

    Prices for germanium increased about 3% during the same period.

    “Higher prices will in turn increase competition by making production more cost-competitive again in countries like Japan, Canada and the US, which will in turn reduce China’s dominance in both markets,” Manthey said.

    “It will take time to build processing plants, but over time, the markets and supply chains will adjust,” he added.

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  • US escalates tech battle by cutting China off from AI chips | CNN Business

    US escalates tech battle by cutting China off from AI chips | CNN Business

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    Editor’s Note: Sign up for CNN’s Meanwhile in China newsletter which explores what you need to know about the country’s rise and how it impacts the world.


    Hong Kong/Washington
    CNN
     — 

    The Biden administration is reducing the types of semiconductors that American companies will be able to sell to China, citing the desire to close loopholes in existing regulations announced last year.

    On Tuesday, the US Commerce Department unveiled new rules that further tighten a sweeping set of export controls first introduced in October 2022.

    The updated rules “will increase effectiveness of our controls and further shut off pathways to evade our restrictions,” US Commerce Secretary Gina Raimondo said in a statement. “We will keep working to protect our national security by restricting access to critical technologies, vigilantly enforcing our rules, while minimizing any unintended impact on trade flows.”

    Advanced artificial intelligence chips, such as Nvidia’s H800 and A800 products, will be affected, according to a regulatory filing from the US company.

    The regulations also expand export curbs beyond mainland China and Macao to 21 other countries with which the United States maintains an arms embargo, including Iran and Russia.

    The measures, which have affected the shares of major American chipmakers, are set to take effect in 30 days.

    The original rules had sought to hamper China’s ability to procure advanced computing chips and manufacture advanced weapons systems. Since then, senior administration officials have suggested they needed to be adjusted due to technological developments.

    Raimondo, who visited China in August, said the administration was “laser-focused” on slowing the advancement of China’s military. She emphasized that Washington had opted not to go further in restricting chips for other applications.

    Chips used in phones, video games and electric vehicles were purposefully carved out from the new rules, according to senior administration officials.

    But these assurances are unlikely to placate Beijing, which has vowed to “win the battle” in core technologies in order to bolster the country’s position as a tech superpower.

    China’s Foreign Ministry criticized the Biden administration’s new rules Monday, before they were officially unveiled.

    “The US needs to stop politicizing and weaponizing trade and tech issues and stop destabilizing global industrial and supply chains,” spokesperson Mao Ning told a press briefing. “We will closely follow the developments and firmly safeguard our rights and interests.”

    As part of ongoing dialogue established by Raimondo and other US officials with their Chinese counterparts, Beijing was informed of the impending updates, according to a senior administration official.

    “We let the Chinese know for clarity that these rules were coming, but there was no negotiation with them,” the official told reporters.

    The tech rivalry between the world’s two largest economies has been heating up. In recent months, the United States has enlisted its allies in Europe and Asia in restricting sales of advanced chipmaking equipment to China.

    In July, Beijing hit back by imposing its own curbs on exports of germanium and gallium, two elements essential for making semiconductors.

    Shares of US chipmakers fell Tuesday following the announcement of new export controls.

    Nvidia’s (NVDA) stock closed down 4.7%, while Intel (INTC) slipped 1.4%. AMD (AMD) shares ended 1.2% lower.

    In its filing, Nvidia said the rules imposed new licensing requirements for exports to China and other markets such as Saudi Arabia, the United Arab Emirates and Vietnam.

    The company said its A800 chip, which was reportedly created for Chinese customers in order to circumvent last year’s restrictions, would be among the components affected.

    However, “given the strength of demand for our products worldwide, we do not anticipate that the additional restrictions will have a near-term meaningful impact on our financial results,” Nvidia said.

    The broader US chipmaking industry is also examining the impact of the new rules.

    The Semiconductor Industry Association said in a statement Tuesday that while it recognized the need to protect national security, “overly broad, unilateral controls risk harming the US semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere.”

    “We urge the administration to strengthen coordination with allies to ensure a level playing field for all companies,” added the group, which represents 99% of the US chip sector.

    The measures are also being reviewed in Europe. On Tuesday, ASML, the Dutch chipmaking equipment manufacturer, said it was evaluating the implications of the rules, though it did not expect them “to have a material impact on our financial outlook for 2023.”

    During a call Wednesday about the company’s third-quarter results, ASML chief executive Peter Wennink said the updated export restrictions would affect between 10% and 15% of the firm’s sales to China.

    On Tuesday, the US Department of Commerce added 13 Chinese entities to a list of firms with which US companies may not do business for national security reasons.

    They include two Chinese startups, Biren Technology and Moore Thread Intelligent Technology, and their subsidiaries.

    The department alleges that these companies are “involved in the development of advanced computing chips that have been found to be engaged in activities contrary to US national security.”

    CNN has reached out to Biren and Moore Thread for comment.

    — Anna Cooban contributed reporting.

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  • India restricts laptop, PC imports to boost local manufacturing | CNN Business

    India restricts laptop, PC imports to boost local manufacturing | CNN Business

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    CNN
     — 

    India has placed restrictions on the import of computers and laptops in a surprise move from the government of Prime Minister Narendra Modi which has been trying to encourage domestic manufacturing in the tech sector.

    Importers will now need to apply for licenses in order to bring laptops, tablets, personal computers and other electronic devices into the country, according to a notice issued by the Ministry of Commerce and Industry on Thursday. Previously, the import of such items was unrestricted.

    The ministry didn’t provide a reason for the change in rules, however Modi has aggressively pushed his “Make in India” campaign, which promotes local manufacturing in a bid to create more jobs. It follows a similar curb on smart TV imports in 2020.

    India’s electronic imports stood at $19.7 billion in the April to June period, up 6.25% from the same period in 2022, according to Reuters.

    CNN has contacted Apple

    (AAPL)
    and Samsung

    (SSNLF)
    , top laptop sellers in the South Asian country, for comment but has not yet received responses.

    India’s push to manufacture domestically comes at a crucial time for the world’s most populous nation, as companies look beyond China to secure crucial supply chains.

    India’s working-age population is expected to hit one billion over the next decade, according to the Organisation for Economic Co-operation and Development. Its large and young labor force makes the country a big draw for global companies seeking alternative manufacturing hubs to China.

    Earlier this year, India’s commerce minister, Piyush Goyal, said Apple was already making between 5% and 7% of its products in India.

    “If I am not mistaken, they are targeting to go up to 25% of their manufacturing,” he said at an event in January.

    In June, US chipmaker Micron

    (MICR)
    announced a new factory in the western state of Gujarat, calling it the country’s first semiconductor assembly and test manufacturing facility.

    The venture will see Micron invest up to $825 million and create “up to 5,000 new direct Micron jobs and 15,000 community jobs over the next several years,” according to the company.

    Foxconn, the world’s largest contract electronics maker and a key supplier to Apple, is also looking to expand its manufacturing operations in India.

    Last month, it abruptly announced it was exiting an ambitious $19.4 billion joint venture with Vedanta

    (VEDL)
    , an Indian metals and energy conglomerate, to help build one of the country’s first chip factories.

    But, the company said it was still committed to investing in Indian chipmaking and was applying to a government program that subsidizes the cost of setting up semiconductor or electronic display production facilities in the country.

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  • IAEA chief ‘completely convinced’ it’s safe to release treated Fukushima nuclear wastewater | CNN

    IAEA chief ‘completely convinced’ it’s safe to release treated Fukushima nuclear wastewater | CNN

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    Tokyo
    CNN
     — 

    Japan’s plan to release treated radioactive water into the ocean is safe and there is no better option to deal with the massive buildup of wastewater collected since the 2011 Fukushima nuclear disaster, the head of the United Nations’ nuclear watchdog told CNN.

    Japan will release the wastewater sometime this summer, a controversial move 12 years after the Fukushima nuclear plant meltdown. Japanese authorities and the IAEA have insisted the plan follows international safety standards – the water will first be treated to remove the most harmful pollutants, and be released gradually over many years in highly diluted quantities.

    But public anxiety remains high, including in nearby countries like South Korea, China and the Pacific Islands, which have voiced concern about potential harm to the environment or people’s health. On Friday, Chinese customs officials announced they would ban food imports from ten Japanese prefectures including Fukushima, and strengthen inspections to monitor for “radioactive substances, to ensure the safety of Japanese food imports to China.”

    Speaking in an interview during a visit to Tokyo Friday, International Atomic Energy Agency (IAEA) Director General Rafael Grossi said that while fears over the plan reflect a “very logical sense of uncertainty” that must be taken seriously, he is “completely convinced of the sound basis of our conclusions.”

    “We have been looking at this basic policy for more than two years. We have been assessing it against … the most stringent standards that exist,” he said. “And we are quite certain of what we are saying, and the scheme we have proposed.”

    Grossi told CNN he had met with Japanese fishing groups, local mayors and other communities affected by the 2011 disaster – and whose livelihoods may be hurt by the release – to listen to those concerns.

    “My disposition … is one of listening, and explaining in a way that addresses all these concerns they have,” he said.

    “When one visits Fukushima, it is quite impressive, I will even say ominous, to look at all these tanks, more than a million tons of water that contains radionuclides – imagining that this is going to be discharged into the ocean. So all sorts of fears kick in, and one has to take them seriously, to address and to explain.

    “This is why I’m here, to listen to all those who in good faith have questions and criticism and question marks, and to address them.”

    On Tuesday, Grossi formally presented the IAEA’s safety review to Japanese Prime Minister Fumio Kishida. The report found the wastewater release plan will have a “negligible” impact on people and the environment, adding that it was an “independent and transparent review,” not a recommendation or endorsement.

    exp iaea fukushima lyman intvw 070512ASEG3 cnni world_00035521.png

    IAEA approves plan for Fukushima’s wastewater

    Japanese authorities have said the release is necessary because they are running out of room to contain the contaminated water – and the move will allow the full decommissioning of the Fukushima plant.

    The 2011 disaster caused the plant’s reactor cores to overheat and contaminate water within the facility with highly radioactive material. Since then, new water has been pumped in to cool fuel debris in the reactors. At the same time, ground and rainwater have leaked in, creating more radioactive wastewater that now needs to be stored and treated.

    That wastewater now measures 1.32 million metric tons – enough to fill more than 500 Olympic-sized swimming pools.

    Japan has previously said there were “no other options” as space runs out – a sentiment Grossi echoed on Friday. When asked whether there were better alternatives to dispose of the wastewater, the IAEA chief answered succinctly: “No.”

    It’s not that there are no other methods, he added – Japan had considered five total options, including hydrogen release, underground burial and vapor release, which would have seen wastewater boiled and released into the atmosphere.

    But several of these options are “considered industrially immature,” said Grossi. For instance, vapor release can be more difficult to control due to environmental factors like wind and rain, which could bring the waste back to earth, he said. That left a controlled release of water into the sea – which, Japanese officials and some scientists point out, is frequently done at nuclear plants around the world, including those in the United States.

    The IAEA will also remain on site for years to come, with a new permanent office set up in Fukushima to help monitor progress.

    “We have the benefit of science,” Grossi said. “Either you have a certain radionuclide in a water sample or you don’t have it … it’s a measurable thing. We have the science, we have the laboratories … to ensure the credibility and the transparency of the process.”

    Japan fukushima 12 years later reactors stewart pkg contd intl hnk vpx_00023612.png

    CNN goes inside the Fukushima nuclear plant where wastewater is being treated

    But some critics have cast doubt on the IAEA’s findings, with China recently arguing that the group’s assessment “is not proof of the legality and legitimacy” of the wastewater release.

    Many countries have openly opposed the plan; Chinese officials have warned that it could cause “unpredictable harm,” and accused Japan of treating the ocean as a “sewer.” The Secretary General of the Pacific Islands Forum, an inter-governmental group of Pacific island nations that includes Australia and New Zealand, also published an op-ed in January voicing “grave concerns,” saying more data was needed.

    And in South Korea, residents have taken to the streets to protest the plan. Many shoppers have stockpiled salt and seafood for fear these products will be contaminated once the wastewater is released – even though Seoul has already banned imports of seafood and food items from the Fukushima region.

    IAEA chief Rafael Grossi during an inspection in Fukushima, Japan, on July 5, 2023.

    International scientists have also expressed concern to CNN that there is insufficient evidence of long-term safety, arguing that the release could cause tritium – a radioactive hydrogen isotope that cannot be removed from the wastewater – to gradually build up in marine ecosystems and food chains, a process called bioaccumulation.

    While Grossi said he takes these objections seriously, he added that he “cannot exclude” the possibility some are driven more by politics than science.

    “We understand that there is a political environment … which is tense. Geopolitical divisions are very, very strong these days so we cannot exclude these things,” he said.

    Grossi also denied media reports that the IAEA had shared a draft of its final report with the Japanese government ahead of its publication. “It’s absurd,” he said. “This is the DNA of the IAEA – to be the nuclear watchdog for nuclear operations, the nuclear watchdog for nuclear safety and security. When we come to a conclusion, it is our independent conclusion.”

    And more broadly, the future of nuclear as an alternative energy source relies on the success of the Fukushima release, he said. Though there has been heightened public alarm toward nuclear plants recently – for instance, regarding the Russian-occupied Zaporizhzhia plant in Ukraine – “the problem there is war, the problem is not nuclear energy,” Grossi said.

    “If there was one lesson that came clearly after the Fukushima accident, it’s that the nuclear safety standards should be observed to the letter,” he added. “If you do that, the probability of having what happened in Fukushima is extremely low.”

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  • Biden and G7 leaders prepare new Russia sanctions as Zelensky expected to attend Japan summit | CNN Politics

    Biden and G7 leaders prepare new Russia sanctions as Zelensky expected to attend Japan summit | CNN Politics

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    Hiroshima, Japan
    CNN
     — 

    US President Joe Biden and fellow world leaders were unveiling tough new sanctions on Russia as they prepare to hear in-person later this weekend from Volodomyr Zelensky, who officials said was planning a dramatic trip to Japan as he continues to appeal for military assistance amid Russia’s invasion.

    The new sanctions are designed to plug loopholes and go after untapped industries as western leaders continue to work toward choking off Moscow’s war financing.

    A dedicated G7 session on Ukraine was set for Friday afternoon. The war was expected to be a central topic of discussion among leaders here as Ukrainian forces prepare for a counteroffensive.

    The high point will come when Zelensky addresses the group in person. Officials declined to say exactly when Zelensky would arrive or detail his travel arrangements. He has been traveling outside his country more as the war grinds onward, including a tour of Europe last week.

    The lengthy trip from Ukraine to Hiroshima, where leaders from the world’s most powerful democracies are gathering, underscores Zelensky’s desire to strengthen support fourteen months into the war.

    The menacing nuclear undertones to Russia’s invasion were placed into sharp relief as the summit got underway. Leaders laid wreaths at the Hiroshima Peace Memorial, the epicenter of the American atomic bomb dropped here in 1945 that wiped out the city and more than 100,000 of its inhabitants while hastening the end of World War II.

    In the background was the Atomic Bomb Dome, now a monument and UNESCO World Heritage Site. The dome was formerly the Hiroshima Prefectural Industrial Promotion Hall, and the atomic blast struck almost directly above it, leaving the frame of its iron dome largely intact.

    It was against that backdrop that Biden and his fellow leaders entered three days of talks.

    The US said Friday it would tighten export controls, including by “extensively restricting categories of goods key to the battlefield,” and will announce nearly 300 new sanctions against “individuals, entities, vessels, and aircraft.”

    Additionally, the US will place new designations across Europe, the Middle East and Asia, and expand its sanctions authorities to further target Russia’s economy.

    The United Kingdom said it will ban the import of Russian diamonds, as part of its latest sanctions against Moscow, Downing Street announced on Friday. The move aims to restrict one of Russia’s few remaining export industries that had been relatively untouched by the withering western sanctions already in place.

    Imports of Russian-origin copper, aluminum, and nickel will also be banned under the UK legislation, which will be introduced later this year, the prime minister’s office said in a statement.

    The Russian diamond industry was worth $4 billion in exports in 2021, according to Downing Street.

    Biden faces his fellow world leaders Friday in Japan under the shadow of a looming default on US debt, a scenario his advisers said risks subverting American leadership and sending the global economy into tailspin.

    The risk appears particularly acute as Biden works to rally fellow G7 officials behind a shared approach toward Russia and China. On the first day of the summit talks, the group is expected to unveil a new tightening of sanctions on Moscow – a response to the invasion of Ukraine that relies on the strength of the American financial system.

    Before arriving, Biden was briefed on the debt ceiling standoff by aides.

    “The President’s team informed him that steady progress is being made,” a White House official said.

    The call lasted 20-30 minutes, press secretary Karine Jean-Pierre told pool reporters traveling with the President. A separate source with knowledge of the talks said — despite the optimism and positive signals — there is a long way to go to get a deal and it’s unclear if negotiators reach one by this weekend or if it will slip into next week.

    How much the debt standoff arises in Biden’s talks in Hiroshima remains to be seen; some European officials said they had been down similar roads before as American leaders worked to avert financial disaster only to find a solution at the last moment.

    But even if it does not arise substantially in the many hours of leaders’ meetings spanning the next three days, the risk of default remains the backdrop against which Biden will attempt to project strength this week in Japan.

    “Debt ceiling brinkmanship that Republicans are driving in Washington, DC, undermines American leadership, undermines the trustworthiness that America can bring to not just our allies and partners but to the rest of the world,” a senior administration official said as Biden began the high-stakes G7 summit.

    Biden cut his trip to Asia short to return to Washington early as negotiations continue over raising the US borrowing limit ahead of June 1, the earliest date by which the country could run out of cash to pay its bills.

    An extensive agenda of issues, including Ukraine, China and artificial intelligence, are all up for discussion. But it was clear from Biden’s decision to cancel planned stops in Australia and Papua New Guinea – Secretary of State Antony Blinken will make a two-day visit to the latter instead – that other matters are weighing on the US president’s time.

    To that end, Biden brought with him to Japan a top domestic policy aide, Bruce Reed, to keep him continually updated on the status of talks between White House aides and congressional Republicans.

    Just the threat of default has the potential to weaken American diplomatic authority, the official said, citing a sanctions regime on Russia that relies on the strength of the US financial system.

    “All of those things reduce America’s capacity to lead,” the official said.

    Biden’s meetings with fellow leaders in Hiroshima will present “an opportunity to highlight just how essential it is that that the Republicans work to get this done expeditiously with the president, because a lot is riding on ensuring that the United States continues to lead and lead alongside the G7.”

    Nowhere is that more evident than Russia’s ongoing war in Ukraine. The conflict will be a key topic of discussion for world leaders Friday.

    “All G7 members are preparing to implement new sanctions and export controls,” the senior official said, framing the US package of sanctions as “substantial.”

    The official previewed a five-pronged plan of new steps G7 nations are taking more broadly to further economically isolate Russia, including efforts to disrupt Russia’s ability to source inputs for its war and to close loopholes that have allowed certain Russian entities to evade existing sanctions.

    The sanctions come 14 months after Russia launched its invasion and as Ukraine prepares for a counteroffensive using billions of dollars in Western military aid.

    Biden and fellow leaders were planning to discuss how much progress has been made on the battlefield, with an eye toward helping Ukraine regain territory and assume leverage in potential peace talks.

    While the US remains Ukraine’s largest contributor of military assistance, some leaders have begun calling for ever-more-advanced weapons, including fighter jets, to send Kyiv. Biden has resisted those calls as he works to prevent an escalation.

    This story has been updated with additional developments.

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  • Russia’s shadowy energy trade is raising fears of a devastating oil spill | CNN Business

    Russia’s shadowy energy trade is raising fears of a devastating oil spill | CNN Business

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    London
    CNN
     — 

    The waters of the Bay of Lakonikos, on the south-eastern side of Greece’s Peloponnese peninsula, are a bright turquoise color. Its shores are an important nesting site for sea turtles.

    Yet it’s not just a place of natural beauty. The area has become a key hub for tankers carrying Russian energy exports.

    As crude and refined petroleum products that would usually go to the European Union are rerouted to Asia — with most seaborne oil imports banned by the bloc in response to Moscow’s assault on Ukraine — cargoes are being transferred here onto larger vessels to make the long trip.

    Ship-to-ship transfers of Russian crude have mushroomed in recent months, reaching a record high during the first three months of the year, according to data from S&P Global, a research firm. Near Greece, more than 3.5 million barrels of Russian gasoil, a refined product used in heating and transport systems, were transferred between ships in March. That’s more than seven times the volume tallied by S&P Global for that month in 2022.

    The transfers highlight the dramatic transformation of the global oil market since President Vladimir Putin ordered a full-scale invasion of Ukraine nearly 14 months ago. As China, India and Turkey fill the void left by Europe, once the top buyer of Russian oil and oil products, trips have lengthened, requiring more ships — and S&P Global data indicates mid-journey handoffs have become more common.

    “We’ve seen a big increase in ship transfers in the Mediterranean,” said Matthew Wright, senior freight analyst at Kpler, a data group. “Smaller vessels come in from Russian ports, they transfer the cargoes onto larger vessels, and then those larger vessels will head off to Asia.”

    Many of these ships are part of what’s become known as the “gray fleet.” Industry insiders like Wright use this term to refer to vessels that started carrying Russian oil in the past year. For many, little is known about their owners, which may be a shell company.

    The “gray fleet” isn’t necessarily doing anything underhanded. But Western observers like Wright say the emergence of this network, where ownership is often masked, has reduced transparency in the oil market, making it harder for regulators to keep watch.

    Australia, Canada and United States recently said in a submission to the International Maritime Organization that more ships were illegally turning off their transponders, or “going dark,” before transferring oil in international waters. Switching off transponders, which transmit location data, can be a way of dodging sanctions, they said.

    Fred Kenney, the IMO’s director of legal and external affairs, told CNN that alarm about this practice had grown over the past year. Collisions are more likely in such cases, raising the odds of a devastating oil spill.

    It’s also harder to tell whether the vessels with murky ownership comply with the strict rules governing oil transfers at sea, according to Kenney.

    “There is a significant level of concern that the regulatory regime that ensures safe and secure shipping on clean oceans is being undermined,” he said.

    Russia’s oil export volumes have rebounded to levels last seen before it invaded Ukraine, according to the International Energy Agency, although the country is still grappling with a sharp drop in revenue from these exports. Group of Seven nations have imposed a cap on the price of Russian oil and oil products, and a smaller pool of buyers can also negotiate greater discounts.

    China’s imports of Russian oil in the first quarter of the year rose 38% compared with a year prior, according to Kpler data. India’s have skyrocketed almost tenfold.

    As trade of Russian oil has become more complex, many Western shippers have pulled back. New, more opaque players have stepped in, contributing to the formation of the “gray fleet.”

    According to VesselsValue, a UK-based market intelligence firm, sales of oil tankers to newly formed companies or undisclosed buyers account for roughly 33% of tanker deals so far this year. Sales to unknown buyers accounted for just 10% of the total in 2022 and 4% in 2021.

    Using satellite images from space technology firm Maxar, CNN was able to home in on pairs of oil tankers dotting the Bay of Lakonikos. Together with Kpler, CNN has worked out the details of one of the transfers.

    According to data from the two ships’ transponders, the smaller tanker docked in St. Petersburg, Russia, where it picked up a cargo of fuel oil in late February. CNN then tracked it around Western Europe to the Mediterranean Sea. At that point, it unloaded its cargo onto the larger ship that had arrived from the direction of the Black Sea port of Novorossiysk in Russia. Kpler considers this vessel to be part of the “gray fleet.”

    From there, the larger tanker continued through the Suez Canal, the primary sea route from Europe to Asia.

    As transactions such as these become more common, experts are growing increasingly worried about the risks.

    While transferring oil from one ship to another is not unusual, Kenney of the IMO said “gray fleet” ships — more difficult to monitor if it’s not clear who owns them — might not be following best practices.

    “There [are] myriad things that can go wrong in a ship-to-ship transfer, which is why there is a comprehensive set of industry rules that govern these transfers,” he said, noting the potential for a spill.

    Canada, Japan and the United Kingdom have pointed out that there is a higher risk of accidental collisions between ships if transponders are turned off. Kpler documented multiple instances of this practice, which is almost always illegal, in 2022.

    “When we see ships, or we get reports of ships turning off their transponders, it’s concerning to us,” Kenney said.

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  • China has not provided extensive assistance to Russia as part of its war against Ukraine even as the two countries forge closer ties, senior Treasury officials say | CNN Business

    China has not provided extensive assistance to Russia as part of its war against Ukraine even as the two countries forge closer ties, senior Treasury officials say | CNN Business

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    CNN
     — 

    While China and Russia have strengthened ties since the Kremlin’s brutal invasion of Ukraine, the US has not seen evidence that China has provided systemic material support to the Kremlin as Russian President Vladimir Putin and his government look for avenues to evade Western sanctions and backfill its military, according to senior US Treasury officials.

    One senior Treasury official said that China is, as of now, unwilling to provide material support to Russia at scale and in a significant way, pointing instead to Russian efforts to source material from North Korea and Iran. The comments come almost one month after revelations of US intelligence that China has been open to providing Russian with requested military and financial assistance, and US national security adviser Jake Sullivan warned top Chinese diplomat Yang Jiechi about American concerns over such a move.

    With relations between Washington and Beijing at historic lows, the senior officials attributed the decision by China to hold off so far on more systemic help to efforts across the sanctions coalition – from public US comments to active and direct messages that the Europeans have given to China.

    With Russia’s brutal invasion of Ukraine into its second year, the Biden administration has continued to take steps to plug the gaps of the Western allies’ sanctions regime as they broaden intelligence sharing with US allies and jurisdictions where Russia has looked to sidestep sanctions and export controls.

    The US and its allies have also taken more direct action, sanctioning a Chinese satellite company providing intelligence to Russian forces in January and putting some Chinese companies on the US export control list.

    As part of that effort and as leaders of the global financial system descend on Washington D.C. next week for the Spring Meetings of the International Monetary Fund and World Bank, top US Treasury and intelligence officials will share information with relevant partners to help countries and businesses understand how the Kremlin continues to use its intelligence services to try and evade the unprecedented sanctions regime instituted by the US and its allies, these senior officials also said.

    The meetings next week with countries the US is concerned about are part of a broader push by the Treasury over the next month as senior officials continue to fan out across the world to strategize with US allies and partners to deepen cooperation and ramp up the pressure on countries key to Russia’s sanctions evasion and backfilling efforts.

    Two of Treasury’s top sanctions officials – Brian Nelson and Liz Rosenberg – will continue the US government’s ramped up efforts internationally to speak to specific countries and their businesses about the risks of providing support to Russia and share detailed information on sanctions evasion. Nelson will travel to Switzerland, Italy, Austria and Germany to compare notes with their counterparts and continue to share intelligence on the ways in which Russia is attempting to evade sanctions; and, Rosenberg will travel to Kazakhstan in Central Asia, a region with a long history of ties to Russia, and through which officials have raised concerns that Russia is sourcing materials.

    Despite the impact sanctions have had on the Russian economy, some observers have pointed to concerns over Moscow’s ability to evade sanctions and re-orient trade routes to continue to acquire some of the technologies and financing needed to fund its war machine through countries it borders and more permissive jurisdictions, such as the United Arab Emirates and Turkey.

    But in recent months officials have also begun to see some results from their public and private efforts. Turkish officials told the US last month that their government has been taking further action to block the transit of sanctioned goods directly to Russia, according to a source familiar with the discussion.

    Since Russia launched its bloody war against Ukraine, the US has imposed thousands of sanctions against Russian politicians, oligarchs and companies, cut off the Russian central bank from its dollar-denominated reserves as well as the global financial messaging system, undermined Russia’s defense-industrial base and imposed a price cap on Russian oil and petroleum products.

    One of the most successful efforts, the price cap, has already been having a demonstrable effect with the Russian Finance Ministry announcing Friday a $29 billion dollar deficit in the budget for the first quarter of 2023, according to Reuters.

    In a speech earlier this year on the anniversary of Russia’s invasion, US Deputy Treasury Secretary Wally Adeyemo publicly warned Russian intelligence services that the US is monitoring their efforts and is cracking down.

    “We know Russia is actively seeking ways to circumvent these sanctions… In fact, one of the ways we know our sanctions are working is that Russia has tasked its intelligence services – the FSB and GRU – to find ways to get around them,” Adeyemo said in his February speech.

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  • What the OPEC cuts mean for Putin and Russia | CNN Business

    What the OPEC cuts mean for Putin and Russia | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Some of the world’s largest oil exporters shocked markets over the weekend by announcing that they would cut oil production by more than 1.6 million barrels a day.

    OPEC+, an alliance between the Organization of the Petroleum Exporting Countries (OPEC) and a group of non-OPEC oil-producing countries, including Russia, Mexico, and Kazakhstan, said on Sunday that the cuts would start in May, running through the end of the year. The news sent both Brent crude futures — the global oil benchmark — and WTI — the US benchmark — up about 6% in trading Monday.

    OPEC+ was formed in 2016 to coordinate and regulate oil production and stabilize global oil prices. Its members produce about 40% of the world’s crude oil and have a significant impact on the global economy.

    What it means for Putin: OPEC+’s decision to cut oil production could have big implications for Russia.

    After Russia invaded Ukraine last year, the United States and United Kingdom immediately stopped purchasing oil from the country. The European Union also stopped importing Russian oil that was sent by sea.

    Members of the G7 — an organization of leaders from some of the world’s largest economies: Canada, France, Germany, Italy, Japan, the United Kingdom and the United States — have also imposed a price cap of $60 per barrel on oil exported by Russia, keeping the country’s revenues artificially low. If oil prices continue to rise, some analysts have speculated that the US and other western nations may have to loosen that price cap.

    US Treasury Secretary Janet Yellen said Monday that the changes could lead to reassessing the price cap — though not yet. “Of course, that’s something that, if we’ve decided that it’s appropriate to revisit, could be changed, but I don’t see that that’s appropriate at this time,” she told reporters.

    “I don’t know that this is significant enough to have any impact on the appropriate level of the price cap,” she added.

    Russia also recently announced that it would lower its oil production by 500,000 barrels per day until the end of this year.

    Just last week Putin admitted that western sanctions could deal a blow to Russia’s economy.

    “The illegitimate restrictions imposed on the Russian economy may indeed have a negative impact on it in the medium term,” Putin said in televised remarks Wednesday reported by state news agency TASS.

    Putin said Russia’s economy had been growing since July, thanks in part to stronger ties with “countries of the East and South,” likely referring to China and some African countries.

    Russia, China and Saudi Arabia: The OPEC+ announcement came as a surprise this week. The group had already announced it would cut two million barrels a day in October of 2022 and Saudi Arabia previously said its production quotas would stay the same through the end of the year.

    “The move to reduce supply is fairly odd,” wrote Warren Patterson, head of commodities strategy at ING in a note Monday.

    “Oil prices have partly recovered from the turmoil seen in financial markets following developments in the banking sector,” he wrote. “Meanwhile, oil fundamentals are expected to tighten as we move through the year. Prior to these cuts, we were already expecting the oil market to see a fairly sizable deficit over the second half or 2023. Clearly, this will be even larger now.”

    Saudi Arabia stated that the cut is a “precautionary measure aimed at supporting the stability of the oil market,” but Patterson says it will likely “lead to further volatility in the market,” later this year as less available oil will add to inflationary feats.

    Still, the changes signal shifting global alliances with Russia, China and Saudi Arabia around oil prices, said analysts at ClearView Energy Partners. Higher-priced oil could help Russia pay for its war on Ukraine and also boosts revenue in Saudi Arabia.

    The White House, meanwhile, has spoken out against OPEC’s decision. “We don’t think cuts are advisable at this moment given market uncertainty – and we’ve made that clear,” National Security Council spokesman John Kirby said Monday.

    – CNN’s Paul LeBlanc and Hanna Ziady contributed to this report

    The crisis triggered by the recent collapses of Silicon Valley Bank and Signature Bank is not over yet and will ripple through the economy for years to come, said JPMorgan Chase CEO Jamie Dimon on Tuesday.

    In his closely watched annual letter to shareholders, the chief executive of the largest bank in the United States outlined the extensive damage the financial system meltdown had on all banks and urged lawmakers to think carefully before responding with regulatory policy.

    “These failures were not good for banks of any size,” wrote Dimon, responding to reports that large financial institution benefited greatly from the collapse of SVB and Signature Bank as wary customers sought safety by moving billions of dollars worth of money to big banks.

    In a note last month, Wells Fargo banking analyst Mike Mayo wrote “Goliath is winning.” JPMorgan in particular, he said, was benefiting from more deposits “in these less certain times.”

    “Any crisis that damages Americans’ trust in their banks damages all banks – a fact that was known even before this crisis,” said Dimon. “While it is true that this bank crisis ‘benefited’ larger banks due to the inflow of deposits they received from smaller institutions, the notion that this meltdown was good for them in any way is absurd.”

    The failures of SVB and Signature Bank, he argued, had little to do with banks bypassing regulations and that SVB’s high Interest rate exposure and large amount of uninsured deposits were already well-known to both regulators and to the marketplace at large.

    Current regulations, Dimon argued, could actually lull banks into complacency without actually addressing real system-wide banking issues. Abiding by these regulations, he wrote, has just “become an enormous, mind-numbingly complex task about crossing t’s and dotting i’s.”

    And while regulatory change will be a likely outcome of the recent banking crisis, Dimon argued that, “it is extremely important that we avoid knee-jerk, whack-a-mole or politically motivated responses that often result in achieving the opposite of what people intended.” Regulations, he said, are often put in place in one part of the framework but have adverse effects on other areas and just make things more complicated.

    The Federal Deposit Insurance Corporation has said it will propose new rule changes in May, while the Federal Reserve is currently conducting an internal review to assess what changes should be made. Lawmakers in Congress, like Democratic Sen. Sherrod Brown, have suggested that new legislation meant to regulate banks is in the works.

    But, wrote Dimon, “the debate should not always be about more or less regulation but about what mix of regulations will keep America’s banking system the best in the world.”

    Dimon’s letter to shareholders touched on a number of pressing issues, including climate change. “The window for action to avert the costliest impacts of global climate change is closing,” he wrote, expressing his frustration with slow growth in clean energy technology investments.

    “Permitting reforms are desperately needed to allow investment to be done in any kind of timely way,” he wrote.

    One way to do that? “We may even need to evoke eminent domain,” he suggested. “We simply are not getting the adequate investments fast enough for grid, solar, wind and pipeline initiatives.”

    Eminent domain is the government’s power to take private property for public use, so long as fair compensation is provided to the property owner.

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  • UK reaches its biggest trade deal since Brexit, joining trans-Pacific partnership | CNN Business

    UK reaches its biggest trade deal since Brexit, joining trans-Pacific partnership | CNN Business

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    Atlanta/Hong Kong
    CNN
     — 

    Britain has reached an agreement to join a major trans-Pacific partnership, calling it its biggest trade deal since Brexit.

    The country will become the first new member, and the first in Europe, to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) since it came into force in 2018.

    British Prime Minister Rishi Sunak announced the move early Friday, hailing it as a historic move that could help lift economic growth in the country by £1.8 billion ($2.2 billion) in the long run.

    “The bloc is home to more 500 million people and will be worth 15% of global GDP once the UK joins,” Sunak’s office said.

    The CPTPP is a free trade agreement with 11 members: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam. It succeeded the Trans-Pacific Partnership after the United States withdrew under former President Donald Trump in 2017.

    The UK agreement comes almost two years after it began talks to join the pact.

    As a member, more than 99% of UK exports to those 11 countries will now be eligible for tariff-free trade. That includes major exports, such as cheese, cars, chocolate, machinery, gin and whisky.

    In the year through September 2022, the United Kingdom exported £60.5 billion ($75 billion) worth of goods to CPTPP countries, Sunak’s office said in a statement.

    Dairy farmers, for example, sent £23.9 million ($29.6 million) worth of products such as cheese and butter to Canada, Chile, Japan and Mexico last year, and were set to “benefit from lower tariffs,” it added.

    The deal also aims to lift red tape for British businesses, which will no longer be required to set up local offices or be residents of the pact’s member countries to provide services there.

    Services made up a huge chunk — 43% — of overall UK trade with CPTPP members last year, according to Sunak’s office.

    “We are at our heart an open and free-trading nation,” the prime minister said in the statement, seeking to cast the deal as an example of the “economic benefits of our post-Brexit freedoms.”

    “As part of CPTPP, the UK is now in a prime position in the global economy to seize opportunities for new jobs, growth and innovation,” Sunak added.

    Several businesses expressed their support for the deal in the government statement, including global bank Standard Chartered

    (SCBFF)
    and spirits maker Pernod Ricard

    (PDRDF)
    .

    Joining the pact “is a big opportunity for our Scotch whisky business,” said Anishka Jelicich, Pernod Ricard’s UK director of public affairs.

    “Five of our top 20 export markets are CPTPP members. We expect tariff cuts and smoother access to some of the world’s fastest growing economies to increase exports and secure jobs and investment in the UK, with sales doubling in some markets.”

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  • In 2024 Republicans may complete a historic foreign policy reversal | CNN Politics

    In 2024 Republicans may complete a historic foreign policy reversal | CNN Politics

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    CNN
     — 

    The GOP in 2024 is moving toward a reprise of its most consequential foreign policy debate ever in a presidential primary. Only this time, the results may be reversed.

    The 1952 GOP presidential nomination fight proved a turning point in the party’s history, when Dwight Eisenhower, a champion of internationalism and alliance with Europe to contain the Soviet Union, defeated Sen. Robert Taft, a skeptic of international alliances who wanted to shift America’s focus from defending Europe toward confronting communist China.

    A similar divide is opening within the GOP now. In a distant echo of Taft, former President Donald Trump and Florida Gov. Ron DeSantis, the race’s two front-runners have both declared that defending Ukraine against Russia is not an American “vital interest” and “distracts” (as DeSantis put it) from the more important challenge of confronting China. Other likely 2024 candidates, such as former Vice President Mike Pence and former UN Ambassador Nikki Haley, come closer to upholding the Eisenhower position that the US must remain steadfast in protecting Europe against Russian aggression – and insisting that abandoning Ukraine would embolden China and other potential US adversaries.

    After Eisenhower’s landmark victory over Taft in 1952, every Republican presidential nominee over the next six decades – a list that extended from Richard Nixon through Ronald Reagan to George W. Bush, John McCain and Mitt Romney – identified more with the internationalist than isolationist wing of the party.

    But Trump broke that streak when he won the nomination in 2016 behind a message of brusque economic nationalism and skepticism of international alliances. Now, the GOP appears on track for a 2024 nomination fight which may demonstrate that Trump’s rise has lastingly shifted the party’s balance of power on foreign policy – and ended the long era of GOP internationalism Eisenhower’s victory began.

    The fact that DeSantis unveiled his views about Ukraine in a statement to Fox News host Tucker Carlson, a fierce opponent of American engagement with allies, underscored the governor’s determination to court Trump’s base with his provocative remarks. After several days of intense criticism from Republican internationalists, DeSantis retreated last week from his description of the war as a “territorial dispute” and called Russian President Vladimir Putin “a war criminal,” much harsher language than Trump has ever used. But DeSantis, in his interview with British journalist Piers Morgan for another Fox outlet, also reiterated his skepticism of open-ended US support for Ukraine. “I just don’t think that’s a sufficient interest for us to escalate more involvement,” the governor said.

    Even with his qualifying statements last week, DeSantis’ skeptical posture toward Ukraine shows the magnetic pull that Trump has exerted on his party, tugging it away from the Eisenhower tradition.

    “Trump-ism is the dominant tendency in Republican foreign policy and it’s isolationist, its unilateralist, its amoral,” said Richard Haass, president of the Council on Foreign Relations and former director of policy planning at the State Department under George W. Bush. The “traditional institutional approach to the world [which was] … the dominant Republican approach since World War II … has clearly been eclipsed for now,” said Haass, who also held foreign policy positions in the Ronald Reagan and George H.W. Bush administrations.

    Ivo Daalder, president of the Chicago Council on Global Affairs and former US permanent representative to NATO under Barack Obama, agrees. The fact that both 2024 GOP front-runners are expressing a broad skepticism about US engagement abroad, he said, raises the possibility that Republican “internationalists have not only lost in ’16 and ‘20” when Trump headed the GOP ticket, “but have lost the party forever.”

    The 1952 presidential election, by contrast, was the moment when GOP internationalists seemed to win the party forever. Leading into World War II, the party had been closely split between an internationalist wing determined to counter Adolf Hitler and imperial Japan and an isolationist faction resistant to entanglement in the intensifying confrontation with fascism, especially in Europe. The divide was both ideological and geographic, pitting generally more moderate internationalist East Coast Republicans (many of them tied to Wall Street and international finance) against more conservative isolationist forces centered in the small towns and small businesses of the Midwest and the far West.

    The Japanese surprise attack that triggered the US entry into World War II ended the political viability of a purely isolationist stance.

    “After Pearl Harbor there was no way to be a strict isolationist and a national political [figure],” said Joyce Mao, an associate professor of history at Middlebury College and author of the book “Asia First,” which recounts the GOP foreign policy debates of that era.

    After World War II, Republican internationalists joined with Democratic presidents Franklin Roosevelt and Harry Truman to build the international institutions meant to prevent another global war: the United Nations, the Marshall Plan to economically rebuild Europe and the North Atlantic Treaty Organization to militarily defend it from the Soviet Union. Eisenhower, who had organized the Allied invasion of Europe on D-Day in 1944, was firmly in that camp and, in fact, returned to Europe in January 1951 to serve as NATO’s first supreme commander.

    But Robert Taft led a block of “old guard” congressional Republicans that remained much more skeptical of European commitments. Taft, a senator from Ohio and the son of former Republican president William Howard Taft, had generally opposed American aid to Europe before Pearl Harbor and even after the war he pushed to reduce the Marshall Plan and voted against the creation of NATO. Like many of the Republicans who initially resisted involvement in World War II, Mao noted, Robert Taft in the post-war period tried to separate himself both from that isolationist past and the contemporary priorities of GOP internationalists like Eisenhower by arguing for an “Asia First” foreign policy that would shift resources and emphasis from defending Europe to confronting the Communists who had seized control of China.

    “Eisenhower was viewed by Taft and his colleagues as much too moderate,” Mao said. “His European focus was deemed by that conservative wing of the party as much too similar to the liberal Democrats. If this was going to be a moment for conservatism to reassert itself not only against liberalism but also against the moderates in the Republican Party, China provided an ideal plank” to do so.

    All these strains culminated in the landmark battle for the 1952 GOP presidential nomination. Taft, the Republican Senate leader, was a passionate favorite of conservatives. Eisenhower, still in Europe as NATO supreme commander, was in many respects a reluctant candidate. But as Stephen Ambrose showed in his classic biography, Eisenhower felt compelled to run largely from fear that Taft would lead the US out of NATO, while simultaneously risking a catastrophic war in China. (Eisenhower was also deeply disenchanted with Truman’s leadership.) Eisenhower resigned his NATO position, returned to the US, mobilized enough support from the GOP’s internationalist wing to beat Taft at the 1952 Republican convention, and then decisively won the presidency that November. “Eisenhower became president precisely because he did not trust this version of isolationism in Taft,” said Peter Feaver, a Duke University political scientist who served as a senior adviser for strategic planning on the National Security Council under George W. Bush.

    Both as a general election candidate and as president, Eisenhower tried to minimize his public conflicts with his party’s “old guard.” But he unmistakably steered the party (and the nation) toward acceptance of American global leadership within a robust international system of alliances. With only modest variation, that became the dominant foreign policy ideology of the GOP for the next 60 years under Presidents Richard Nixon, Gerald Ford, Ronald Reagan and George H.W. Bush. Late in that period, George W. Bush offered a different emphasis by stressing unilateral American action over coordination with allies, but even he emphasized the need for the US to remain engaged with the world. “It’s a pretty unbroken streak,” said Geoffrey Kabaservice, author of “Rule and Ruin,” a history of the struggles between GOP conservatives and moderates.

    Taft-like isolationism, coupled with nativist opposition to immigration and protectionist opposition to free trade, first resurfaced as a major force in the GOP with the long-shot presidential campaigns of conservative commentator Patrick J. Buchanan in 1992 and 1996. Two decades later, Trump revived that same triumvirate of isolationism, protectionism and nativism – what scholars sometimes call “defensive nationalism” – in his winning drive for the 2016 GOP nomination.

    Though some traditional GOP internationalists had hoped that Trump in office might moderate those impulses, as president he barreled down all those roads, repeatedly clashing with traditional allies. Now, DeSantis’ choice to echo Trump in devaluing Ukraine – following the calls from so many House conservatives to reduce the US commitment there – is deflating another hope of the GOP’s beleaguered internationalist wing: that Trump’s ascent represented a temporary detour and the party would snap back to its traditional support for international engagement once he left office.

    “Trump-ism has to be taken seriously,” as a long-term force in GOP thinking about the world, Haass said. The foreign policy center of gravity in the Republican Party, he added, has moved toward “a much more pinched or minimal American relationship with the world, [with] not a lot of interest in contributing to global responses to challenges like climate change or pandemics.”

    Even before DeSantis qualified his comments in the interview with Morgan, Feaver believed the Florida governor was trying to find a position on Ukraine somewhere between Trump’s undiluted skepticism and the unreserved support of Sens. Lindsey Graham of South Carolina and Mitch McConnell of Kentucky. But, Feaver said, by including such inflammatory language as “territorial dispute” in his initial comments, DeSantis demonstrated the risks of pursuing such a strategy of “triangulation.”

    “Triangulation is a risky game because if you get the language off, you may commit yourself in a campaign to a line that makes no sense when you are governing,” Feaver said. “This is one of the hardest problems for newcomers and challengers when they are campaigning for president. By giving applause lines that work for the narrow segments of ideologically hardened factions that they are trying to win over for the primary, they can lock themselves into policy positions that are not sound when they actually win.”

    As an example, Feaver said DeSantis’ insistence that the US should shift more attention from countering Russia to containing China – an argument he repeated with Morgan – was illogical because “abandoning Ukraine assists China’s most significant ally, Russia.” Haley made a similar case in her recent Wall Street Journal article criticizing DeSantis (though not by name) for his comments to Carlson. “It’s naive to think we can counter China by ignoring Russia,” Haley wrote.

    Daalder points out another logical flaw in the updated “Asia First” arguments from DeSantis and Trump. “If the US were to abandon its allies in Europe … our allies in Asia are going to ask, ‘What’s to say they are not going to do the same with regards to China?’” Daalder said. “By demonstrating your willingness to stand up to Russia you are also strengthening the view that in Asia that when it comes to it that we will be there to help them.”

    But polls leave no doubt that both prongs of the modern Robert Taft position – that the US should reduce its commitment to Europe-focused international alliances and harden its resistance to China – have a substantial base of support in the contemporary Republican coalition. In a Gallup poll released earlier this month, by a lopsided margin of 76% to 12%, Republican voters were more likely to identify China than Russia as the principal US adversary in the world. (More Democrats picked Russia than China.) Polls have also found a steady decline in Republican support for US aid to Ukraine: polls this year by both the Pew Research Center and Quinnipiac University found that the share of GOP voters who believe the US is doing too much now equals the combined percentage who think it is doing too little or the right amount. (Quinnipiac found big majorities of Democrats and independents still believe the US is doing the right amount or not enough.)

    The latest Chicago Council on Global Affairs annual survey also tracks a broader retreat from the world among GOP voters. In that poll, conducted last November, the share of Republicans who said the US should take an active role in world affairs fell to 55% – the lowest the survey has ever recorded. Underscoring that erosion, a slight majority of Republicans in the poll said the costs of an active US international role now exceed the benefits.

    Opinions in the GOP about whether the US should do more or less in Ukraine don’t vary much along lines of education or age, the Pew poll found. But generally, these surveys show that the turn away from global leadership is most powerful among two distinct groups of Republicans: those who are younger, and those who lack college degrees. While a solid three-fifths of Republicans with a college degree in the Chicago Council poll said the benefits of US leadership exceed the costs, for instance, a majority of non-college Republicans disagreed. Younger Republicans were also much more likely than those over 60 to say the costs exceed the benefits.

    It’s probably no coincidence that those two groups – Republicans without a college degree and those who are younger – have consistently registered as Trump’s strongest supporters in early polls about the 2024 race.

    Trump is signaling that in a second term he will likely push even further in an isolationist and protectionist direction. John Bolton, Trump’s former national security adviser, has said he believed the former president came close to withdrawing the US from NATO and would likely do so if elected to a second term. Trump certainly hinted at that possibility in a recent campaign video in which he declared, “we have to finish the process we began under my administration of fundamentally reevaluating NATO’s purpose and NATO’s mission.” Trump has also said he would impose a four-year plan “to phase out all Chinese imports of essential goods, everything from electronics to steel to pharmaceuticals.” That would be a wrenching change in the global economy.

    In all these ways, Trump is promising to fulfill Robert Taft’s vision from seven decades ago – and to erase Eisenhower’s lasting victory in setting the GOP’s direction. DeSantis does not appear to have decided to jump entirely on that Trump train – but neither is he lying down on the tracks to stop it. With these two men far ahead of any potential rival, it seems highly likely that the GOP in 2024 will continue to move away from Eisenhower-style international cooperation toward a volatile compound of isolationism and unilateralism. And that could generate enormous turbulence across the globe.

    Trump’s first term, as Daalder noted, was a chaotic time for the international order and traditional US alliances. But “If an isolationist leader gets elected president in 2024,” Daalder added, “you haven’t seen nothing yet.”

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  • China may prefer TikTok to be banned than fall into US hands | CNN Business

    China may prefer TikTok to be banned than fall into US hands | CNN Business

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    Hong Kong
    CNN
     — 

    Nearly three years after the Trump administration threatened to ban TikTok if its Chinese owner didn’t sell the company to American investors, the video app is once again facing an existential threat.

    TikTok CEO Shou Zi Chew will appear later Thursday before US lawmakers, many of whom want the app banned in the United States because of the risk they say it presents to national security. The clamor for a sale is growing louder again.

    But an outright divestment isn’t in the cards, according to analysts and legal experts, not least because the Chinese government views TikTok’s technology as sensitive and has taken steps since 2020 to ensure it can veto any sale by its Beijing-based owner, ByteDance.

    At issue is who owns the keys to TikTok’s algorithms and the vast troves of data collected from the 150 million people in the United States who use the app each month.

    The Chinese government considers some advanced technology, including content recommendation algorithms, to be critical to its national interest. In December, Chinese officials proposed tightening the rules that govern the sale of that technology to foreign buyers.

    “Beijing will have no say in the US decision to mandate the sale of TikTok, but it will retain the ultimate approval authority over such a sale,” said Brock Silvers, chief investment officer for Kaiyuan Capital.

    “It also seems extremely unlikely that Beijing will accept any deal that removes TikTok’s algorithm[s] from its direct control and regulatory authority,” he said.

    TikTok’s algorithms, which keep users glued to the app, are believed to be key to its success. The algorithms give recommendations based on users’ behavior, thus pushing videos they actually like and want to watch.

    Chinese regulators first added algorithms to the restricted list of technologies in August 2020, when the Trump administration threatened to ban TikTok unless it was sold.

    Back then, Chinese state media published a commentary by a professor of trade at the University of International Business and Economics who said the updated rules meant ByteDance would need a license from Beijing to sell its technology.

    “Some cutting-edge technologies might impact national security and public welfare, and need to be included in [export control] management,” Cui Fan told Xinhua.

    The intended sale of TikTok in 2020 to Oracle and Walmart hit a snag after Beijing added algorithms to its export control list. The Biden administration eventually rescinded the Trump-era executive order targeting TikTok, but replaced it with a broader directive focused on investigating technology linked to foreign adversaries, including China.

    Now, the company is once again caught up in a geopolitical struggle between Washington and Beijing.

    “The TikTok hearings in the United States mark the beginnings of a regulatory meat-grinder facing all [Chinese] tech companies,” said Alex Capri, a research fellow at the Hinrich Foundation.

    A senior official from the Chinese regulator of digital and traditional media visited Bytedance’s offices last week. He urged the company to improve the use of “recommendation algorithms” to spread “positive energy” and strengthen the review of online content, according to a statement from the regulator posted on its website.

    The visit highlights Beijing’s resolve to keep its most powerful internet companies on a tight leash. It also has more direct levers to pull.

    In April 2021, a Chinese government entity acquired a “golden share” of 1% in a Beijing subsidiary of ByteDance, according to business data platform Qichacha. The subsidiary controls operating licenses for Douyin, TikTok’s sister app in China, and Toutiao, a news aggregation app.

    “TikTok’s algorithms make it truly unique in terms of data harvesting and strategic analytics, therefore, I don’t see Beijing allowing it to fall into the hands of US interests,” said Capri.

    “Unless they can somehow still access TikTok’s data through other means and methods, including ongoing cyber intrusion and other forms of back-door access.”

    Chinese regulators have been gradually tightening their control over algorithm technology more generally.

    Starting in March 2022, an unprecedented regulation came into effect requiring internet companies to register recommendation algorithms with the Cyberspace Administration, the powerful internet regulator that reports to President Xi Jinping.

    At the beginning of 2023, rules governing “deep synthesis algorithms” also took effect. They will restrict the use of AI-powered image, audio and text-generation software. Such technologies underpin popular apps such as ChatGPT.

    These regulatory developments suggest that TikTok’s recommendation algorithms will be subject to China’s export controls, said Winston Ma, an adjunct professor at New York University School of Law.

    TikTok has been erecting technical and organizational barriers that it says will keep user data safe from unauthorized access.

    Under the plans, known as Project Texas, the US government and third-party companies such as Oracle would also have some degree of oversight of TikTok’s data practices. TikTok is working on a similar plan for the European Union known as Project Clover.

    But that hasn’t reassured US officials, likely because no matter what TikTok does internally, China would still theoretically have leverage over TikTok’s Chinese owners. (Similar measures taken by Huawei didn’t prevent it from being kicked out of Western 5G markets.)

    And the concerns would remain even if TikTok is sold to an American buyer, Capri said.

    “A change of TikTok’s ownership solves nothing,” he said. “The real issue is general data security and who ultimately has access to that data, by whatever means, regardless of legal ownership.”

    The true test, he said, is whether user data can be effectively ring-fenced and privacy and security can be achieved through data segregation, encryption and other means.

    As for a solution, Silvers expects both sides to try to “finesse a compromise” where US concerns are addressed, but Beijing still retains control over TikTok.

    But, he believes Beijing would ultimately prefer for TikTok leave the US market rather than surrender its algorithm.

    “If any Chinese company is to have any chance of surviving increased scrutiny from Western governments, they will have to entrust their data to third party security firms and endure rigorous third party audits and government intrusion, in addition to transferring ownership,” Capri said.

    “This is really an existential crisis for Chinese firms operating in the West.”

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  • China imports 27 foreign video games as it reopens market to global titles | CNN Business

    China imports 27 foreign video games as it reopens market to global titles | CNN Business

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    Hong Kong
    CNN
     — 

    China has approved 27 foreign video games, including titles to be released by Tencent, NetEase and Bilibili, as it gradually reopens the world’s largest mobile entertainment market to international titles.

    It was the second batch of foreign games to be allowed to enter the Chinese market since December.

    The latest titles include “Seven Deadly Sins: Grand Cross,” a popular global role-playing game from South Korea’s Netmarble, and “Merge Mansion,” a mobile merge game from Finland’s Metacore, according to a list published by the National Press and Publication Administration (NPPA) on Monday.

    Tencent

    (TME)
    will distribute the two games in mainland China.

    NetEase

    (NTES)
    will release “Audition: Everybody Party,” a Chinese version of the hit dancing game “Audition Online,” which was developed by South Korea’s T3 Entertainment.

    Bilibili

    (BILI)
    will publish the localized version of “Uma Musume: Pretty Derby,” a hugely popular franchise from Japan’s Cygames.

    Other Chinese publishers on the list include XD, Yostar and iDreamSky Technology.

    Among the 27 games, seven were made in Japan, followed by five from South Korea.

    Online game stocks pulled higher in Asia on Tuesday.

    In South Korea, shares in Netmarble Corp were up 7%. Devsisters Corp, whose hit game “Cookie Run” was also on the NPPA’s list, soared 15%. Nexon Games, whose popular “Blue Archives” and “MapleStory” were given the greenlight, surged 16%.

    In Hong Kong, Bilibili was up as much as 9.1%. It last jumped 5.4%. XD advanced 2.8%. iDreamSky Technology was up 3.2%.

    “We believe this implies a more supportive regulatory policy towards foreign titles that further support a healthier and normalized development of online gaming industry going forward,” said Citi analysts on Tuesday.

    “We expect there could be two to three more imported batches in 2023, bringing total imported titles to 100 to 120.”

    The NPPA’s move came two months after the iconic “World of Warcraft” franchise went offline in mainland China, after US publisher Blizzard and its Chinese distributor NetEase broke off talks to extend their 14-year partnership. That left many Chinese players devastated.

    The regulator suspended licensing for all video games for nine months from July 2021 to April 2022, as the government launched a far-reaching tech crackdown and introduced stringent measures to cap playing times for minors in order to curb extreme cases of gaming addiction.

    The NPPA lifted the freeze on domestic titles last April, in a sign that Beijing’s crackdown on the tech sector was easing. But foreign games were still unable to access the Chinese market until December, when the regulator finally approved 45 foreign titles, including “Pokémon Unite” by Nintendo and “Valorant” by Riot Games.

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  • Dutch to restrict semiconductor tech exports to China, joining US effort | CNN Business

    Dutch to restrict semiconductor tech exports to China, joining US effort | CNN Business

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    Amsterdam/Washington
    Reuters
     — 

    The Netherlands’ government on Wednesday said it plans new restrictions on exports of semiconductor technology to protect national security, joining the US effort to curb chip exports to China.

    The announcement marked the first concrete move by the Dutch, who oversee essential chipmaking technology, toward adopting rules urged by Washington to hobble China’s chipmaking industry and slow its military advances.

    The US in October imposed sweeping export restrictions on shipments of American chipmaking tools to China, but for the restrictions to be effective it needs other key suppliers in the Netherlands and Japan, who produce key chipmaking technology, to agree. The allied countries have been in talks on the matter for months.

    Dutch Trade Minister Liesje Schreinemacher announced the decision in a letter to parliament, saying the restrictions will be introduced before the summer.

    Her letter did not name China, a key Dutch trading partner, nor did it name ASML Holding

    (ASML)
    , Europe’s largest tech firm and a major supplier to semiconductor manufacturers, but both will be affected. It specified one technology that will be impacted is “DUV” lithography systems, the second-most advanced machines that ASML sells to computer chip manufacturers.

    “Because the Netherlands considers it necessary on national security grounds to get this technology into oversight with the greatest of speed, the Cabinet will introduce a national control list,” the letter said.

    A White House representative did not immediately respond to a request for comment.

    ASML said in a response it expects to have to apply for licenses to export the most advanced segment among its DUV machines, but that would not impact its 2023 financial guidance.

    ASML dominates the market for lithography systems, multimillion dollar machines that use powerful lasers to create the minute circuitry of computer chips.

    The company expects sales in China to remain about flat at 2.2 billion euros in 2023, implying relative shrinkage as the company expects overall sales to grow by 25%. Major ASML customers such as TSMC and Intel

    (INTC)
    are engaged in capacity expansions.

    ASML has never sold its most advanced “EUV” machines to customers in China, and the bulk of its “DUV” sales in China go to relatively less advanced chipmakers. Its biggest South Korean customers, Samsung

    (SSNLF)
    and SK Hynix both have significant manufacturing capacity in China.

    The Dutch announcement leaves major questions unanswered, including whether ASML will be able to service the more than 8 billion euros worth of DUV machines it has sold to customers in China since 2014.

    Schreinemacher said the Dutch government had decided on measures “as carefully and precisely as possible … to avoid unnecessary disruption of value chains.”

    “It is for companies of importance to know what they are facing and to have time to adjust to new rules,” she wrote.

    Japan is expected to issue an update on its chip equipment export policies as soon as this week.

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  • Trump proposes building 10 ‘freedom cities’ and flying cars | CNN Politics

    Trump proposes building 10 ‘freedom cities’ and flying cars | CNN Politics

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    CNN
     — 

    Former President Donald Trump on Friday proposed building up to 10 futuristic “freedom cities” on federal land, part of a plan that the 2024 presidential contender said would “create a new American future” in a country that has “lost its boldness.”

    Commuters, meanwhile, could get around in flying cars, Trump said – an echo of “The Jetsons,” the classic cartoon about a family in a high-tech future society. Work to develop vertical takeoff and landing vehicles is already underway by major airlines, auto manufacturers and other companies, though widely seen as years away from reaching the market.

    “I want to ensure that America, not China, leads this revolution in air mobility,” Trump, who announced his third bid for the presidency in November, said in a four-minute video detailing his plan.

    He said he would launch a contest to charter up to 10 “freedom cities” roughly the size of Washington, DC, on undeveloped federal land.

    “We’ll actually build new cities in our country again,” Trump said in the video. “These freedom cities will reopen the frontier, reignite American imagination, and give hundreds of thousands of young people and other people, all hardworking families, a new shot at home ownership and in fact, the American dream.”

    Trump’s pitch comes the day before he is set to address the Conservative Political Action Conference in the Washington, DC, area, and as the 2024 Republican presidential field begins to take shape.

    The proposal is the latest in a series of early policy offerings from Trump, who in recent weeks has also said he would seek to ramp up domestic energy production, adopt a more isolationist foreign policy stance and purge the government and military of “warmongers and globalists,” and undo a Biden executive order that would require government agencies to submit annual public plans aimed at promoting equity.

    In December, the former president unveiled plans as part of his “free speech platform” that included vows to ban federal money from being used to label speech as misinformation or disinformation and to punish universities engaging in “censorship activities” with cuts to federal funding.

    Trump did not elaborate Friday on how he would pay for his latest proposal – leaving unanswered what could be the biggest question as Republicans in Washington seek to curb federal spending. He also did not explain how some elements of his proposal differ from similar Democratic plans.

    His plan, which was light on details, includes three additional planks: increasing tariffs on goods imported into the United States; providing families with “baby bonuses” that he said would “help launch a new baby boom”; and launching a beautification effort aimed at removing “ugly” buildings and revitalizing parks and public spaces.

    Trump did not explain what “baby bonuses” would amount to or who would qualify. It’s not clear how his proposal differs from the enhanced child tax credit, which wasn’t extended beyond 2021. A group of Democratic lawmakers and progressive advocates tried – but failed – to have it included in the $1.7 trillion spending measure in December. That proposal was blocked by Republicans.

    Trump on Friday also called for universal tariffs and imposing higher taxes on imported goods. He said he would escalate a trade battle with China, which he began during his four years in the White House. Doing so, he said, would jump-start American manufacturing.

    President Joe Biden has left tariffs in place on $350 billion of Chinese goods – nearly two-thirds of what the US imports from China – which were imposed by Trump.

    However, the costs of those tariffs are being passed on to American consumers, and contributing to inflation, experts say.

    Treasury Secretary Janet Yellen said last year that those tariffs on Chinese goods have “imposed more harm on consumers and businesses” than on China.

    Chris Rupkey, chief economist at markets research firm FwdBonds, said Trump’s proposed economic plan is reflective of the onetime real estate developer’s efforts before taking office.

    “Builders build and make dreams a reality, but this plan looks like a stretch because the country cannot afford to undertake massive new projects when the national debt is over $31 trillion,” Rupkey said in an email. “There are some interesting ideas here, but this is not the right time for bold plans that dream big. There’s no money left in Uncle Sam’s till to pay for big dreams and daring projects.”

    The nation is in the midst of a “cost-of-living crisis” that makes this too expensive of a proposition, Rupkey added.

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