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Tag: Janet Yellen

  • Yellen says ending Biden tax incentives would be ‘historic mistake’ for states like North Carolina

    Yellen says ending Biden tax incentives would be ‘historic mistake’ for states like North Carolina

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    WASHINGTON (AP) — Treasury Secretary Janet Yellen warned voters in the battleground state of North Carolina that they could lose jobs if Republicans weaken a signature Biden administration law that encourages investments in manufacturing and clean energy.

    Yellen said that Republican-dominated states like North Carolina are greatly benefiting from tax incentives under the 2022 Inflation Reduction Act and that eliminating them would be a “historic mistake,” in a Thursday speech a community college in Raleigh.

    North Carolina has emerged as a key battleground this election cycle between Republican former President Donald Trump and Democratic Vice President Kamala Harris, where Trump ultimately won North Carolina in the 2020 presidential election.

    Yellen said Treasury data shows that 90,000 North Carolina households claimed more than $100 million in residential clean energy credits and $60 million in energy efficiency credits.

    “Rolling them back could raise costs for working families at a moment when it’s imperative that we continue to take action to lower prices,” Yellen said. “It could jeopardize the significant investments in manufacturing we’re seeing here and across the country, along with the jobs that come with them, many of which don’t require a college degree. And it could give a leg-up to China and other countries that are also investing to compete in these critical industries.”

    “As we see clearly here in North Carolina, this would be a historic mistake,” she said.

    Some Republicans have called on their leaders to reconsider repealing IRA energy tax incentives.

    A group of 18 House Republicans in August called on House Speaker Mike Johnson to reconsider efforts to eliminate them.

    “Prematurely repealing energy tax credits, particularly those which were used to justify investments that already broke ground, would undermine private investments and stop development that is already ongoing,” the letter reads. “A full repeal would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return.”

    But Rep. Chip Roy, R-Texas, tweeted on social media site X that the lawmakers who signed the letter want to “preserve so-called ‘green’ handouts to Democrats’ corporate cronies.”

    “The GOP must ignore K-Street lobbyists and refuse to fund the climate corporate cronies destroying our country,” he said.

    The Republican case against the Inflation Reduction Act hinges on the argument that the spending is wasteful and benefits China.

    IRS data released in August states that 3.4 million American families have claimed $8.4 billion in residential clean energy and home energy efficiency tax credits in 2023 — mostly towards solar panels and battery storage.

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  • Treasury Secretary Yellen says ending Biden IRA tax incentives would be ‘historic mistake’ for states like North Carolina

    Treasury Secretary Yellen says ending Biden IRA tax incentives would be ‘historic mistake’ for states like North Carolina

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    Treasury Secretary Janet Yellen is warning voters in the battleground state of North Carolina that they could lose jobs if Republicans weaken a signature Biden administration law that encourages investments in manufacturing and clean energy.

    Yellen says that Republican-dominated states like North Carolina are greatly benefiting from tax incentives under the 2022 Inflation Reduction Act and that eliminating them would be a “historic mistake,” according to a draft of a speech she will give Thursday at a community college in Raleigh. The Treasury Department released the remarks ahead of the address.

    North Carolina has emerged as a key battleground this election cycle between Republican former President Donald Trump and Democratic Vice President Kamala Harris, where Trump ultimately won North Carolina in the 2020 presidential election.

    Yellen says Treasury data shows that 90,000 North Carolina households claimed more than $100 million in residential clean energy credits and $60 million in energy efficiency credits.

    “Rolling them back could raise costs for working families at a moment when it’s imperative that we continue to take action to lower prices,” Yellen says in her speech. “It could jeopardize the significant investments in manufacturing we’re seeing here and across the country, along with the jobs that come with them, many of which don’t require a college degree. And it could give a leg-up to China and other countries that are also investing to compete in these critical industries.”

    “As we see clearly here in North Carolina, this would be a historic mistake,” she says.

    Some Republicans have called on their leaders to reconsider repealing IRA energy tax incentives.

    A group of 18 House Republicans in August called on House Speaker Mike Johnson to reconsider efforts to eliminate them.

    “Prematurely repealing energy tax credits, particularly those which were used to justify investments that already broke ground, would undermine private investments and stop development that is already ongoing,” the letter reads. “A full repeal would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return.”

    But Rep. Chip Roy, R-Texas, tweeted on social media site X that the lawmakers who signed the letter want to “preserve so-called ‘green’ handouts to Democrats’ corporate cronies.”

    “The GOP must ignore K-Street lobbyists and refuse to fund the climate corporate cronies destroying our country,” he said.

    The Republican case against the Inflation Reduction Act hinges on the argument that the spending is wasteful and benefits China.

    IRS data released in August states that 3.4 million American families have claimed $8.4 billion in residential clean energy and home energy efficiency tax credits in 2023 — mostly towards solar panels and battery storage.

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    Read the stories.

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    Fatima Hussein, The Associated Press

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  • Tensions between Beijing and Washington are the biggest worry for US companies in China, report says

    Tensions between Beijing and Washington are the biggest worry for US companies in China, report says

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    TOKYO – Simmering tensions between Beijing and Washington remain the top worry for American companies operating in China, according to a report by the American Chamber of Commerce in China released Tuesday.

    The survey of U.S. companies said inconsistent and unclear policies and enforcement, rising labor costs and data security issues were other top concerns. It also said that, despite the insistence of Chinese leaders that Beijing welcomes foreign businesses, many still are hindered from free competition.

    “The Chinese government has stated that it encourages foreign direct investment, but many of our members continue to encounter barriers to investment and operations including policies that discriminate against them and public relations campaigns that create suspicion of foreigners,” the report said.

    The report welcomed an improvement in relations in 2023 that was capped by summit meetings of Chinese leader Xi Jinping and President Joe Biden, but said the U.S. presidential election in November was “looming large” over the future business environment.

    More recently, U.S. Treasury Secretary Janet Yellen visited Beijing, where she raised concerns that potential overcapacity in Chinese industries — such as electric vehicles, steel making and solar panels — might crowd out U.S. and other foreign manufacturers.

    “We recognize that there are significant areas of contention in the U.S.-China relationship, many of which have no easy or short-term prospects for resolution,” it said.

    The report said the Chamber saw high-level exchanges and communication between the two sides as a top priority.

    Despite the relative improvement in China-U.S. ties, American companies are dealing with slow progress from the Chinese government on promises to level the playing field between foreign and Chinese companies, the report said. On the other hand, heightened export controls and other restrictions from the U.S. government have raised the cost of compliance.

    “So the end result is companies are getting squeezed between the two governments, and on the regulatory front, what we’re seeing is it’s not getting easier to do business in China; it’s getting harder,” said the chamber’s chair, Sean Stein.

    American companies operating in China saw improved profits last year, though slightly less than half expect to be profitable in 2024.

    Still, many members of the American Chamber said they were more optimistic about growth of China’s own economy.

    Among its many recommendations the report urged China to create and implement “transparent and practical economic policies which treat domestic and foreign entities equally.”

    Referring to concerns over the risk of being caught up in accusations they have violated China’s national security, it also appealed to China’s leaders to clarify and narrow the scope of the country’s anti-espionage law to prevent it from interfering with normal business operations.

    Such requests follow repeated raids on foreign companies that Chinese authorities say were conducted on national security grounds.

    The report also had recommendations for the U.S. side, including providing clear visa policies for Chinese students to show they will be welcomed. Similarly, American students should be encouraged to study in China, the report said.

    It also called on U.S. officials to avoid resorting to unilateral controls that may be ineffective and fail to meet goals for national security and foreign policy. Washington should engage with Chinese companies to allow them to address export control concerns such as military use of civilian technologies before the companies are subjected to sanctions, it said.

    The 617-page bilingual report provided hundreds of recommendations spanning a wide variety of industries, from sports and online streaming to occupational safety issues and rural traffic management.

    American companies generally are not planning to move supply chains out of China given how large and important it is as a market of 1.4 billion people. But their willingness to increase investments there and make it their strategic focus has been decreasing as its advantages diminish, the report said.

    ___

    AP writer Simina Mistreanu contributed from Kaohsiung, Taiwan.

    Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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    Elaine Kurtenbach, Associated Press

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  • The Latest | Netanyahu says Israel will decide how to respond as Iran warns against retaliation

    The Latest | Netanyahu says Israel will decide how to respond as Iran warns against retaliation

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    Prime Minister Benjamin Netanyahu said Israel would decide whether and how to respond to Iran’s major air assault earlier this week, brushing off calls for restraint from close allies.

    Israel has vowed to respond to Iran’s unprecedented attack, leaving the region bracing for further escalation after months of fighting in Gaza. Israel’s allies have been urging Israel to hold back on any response to the attack that could spiral.

    The diplomatic pressure came as Iran’s president warned that even the “tiniest” invasion of its territory would bring a “massive and harsh” response.

    Over the weekend, Iran launched hundreds of missiles and drones at Israel after an apparent Israeli strike killed two Iranian generals. Israel and Iran have waged a long shadow war, but the strike was Iran’s first direct military attack on Israel. Israel says it and its partners intercepted nearly all the missiles and drones.

    Iran’s President Ebrahim Raisi warned Israel against any retaliation as he addressed an annual army parade, which was moved from its usual route and not broadcast live on state TV — possibly to avoid being targeted. In remarks carried by Iran’s official IRNA news agency, Raisi said the weekend attack was limited, and that if Iran had wanted to carry out a bigger attack, “nothing would remain from the Zionist regime.”

    Regional tensions have increased since the start of the latest Israel-Hamas war on Oct. 7, when Hamas and Islamic Jihad, two militant groups backed by Iran, carried out a cross-border attack that killed 1,200 people in Israel and kidnapped 250 others. Israel responded with an offensive in Gaza that has caused widespread devastation and killed more than 33,800 people, according to local health officials.

    Currently:

    — Netanyahu brushes off calls for restraint as Iran warns against retaliation

    — Lebanon says Israeli agents likely killed Hezbollah-linked currency exchanger

    — EU leaders vow to impose tougher sanctions against Iran

    — The G7 eyes targeted sanctions on Iran and a message of restraint

    — US House’s Ukraine, Israel aid package gains Biden’s support. What’s inside the package?

    Here is the latest:

    U.S. AND 47 OTHER COUNTRIES CONDEMN IRANIAN ATTACK ON ISRAEL

    UNITED NATIONS – The United States and 47 other countries issued a statement unequivocally condemning attacks on Israel by Iran “and its militant partners.”

    The statement issued Wednesday night calls their “dangerous and destabilizing actions” an escalation “that poses a grave threat to international peace and security.”

    The Iranian attack on Saturday marked the first time Tehran has launched a direct military assault on Israel. Israeli authorities said Iran lunched more than 300 drones and missiles, 99% of which were intercepted by air defenses in tandem with the U.S., Britain, France and Jordan.

    The attack took place less than two weeks after a suspected Israeli strike in Syria killed two Iranian generals in an Iranian consulate building in Damascus.

    The 48 mainly Western countries also condemned the fact that the ballistic and cruise missiles and attack drones “violated the airspace of several regional states, putting at risk the lives of innocent people in those countries, and appeared to traverse airspace near the holy sites in Jerusalem.”

    The countries also condemned Iran’s seizure of a Portuguese-flagged commercial ship near the Strait of Hormuz on Saturday and called for the immediate release of the ship and its crew.

    “We welcome the efforts to avert a further immediate escalation of violence in the region following the successful coordinated efforts to defend against Iran’s attack,” the statement said. “We call on all regional parties to take steps to avert further escalation of the situation.”

    UNRWA HEAD SAYS ISRAEL IS TRYING TO END ITS OPERATIONS IN GAZA

    UNITED NATIONS – The head of the U.N. agency helping Palestinian refugees is accusing Israel of trying to end its operations in Gaza and the West Bank.

    Philippe Lazzarini is urging the U.N. Security Council to safeguard his agency’s critical role as the relief agency for Palestinians.

    Lazzarini told the council Wednesday that Israel has banned the agency from delivering aid to Gaza. International experts have warned that faminine is imminent in the northern part of the territory.

    Since the war began, Lazzarini said, 178 personnel from the agency known as UNRWA have been killed. More than 160 of the agency’s premises, which were mostly used to shelter Palestinians, have been damaged or destroyed, killing more than 400 people.

    “We demand an independent investigation and accountability for the blatant disregard for the protected status of humanitarian workers, operations, and facilities under international law,” UNRWA’s commissioner general said.

    Israel has alleged that 12 of UNRWA’s thousands of workers participated in the Oct. 7 Hamas attack on Israel that sparked the war. Lazzarini pledged to implement recommendations and strengthen safeguards to ensure UNRWA’s neutrality.

    QATAR SAYS IT’S RETHINKING ITS MEDIATOR ROLE

    DOHA, Qatar — Qatar’s prime minister said Wednesday the country is reevaluating its role as a mediator between Israel and Hamas.

    Qatar has been a key intermediary throughout the war in Gaza. It, along with the U.S. and Egypt, was instrumental in helping negotiate a brief halt to the fighting in November that led to the release of dozens of hostages.

    Qatari Prime Minister Sheikh Mohammed bin Abdurrahman Al Thani said there had been an “abuse” of Qatar’s mediation for “narrow political interests.”

    He did not name one side in his remarks. But Israeli Prime Minister Benjamin Netanyahu has criticized Qatar and recently threatened to shutter Qatar-owned broadcaster Al Jazeera.

    Top Hamas leaders live in exile in Qatar, which is seen as one of the only parties with influence over the militant group.

    Al Thani said there were “limits” to the role of mediator and “to the ability to which we can contribute to these negotiations in a constructive manner.”

    Mediators have been trying to push Hamas and Israel toward a cease-fire deal, but the sides remain far apart on key terms.

    UN SECRETARY-GENERAL URGES `MAXIMUM RESTRAINT’

    UNITED NATIONS — U.N. Secretary-General Antonio Guterres is reiterating his call for “maximum restraint” between Israel and Iran.

    U.N. spokesman Stephane Dujarric told reporters Wednesday that rhetoric in the Middle East is becoming “increasingly dangerous.” Dujarric said the world and the region “cannot afford another open conflict.”

    The comments follow the Israeli prime minister’s vow to respond to Tehran’s first direct attack against his country and the Iranian’s president’s warning of a massive response if Israel does.

    UN SECURITY COUNCIL TO VOTE ON PALESTINIAN STATE

    UNITED NATIONS – The U.N. Security Council is scheduled to vote this week on a resolution that would give a green light for a Palestinian state to join the United Nations as a full member, a move opposed by the United States.

    The vote was scheduled for Friday afternoon. But Arab nations are pressing for a vote Thursday, when the council is holding a ministerial meeting on the Palestinian Authority’s request for full U.N. membership.

    Palestinian President Mahmoud Abbas delivered the application in 2011. That bid failed because the Palestinians did not get the required minimum support of nine of the Security Council’s 15 members.

    In early April, after years of failed on-and-off peace talks, the Palestinians turned to the United Nations again to fulfill their dream of an independent state, sending a letter to the Security Council that was supported by 140 countries.

    The United States, Israel’s closest ally, had promised to veto any resolution endorsing Palestinian membership.

    U.S. deputy ambassador Robert Wood reiterated the longstanding position last week: “The issue of full Palestinian membership is a decision that should be negotiated between Israel and the Palestinians.”

    Israel says such steps are an attempt to sidestep the negotiating process. Israel’s current right-wing government is dominated by hard-liners who oppose Palestinian statehood.

    ISRAEL’S AIR FORCE REVIEWS ITS DEFENSE OF IRAN’S ATTACK

    SDEROT, Israel — An Israeli military official says the air force is preparing for future attacks from Iran.

    The official said Wednesday that the air force has been reviewing its successful defense against Iran’s missile attack over the weekend as it makes adjustments for potential additional fighting.

    Israel has promised to respond against Iran, raising the possibility of a full-blown war, with Lebanon’s well-armed Hezbollah militant group almost certainly joining the fold.

    Hezbollah, which has been locked in daily tit-for-tat fighting with Israel through the six-month Gaza war, is believed to have well over 100,000 rockets and missiles in its arsenal. Combined with Iran’s weapons, that could pose a major test for Israel’s air defense systems.

    “We are preparing ourselves for the next time, debriefing the mission and seeing how could we prepare ourselves for the for the next attack,” said Brig. Gen. Doron Gavish, the former commander of Israel’s air defense who is now serving in reserves. He spoke to reporters at a military base in southern Israel.

    Iran says its strike was a response to an alleged Israeli airstrike that killed two Iranian generals in Syria on April 1.

    Israel says 99% of the more than 300 missiles and drones that Iran lauched were intercepted. It was assisted a coalition of international partners and the fact that Iran telegraphed its attack ahead of time.

    ISRAEL SAYS IT ARRESTED AND KILLED MILITANTS IN BEIT HANOUN

    JERUSALEM — The Israeli military said Wednesday that it arrested and killed militants in an operation in the northern Gaza town of Beit Hanoun over the past week.

    The announcement comes after Palestinians said troops conducted raids there and forced displaced people to leave their shelters.

    The military said it was a “focused operation” meant to remove militants from a civilian area. It did not say how many people were killed or arrested.

    It said it targeted two facilities used as schools after intelligence pointed to militants from Hamas and Islamic Jihad. The military said forces told civilians to leave the building before raiding it.

    Palestinians had reported heavy bombardment of Beit Hanoun. Witnesses said many people had been interrogated and some adults were detained and taken to unknown locations.

    Palestinians have said the forces have left the town. The military did not immediately respond to a request for comment on whether the operation was over.

    It was the latest in a series of Israeli raids in northern Gaza.

    14 WOUNDED IN HEZBOLLAH ATTACK ON NORTHERN ISRAEL

    JERUSALEM — A drone and rocket attack by the Lebanese militant group Hezbollah on a border town in Israel’s north wounded 14 soldiers, Israel’s military says.

    Wednesday’s strike hit a community center in the town of Arab al-Aramshe where soldiers were sleeping, the military said. Six soldiers were seriously wounded, two were moderately wounded and six were lightly wounded.

    Hezbollah has said it targeted a military facility on the border to avenge the killing of a number of its fighters, including a commander, in Israeli strikes the previous day.

    The Israeli military said its fighter jets responded by striking the areas from where the projectiles were fired, without elaborating on the location. It also said its fighters struck other Hezbollah military compounds in Naqoura and Yarine in south Lebanon.

    Israel’s rescue service Magen David Adom said earlier that at least 13 people were wounded, without disclosing their identities.

    Hezbollah, which is sponsored by Iran, has exchanged fire with Israeli forces on a near-daily basis since the start of the war in Gaza.

    ITALY WOULD CONTRIBUTE TO ANY UN PEACEKEEPING IN GAZA

    Italy’s foreign minister says Rome would be willing to contribute troops to any possible U.N. peacekeeping force for Gaza, even though no such proposal is currently on the table and Israel has rejected the idea.

    In an interview with The Associated Press, Foreign Minister Antonio Tajani suggested a U.N. force under Arab command could help provide security if Israel and the Palestinians make headway on an eventual two-state solution. He said the U.N. peacekeeping mission in Lebanon could be the model.

    “If there is the solution and for a short time we need the presence of the United Nations under Arab control, we are ready for sending Italian soldiers,” Tajani said ahead of a Group of Seven foreign ministers meeting in Capri.

    Israeli Prime Minister Benjamin Netanyahu has ruled out a foreign peacekeeping force in Gaza after the war, saying only Israel is capable of keeping the territory demilitarized.

    GERMANY STANDS IN ‘FULL SOLIDARITY’ WITH ISRAEL

    TEL AVIV, Israel — German Foreign Minister Annalena Baerbock on Wednesday expressed her country’s full solidarity with Israel in the face of Iran’s attack on the weekend.

    She vowed consequences for Iran and said the European Union was working on imposing on further sanctions.

    “We will not tolerate this. We stand in full solidarity with Israel,” she told reporters. “Iran and its proxies such as Hezbollah or the Houthis must not be allowed to add fuel to the fire.”

    Baerbock called on Israel to exercise restraint in its reaction to Iran’s attack in order to avoid a further escalation of the conflict.

    “Everyone must now act prudently and responsibly. I’m not talking about giving in. I’m talking about prudent restraint, which is nothing less than strength,” the German minister said. “Because Israel has already shown strength with its defensive victory at the weekend.”

    The minister also called for the release of the Israeli hostages in Gaza and demanded more humanitarian aid for Gaza’s civilian population.

    ARROW 3 MISSILE DEFENSE SYSTEM USED SUCCESSFULLY, MAKER SAYS

    JERUSALEM — The Arrow 3 missile defense system, designed to intercept long-range ballistic missiles, was deployed successfully against a missile salvo for the first time over the weekend to repel the Iranian attack on Israel, the system’s maker said Wednesday.

    Speaking to The Associated Press, Boaz Levy, chief executive of state-owned Israel Aerospace Industries, the primary builder of the Arrow system, said that the system has been “operational for decades,” but was used Saturday “for the very first time against ballistic missiles in a salvo scenario,” intercepting high-flying munitions inside and outside the atmosphere.

    Of about 300 drones and missiles launched by Iran into Israeli airspace Saturday night, the military says that 99% were intercepted by Israel’s multilayered air defense system, wounding only one person — a young girl.

    “There is no hermetic seal. no system can give you an hermetic seal. But we did succeed to have 99% of success,” said Levy.

    The Arrow’s success Saturday night in defending Israel is likely to please Germany, which recently signed a contract with Israel and the United States to procure Arrow 3. When operational, the system could protect much of Europe from long-range ballistic missiles.

    UK FOREIGN SECRETARY DAVID CAMERON IN ISRAEL FOR MEETINGS

    JERUSALEM — U.K. Foreign Secretary David Cameron says “it’s clear the Israelis are making a decision to act” against Iran, but he hopes it will do so “in a way that is smart as well as tough and also does as little as possible to escalate this conflict.”

    Cameron landed in Israel on Wednesday for meetings with senior Israeli and Palestinian officials.

    He said his main aim was to “focus back the eyes of the world back on the hostage situation” and urged Hamas to agree to a temporary cease-fire agreement.

    Cameron told broadcasters that “the real need is to refocus back on Hamas, back on the hostages, back on getting the aid in, back on getting a pause in the conflict in Gaza.”

    Cameron is due to travel from the Middle East to a meeting of Group of Seven foreign ministers in Italy. He said he wanted the group of wealthy industrialized nations to “show a united front” and impose coordinated sanctions on Iran in response to its “malign activity” in the region.

    “They need to be given a clear and unequivocal message by the G7 and I hope that will happen at the weekend,” Cameron said.

    RIGHTS GROUP SAYS ISRAELI FORCES JOINED OR FAILED TO STOP SETTLER ATTACKS ON PALESTINIANS

    JERUSALEM — Human Rights Watch says Israeli forces either took part in or failed to stop settler attacks on Palestinians in the occupied West Bank that displaced hundreds of people from several Bedouin communities last fall.

    Settler violence surged after the Oct. 7 Hamas attack that triggered the war in Gaza, leading to the complete uprooting of at least seven Palestinian Bedouin communities and displacement from several others, according to the New York-based rights group.

    Settlers launched another wave of attacks late last week after a 14-year-old Israeli boy was killed in what Israeli authorities say was a militant attack. The United Nations’ human rights office on Tuesday called on Israeli security forces to “immediately end their active participation in and support for settler attacks on Palestinians.”

    The Human Rights Watch report released Wednesday focused on the earlier rash of violence. The rights group says Israeli settlers assaulted Palestinians, stole their belongings and livestock and threatened to kill them if they did not leave permanently. The settlers also destroyed homes and schools.

    The military didn’t immediately respond to a request for comment from The Associated Press.

    IRAN THREATENS ‘MASSIVE’ RESPONSE IF ISRAEL LAUNCHES ‘TINIEST INVASION’

    TEHRAN, Iran — Iran’s president has warned that the “tiniest invasion” by Israel would bring a “massive and harsh” response, as the region braces for potential Israeli retaliation after Iran’s attack over the weekend.

    President Ebrahim Raisi spoke Wednesday at an annual army parade that was relocated to a barracks north of the capital, Tehran, from its usual venue on a highway in the city’s southern outskirts. Iranian authorities gave no explanation for its relocation, and state TV did not broadcast it live, as it has in previous years.

    Iran launched hundreds of missiles and drones at Israel over the weekend in response to an apparent Israeli strike on Iran’s embassy compound in Syria on April 1 that killed 12 people, including two Iranian generals.

    Israel, with help from the United States, the United Kingdom, neighboring Jordan and other nations, successfully intercepted nearly all the missiles and drones.

    Israel has vowed to respond, without saying when or how, while its allies have urged all sides to avoid further escalation.

    Raisi said Saturday’s attack was a limited one, and that if Iran had wanted to carry out a bigger attack, “nothing would remain from the Zionist regime.” His remarks were carried by the official IRNA news agency.

    UN APPEALS FOR $2.8 BILLION TO PROVIDE AID TO 3 MILLION PALESTINIANS

    UNITED NATIONS – The United Nations is appealing for $2.8 billion to provide desperately needed aid to 3 million Palestinians, stressing that tackling looming famine in war-torn Gaza doesn’t only require food but sanitation, water and health facilities.

    Andrea De Domenico, the head of the U.N. humanitarian office for Gaza and the West Bank, told reporters Tuesday that “massive operations” are required to restore those services and meet minimum standards — and this can’t be done during military operations.

    He pointed to the destruction of hospitals, water and sanitation facilities, homes, roads and schools, adding that “there is not a single university that is standing in Gaza.” De Domenico said there are signs of Israel’s “good intention” to get humanitarian aid into Gaza, but the U.N. keeps pushing because it’s not enough. He pointed to Israeli denials and delays on U.N. requests for aid convoys to enter Gaza.

    The U.N. humanitarian official called for a complete change of focus to recognize that preventing famine goes beyond providing flour for bread or pita and to recognize that “water, sanitation and health are fundamental to curb famine.”

    Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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  • Yellen says US will not accept its industries being decimated by cheap Chinese imports

    Yellen says US will not accept its industries being decimated by cheap Chinese imports

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    BEIJING (Reuters) – U.S. Treasury Secretary Janet Yellen warned on Monday that the United States would not accept new industries being decimated by subsidized Chinese imports in the same way that the U.S. steel sector was crushed a decade ago.

    After wrapping up four days of talks with Chinese officials, Yellen told a news conference the exchanges had advanced American interests.

    She said she had raised concerns about China’s weak domestic demand and overinvestment in industries such as electric vehicles, batteries and solar products, fueled by “large-scale government support.”

    U.S. Treasury Secretary Janet Yellen in Beijing

    Treasury Secretary Janet Yellen in Beijing. (Reuters)

    She added, “We’ve seen this story before. Over a decade ago, massive PRC government support led to below-cost Chinese steel that flooded the global market and decimated industries across the world and in the United States,” employing the formal name, the People’s Republic of China.

    “I’ve made it clear that President Biden and I will not accept that reality again.”

    Yellen said that when the global market is flooded with artificially cheap Chinese products, “the viability of American and other foreign firms is put into question.”

    (Reporting by David Lawder; Editing by Clarence Fernandez)

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  • Secretary Yellen meets with Chinese Premier Li in Beijing:

    Secretary Yellen meets with Chinese Premier Li in Beijing:

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    Treasury Secretary Janet Yellen and Chinese Premier Li Qiang sounded a hopeful note on bilateral relations at the start of their Sunday meeting in Beijing.

    The U.S.-China relationship can only move forward with direct and open communication, Yellen told Li, after arriving in the Chinese capital from the southern city of Guangzhou.

    “The meeting was frank and productive and builds on progress made by President Biden and President Xi at the Woodside Summit last November to deepen bilateral discussions,” a readout from the Treasury Department said, adding that Yellen discussed a level playing field for both American and Chinese workers and business as well as the impacts of Chinese industrial overcapacity on American workers and firms. 

    Overcapacity refers to a situation where Chinese government support to industries fuels production capacity but risks a surge of exports at depressed prices to the global market, undercutting international competitors.

    China US Yellen
    Treasury Secretary Janet Yellen, left, meets Chinese Premier Li Qiang at the Great Hall of the People in Beijing, China, on April 7, 2024.

    Tatan Syuflana / AP


    “As the world’s two largest economies, we have a duty to our own countries and to the world to responsibly manage our complex relationship and to cooperate and show leadership on addressing pressing global challenges,” Yellen said. “I have returned to China at President Biden’s direction following the Woodside Summit to build on the foundation that we have laid.”

    Li, in welcoming Yellen, said “China sincerely hopes that the two countries will be partners, not adversaries”.

    He added that Chinese internet users have closely followed the details of her trip since her appearance in Guangzhou, showing “expectation and hope for the China-US relationship to continue to improve”.

    In Guangzhou, Yellen had a series of meetings including hours of discussions with her counterpart, Vice Premier He Lifeng.

    Washington is especially concerned about this phenomenon in new industries such as electric vehicles and solar energy.

    Yellen’s trip marks her second visit to China in less than a year.

    “While we have more to do, I believe that, over the past year, we have put our bilateral relationship on more stable footing,” she said in opening remarks to Premier Li as she begins two days of high-level talks in Beijing.

    Rather than ignoring differences, this has meant “understanding that we can only make progress if we directly and openly communicate with one another”, the Treasury chief said.

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  • US and China plan talks on economies, including manufacturing ‘overcapacity’ issue, Yellen says

    US and China plan talks on economies, including manufacturing ‘overcapacity’ issue, Yellen says

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    GUANGZHOU – The U.S. and China agreed to hold talks that will address a key American complaint about China’s economic model, Treasury Secretary Janet Yellen said on the second day of an official visit to China.

    The two sides will hold more talks and create two new economic groups dedicated to growth in domestic and global economies as well as anti-money laundering, according to a U.S. statement about the creation of the groups.

    Yellen, who started her five-day visit in one of China’s major industrial and export hubs, has focused thus far on what the U.S. considers to be unfair Chinese trade practices in talks with senior Chinese officials.

    “I think the Chinese realize how concerned we are about the implications of their industrial strategy for the United States, for the potential to flood our markets with exports that make it difficult for American firms to compete,” Yellen told reporters directly after the announcement.

    “It’s not going to be solved in an afternoon or a month, but I think they have heard that this is an important issue to us.”

    In her statement, Yellen said she and her counterparts “agreed that the U.S. and China will hold intensive exchanges on balanced growth in the domestic and global economies. These exchanges will facilitate a discussion around macroeconomic imbalances, including their connection to overcapacity, and I intend to use this opportunity to advocate for a level playing field for American workers and firms.”

    The announcement of the groups come after two days of extended meetings between Yellen and Vice Premier He Lifeng on Friday and Saturday.

    “It’s going to be critical to our bilateral relationship going forward and to China’s relationship with other countries that are important, and this provides a structured way in which we can continue to listen to one another and see if we can find a way forward that will avoid conflict,” Yellen told reporters.

    Earlier state media coverage of her trip had dismissed U.S. concerns about overcapacity as a pretext for tariffs. The official Xinhua News Agency wrote Friday night that while Yellen’s trip is “a good sign” that the world’s two largest economies are maintaining communication, “talking up ‘Chinese overcapacity’ in the clean energy sector also smacks of creating a pretext for rolling out more protectionist policies to shield U.S. companies.”

    Yellen told reporters during an Alaska refueling stop en route to China that the U.S. “won’t rule out” tariffs to respond to China’s heavily subsidized manufacturing of green energy products.

    Chinese government subsidies and other policy support have encouraged solar panel and EV makers in China to invest in factories, building far more production capacity than the domestic market can absorb.

    The massive scale of production has driven down costs and ignited price wars for green technologies, a boon for consumers and efforts to reduce global dependence on fossil fuels. But Western governments fear that that capacity will flood their markets with low-priced exports, threatening American and European jobs.

    The U.S. has made efforts through legislation and executive orders to wean itself off certain Chinese technologies in order to build out its domestic manufacturing capabilities. Many members of the White House and Congress view the actions as important to maintaining national security.

    The $280 billion CHIPS and Science Act passed in 2022 to boost the semiconductor industry and scientific research in a bid to create more high-tech jobs in the United States and help it better compete with China. Additionally, last August, U.S. President Joe Biden signed an executive order to block and regulate high-tech U.S.-based investments going toward China.

    Yellen moves onto Beijing on Saturday afternoon for more meetings over the weekend with senior officials, economists and the nation’s central bank governor.

    ___

    Associated Press Greater China Correspondent Ken Moritsugu in Beijing contributed to this report.

    Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

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    Fatima Hussein, Associated Press

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  • After searing inflation,

    After searing inflation,

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    Treasury Secretary Janet Yellen said “American workers are getting ahead” now that their pay is growing faster than inflation, making the Biden administration’s case that the U.S. has rebounded from the economic calamity caused by the pandemic. 

    “We know that Americans are experiencing discomfort because some important prices are higher than they were pre-pandemic,” Yellen told “CBS Evening News.” “But what I think is really important is that wages have gone up along with prices, so people are better off than they were pre-pandemic.”

    Inflation ranked as the most important problem facing the U.S. in a December poll of American adults by CBS News, even outpacing issues like immigration and the state of democracy. Prices skyrocketed in the aftermath of the COVID-19 pandemic, with inflation reaching a 40-year high of 9.1% in June 2022, squeezing millions of households whose incomes failed to keep pace. 

    Inflation has rapidly cooled since then, thanks in part to a series of interest rate hikes by the Federal Reserve starting in March 2022 aimed at dampening consumer demand and slowing economic growth. Experts now say the economy is on solid ground, pointing to strong growth, robust consumer spending and low unemployment, developments that Yellen stressed in her discussion with CBS News. 

    As of the end of 2023, the typical U.S. worker could afford the same goods and services as in 2019, prior to the pandemic, and had an additional $1,400 to spend or save per year, according to a January analysis by Treasury officials. That’s partly because wages are now outrunning inflation, with hourly earnings jumping 4.5% in January, compared with an annualized inflation rate of 3.1%.

    Despite the pinch of inflation, consumers are continuing to spend — one reason why the U.S. economy has so far defied predictions of a recession. And workers are behaving in ways that suggest they are optimistic about the future, Yellen said.

    “We’ve seen a record number of small businesses formed, and Americans don’t start up a small business unless they think the prospects are going to be good,” she said. “So I take that as a vote of confidence in where this economy is going.”

    “A slap in the face”

    Still, many Americans don’t view the economy through the same lens as bullish economists. And Yellen acknowledged that life remains precarious for millions of people. 

    “Childcare is expensive. Education is expensive,” Yellen said. “We know that almost half of Americans on one occasion or another have felt they couldn’t afford to fill a prescription. It was that or not having enough to eat, so there’s no question that Americans have experienced burdens.”

    Voters in the battleground state of Michigan who spoke with “CBS Evening News” expressed a host of economic worries, from housing prices to student debt. One of them, Demar Byas of Pontiac, referred to experts touting the nation’s economic performance as a “slap in the face.”

    “You’re celebrating these numbers, but we are struggling,” said Byas, who juggles several jobs to make ends meet. “It’s no relief in sight, and just say those numbers and to celebrate that, and as I said stuff becomes a slap in the face.”

    Underlying many of their concerns is anxiety about the surging cost of car insurance and housing, as well as a sense that it’s more difficult now to achieve the same standard of living as in prior generations. So-called “referred pain,” or fears about the state of the world, from climate change to gun violence, is one reason why some experts believe voters view the economy negatively despite evidence it is doing well. 

    Another Michigan resident, Elizabeth Nelson of Ann Arbor, said she worries about the future for her children, ages 19 and 21.

    “What I’m reading and hearing about the job market, I’m scared for them. I’m really scared for them,” Nelson said. She added, “We’re losing some real low rungs on the ladder of economic security across lifetimes.”

    Where does inflation go from here?

    Yellen said that President Joe Biden’s policies are aimed at addressing some of the anxieties experienced by voters, from capping insulin prices to bringing down energy costs. She also predicted that inflation will continue to recede.

    “Americans should feel confident that inflation will come down to levels that will no longer really be noticeable or worrisome to them,” Yellen said. 


    Inflation didn’t drop to expected rate in January

    03:52

    She also expects relief on another key issue for many voters — the ongoing increase in home prices and rents. “What we can see is that the rental prices for new apartments are no longer rising. And in some cities they’re actually falling,” Yellen said. 

    As for the broader economy, Yellen said a recession is unlikely at this point. That’s a stark change from a year ago, when many economists were predicting a steep downturn. 

    “I consider the odds [of a recession] very low,” Yellen said. “We have a very well-performing economy that has the ability to keep doing what it’s doing, namely grow, create jobs and improve living standards.”

    Aimee Picchi

    Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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  • CNBC Daily Open: Wall Street rattled over Fed worries

    CNBC Daily Open: Wall Street rattled over Fed worries

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    A trader works, as a screen displays a news conference by Federal Reserve Board Chairman Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 31, 2024. 

    Brendan McDermid | Reuters

    This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    Wall Street retreats
    U.S. stocks     lost ground on Monday and Treasury yields rose amid lingering concerns that the Federal Reserve may not cut rates as much as expected. The blue-chip Dow fell over 200 points. The S&P 500 also slumped after hitting a record high last week. The Nasdaq Composite also dropped 0.2%. 

    Oil’s supply crunch
    The oil market faces a supply crunch by the end of 2025 as the world is not replacing crude reserves fast enough, according to Occidental CEO Vicki Hollub. About 97% of the oil produced today was discovered in the 20th century, she told CNBC. 

    Palantir surges
    Shares of Palantir spiked 19% in extended trading after the company reported revenue that topped analysts’ estimates. In a letter to shareholders, Palantir CEO Alex Karp said demand for large language models in the U.S. “continues to be unrelenting.”

    Red Sea tensions
    Higher shipping costs due to tensions in the Red Sea could hinder the global fight against inflation, said the Organisation for Economic Co-operation and Development. Clare Lombardelli, chief economist at the OECD, told CNBC that shipping-driven inflation pressures remain a risk rather than its base case.

    [PRO] Banking allure
    The banking sector offers attractive opportunities despite an increase in volatility, according to fund manager Cole Smead. “It’s the banks that made bad decisions that are making [other] banks look attractive in pricing,” Smead told CNBC, who picked two bank stocks that are in play. 

    The bottom line

    Investors are once again getting ahead of themselves on the Fed’s next move.

    Markets were rattled after Federal Reserve Chair Jerome Powell reiterated the central bank is unlikely to rush to lower interest rates. 

    Wall Street has been parsing his hawkish comments, yet in essence what Powell said over the weekend was no different than what he shared at Wednesday’s press conference: that he wants to see more evidence that inflation is coming down to a sustainable level.

    Still, the debate over the timing of rate cuts unsettled Fed watchers.  

    This sparked a sell-off spurred by higher bond yields. The yield on the 10-year Treasury spiked for a second day, trading around 4.163%. Typically, higher yields tend to indicate investors think the Fed will take longer to cut rates. 

    Fresh data out Monday also didn’t help.  A new survey showed the U.S. services sector expand at a faster-than-expected clip in January. 

    This on top of the booming jobs report released Friday, fueled investor worries that rates may stay elevated for much longer.

    Wall Street will now look ahead to the swath of Fed speakers this week. Perhaps they will shed more light on the path for rate cuts.

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  • Trump is a 'transactional president' but may not rock the boat on China, Standard Chartered CEO says

    Trump is a 'transactional president' but may not rock the boat on China, Standard Chartered CEO says

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    Bill Winters, chief executive officer of Standard Chartered, said the U.S. Federal Reserve looks set to pause its interest rate cycle in June get a better read on the latest inflation data.

    Bloomberg | Getty Images

    Former U.S. President Donald Trump would be a “transactional president” if he returns to power, but is unlikely to blow up the Biden administration’s rebuilding of relations with China, according to Standard Chartered CEO Bill Winters.

    Trump won the Iowa caucus by around 30 points over his closest rival and is the clear favorite to secure the Republican nomination for the 2024 presidential election, despite facing 91 felony counts across numerous criminal cases relating to his attempts to overturn his 2020 election defeat, mishandling of classified documents and hush-money payments to a porn star.

    During his last term in office, Trump took a combative stance toward Beijing and triggered a trade war with a slew of tariffs on Chinese goods and constant threats of more economically punitive measures.

    President Joe Biden‘s administration has sought to repair the fragile relationship. U.S. Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo visited China last summer, and Biden met Chinese President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation leaders’ meeting in San Francisco in November.

    Speaking to CNBC at the World Economic Forum in Davos, Switzerland, on Tuesday, Winters said Washington and Beijing are now “pretty interlinked” and that for any president to “aggressively disentangle” would be bad for the U.S., Chinese and global economies.

    “Nobody really wants that or needs that right now, so I think the slight re-engagement that we’re seeing through the Biden administration, visits from the Commerce Secretary and Janet Yellen etc., are an indication to me that the U.S. is looking to stabilize,” he said.

    “If Trump becomes president, we know that he’s a transactional president, and there’s probably a transaction in there someplace that keeps the economy on an even keel without fundamentally disrupting that relationship, but of course we watch all the time and we’re well aware that there could be either unintended consequences or accidents, but I’m staying pretty optimistic that we could avoid the worst.”

    Though it’s headquartered in the U.K., Standard Chartered earns most of its revenue in Asia, and Winters also said he remains “very optimistic about the Chinese economy in the medium-, long-term” despite its well-documented short-term headwinds.

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  • U.S. wraps up fiscal year with a budget deficit near $1.7 trillion, up 23%

    U.S. wraps up fiscal year with a budget deficit near $1.7 trillion, up 23%

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    Janet Yellen, U.S. Secretary of the Treasury, participates in a global infrastructure and investment forum in New York on Sept. 21, 2023.

    Pool | Via Reuters

    The federal government wound up its fiscal year in September with a deficit just shy of $1.7 trillion, the U.S. Department of the Treasury announced Friday.

    Wrapping up a year in which some thought the shortfall could exceed $2 trillion, the U.S. ended up with an imbalance of $1.695 trillion, up about $320 billion, or 23.2%, from fiscal 2022.

    The huge deficit came as revenue fell $457 billion from a year ago and expenses decreased by just $137 billion. Outlays for the year totaled $6.134 trillion.

    The budget shortfall adds to the staggering U.S. debt total, which stood at $33.6 trillion earlier this week. The deficit level was eased somewhat when the Supreme Court voided President Joe Biden’s effort to erase billions in student loan debt.

    That number has swelled by more than $10 trillion since the first quarter of 2020, when the Covid-19 pandemic hit and pushed the government into a spending spree aimed at making up for the damage done to the economy.

    Of the government outlays last year, some $659 billion went for net interest on the accumulated debt, up from $475 billion in fiscal 2022.

    Treasury Secretary Janet Yellen said the administration is “committed to addressing challenges to our long-term fiscal outlook” and pointed out several measures she said are going to bring down the deficit over the next decade.

    “The U.S. economy remains resilient despite global headwinds,” Yellen said. “Previous expectations that the U.S. would fall into recession over the course of 2023 have not borne out.”

    Financing the debt has gotten significantly more expensive over the past year as the Federal Reserve has jacked up benchmark interest rates in an effort to combat inflation. The central bank has raised its key lending rate by 5.25 percentage points, and Treasury yields have responded in kind. The 10-year Treasury note has been flirting with a 5% yield. It was less than 1% through 2020.

    The budget report comes the same week Biden asked Congress to allocate $105 billion for “national security priorities,” including $61 billion for Ukraine, along with humanitarian assistance in Israel and Gaza.

    Don’t miss these CNBC PRO stories:

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  • UAW threatens to expand strike to more auto plants by end of week

    UAW threatens to expand strike to more auto plants by end of week

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    The auto workers’ strike against Detroit’s Big Three entered its fourth day with no signs of an early breakthrough and amid a threat by the United Auto Workers that the labor action could soon escalate. 

    A spokesman for General Motors said that representatives of the company and the labor group were continuing to negotiate. But In a video statement late Monday, UAW President Shawn Fain said more factories could be targeted if “serious progress” toward an agreement isn’t reached by Friday at noon.

    “Autoworkers have waited long enough to make things right at the Big Three. We’re not waiting around, and we’re not messing around,” he said.

    So far the strike is limited to about 13,000 workers at three factories — one each at GM, Ford Motor and Stellantis. GM warned, however, that 2,000 UAW-represented workers at an assembly plant in Kansas City are “expected to be idled as soon as early this week” because of a shortage of supplies from a GM plant near St. Louis, where workers walked off the job Friday.

    Workers at the Kansas City plant build the Chevrolet Malibu and Cadillac XT4.

    Ford on Friday moved to temporarily lay off 600 non-striking workers at its assembly plant in Wayne, Michigan, only hours after other employees at the facility had walked off the job.

    “This layoff is a consequence of the strike at Michigan Assembly Plant’s final assembly and paint departments, because the components built by these 600 employees use materials that must be e-coated for protection,” the company said in a statement Friday. “E-coating is completed in the paint department, which is on strike.”

    Treasury Secretary Janet Yellen said she is hoping for a quick resolution, and that it is too soon to gauge the impact of the strike.

    “It’s premature to be making forecasts about what it means for the economy. It would depend on how long the strike lasts and who would be affected by it,” she said on CNBC.

    Experts say the strike could drive up new and used car prices and cause a loss of $5.6 billion in wages and automaker earnings.


    UAW worker on Ford layoffs, CEO salaries and automakers’ “family” culture

    05:10

    In a sign of the potential economic and political of a long strike, President Joe Biden is sending two top administration officials to Detroit this week to meet with both sides. Biden has sided with the UAW in brief public comments, saying that the automakers have not fairly shared their record profits with workers.

    An administration official said Monday that acting Labor Secretary Julie Su and senior aide Gene Sperling will not serve as mediators — they won’t be at the bargaining table — but are going to Detroit “to help support the negotiations in any way the parties feel is constructive.” The official was not authorized to discuss private discussions and spoke anonymously.

    The UAW’s Fain on Sunday shot down an offer by Stellantis — which owns Chrysler, Dodge, Jeep and RAM, along with major foreign brands including Citroën, Peugeot and Maserati — to hike its worker’ wages by 21% over four years. 

    Ford and GM have also each offered a roughly 20% pay bump. The union is asking for a 36% hike over a four-year contract. 

    The union also wants the Big Three automakers to eliminate their two-tier wage model, which results in many workers earning less than the average wage of $32 an hour; offer defined benefit pensions to all employees; limit the the use of temporary workers; offer a four-day workweek; and provide more job protections, including the right to strike over plant closings. 

    “Our demands are just,” Fain said on “Face the Nation.” “We’re asking for our fair share in this economy and the fruits of our labor.” 


    UAW president Shawn Fain says 21% pay hike offered by Chrysler parent Stellantis is a “no-go”

    08:06

    Rather than launching an all-out strike of its 146,000 members, the union opted to target three factories a plan that could make the union’s $825 million strike fund last longer. Workers walked out of a GM plant in Wentzville, Missouri, a Ford plant near Detroit, and a Stellantis factory in Toledo, Ohio, that produces Jeeps.

    A key feature of the UAW strategy is the threat of escalating the strike if the union is unhappy with the pace of bargaining. On Friday, Fain said more factories could be targeted: “It could be in a day, it could be in a week.”

    Strategically, targeting three factories “certainly created more uncertainty,” Harry Katz, the Jack Sheinkman Professor of Collective Bargaining at Cornell University, told CBS News, adding that Fain is signaling that “he’s a tough, militant guy that’s not going to agree to concessions.”

    The UAW “will get a strong agreement — it’s a question of how and when they reach a compromise,” Katz predicted.

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  • Auto industry strike continues as UAW chief Shawn Fain demands

    Auto industry strike continues as UAW chief Shawn Fain demands

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    Historic UAW strike continues: Father, daughter speak from the picket line


    Historic UAW strike continues: Father, daughter speak from the picket line

    02:21

    The auto workers’ strike against Detroit’s Big Three went into its fourth day with no signs of an early breakthrough and against the threat that the walkout could soon spread.

    A spokesman for General Motors said that representatives of the company and the United Auto Workers were continuing to negotiate on Monday.

    So far the strike is limited to about 13,000 workers at three factories — one each at GM, Ford Motor and Stellantis. GM warned, however, that 2,000 UAW-represented workers at an assembly plant in Kansas City are “expected to be idled as soon as early this week” because of a shortage of supplies from a GM plant near St. Louis, where workers walked off the job Friday.

    Workers at the Kansas City plant build the Chevrolet Malibu and Cadillac XT4.

    Ford on Friday moved to temporarily lay off 600 non-striking workers at its assembly plant in Wayne, Michigan, only hours after other employees at the facility had walked off the job.

    “This layoff is a consequence of the strike at Michigan Assembly Plant’s final assembly and paint departments, because the components built by these 600 employees use materials that must be e-coated for protection,” the company said in a statement Friday. “E-coating is completed in the paint department, which is on strike.”

    Treasury Secretary Janet Yellen said she is hoping for a quick resolution, and that it is too soon to gauge the impact of the strike.

    “It’s premature to be making forecasts about what it means for the economy. It would depend on how long the strike lasts and who would be affected by it,” she said on CNBC.

    Experts say the strike could drive up new and used car prices and cause a loss of $5.6 billion in wages and automaker earnings.


    UAW worker on Ford layoffs, CEO salaries and automakers’ “family” culture

    05:10

    In a sign of the potential economic and political of a long strike, President Joe Biden is sending two top administration officials to Detroit this week to meet with both sides. Biden has sided with the UAW in brief public comments, saying that the automakers have not fairly shared their record profits with workers.

    An administration official said Monday that acting Labor Secretary Julie Su and senior aide Gene Sperling will not serve as mediators — they won’t be at the bargaining table — but are going to Detroit “to help support the negotiations in any way the parties feel is constructive.” The official was not authorized to discuss private discussions and spoke anonymously.

    UAW President Shawn Fain on Sunday shot down an offer by Stellantis — which owns Chrysler, Dodge, Jeep and RAM, along with major foreign brands including Citroën, Peugeot and Maserati — to hike its worker’ wages by 21% over four years. 

    Ford and GM have also each offered a roughly 20% pay bump. The union is asking for a 36% hike over a four-year contract. 

    The union also wants the Big Three automakers to eliminate their two-tier wage model, which results in many workers earning less than the average wage of $32 an hour; offer defined benefit pensions to all employees; limit the the use of temporary workers; offer a four-day workweek; and provide more job protections, including the right to strike over plant closings. 

    “Our demands are just,” Fain said on “Face the Nation.” “We’re asking for our fair share in this economy and the fruits of our labor.” 


    UAW president Shawn Fain says 21% pay hike offered by Chrysler parent Stellantis is a “no-go”

    08:06

    Rather than launching an all-out strike of its 146,000 members, the union opted to target three factories a plan that could make the union’s $825 million strike fund last longer. Workers walked out of a GM plant in Wentzville, Missouri, a Ford plant near Detroit, and a Stellantis factory in Toledo, Ohio, that produces Jeeps.

    A key feature of the UAW strategy is the threat of escalating the strike if the union is unhappy with the pace of bargaining. On Friday, Fain said more factories could be targeted: “It could be in a day, it could be in a week.”

    Strategically, targeting three factories “certainly created more uncertainty,” Harry Katz, the Jack Sheinkman Professor of Collective Bargaining at Cornell University, told CBS News, adding that Fain is signaling that “he’s a tough, militant guy that’s not going to agree to concessions.”

    The UAW “will get a strong agreement — it’s a question of how and when they reach a compromise,” Katz predicted.

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  • China says drop in trade with the U.S. is ‘a direct consequence of U.S. moves’

    China says drop in trade with the U.S. is ‘a direct consequence of U.S. moves’

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    Relations between Washington and Beijing are at their lowest in decades amid disputes over trade, technology, human rights and China’s increasingly aggressive approach toward its territorial claims involving self-governing Taiwan and the South China Sea.

    Jason Lee | Reuters

    BEIJING — China’s ambassador to the U.S., Xie Feng, has blamed U.S. tariffs and export controls for a drop in trade between the two countries.

    That’s according to a speech he gave via video on Tuesday at Forbes’ U.S.-China Business Forum in New York, published online by the Chinese embassy in the U.S.

    China-U.S. trade fell by 14.5% in the first half of the year from a year ago, Xie pointed out.

    “This is a direct consequence of U.S. moves to levy Section 301 tariffs on Chinese imports, abuse unilateral sanctions and further tighten up export controls,” he said.

    “Livelihoods of many families have been affected, and businesses from both countries have born the brunt.”

    China’s trade partners

    The U.S. is China’s largest trading partner on a single country basis.

    Year-to-date, U.S.-China trade fell further in July with a 15.4% decline from the same period in 2022, China customs data showed.

    To shut out China is to close the door on opportunities, cooperation, stability and development.

    Xie Feng

    China’s ambassador to the U.S.

    “The biggest risk is any decoupling between China and the United States, and the largest source of insecurity comes from any confrontation between the two,” he said.

    “To shut out China is to close the door on opportunities, cooperation, stability and development.”

    Exports remain a major contributor to China’s economy, although their share has fallen in recent years.

    The U.S. government on Wednesday revised down second-quarter domestic product to a 2.1% annualized pace, contrary to expectations there would be no revision, Reuters said. The report said lower business spending on equipment contributed to the revision.

    Xie on Tuesday called for finding “a path for expanding mutually beneficial economic cooperation and trade between China and the United States.”

    “Going forward, we need to continue taking concrete steps, no matter how small they may look,” he said, giving examples — such as making it easier for people to travel between the two countries, and renewing an agreement to cooperate on science and technology.

    On a regional basis, the European Union and Association of Southeast Asian Nations are China’s largest trading partners. Those trade flows have also dropped this year — albeit at a more moderate pace — amid a decline in global demand.

    Xie on Tuesday pointed out China’s global dominance in trade and in industries such as electric vehicles. He noted that France, the U.K. and Japan had significantly increased their foreign investment in China in the first half of the year.

    “More efforts will be made to protect foreign investment and ensure national treatment for foreign-invested enterprises,” he said.

    U.S. Commerce Secretary visits China

    In his remarks, Xie noted U.S. Commerce Secretary Gina Raimondo’s trip to China this week. Following her meetings with Chinese government officials, the U.S. and China agreed to establish regular communication channels on commerce, export controls and protecting trade secrets.

    Raimondo told reporters said she “said no” to China’s requests to reduce export controls and “retract” the executive order on outbound investment screening.

    “We don’t negotiate on matters of national security,” she said.

    Instead of containing China, it will only curtail the right of American businesses to develop in China.

    Xie Feng

    China’s ambassador to the U.S.

    The U.S. government has cited national security concerns for its moves to restrict Chinese companies’ purchases of advanced semiconductors from U.S. businesses.

    In 2018, the Trump administration imposed tariffs on Chinese goods, to which Beijing responded with tariffs of its own.

    Xie claimed that average U.S. tariffs on Chinese products were 19%, while the Chinese tariffs on U.S. goods averaged 7.3%.

    “Is this fair? Does this truly serve U.S. interests?”

    U.S.-China relations are the worst they've been in thirty years, says attorney Dennis Unkovic

    The ambassador assumed his role in May after a period of about six months in which China had no ambassador to the U.S. 

    In August, U.S. President Joe Biden signed an executive order aimed at restricting U.S. investments into Chinese semiconductor, quantum computing and artificial intelligence companies over national security concerns. Treasury Secretary Janet Yellen is mostly responsible for determining the details, which currently remain open to public comment. 

    Xie called the executive order “a violation of the principle of free trade.”

    Read more about China from CNBC Pro

    “It is simply confusing that the United States, which repeatedly urged China to expand access for foreign investment in the past, is now imposing restrictions itself,” he said. “Instead of containing China, it will only curtail the right of American businesses to develop in China.”

    As part of Raimondo’s trip to China, the U.S. commerce secretary said she spoke with more than 100 businesses and increasingly heard from them that “China is uninvestible because it’s become too risky.”

    “My message was there’s a desire to do business, but we need predictability, due process and a level playing field,” Raimondo added in an exclusive interview with CNBC’s Eunice Yoon on Wednesday.

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  • What Biden’s executive order means for U.S. investors in China

    What Biden’s executive order means for U.S. investors in China

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    The U.S. and Chinese flags hang outside the Goldman Sachs headquarters in New York on Dec. 16, 2008.

    Chris Hondros | Getty Images News | Getty Images

    BEIJING — The Biden administration’s long-awaited executive order on U.S. investments in Chinese companies leaves open plenty of questions on how it will be implemented.

    Its 45-day public comment period gives U.S. investors significant potential to influence any final regulation, analysts said.

    “The executive order obviously gives an outline of what the program’s scope is going to be like,” said Brian P. Curran, a partner, global regulatory at law firm Hogan Lovells in Washington, D.C.

    “It’s not even a proposed rule. It’s not a final rule.”

    U.S. President Joe Biden on Wednesday signed an executive order aimed at restricting U.S. investments into Chinese semiconductor, quantum computing and artificial intelligence companies over national security concerns.

    Treasury Secretary Janet Yellen is mostly responsible for determining the details. Her department has published a fact sheet and a lengthy “Advance Notice of Proposed Rulemaking” with specific questions it would like more information on.

    Businesses can share information confidentially as needed, according to the advanced notice, which is set to be formally published on Monday. The notice said it is only a means for sharing the Treasury’s initial considerations, and will be followed by draft regulations.

    “The final scope of the restriction, to be defined by the Treasury Department after public consultations, including with U.S. investors in China, will be critical for the enforcement of the order,” said Winston Ma, an adjunct professor at NYU Law and a former managing director of CIC.

    So what’s banned?

    This week’s announcements don’t explicitly prohibit U.S. investments into Chinese businesses, but the documents indicate what policymakers are focused on.

    The U.S. transactions potentially covered include:

    • Acquisition of equity interests such as via mergers and acquisitions, private equity and venture capital;
    • Greenfield investment;
    • Joint ventures;
    • Certain debt financing transactions.

    The forthcoming regulations are not set to take effect retroactively, the Treasury said. But the Treasury said it may request information about transactions completed or agreed to since the issuance of the executive order.

    “We’ve been advising clients leading up to the issuance of the executive order, it does make sense to look at your exposure to the kinds of transactions that have the potential to be covered by the regime,” Curran said.

    Any plans to invest in the sectors named in the public materials should come under additional consideration of the risks and how to manage them, he said.

    Biden's exec. order on China is much more narrow than originally conceived: Michelle Caruso-Cabrera

    Here are the sectors of concern:

    Semiconductors — Treasury is considering a ban on tech that enables production or improvement of advanced integrated circuits; design, fabrication and packaging capabilities for advanced integrated circuits; and installation, or sale to third-party customers, of certain supercomputers.

    Treasury is also considering a notification requirement for transactions involving the design, fabrication and packaging of other integrated circuits.

    The U.S. government is concerned about tech that will “underpin military innovations,” the advance notice said.

    Quantum computing — Treasury is considering a ban on transactions involving the production of quantum computers, sensors and systems.

    However, the Treasury said it is considering not to require investors to notify it of transactions in this sector.

    The U.S. government is concerned about quantum information technologies that could “compromise encryption and other cybersecurity controls and jeopardize military communications,” the notice said.

    Artificial intelligence — Treasury is considering a ban on U.S. investments into the development of software using AI systems designed for exclusive military, government intelligence or mass-surveillance use.

    The Treasury said it may also require U.S. persons to notify it if undertaking transactions involved with AI systems for cybersecurity applications, digital forensics tools, control of robotic systems and facial recognition, among others.

    However, the Treasury said its intent is not to touch entities that develop AI systems only for consumer applications and other uses that don’t have national security consequences.

    What’s allowed

    The Treasury said it expects to exclude certain investments into publicly-traded securities or exchange-traded funds.

    The following transactions are not set to be included by forthcoming regulation:

    • University-to-university research collaborations
    • Contracts to buy raw materials
    • Intellectual property licensing
    • Bank lending and payment processing
    • Underwriting
    • Debt rating
    • Prime brokerage
    • Global custody
    • Stock research

    What’s next

    The Treasury is asking for written comments on its advanced notice by Sept. 28.

    The notice includes wide-ranging requests for data into investment trends. It also asked questions about effective threshold requirements and definitions, and details about the resulting burdens for U.S. investors: “If such limitations existed or were required, how might investment firms change how they raise capital from U.S. investors, if at all?”

    Among the many other questions, the Treasury is asking for areas within the three overarching categories where U.S. investments into Chinese entities would “provide a strategic benefit to the United States, such that continuing such investment would benefit, and not impair, U.S. national security.”

    “There is a lot of opportunity for the public’s comment for what should be covered what should not be covered,” said Anne Salladin, a partner, global regulatory, at Hogan Lovells. “It strikes me as an extraordinarily good opportunity for clients to weigh in on that front.”

    “This has been under consideration by the administration for a couple of years now,” she said. “One of the things that’s important is to take [the regulatory process] at a slow speed to understand what the ramifications are for U.S. businesses.”

    The kind of law that Biden’s [planning], it’s small but it’s important because once the state starts to meddle with these things it creates more dramatic possibilities.

    Jonathan Levy

    Professor, University of Chicago

    Given the lengthy process, forthcoming regulations aren’t expected to take effect until next year.

    However, the niche industry of China-based venture capitalists — which raise funds from U.S. investors to invest in Chinese start-ups, many tech-focused — is already struggling.

    Fewer than 300 unique U.S.-based investors have participated in China-based VC deals since 2016 each year, with just 64 participants so far this year, according to Pitchbook.

    China VC deal activity in the second quarter continued a recent decline, to the lowest since the first quarter of 2017, according to Pitchbook.

    The data showed China VC deal activity with U.S.-only investor participation in artificial intelligence has fallen since the first quarter of 2022. Pitchbook recorded barely any such deals in quantum computing since 2021, while semiconductors saw moderate activity through the first half of this year.

    Read more about China from CNBC Pro

    The industry and political developments also mark a shift in the overall risk environment.

    “The kind of law that Biden’s [planning], it’s small but it’s important because once the state starts to meddle with these things it creates more dramatic possibilities,” said Jonathan Levy, a University of Chicago economic history professor and author of “Ages of American Capitalism: A History of the United States.”

    While he said he doesn’t have any sources within the Biden administration, Levy said the latest developments signal to him that the U.S. government doesn’t want the new economic relationship with China “to consist of U.S. investment funds investing in Chinese high tech because we think high tech is kind of a strategic interest.”

    “I also think more fundamentally, I don’t know what kind of relationship they have in mind, [but] there’s going to be a new order. We want to shape to some degree what that [order] looks like.”

    — CNBC’s Amanda Macias contributed to this report.

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  • ‘Blatant economic coercion’: China slams Biden’s order limiting U.S. overseas tech investment

    ‘Blatant economic coercion’: China slams Biden’s order limiting U.S. overseas tech investment

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    China sharply rebuked President Joe Biden’s long-awaited executive order that limits U.S. investment in technology — but stopped short of issuing immediate counter measures.

    The Chinese commerce and foreign affairs ministries issued strong responses on Thursday, just hours after Biden signed off on the measure targeting “countries of concern” on the basis of national security.

    “China is strongly dissatisfied with and resolutely opposed to the U.S.’s insistence on introducing restrictions on investment in China,” the foreign ministry said in a statement, according to a CNBC translation. “This is blatant economic coercion and technological bullying.”

    The Chinese Commerce Ministry called upon the U.S. to “respect the market economy and the principles of fair competition” and to “refrain from artificially hindering global trade and creating obstacles that impede the recovery in the global economy.”

    “The message is quite clear,” Eswar Prasad, a professor in international trade at Cornell University, told CNBC Thursday.

    “Washington wants to use the national security imperative as a way of trying to limit the transfers of technology and investments related to technology to China, because there’s not just a national security angle, but also quite frankly, a commercial angle,” he added.

    An editorial photo art illustrating smart city communication networks against the urban landscape in Shanghai.

    Dong Wenjie | Moment | Getty Images

    On Wednesday, Biden signed off on the executive order that limits U.S. investment and expertise in semiconductors and microelectronics, quantum computing and certain artificial intelligence capabilities in China, Hong Kong and Macao.

    The latest order bears some similarities to a toned-down version of the initial Outbound Investment Transparency Act the Senate recently passed and omitted wording for an outright ban on investment.

    It comes amid an escalating race for global technological supremacy that has both national security and economic implications.

    “I think it is going to have a pretty broad chilling effect on technology transfers and investments by U.S. firms in China,” Prasad said.

    ‘National emergency’

    Biden warned in the executive order that certain American investments may contribute to “the development of sensitive technologies and products in countries that develop them to counter United States and allied capabilities.”

    “I find that countries of concern are engaged in comprehensive, long-term strategies that direct, facilitate, or otherwise support advancements in sensitive technologies and products that are critical to such countries’ military, intelligence, surveillance, or cyber-enabled capabilities,” said the president, who further characterized the situation as “a national emergency.”

    This is spectacularly bad timing for China.

    Eswar Prasad

    economics professor, Cornell University

    “The investment restrictions largely mirror export controls already in place, including those that ban exports to China of machinery and software used to produce advanced semiconductors,” Gabriel Wildau, a Teneo managing director focusing on China political risk, wrote in a note to clients.

    “Unprecedentedly tough restrictions that the US Commerce Department issued in October (soon to be expanded) already rendered new U.S. investment in advanced Chinese semiconductor production effectively impossible, since any such factory would need imported equipment covered by those restrictions,” he added.

    ‘Narrowly’ defined

    During a visit to Beijing in July, U.S. Treasury Secretary Janet Yellen assured her Chinese counterparts that any curbs on U.S. outbound investments would be “transparent” and “very narrowly targeted.”

    Biden’s executive order though is still some way from becoming concrete legislation.

    The U.S. Treasury has been tasked to formulate exact regulations to implement the order, including defining the boundary between prohibited transactions and those that merely require notification.

    Late Wednesday, the U.S. Treasury Department invited public comment to “seek early stakeholder participation in the rulemaking process” — including input on the sub-sets of national security technologies and related products to the areas of technology identified in Biden’s executive order.

    The Treasury Department said it anticipates excepting certain transactions, including potentially those in publicly-traded instruments and intracompany transfers from U.S. parents to subsidiaries. 

    ‘Spectacularly bad timing’

    Biden’s executive order comes at a time when a raft of economic data has underscored slowing growth momentum in the world’s second-largest economy.

    Official data Wednesday showed that China’s consumer prices fell for the first time in two years in July from a year ago, as producer prices declined on a year-on-year basis for a 10th straight month.

    “I don’t think the U.S. Treasury or the [Biden] administration planned it this way, but this is spectacularly bad timing for China,” Prasad said. “Confidence is falling, growth is stalling, China seems to be sliding into a downward spiral with deflation, low growth and lack of confidence all feeding on each other.”

    Chipmaking nations such as the U.S. are teaming up against China

    “This does very little to inspire confidence that China is going to be able to pull back on short-term growth. And this could also affect its long-term growth potential because China is very eager to move into high tech, higher value-added industries,” Prasad said.

    As part of its plan to bolster growth, China’s top leaders have recently changed their tone on private and foreign investors, while anticipating the country’s post-pandemic economic recovery to proceed in a “tortuous” manner.

    “At the moment, its domestic innovation program is not going that well. China still needs foreign technology — it needs foreign capital a lot less than foreign technology. Without foreign technology, I think it’s very difficult for China to make that leap,” he added.

    — CNBC’s Evelyn Cheng contributed to this story.

    Read more about China from CNBC Pro

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  • White House blames Republicans for U.S. credit rating downgrade

    White House blames Republicans for U.S. credit rating downgrade

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    White House blames Republicans for U.S. credit rating downgrade – CBS News


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    Fitch Ratings downgraded the U.S. government’s top credit rating on Tuesday. The White House in a statement said they disagreed with the decision and blamed Republicans, who they say were “cheerleading default.” CBS News senior White House correspondent Weijia Jiang reports.

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  • Nikki Haley: ‘Every company needs to have a Plan B’ on China

    Nikki Haley: ‘Every company needs to have a Plan B’ on China

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    Republican presidential candidate, former U.N. Ambassador Nikki Haley speaks at the American Enterprise Institute on June 27, 2023 in Washington, DC. Haley’s remarks focused on the future of U.S.-China relations and her foreign policy views. 

    Drew Angerer | Getty Images

    American companies should be ready to stop treating China as an economic competitor and start viewing it as a national security threat, Nikki Haley, a Republican presidential candidate and former ambassador to the United Nations, said Monday.

    “I think China’s an enemy. I think we have to take them incredibly seriously. And the problem is, you can look at dollars and cents or you can look at a threat to America,” Haley said on CNBC’s “Squawk Box.”

    “Companies and people have said for too long, ‘We’ll deal with China tomorrow.’ But China is dealing with us today. We’ve got to address this,” she added.

    Haley said “every company needs to have a Plan B” in the event that China decides to “pull the rug out from under us.” She called Beijing “the biggest threat we’ve had since Pearl Harbor.”

    The former governor of South Carolina also criticized Treasury Secretary Janet Yellen, who recently said the U.S. relationship with China need not be a “winner take all” contest.

    “To even say that means you don’t understand China,” Haley said of Yellen.

    Haley’s latest remarks build on the hawkish position she laid out last month in a Wall Street Journal op-ed, in which she vowed to push U.S. businesses “to leave China as completely as possible.”

    She also urged businesses to forge stronger ties with U.S. allies, such as India, Japan and South Korea, to become less dependent on China.

    Haley pointed to a series of actions taken by China’s communist leadership in recent years that she said pose a multi-layered economic and security threat to the United States. They include buying hundreds of thousands of acres of U.S. farmland, purchasing the country’s largest pork producer, floating spy balloons over America, spreading propaganda in universities, lobbying Congress through “front companies,” rapidly building up a massive naval fleet, stealing U.S. intellectual property and developing new weapons.

    The Chinese Embassy in Washington, D.C., did not immediately comment on Haley’s remarks. Chinese government officials frequently insist that Beijing merely seeks a mutually beneficial, “win-win” relationship with the United States. But American diplomats privately joke that “win-win” here means China wins twice.

    Haley also suggested that China’s role in the U.S. fentanyl crisis raises questions about the future of the bilateral trade relationship.

    Many of the precursor chemicals that make up fentanyl originate in China before being illegally diverted to Mexico, where they are processed by cartels to create the deadly synthetic opioid. The Department of Justice has said fentanyl overdoses are the leading cause of death for Americans ages 18 to 49.

    Firefighters help an overdose victim on July 14, 2017 in Rockford, Illinois.

    Getty Images

    “I think if it means us ending normal trade relations, you go to China and say, ‘We’ll end normal trade relations until you stop killing Americans,’” she said.

    Haley’s alarm-ringing on China comes as she seeks to distinguish herself in the Republican presidential primary, which has so far been dominated by former President Donald Trump.

    Only one of Trump’s competitors, Florida Gov. Ron DeSantis, has consistently garnered double-digit support in national polls of the primary race. The rest of the field, including Haley, has struggled to gain traction with voters.

    Haley took aim at DeSantis over his ongoing feud with Disney, which stemmed from the entertainment giant’s opposition to a controversial classroom bill in Florida. While she disagrees with Disney’s stance, “I also don’t think that governors should spend taxpayers dollars suing companies.”

    Still, it is difficult to predict how forcefully criticizing China will help to set Haley, or any candidate, apart from the pack in the 2024 election cycle.

    This is in large part because polls consistently show that a hawkish attitude toward Beijing is one of the few policy positions that enjoys broad support among both Democrats and Republicans.

    CNBC Politics

    Read more of CNBC’s politics coverage:

    As President Joe Biden mounts a reelection campaign, his administration is taking a hard line against China that bears a strong similarity to those of Republicans like Haley.

    FBI Director Christopher Wray testified this month that no other country presents a “more comprehensive threat to our ideas, our innovation [and] our economic security.”

    Asked about the state of the Republican primary, Haley described it as a marathon, “not a sprint.”

    She also said that she would support Trump if he is the eventual Republican nominee. “I’m not going to have a President Kamala Harris,” she said, a reference to the view held by many Republican voters that Biden, who turned 80 last year, is too old to be president.

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  • Kerry upholds U.S.-China ‘stability’ in symbolic Beijing visit

    Kerry upholds U.S.-China ‘stability’ in symbolic Beijing visit

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    U.S. Climate Envoy John Kerry and China’s Premier Li Qiang attend a meeting at the Great Hall of the People in Beijing on July 18, 2023.

    Florence Lo | Afp | Getty Images

    BEIJING — In the third high-level U.S. official visit to China in about a month, U.S. special envoy for climate John Kerry emphasized efforts to stabilize the bilateral relationship.

    “Now we’re in a place where because of the efforts of President Biden and President Xi to try to stabilize the relationship, we can now I hope, make progress between now and the meeting in the UAE, in December, of COP 28,” Kerry said Tuesday, in opening remarks at a meeting with Chinese Premier Li Qiang.

    About a week earlier, Li met with U.S. Treasury Secretary Janet Yellen in the same building. In late June, U.S. Secretary of State Antony Blinken also met there with Chinese President Xi Jinping.

    Blinken’s visit brought a thaw to increasingly frigid relations in which climate talks, one of the few areas of cooperation, have even seen temporary suspension.

    The U.S. and China are also the world’s largest polluters. In recent weeks, global temperatures have climbed to record highs.

    Our hope is now that this could be the beginning of a new definition of collaboration and the capacity to resolve the differences between us.

    John Kerry

    Chinese premier

    The world faces great “challenges” in responding to climate change, Li said.

    “It is incumbent upon China, the United States, and indeed all countries in the world to strengthen coordination with consensus and speed of actions,” he said, according to an official translation of his Mandarin-language remarks.

    Earlier on Tuesday, Kerry also emphasized stability in his meeting with China’s top diplomat, Wang Yi.

    “Biden is very committed to stability within this relationship and also to achieve efforts together, that can make a significant difference in the world,” Kerry said.

    “Our hope is now that this could be the beginning of a new definition of collaboration and the capacity to resolve the differences between us.”

    Read more about China from CNBC Pro

    Climate talks between the U.S. and China were temporarily suspended after then-House Speaker Nancy Pelosi visited Taiwan in August last year, drawing the ire of Beijing.

    China considers the democratically self-ruled island as part of its territory.

    Tensions between the U.S. and China have also spilled over into technology, with U.S. efforts to limit Chinese access to high-end semiconductor technology.

    “Of course, pushing for cooperation on climate change is under the larger scope of China-U.S. relations,” Wang said, according to a CNBC translation of the Mandarin.

    He said the two countries could resolve problems as long as the dialogue was based on “equality” and with “mutual respect.”

    Following the latest U.S. senior official visits to Beijing, high-level Chinese officials are expected to visit the U.S. at an unspecified date.

    Since arriving in Beijing on Sunday, Kerry has focused on talks with his climate counterpart Xie Zhenhua. Kerry is set to depart on Wednesday.

    Parts of meetings open to the press were tense.

    During the meeting with the Chinse premier, Kerry brought up a report of a 52°C (125.6°F) temperature reading in China a few days earlier. Li interjected to question whether it was from an official weather report or “small” media, and whether it was a reading from the ground or air.

    “Oh. Well, it may not be,” Kerry said. He said that he’d seen the news on TV and said his point was about the rate of change and predictions for the future.

    State-run China News Agency on Monday said an “automatically” recorded temperature from a local weather station showed the Sanbao township in Xinjiang reached a record high of 52.2°C on Sunday.

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  • The American banking landscape is on the cusp of a seismic shift. Expect more pain to come

    The American banking landscape is on the cusp of a seismic shift. Expect more pain to come

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    The whirlwind weekend in late April that saw the country’s biggest bank take over its most troubled regional lender marked the end of one wave of problems — and the start of another.

    After emerging with the winning bid for First Republic, a lender to rich coastal families that had $229 billion in assets, JPMorgan Chase CEO Jamie Dimon delivered the soothing words craved by investors after weeks of stomach-churning volatility: “This part of the crisis is over.”

    But even as the dust settles from a string of government seizures of failed midsized banks, the forces that sparked the regional banking crisis in March are still at play.

    Rising interest rates will deepen losses on securities held by banks and motivate savers to pull cash from accounts, squeezing the main way these companies make money. Losses on commercial real estate and other loans have just begun to register for banks, further shrinking their bottom lines. Regulators will turn their sights on midsized institutions after the collapse of Silicon Valley Bank exposed supervisory lapses.  

    What is coming will likely be the most significant shift in the American banking landscape since the 2008 financial crisis. Many of the country’s 4,672 lenders will be forced into the arms of stronger banks over the next few years, either by market forces or regulators, according to a dozen executives, advisors and investment bankers who spoke with CNBC.

    “You’re going to have a massive wave of M&A among smaller banks because they need to get bigger,” said the co-president of a top six U.S. bank who declined to be identified speaking candidly about industry consolidation. “We’re the only country in the world that has this many banks.”

    How’d we get here?

    To understand the roots of the regional bank crisis, it helps to look back to the turmoil of 2008, caused by irresponsible lending that fueled a housing bubble whose collapse nearly toppled the global economy.

    The aftermath of that earlier crisis brought scrutiny on the world’s biggest banks, which needed bailouts to avert disaster. As a result, it was ultimately institutions with $250 billion or more in assets that saw the most changes, including annual stress tests and stiffer rules governing how much loss-absorbing capital they had to keep on their balance sheets.

    Non-giant banks, meanwhile, were viewed as safer and skirted by with less federal oversight. In the years after 2008, regional and small banks often traded for a premium to their bigger peers, and banks that showed steady growth by catering to wealthy homeowners or startup investors, like First Republic and SVB, were rewarded with rising stock prices. But while they were less complex than the giant banks, they were not necessarily less risky.

    The sudden collapse of SVB in March showed how quickly a bank could unravel, dispelling one of the core assumptions of the industry: the so-called stickiness of deposits. Low interest rates and bond-purchasing programs that defined the post-2008 years flooded banks with a cheap source of funding and lulled depositors into leaving cash parked at accounts that paid negligible rates.

    “For at least 15 years, banks have been awash in deposits and with low rates, it cost them nothing,” said Brian Graham, a banking veteran and co-founder of advisory firm Klaros Group. “That’s clearly changed.”

    ‘Under stress’

    After 10 straight rate hikes and with banks making headline news again this year, depositors have moved funds in search of higher yields or greater perceived safety. Now it’s the too-big to-fail-banks, with their implicit government backstop, that are seen as the safest places to park money. Big bank stocks have outperformed regionals. JPMorgan shares are up 7.6% this year, while the KBW Regional Banking Index is down more than 20%.

    That illustrates one of the lessons of March’s tumult. Online tools have made moving money easier, and social media platforms have led to coordinated fears over lenders. Deposits that in the past were considered “sticky,” or unlikely to move, have suddenly become slippery. The industry’s funding is more expensive as a result, especially for smaller banks with a higher percentage of uninsured deposits. But even the megabanks have been forced to pay higher rates to retain deposits.

    Some of those pressures will be visible as regional banks disclose second-quarter results this month. Banks including Zions and KeyCorp told investors last month that interest revenue was coming in lower than expected, and Deutsche Bank analyst Matt O’Connor warned that regional banks may begin slashing dividend payouts.

    JPMorgan kicks off bank earnings Friday.

    “The fundamental issue with the regional banking system is the underlying business model is under stress,” said incoming Lazard CEO Peter Orszag. “Some of these banks will survive by being the buyer rather than the target. We could see over time fewer, larger regionals.”

    Walking wounded

    Compounding the industry’s dilemma is the expectation that regulators will tighten oversight of banks, particularly those in the $100 billion to $250 billion asset range, which is where First Republic and SVB slotted.

    “There’s going to be a lot more costs coming down the pipe that’s going to depress returns and pressure earnings,” said Chris Wolfe, a Fitch banking analyst who previously worked at the Federal Reserve Bank of New York.

    “Higher fixed costs require greater scale, whether you’re in steel manufacturing or banking,” he said. “The incentives for banks to get bigger have just gone up materially.”

    Half of the country’s banks will likely be swallowed by competitors in the next decade, said Wolfe.

    While SVB and First Republic saw the greatest exodus of deposits in March, other banks were wounded in that chaotic period, according to a top investment banker who advises financial institutions. Most banks saw a drop in first-quarter deposits below about 10%, but those that lost more than that may be troubled, the banker said.

    “If you happen to be one of the banks that lost 10% to 20% of deposits, you’ve got problems,” said the banker, who declined to be identified speaking about potential clients. “You’ve got to either go raise capital and bleed your balance sheet or you’ve got to sell yourself” to alleviate the pressure.

    A third option is to simply wait until the bonds that are underwater eventually mature and roll off banks’ balance sheets – or until falling interest rates ease the losses.

    But that could take years to play out, and it exposes banks to the risk that something else goes wrong, such as rising defaults on office loans. That could put some banks into a precarious position of not having enough capital.

    ‘False calm’

    In the meantime, banks are already seeking to unload assets and businesses to boost capital, according to another veteran financials banker and former Goldman Sachs partner. They are weighing sales of payments, asset management and fintech operations, this banker said.

    “A fair number of them are looking at their balance sheet and trying to figure out, `What do I have that I can sell and get an attractive price for’?” the banker said.

    Banks are in a bind, however, because the market isn’t open for fresh sales of lenders’ stock, despite their depressed valuations, according to Lazard’s Orszag. Institutional investors are staying away because further rate increases could cause another leg down for the sector, he said.

    Orszag referred to the last few weeks as a “false calm” that could be shattered when banks post second-quarter results. The industry still faces the risk that the negative feedback loop of falling stock prices and deposit runs could return, he said.

    “All you need is one or two banks to say, ‘Deposits are down another 20%’ and all of a sudden, you will be back to similar scenarios,” Orszag said. “Pounding on equity prices, which then feeds into deposit flight, which then feeds back on the equity prices.”

    Deals on the horizon

    It will take perhaps a year or longer for mergers to ramp up, multiple bankers said. That’s because acquirers would absorb hits to their own capital when taking over competitors with underwater bonds. Executives are also looking for the “all clear” signal from regulators on consolidation after several deals have been scuttled in recent years.

    While Treasury Secretary Janet Yellen has signaled an openness to bank mergers, recent remarks from the Justice Department indicate greater deal scrutiny on antitrust concerns, and influential lawmakers including Sen. Elizabeth Warren oppose more banking consolidation.

    When the logjam does break, deals will likely cluster in several brackets as banks seek to optimize their size in the new regime.

    Banks that once benefited from being below $250 billion in assets may find those advantages gone, leading to more deals among midsized lenders. Other deals will create bulked-up entities below the $100 billion and $10 billion asset levels, which are likely regulatory thresholds, according to Klaros co-founder Graham.

    Bigger banks have more resources to adhere to coming regulations and consumers’ technology demands, advantages that have helped financial giants including JPMorgan steadily grow earnings despite higher capital requirements. Still, the process isn’t likely to be a comfortable one for sellers.

    But distress for one bank means opportunity for another. Amalgamated Bank, a New York-based institution with $7.8 billion in assets that caters to unions and nonprofits, will consider acquisitions after its stock price recovers, according to CFO Jason Darby.

    “Once our currency returns to a place where we feel it’s more appropriate, we’ll take a look at our ability to roll up,” Darby said. “I do think you’ll see more and more banks raising their hands and saying, `We’re looking for strategic partners’ as the future unfolds.”

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