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Saudi Arabia, Russia Ties Under Strain Over Oil-Production Cuts
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Tag: Trade
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U.S. trade deficit in goods leaps 17% as exports retreat
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The numbers: The trade deficit in goods shot up 17% in April to a six-month high of $96.8 billion, reflecting a rebound in imports and a broad decline in American exports.
The trade gap in goods rose from $82.7 billion in March, the Census Bureau said.
Larger deficits subtract from gross domestic product, the official scorecard for the economy.
An advanced estimate of wholesale inventories, meanwhile, showed a 0.2% decline in April. Retail inventories rose 0.2% in the month, according to an early estimate.
Higher inventories add to GDP, but the mixed results suggest little impact.
Key details: Exports dropped 5.5% to $163.3 billion. U.S. companies shipped fewer cars, food, consumer goods, oil and other industrial supplies.
Imports of goods rose 1.8% to $260 billion in April, mostly because of higher oil prices and strong demand among consumers for new cars and trucks.
Big picture: The rebound in imports suggests more capacity for consumers to spend. Car sales this year have been particularly strong as more models become available and dealers offer more discounts.
Auto sales fell last year to the lowest level in 11 years owing to a shortage of vehicles and record prices.
The slowdown in inventory growth, however, indicates businesses are unsure about future demand. They are hedging their bets and don’t want to get caught with excess inventory like they did last year.
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U.S., China’s top commerce officials meet to discuss trade concerns
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The U.S. and China flags stand behind a microphone at the U.S. Embassy in Beijing on April 9, 2009.
Frederic J. Brown | AFP | Getty Images
U.S. Secretary of Commerce Gina Raimondo sat down with her Chinese counterpart Wang Wentao in Washington D.C. on Thursday to discuss “concerns” surrounding bilateral trade.
Marking the first cabinet-level exchange between the two countries in months, the U.S. talked about American companies operating in China.
According to a readout by the Commerce Department, “The two had candid and substantive discussions on issues relating to the U.S.-China commercial relationship, including the overall environment in both countries for trade and investment and areas for potential cooperation.”
Raimondo also “raised concerns about the recent spate of PRC [People’s Republic of China] actions taken against U.S. companies operating in the PRC,” it said.
The bilateral exchange between Raimondo and Wang comes as market observers keep a close eye on whether the U.S. will curb American investments into China, as relations between the world’s largest economies sour.
The Group of Seven leaders met Hiroshima over the weekend, and vowed to “de-risk and diversify” from Chinese reliance, adding that some of Beijing’s practices “distort the global economy.”
The high-level talks come as China reportedly conducted inspections on U.S. audit firms in the mainland over national security breaches.
Earlier this week, China announced it will ban some purchases of products from U.S. memory chipmaker Micron — barring operators of “critical information infrastructure” in China after a security review conducted by the Cyberspace Administration of China.
In response, the U.S. Commerce Department’s spokesperson said, “We firmly oppose restrictions that have no basis in fact.” He said the department will engage with the Chinese government to “detail” its position and seek clarity.
In the release published by China’s Ministry of Commerce after his meeting with Raimondo, Wang also raised concerns over U.S. policies on semiconductors and export controls.
“The two sides agreed to establish communication channels to maintain and strengthen exchanges on specific economic and trade concerns and cooperation matters,” it said.
Wang is expected to meet U.S. Trade Representative Katherine Tai during his visit to the U.S. where he is set to attend the Asia-Pacific Economic Cooperation trade ministers’ meeting.
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Embattled Macron struggles to reconnect with France
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DUNKIRK, France — Emmanuel Macron couldn’t have hoped for a more engaging crowd.
A group of women — workers with hard helmets and protective gear — were asking for a photo. “You’re being mobbed by the women of Aluminium Dunkerque!” they laughed.
Standing amid the crowd of factory workers in the port city of Dunkirk, the French president was in his element: shaking hands, fielding questions and taking selfies. “Any more questions?” he asked.
But he did not address the elephant in the room. And none of the blue-collar workers shouted about Macron’s unpopular, controversial pensions reform. It wasn’t that nobody dared ruin the unveiling of an electric battery giga-factory project; Rather these workers had been hand-picked by their employer.
In the past weeks, Macron has been hitting the road across France visiting towns big and small, in what he has called a bid to “engage” with the people after the bruising debates over his controversial pensions reform.
France has been rocked by weeks of protests in the wake of the French president’s decision to bypass parliament and push through a reform raising the age of retirement to 64 from 62. The forcing through of the reform was widely seen as yet another manifestation of Macron’s famously “Jupiterian” governance style — a vertical, top-down manner of running the country.
Though nationwide protests have ebbed since the reform became law in April, Macron’s initial visits had been dogged by ad-hoc demonstrations called casserolades [casserole protests], organized by trade unionists and protesters against his reforms. The tightly-controlled show in Dunkirk followed more tumultuous scenes during his initial visits. In the eastern region of Alsace, Macron faced booing crowds and power cuts during his visit to a local factory in April, which were claimed by the hard-line CGT trade union.
In Dunkirk, police secure the area ahead of the French president’s visit | Clea Caulcutt For the French president, it has meant a clampdown on visits. Encounters with the public are minutely choreographed to avoid bad publicity, with details unveiled at the very last minute.
In Dunkirk, over 1,000 police officers were deployed to secure the area visited by the president, erecting barricades, closing streets and banning cars in the town center. Such scenes are unusual in France where successive presidents have enjoyed freely mingling with the people. On the sidelines of his visit, POLITICO caught up with the French president to ask him about his charm offensive.
“Of course, it’s great … I’m trying to reach out [to the people] … to explain the coherence of what we are doing. We get results when we are coherent and consistent,” he said.
On his difficulties in connecting with the public, Macron said: “My visits are simple … The overwhelming majority of the French may be against the pensions reform … But I do not confuse people who disagree with me with the small minority that are prone to disrespect and invective.”
Police surround a protestor during Macron’s visit to Alsace, April 2023 | Frederick Florin/AFP via Getty Images Grabbing the limelight
In addition to touring the country in recent weeks, Macron has relentlessly blitzed the media sphere, granting multiple interviews to the French and international press, while putting forward a string of government proposals for improving education, tackling immigration and bringing back industry.
“In appearance, Emmanuel Macron and [his prime minister] Elisabeth Borne adopted a very efficient strategy. In drowning out the news, with their visits, their proposals and their new measures, they were able to impose a new agenda,” said Bruno Cautrès, a politics researcher at Sciences Po University.
“But the data shows that the public has not moved on,” he added. This month several polls showed a majority of the French still support the protest movement against the president’s centerpiece reform.
Even if nationwide protests over the pensions reform have tapered off, concerns are rising about increasing violence against elected officials and personal attacks against the president. In the southern city of Avignon, residents woke up last week to find dozens of posters depicting the French president as Hitler. That same week, Brigitte Macron’s great-nephew was assaulted in Macron’s hometown of Amiens in an apparent politically-motivated attack.
Fixing France
Beyond the accusations that Macron’s pensions reform push was too brutal, and too disrespectful of parliamentary democracy, the recent political turmoil has political commentators discussing a “democratic crisis” in France.
Some say France needs a constitutional reform, others that political life has become too polarized. According to Sylvain Fort, a former advisor to the French president, the mainstream left and right in France still haven’t recovered from his victory in 2017.
“My great surprise is that opposition parties are still shadows of their former selves. It’s not the president that is stopping the opposition from rebuilding itself. The president doesn’t want the democratic debate to be sterile, it’s the result of years of neglect,” he said.
Instead, the far-right and the far-left parties have dominated the political debate in France.
In Dunkirk, Macron eschewed ideology and hoped to make one point clear: his tough choices are bringing jobs and investment back to France. But by the same token, if Macron’s reform drive grinds to a halt, his government will face significant challenges.
“If after all the [recent] proposals he has made, we see that in a year’s time, nothing has progressed … then yes, he will find it very difficult to finish his mandate,” said Cautrès.
The government has already had to delay tackling a key issue — migration — because of a lack of consensus and parliamentary support. Depending on the evolution of Macron’s reconnect-with-the-people tour, his second-term agenda could be severely upended, rendering him a lame-duck president.
Fixing the economy may not be enough to rekindle trust between the French and their president.
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Clea Caulcutt
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Japan and South Korea have a lot at stake in a free and open South China Sea
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China has so far not acted in an aggressive manner toward shipping in the South China Sea, but the very potential of action creates a clear threat to the economies of Japan and South Korea.
Kazuhiro Nogi | AFP | Getty Images
The following commentary is from Kevin Klowden, chief global strategist of Milken Institute.
News coverage of the weekend’s Group of Seven meetings focused on Ukraine, but China’s rising global presence was the other big topic on the G7 agenda. For two of East Asia’s biggest economies, in particular, the implications of that rise are critically important.
China wants to be the great military and political power of East Asia. Nowhere is that more evident than in President Xi Jinping’s “nine-dash” declaration, through which Beijing claims sovereignty over almost all the South China Sea. And of all the countries with cause to be concerned about that claim, perhaps none have more on the line than Japan and South Korea.
Most of the world is focused on the resource and military implications of Chinese claims to the islands in the region, and Beijing’s development of what is becoming the world’s largest navy. For Japan and South Korea, the threat to their supply chains and energy imports is a far more real and present issue.
In particular, Japan and South Korea are concerned about Chinese declarations which invoke not only the right to inspect cargo, but also the ability to restrict traffic. Neither Japan nor South Korea has any political interest in the ownership of the Spratly Islands, or in China replacing the United States as a dominant naval power. However, they have a strong economic stake in moving their energy imports and manufacturing components without fear of restriction. Even in a non-wartime situation, China has taken the position that the South China Sea is a controlled territory rather than open international waters under Chinese guardianship.
China has so far not acted in an aggressive manner toward shipping in the sea, but the very potential of action creates a clear threat to the economies of Japan and South Korea. China wouldn’t even have to directly stop vessels — it could merely electronically track specific cargo, or carry out inspections or diversions. Such actions would raise the specter of unpredictability and significantly rising costs.
For Japan and South Korea, the role taken by the United States in the post-World War II period was far less disruptive, not only because of their alliance but, more importantly, because the United States acted as a guarantor of free trade and protected movement through the corridor.
Linking the two countries to trading partners in Southeast Asia, India, and beyond is going to increase rather than decrease in importance.
Kevin Klowden
Milken Institute
Few people outside Japan or South Korea focus on or understand just how significant the South China Sea is when it comes to regional and even global energy supplies. Significantly, the sea is estimated to carry 30% of the world’s crude oil, supplying China and providing a vital lifeline for the energy-dependent economies of South Korea and Japan.
For Japan, the 2011 Tohoku earthquake and subsequent nuclear accident at Fukushima only exacerbated that dependence. The resulting curtailment of Japan’s nuclear program has left the country dependent on energy imports, with as much as 98% of Japanese oil coming from the Middle East.
In many ways, South Korea is even more dependent on energy imports than Japan, making oil and natural gas imports especially significant.
The South China Sea is important in more than just energy. It also serves as a key passageway for Japan and South Korea’s global supply chains. Estimates suggest that the sea carries between 20% and 33% of global trade; for Japan, that figure reaches as much as 40%.
As global supply chains regionalize, the role of the South China Sea in the Japanese and South Korean economies will only grow. Linking the two countries to trading partners in Southeast Asia, India, and beyond is going to increase rather than decrease in importance.
Japan and South Korea have been able to rely on the stability of the South China Sea as a conduit for driving their economic growth, even as the global political situation has changed over the decades. Significant shifts, including the Vietnam War and the end of the Cold War, haven’t stopped trade in the sea from growing more and more important.
As the United States balances commitments in Europe, Asia and elsewhere, the three strongest economies of East Asia — China included — all have a vested interest in ensuring the stability of trade, supply chains and energy flows.
For South Korea and Japan, trade remains stable in the South China Sea for now. But with China increasingly looking to assert itself and change the status quo in its favor, it’s essential that both countries ask themselves: How much are they willing and able to concede to China in the region before it becomes untenable? And are they prepared with alternatives that will allow them to compete economically?
Knowing the answers to those questions and being prepared for a more Chinese-dominant future in the South China Sea is important for all three countries — even if the status quo holds for now.
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Sinn Féin scores record win in Northern Ireland as voters rage at DUP blockade of Stormont
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DUBLIN — Sinn Féin has scaled new electoral heights in Northern Ireland. They can thank the Stormont-wrecking antics of their sworn enemies, the Democratic Unionist Party, for making it possible.
The Irish republicans had been tipped to finish a strong first place in Northern Ireland’s council elections last Thursday, overtaking Jeffrey Donaldson’s DUP along the way. But even Sinn Fein’s wildest hopes were eclipsed as the weekend’s results built to a crescendo over a marathon two-day count.
When final results were declared in Belfast City Hall after midnight Saturday, Sinn Féin had won 144 seats, a 39-seat gain that more than doubled expectations. Its 30.9 percent share of the vote marked a historic high, two points better even than last year’s poll-topping Northern Ireland Assembly election — a performance that should have propelled the party’s regional leader, Michelle O’Neill, into the first minister’s chair for the first time.
But O’Neill has been denied the chance to lead a cross-community executive, as the Good Friday peace accord intended, because the Democratic Unionists — used to finishing first — have spent the past year blocking the formation of any government at Stormont. The current rules of power-sharing require both Sinn Féin and the DUP to participate.
According to analysts and other party leaders, the DUP’s obstructionist tactics may have galvanized support with unionist die-hards — but also triggered waves of new support for their traditional enemies from voters sick of the deadlock.
“Jeffrey Donaldson has become the greatest recruiting sergeant possible for republicans. The longer Michelle O’Neill is blocked from becoming first minister, the more voters are driven into the arms of her party,” wrote Suzanne Breen, political editor of the Belfast Telegraph.
Social Democratic and Labour Party leader Colum Eastwood, who competes with Sinn Féin in Irish nationalist areas, said his own moderate party’s grassroots had switched to Sinn Féin in unprecedented numbers because the DUP had exhausted their patience.
“They’re very annoyed that Michelle O’Neill hasn’t been able to become first minister,” said Eastwood, whose party — one of the architects of the Good Friday breakthrough a quarter-century ago — suffered heavy losses amid the Sinn Féin-DUP showdown.
“They want politicians to get back to work and deal with the issues besetting our community,” Eastwood said. “Now it’s over to the DUP to get on with it.”
Still waiting
When or whether the DUP actually does so remains far from certain, given that its own vote held up well at Thursday’s election.
Donaldson and other senior DUP figures have spent the past three months picking holes in the British government’s Windsor Framework, the successor post-Brexit trade deal for Northern Ireland designed to reduce — but not eliminate — EU-required checks on goods arriving from the rest of the United Kingdom. Unionists argue such checks effectively place Northern Ireland partly outside the U.K., and on a slippery slope toward a united Ireland, Sinn Féin’s ultimate goal.
U.K. Prime Minister Rishi Sunak had hoped the Windsor Framework compromise package would have persuaded the DUP to resume cooperation at Stormont with a strengthened Sinn Féin.
Jeffrey Donaldson said that his party’s resilient performance showed most unionists would rather have no Stormont than accept “barriers to trade between Northern Ireland and Great Britain.” | Charles McQuillan/Getty Images But Donaldson told reporters at Belfast City Hall that his party’s resilient performance — it won 122 of the 462 seats on Northern Ireland’s 11 councils, the exact same total as in the 2019 election — showed most unionists would rather have no Stormont than accept “barriers to trade between Northern Ireland and Great Britain.”
“The DUP have polled strongly despite everything that has been thrown at us,” said Donaldson, who now wants Westminster to pass unspecified legislation reinforcing Northern Ireland’s constitutional ties to Britain. “The U.K. government must move to ensure that our place in the United Kingdom is not only respected, but protected in law. The mandate we’ve been given reinforces that message.”
His immediate predecessor as DUP leader, Edwin Poots, said while others expected the party to end its Stormont sabotage now that the election was out of the way, such a move remains unlikely unless the U.K. government finds extra support for Stormont’s ailing finances.
“We’re ready to go back but we need to get more than what’s currently on the table,” Poots said. “If we went back into the assembly and executive in the morning, with this budget, the first task of every minister would be to implement cuts. It’s imperative that we get a package to ensure this will not be the case.”
O’Neill, who spent much of the weekend joining in jubilant scenes with Sinn Féin activists, expressed exasperation that the DUP might string others along indefinitely for many months longer.
“I am not accepting the autumn as a timeframe for a restored executive, as a lot of people are suggesting. There shouldn’t be any more delays. Let’s do it Monday morning,” she said.
Joining O’Neill in Belfast was Sinn Féin’s overall leader, Mary Lou McDonald, a Dubliner whose eye remains on a bigger prize: leading a government in the neighboring Republic of Ireland for the first time.
Sinn Féin, the only party contesting elections in both parts of Ireland, wants as part of its Irish unity strategy to gain the reins of power in both jurisdictions simultaneously. For decades a fanciful dream — and a unionist nightmare — this scenario has become a probability.
The party’s growth to become the top party in Northern Ireland is matched south of the border by McDonald’s successful efforts to build Sinn Féin into the dominant opposition party in Dáil Éireann, Ireland’s parliament. It has topped every opinion poll for years and looks likely to win the next general election, which must happen by 2025 but could come sooner.
As McDonald and O’Neill together ascended the steps of Belfast City Hall, Sinn Féin activists cheered their party’s rising expectations of gaining power in both the Dáil and Stormont, with McDonald as prime minister in Dublin and O’Neill as first minister in Belfast — if the DUP ever relents.
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Shawn Pogatchnik
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European officials are quietly preparing for the possibility Biden loses the next election
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U.S. President Joe Biden (R) meets with President of European Commission Ursula von der Leyen (L) in the White House. Both want to accomplsish as much as possible before key elections.
Alex Wong | Getty Images News | Getty Images
BRUSSELS — There’s still more than a year to go before U.S. voters head to the polls, but at the heart of the European Union, officials are already racing to get as much as possible done before any potential change of leadership in the White House.
“There is unprecedented close cooperation and coordination between the EU and the current U.S. administration. It goes from official levels to the highest levels,” an EU official, who preferred to remain anonymous due to the sensitive nature of the situation, told CNBC.
“The EU is aware that this [cooperation] is not a given and such approach might change when there is someone like [former President Donald] Trump in the White House again. And the EU tries to use this momentum to advance [a] number of files, topics where there are shared interests,” the official added.
The EU, a group of 27 nations, was openly thrilled with the election of Joe Biden in late 2020 after four challenging years under the presidency of Trump, during which the transatlantic relationship hit a low. The two sides had different views on trade, defense and technology — to name just a few points of tensions.
But there was a drastic improvement in relations the moment that Biden arrived at 1600 Pennsylvania Avenue. His style and policy priorities were a lot more aligned with Brussels, including over how to deal with the coronavirus pandemic and climate change. This became ever more clear with Russia’s invasion of Ukraine, with European leaders welcoming the financial and military support from the largest economy in the world.
“The United States and the European Union have taken a strong and united stand against Russia’s illegal, unjustifiable, and unprovoked war against Ukraine,” European Commission President Ursula von der Leyen said in March alongside Biden in Washington, D.C.
“Putin thought that he would divide us, and yet we are more united than ever. We stand together in our unwavering support for Ukraine for as long as it takes,” she added.
But it’s possible that the current agreement, and working practices, will all come to an end if there’s a new president in the White House.
“It will be a difficult relationship,” Kevin Klowden, chief global strategist at Milken Institute, told CNBC over the phone in the scenario of a Republican candidate taking over the presidency.
“There’s a concern for Europeans that the U.S. will withdraw support [for Ukraine],” he said, adding that this is both military and financial aid.
The European Commission, the executive arm of the EU, was not immediately available for comment when contacted by CNBC.
The transatlantic partnership remains essential for the EU.
Speaking to CNN earlier this month, Trump didn’t answer a question on whether he wants Russia or Ukraine to win the war, and did not commit to any backing for Kyiv if he did manage to win the presidency once again. He, however, claimed the conflict would end within 24 hours if he was back in charge.
Florida Gov. Ron DeSantis, who is expected to launch his bid for the 2024 presidential campaign later this month, has said he believes the U.S. shouldn’t get further involved in the Ukraine war.
“The transatlantic partnership remains essential for the EU,” a European diplomat told CNBC, also speaking under the condition of anonymity due to the sensitive nature of the situation.
However, the same source said the relationship might look slightly different in the future anyway as Europe looks to become less reliant on other parts of the world — including both China and the U.S.
“The EU is developing its own path towards strategic autonomy, which doesn’t mean we are turning our back on our allies. On the contrary, it means we have to be more capable to be able to make our own choices,” the same diplomat said, adding this will continue regardless of who is in office at the White House.
There’s a realization in Europe that whoever is the next American president will naturally have U.S. interests in mind, which often don’t tally with what Europe wants. Proof of that was when the Biden administration, in spite of a close relationship, introduced unprecedented green subsidies which threatened the European economy. The U.S. Inflation Reduction Act, often shortened to IRA, left Europe blindsided and searching for concessions.
Meanwhile, EU-wide elections are due in June 2024 and officials in Brussels openly say that they have until the end of this year to complete policy actions. Officials believe they will not be able to pass new legislation from January onward with lawmakers focused on their election campaign.
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Pa. should release marijuana data | Opinion – Medical Marijuana Program Connection
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Fully legalizing marijuana in Pennsylvania would require a robust regulatory framework, from licensing growers and distributors to tracking and collecting taxes, preventing underage use and ensuring public safety.
Gov. Josh Shapiro supports legal adult use to the point of including that prospect in his first proposed budget. He recommends a 20% tax on wholesale prices of marijuana products. Assuming that sales would begin in January 2025, he estimated that the tax would produce $16 million in revenue in the first year and gradually rise to $188 million a year by the end of the decade.
Any regulatory regime also would have to include ensured transparency so that the relevant information could be used to guide policy. Yet, the administration remains far less than forthcoming regarding basic information about the existing medical marijuana program.
The state Department of Health has stonewalled the news organization Spotlight PA’s requests for records regarding marijuana prescriptions by specific doctors. According to the agency, releasing the data would violate privacy laws, even thought the Right-Know-Request did not seek any information about specific patients.
Using other public records, Spotlight PA has shown the department has cited excessive patient approval numbers for marijuana use in at least one disciplinary case against a doctor. In…
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WTO chief pushes for reglobalized supply chains to cut down bottleneck risks
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Ngozi Okonjo-Iweala, director general of the World Trade Organization (WTO), speaks during the Clinton Global Initiative (CGI) annual meeting in New York, on Monday, Sept. 19, 2022.
Michael Nagle | Bloomberg | Getty Images
World Trade Organization Director-General Ngozi Okonjo-Iweala urged diversification in global supply chains, amid ongoing efforts to progress the body’s reform.
“There is an overconcentration of manufacturing in certain sectors in certain countries,” she told CNBC’s Martin Soong on the sidelines of the latest weekend summit of G-7 (Group of Seven) major economic powers in Hiroshima, Japan. “I agree that we need to build resilience, that the world cannot be reliant on a few countries for a few key products.”
She gave the examples of pharmaceuticals and the dearth of Covid-19 vaccine available to certain importing regions, as producers introduced export restrictions during the pandemic. She also referenced the worldwide shortage of critical semi-conductor chips, which has created bottlenecked manufacturing in the technological and automotive industries.
The WTO’s chief pitched the dual benefits of pursuing diversification in developing countries to simultaneously boost their economic growth and meet global supply requirements.
“Let’s reglobalize by situating diversifying industries into these countries. We kill two birds with one stone. One is we build global resilience beyond just our neighbors and our friends, because you never know who is your friend. Your friend today can be not your friend tomorrow,” she argued.
“Let’s look for those areas where we have the right environment, diversify and use that to bring them in from the margin into the global system. That will re-spur growth in those countries and in the world.”
The emphasis on “reglobalization” comes as geopolitical tensions and recent U.S. legislation have stoked worries over the potential fragmentation of global trade.
The U.S. Inflation Reduction Act — a sweeping green package of tax, health and climate legislation signed by President Joe Biden in August last year — introduced subsidies to galvanize the domestic production of electric vehicles, at the same time unlocking “serious concerns” within the European Union over the outlook for their own exported goods.
The fate of Western trade with key manufacturing hub China has also come under question, although G-7 leaders explicitly restated they are not pursuing a policy of economic decoupling from Beijing in their latest communique of Saturday.
“Our policy approaches are not designed to harm China nor do we seek to thwart China’s economic progress and development. A growing China that plays by international rules would be of global interest. We are not decoupling or turning inwards. At the same time, we recognize that economic resilience requires de-risking and diversifying,” they said, nevertheless noting the need to take collective and individual steps to invest in their own “economic vibrancy” and dwindle “excessive dependencies in our critical supply chains.”
The WTO faces struggles closer to home, amid bids to reform one tier of its global trade dispute settlement system, the Appellate Body, which the U.S. Trade Representative’s office in February 2020 accused of “persistent overreaching” and extending its own power “at the expense of the authority of the United States and the other WTO members.”
The Appellate Body has been effectively paralyzed following the U.S. blockage of adjudicator appointments in recent years.
“Our goal is a fully functioning (dispute system) by 2024,” Deputy United States Trade Representative Maria Pagan told Reuters in January. The WTO’s Okonjo-Iweala said Washington and other countries have been engaging in dialogue to overhaul the Appellate Body, stressing her desire to “move beyond the discussion to specific proposals.”
Asked about reports over an U.S. reform suggestion that both the plaintiff and the defendant must agree before moving a dispute to the attention of the Appellate Body, the director-general said that such a pitch had yet to materialize as a formal proposal.
“I think those are some ideas maybe that people might have heard, the U.S. talk about, and so on. But we don’t have proposals yet on paper.”
The WTO is set to hold its next Ministerial Conference — the so-styled MC13 — in February 2024.
“We may not have completed the reform by then,” she noted, nevertheless adding, “I hope and expect that we will have done a great deal of work that will show that the organization is moving purposefully towards reforming that system.”
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The Pet Shop: Calendar of events
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Pet Adoption Fair: 9 a.m.-noon May 21, Temple Emanuel, 1129 Jefferson Road, Greensboro. With Red Dog Farm Animal Rescue Network. 336-288-7006.
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China-Taiwan tensions could grip 2024 election as Musk, Buffett and Dalio sound alarms
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Chinese tourists walk past an installation depicting Taiwan (R) and mainland China at a tourist area on Pingtan island, the closest point to Taiwan, in China’s southeast Fujian province on April 6, 2023.
Greg Baker | AFP | Getty Images
Fraying U.S.-China relations and rising tensions over Taiwan have influential business leaders such as Elon Musk and Warren Buffett sounding alarms about a possible invasion – a matter that will likely loom over the 2024 election.
China is already bound to be a major issue in the U.S. campaign as President Xi Jinping pushes to expand his nation’s power. China’s policy regarding Taiwan, the world’s leader in the semiconductor industry, could end up making it an even bigger focus.
The cross-strait strife has already provoked commentary from some top contenders in the Republican presidential primary race who have stressed the need to deter a possible Chinese invasion invasion of the island. Taiwan is also a topic of discussion during this week’s Group of Seven meeting in Japan, which President Joe Biden is attending.
Xi has made Taiwan “reunification” a focal point of his agenda and Beijing has ramped up hostilities against the island, putting a spotlight on its importance to the global economy and conjuring fears of a major international conflict that could eclipse Russia’s devastating war in Ukraine.
“The official policy of China is that Taiwan should be integrated. One does not need to read between the lines, one can simply read the lines,” Tesla CEO Musk said in an interview Tuesday with CNBC’s David Faber.
“So I think there’s a certain — there’s some inevitability to the situation,” Musk said, adding that it would be bad for “any company in the world.”
Tesla just last month announced plans to open a new factory in Shanghai that will build “Megapack” batteries.
Musk’s remarks came one day after Buffett’s Berkshire Hathaway revealed in a filing that it has completely abandoned its recently acquired stake in Taiwan Semiconductor Manufacturing Co., once worth more than $4 billion. The world’s largest chipmaker, based in Hsinchu, Taiwan, produces the majority of the advanced semiconductors used by top tech companies like Apple, Amazon, Google, Qualcomm and more.
Buffett said in recent weeks that the geopolitical strife over Taiwan was “certainly a consideration” in his decision to offload the shares over the last two fiscal quarters. And in an analyst call earlier this month, Buffett said that while the company was “marvelous,” he had “reevaluated” his position “in the light of certain things that were going on.”
“I feel better about the capital that we’ve got deployed in Japan than Taiwan. And I wish it weren’t so, but I think that’s a reality,” he said.
Meanwhile, Ray Dalio, founder of hedge fund titan Bridgewater Associates, in late April wrote a lengthy post on LinkedIn warning that the U.S. and China were on the “brink of war” — though he specified that that could mean a war of sanctions rather than military might.
The apparent worries from the three members of Forbes’ list of the world’s richest people come “a little late to the party,” Longview Global senior policy analyst Dewardric McNeal said in an interview with CNBC.
“It’s frustrating to me,” McNeal said. “We’ve been talking about this for years, and we’ve also been trying to warn against being overly dependent on China as your source for selling products [and] manufacturing products.”
He also noted that Berkshire Hathaway still holds stock in BYD, an electric car maker based in Shenzhen, China. “Quite frankly, it is advantageous for China to scare investors away from Taiwan and damage or taint that economy, because that is one of the scenarios [in which] that they could bring Taiwan to heel without an armed intervention,” McNeal said.
Buffett’s company has sold more than half the stake in BYD it held as of last year.
“I don’t think an attack is imminent, but that doesn’t mean you shouldn’t be using this time to plan,” McNeal said. “And what I often see is businesses sort of talking beyond the point, hoping — hope is not a strategy — that this won’t happen.”
The U.S. policy on Taiwan
U.S. intelligence officials have said Xi is pushing China’s military to be ready to seize Taiwan by 2027. China is “likely preparing for a contingency to unify Taiwan with the [People’s Republic of China] by force,” the Pentagon said in 2021.
China asserts Taiwan, a self-governing democracy, is part of its territory. It has pushed to absorb the island under the banner of “one country, two systems,” a status rejected by Taiwan’s government in Taipei.
Beijing in recent years has steadily ramped up its pressure over Taiwan on economic and military fronts. It flexed its might as recently as last month by conducting large combat drills near Taiwan, while vowing to crack down on any hints of Taiwanese independence.
China has not ruled out using force to take control of Taiwan.
Taiwan’s recent interactions with the U.S. have provoked aggressive reactions from China. After then-House Speaker Nancy Pelosi, D-Calif., visited Taipei last summer, China launched missiles over Taiwan and cut off some diplomatic channels with the U.S.
A meeting in California last month between Taiwan’s president, Tsai Ing-wen, and current House Speaker Kevin McCarthy, R-Calif., prompted more threats and fury from Beijing.
Even in a political climate where both major U.S. parties have been critical of China and wary of its encroaching global influence, leaders have tread carefully around the volatile subject of Taiwan. The U.S. has officially recognized a “One China” policy — that Taiwan is a part of the mainland — for more than four decades, and China has vowed to sever diplomatic ties with countries that seek official diplomacy with Taiwan.
While Pelosi spoke of America’s interest in preserving Taiwan’s democracy on her trip to Taipei, she stressed in a Washington Post op-ed at the time that her visit “in no way contradicts the long-standing one-China policy.”
Biden was seen to break with America’s longstanding stance on Taiwan when he said last year that U.S. forces would defend the island if it was attacked by China. The White House, however, maintains the U.S. policy on Taiwan is unchanged.
2024 contenders weigh in
Dalio predicted that the brinksmanship between the two superpowers will grow more aggressive over the next 18 months, in part because the 2024 U.S. election cycle could usher in a swell of anti-Chinese rhetoric.
There’s little doubt that China will a major topic on the campaign trail. At least three Republicans who are seen as potential presidential candidates — Florida Gov. Ron DeSantis, Virginia Gov. Glenn Youngkin and former United Nations Ambassador John Bolton — have recently embarked on trips to Asia, including Taiwan, to meet with allied leaders.
Meanwhile, U.S. lawmakers at every level have produced an array of legislation seeking to reverse China’s growing influence, some of which has drawn accusations of fearmongering. And some of the potential presidential contenders have already weighed in with calls to meet Chinese aggression with strength.
“Xi clearly wants to take Taiwan at some point,” DeSantis said in an interview with Nikkei while in Japan. “He’s got a certain time horizon. He could be emboldened to maybe shorten that horizon. But I think ultimately what I think China respects is strength,” DeSantis said.
DeSantis had drawn criticism for a previous foray into geopolitics when he described Russia’s war in Ukraine as a “territorial dispute.” His views on U.S. policy toward Taiwan, in contrast, were more vague.
“I think our policy should really be to shape the environment in such a way that really deters them from doing that,” DeSantis said of a potential Chinese invasion of Taiwan. “I think if they think the costs are going to outweigh whatever benefits, then I do think that they would hold off. That should be our goal.”
DeSantis, who is gearing up to formally announce his presidential campaign next week, is seen as former President Donald Trump‘s top rival for the Republican nomination.
Trump said last year that he expected China to invade Taiwan because Beijing is “seeing that our leaders are incompetent,” referring to the Biden administration.
Former Vice President Mike Pence, who says he will make his own decision about running for president by next month, said in April that the U.S. should increase sales of military hardware to Taiwan, “so that the Chinese will have to count the cost before they make any move against that nation.”
In an interview Wednesday on CNBC’s “Squawk Box,” Pence cited the cross-strait tensions as an argument against cutting U.S. military spending.
“At a time when China is literally floating a new battleship every month and continuing military provocations across the Asia-Pacific and Russia’s waging an unprovoked war in Eastern Europe, the last thing we ought to be doing is cutting defense spending,” he said.
Former United Nations Ambassador Nikki Haley, who launched her presidential campaign in February, said in a statement to CNBC, “American resolve matters to China.”
“They are watching what we do in Ukraine. If we abandon our friends in Ukraine, as some want us to do, it will only encourage China to attack our friends in Taiwan,” Haley said.
‘Like trying to separate conjoined twins’
But the political will to defend Taiwan in a Chinese invasion may clash with economic forces.
“Almost no one realizes that the Chinese economy and the rest of the global economy are like conjoined twins. It would be like trying to separate conjoined twins,” Musk told CNBC on Tuesday. “That’s the severity of the situation. And it’s actually worse for a lot of other companies than it is for Tesla. I mean, I’m not sure where you’re going to get an iPhone, for example.”
Some CEOs of America’s biggest banks have said they would pull their business from China if directed to do so following an invasion of Taiwan. But Musk’s characterization of the entangled global economy is no exaggeration — and much of the focus has fallen on TSMC.
“If Taiwan were taken out, we would be like severing our brain, because the world economy will not work without [TSMC] and the chips that come out of Taiwan today,” John Rutledge, chief investment strategist of Safanad, said Wednesday on CNBC’s “Power Lunch” in response to Musk’s comments.
David Sacks, a research fellow at the Council on Foreign Relations, said on CNBC that Apple is in a “very tough position” because the most advanced chips it needs are made in a single building on TSMC’s campus in Taiwan.
The company’s technological edge in the production of semiconductors, which are used in all manner of products from cars to washing machines, has led to it being a potential “single point of failure” for many companies, McNeal said.
But he also noted that the global reliance on TSMC — including by China, which reportedly depends on the company to provide about 70% of the chips needed to fuel its electronics industry — could act as a sort of bulwark against an invasion.
A paper from the Stimson Center on Taiwan’s “Silicon Shield” put a fine point on the issue: “Without a doubt, the first Chinese bomb or rocket that should fall on the island would make the supply chain impact of the COVID pandemic seem like a mere hiccup in comparison.”
There are nevertheless efforts underway to diversify the industry geographically, including through a $40 billion investment to expand TSMC chip production in Arizona.
McNeal said the issue should not solely be centered around TSMC and possible supply chain woes.
“For our Taiwan friends, that message says you don’t give a damn about them, their lives, their safety. You’re only in this for what it means for your bottom line,” he said. “For me personally, that’s not a message that I want to send.”
— CNBC’s Amanda Macias and Michael Bloom contributed to this report.
Disclosure: Dewardric McNeal is a CNBC contributor.
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Parenting 101: 3 Products that will streamline busy mornings
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We’re in the homestretch, parents – the end of the school year is approaching. I can’t tell you how much I’m looking forward to NOT packing lunches! But we still have a few weeks left, and I’ve got 3 products that will streamline busy mornings so you can get through this last haul without pulling your hair out.
For great, hearty breakfasts on the go, we love a good breakfast sandwich. The Hamilton Beach Breakfast Sandwich maker is a lifesaver! Celebrating its 10-year anniversary, this must-have countertop appliance helps create homemade breakfast sandwiches using a variety of fresh ingredients in five minutes or less, stacking and heating all the layers at once, including freshly cracked eggs. After a few minutes, the layers come together to form a cheesy, melty, and delicious breakfast sandwich, ideal for enjoying at home or on-the-go.
We’re also big fans of smoothies in my household. I find it to be a quick way to pack in a bunch of healthy fruits and dairy into one nutrition-packed drink. To whip them up in a jif, I use the KitchenAid Speed Ice Crushing Blender. It has a larger main compartment along with two smaller individualized containers to divvy them up. The motor in the main unit is powerful enough to pulverize ice and frozen fruits, and it’s equally easy to clean (a big plus in my books!). And in their new 2023 colour Hibiscus, it’s as stylish as it is convenient.
I looove having an organized fridge – it makes meal prep, cooking, and lunch-making so much easier. I outfitted my entire refrigerator with KSP storage bins (available at Kitchen Stuff Plus). They come in different sizes, they’re strong and durable, they’re clear so you can easily see what’s inside, and the larger models have built-in handles for easy retrieval. I keep lunch snacks in one and just pull it out in the morning to throw together school lunches in a snap.
– Jennifer Cox
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UN chief backs reform of Security Council, global financial system
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United Nations Secretary-General António Guterres backed the reform of the U.N. Security Council and the international financial system to align them with the “realities of today’s world.”
Both the U.N. body and the financial architecture reflect the power relations of 1945 and need to be updated, Guterres told a press conference Sunday on the margins of the G7 summit in Hiroshima, Japan, according to Reuters.
“The global financial architecture is outdated, dysfunctional and unfair,” Guterres said. “In the face of the economic shocks from the COVID-19 pandemic and the Russian invasion of Ukraine, it has failed to fulfill its core function as a global safety net.”
Guterres made the same point on Saturday, writing in a tweet that it was “time to think seriously about the reform” of the international financial architecture.
The U.N. Security Council came under fire in April when Russia assumed the rotating presidency of the 15-member body despite the fact that 141 countries condemned its aggression on Ukraine. Experts have claimed that Russia’s veto in the Security Council undermines the U.N.’s effectiveness on the international stage.
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Gregorio Sorgi
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China fears threaten to shatter G7 unity
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HIROSHIMA, Japan — As the leaders of the Group of Seven gather for their annual summit in Japan this week, three world-changing conflicts — past, present and potential — will converge.
The atomic bomb that ended World War II destroyed much of the city of Hiroshima, where the leaders will meet. Today, Russia’s war in Ukraine is costing thousands of lives and billions of dollars as it drags on. And then there’s the risk of another horrifying catastrophe to come, as China threatens Taiwan.
And it’s over China where the alliance may come unstuck.
For hawks like the U.S. and Japan, the summit beginning Friday offers a timely opportunity to make the case to Europe’s leaders directly that it’s time to get off the fence when it comes to confronting China.
“This G7 Summit will be an appropriate venue to also discuss security issues and our security cooperation not only in Europe, but also in the Indo-Pacific region,” Noriyuki Shikata, cabinet secretary at the Japanese prime minister’s office, told POLITICO.
The U.S. is betting on at least the appearance of common ground with allies about the People’s Republic of China. Ahead of the summit, U.S. National Security Council spokesperson John Kirby told reporters: “You can expect to hear at the end of those discussions that all the G7 leaders are of a common mind about how to deal with the challenges that the PRC presents.”
But — beyond the inevitably bland diplomatic lines of a summit communique — getting consensus on meaningful security measures for the Indo-Pacific region will be hard, even in the symbolic setting of Hiroshima.
East Asia is again descending into a state of growing security risks and military imbalance, this time due to China’s aggressive moves against Taiwan and the South China Sea.
“There’s a feeling that there’s a little bit of a gap, perhaps, between where the Europeans are on some China issues and where the U.S. is,” said Zack Cooper, former aide to the U.S. National Security Council and a senior fellow at the American Enterprise Institute.
Chief among the points of tension is how far to go in trying to stop a potential Chinese invasion of Taiwan, which could trigger world war and wreck the global economy. The self-governing island, which Beijing claims as its own, provides most of the world’s advanced computer chips that are vital to the tech and defense industries. Not all European governments are convinced it’s something they need to prioritize. “It’s going to be a continuing challenge,” Cooper said.
Picking friends
NATO is set to extend its footprint in Asia and set up a new liaison office in Tokyo to better coordinate with regional partners, such as Australia, South Korea and New Zealand.
However, French President Emmanuel Macron has repeatedly called on NATO to focus only on the Euro-Atlantic theater, saying Asia — China — is not covered geographically. He also triggered an outcry with recent comments to POLITICO, suggesting that Taiwan’s security was not Europe’s fight, and that the EU should not automatically follow America’s lead.
Justin Trudeau comes to the G7 following months of intelligence leaks that have painted his government as weak on foreign interference | Yuchi Yamazaki/AFP via Getty Images Macron’s stance sets France — which is the EU’s biggest military power — apart from the U.S. and Japan, and also from the U.K., where Prime Minister Rishi Sunak is expected to announce a new security deal with Japan during his visit.
“Ukraine today could be East Asia tomorrow,” Japanese Prime Minister Fumio Kishida said last year, not long after Russia’s full-scale invasion began. Last week, Japan’s Foreign Minister Yoshimasa Hayashi made an even more explicit warning in a speech made to his 27 EU counterparts in Sweden.
“China is continuing and intensifying its unilateral attempts to change the status quo by force in the East and South China Seas. China is also increasing its military activities around Taiwan,” Hayashi said. “In addition, China and Russia are strengthening their military collaboration, including joint flights of their bombers and joint naval exercises in the vicinity of Japan.”
The Chinese-Russian ties will be part of the G7 leaders’ discussions, according to two officials involved in the process, who spoke on condition of anonymity because summit preparations are not public. While the Chinese authorities stop short of openly arming Russia in its war against Ukraine, a long-term strategic partnership between Beijing and Moscow is unshakable for President Xi Jinping.
G7 countries such as the U.S. and Japan are expected to raise the need to sanction countries that work around Western trade restrictions on Russia, according to the officials. Chinese companies found to be selling dual use goods to Russia would be a top focus.
Bully tactics
China’s willingness to throw around its economic weight is one area where there’s likely to be more unity between G7 allies.
The need to fight back against economic coercion will take center stage at the summit. The EU, U.S., Canada and Japan are going to rally around calls to combat China’s use of its economic power to bully smaller economies that act against its political interests.
“The sense of urgency and unity is a force factor in and of itself. For example, never before has the G7 addressed economic coercion,” Rahm Emanuel, the U.S. ambassador to Japan, told POLITICO.
“When measured against the recent past, the G7 and EU are more strategically aligned in key economic and military matters,” added Emanuel, who served as chief of staff to former U.S. President Barack Obama.
When it comes to the European view, EU Commission President Ursula von der Leyen is clear that the bloc is “competing with China” and will need to up its game. “We will reduce strategic dependencies — we have learned the lessons of the last year,” she said in a press conference ahead of the trip.
Justin Trudeau, the Canadian prime minister, comes to the G7 following months of intelligence leaks that have painted his government as weak on foreign interference, specifically from China. He’ll be carrying Canada’s message that it can be a safe, non-authoritarian alternative to Russia and China for supplying critical minerals and energy, including nuclear power.
Despite the toughening rhetoric on China, what still unites the G7 countries is an eagerness not to shut the door on talks with Beijing.
US President Joe Biden arrives to attend the G7 Summit in Hiroshima on May 18, 2023 | Brendan Smialowski/AFP via Getty Images The Biden administration has for months been seeking to secure a visit to China for top Cabinet members, such as Treasury Secretary Janet Yellen. Biden’s national security adviser, Jake Sullivan, held eight hours of talks with the Chinese Communist Party’s foreign policy chief, Wang Yi, this month.
Just before he left for Japan on Wednesday, U.S. President Joe Biden was asked whether his last-minute decision to truncate his trip abroad could be seen as “almost a win for China.” Instead of staying in the region for a summit of the Quad — Japan, India, the U.S. and Australia — Biden plans to return to Washington Sunday to deal with domestic issues.
The president downplayed the move as something China could use to its advantage, noting he will still meet with Quad nation leaders in Japan. “We get a chance to talk separately at the meeting,” he said
Then, Biden was asked whether he has plans to speak with the Chinese president soon.
“Whether it’s soon or not, we will be meeting,” he said, before leaving the room.
Cristina Gallardo in London and Zi-Ann Lum in Ottawa contributed reporting.
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Eli Stokols, Phelim Kine and Stuart Lau
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G7 vs China: US, Europe unite in tough messaging against Beijing
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HIROSHIMA, Japan — China on Saturday faced a strong pushback from the Group of Seven countries over its stances on Russia, Taiwan, trade bullying, economic monopoly and domestic interference, with the G7 leaders’ statement reflecting a broad convergence of the U.S., Europe and Japan on a need to change tack.
Issued around the time of Ukrainian President Volodymyr Zelenskyy’s arrival in Hiroshima, where the summit is taking place, the statement by leaders of the G7 wealthy democracies asked Beijing to do more to stop Russia’s war on Ukraine.
“We call on China to press Russia to stop its military aggression, and immediately, completely and unconditionally withdraw its troops from Ukraine,” the leaders said in the statement. “We encourage China to support a comprehensive, just and lasting peace based on territorial integrity and the principles and purposes of the U.N. Charter, including through its direct dialogue with Ukraine.”
Crucially, the U.S. and Europe — the two main constituents of the G7 — came round to a common set of language on China. For France and Germany, in particular, their focus on a conciliatory attitude to China was reflected in the final statement, which began the China section by stating “We stand prepared to build constructive and stable relations with China.”
The G7’s repeated emphasis of “de-risking, not decoupling” is a nod to the EU approach to China, as European member countries are wary of completely cutting off business ties with Beijing.
The language on Taiwan remained the same compared with recent statements. “We reaffirm the importance of peace and stability across the Taiwan Strait as indispensable to security and prosperity in the international community,” the statement said, adding there’s “no change in the basic positions” in terms of the one China policies.
Domestic interference
Apart from Russia, another new element this year is the mention of domestic interference — which human rights groups say is a reflection of the growing concern about China’s “overseas police stations” in other countries. “We call on China … not to conduct interference activities aimed at undermining the security and safety of our communities, the integrity of our democratic institutions and our economic prosperity,” the leaders said in their statement, citing the Vienna Convention which regulates diplomatic affairs.
On global economics, both sides of the Atlantic and Japan now see the need to fundamentally change the overall dynamic of economic globalization, placing security at the front of policy considerations.
“Our policy approaches are not designed to harm China nor do we seek to thwart China’s economic progress and development. A growing China that plays by international rules would be of global interest,” the G7 leaders said in the statement.
“We are not decoupling or turning inwards. At the same time, we recognize that economic resilience requires de-risking and diversifying. We will take steps, individually and collectively, to invest in our own economic vibrancy. We will reduce excessive dependencies in our critical supply chains,” they said.
One central theme is economic coercion, where China has punished a wide range of countries — from Japan and Australia to Lithuania and South Korea — over the decade when political disagreements arose.
The G7 countries launched a new “coordination platform on economic coercion” to “increase our collective assessment, preparedness, deterrence and response to economic coercion,” according to the statement. They also plan to coordinate with other partners to further the work on this.
For France, the focus on a conciliatory attitude to China was reflected in the final statement, which began by stating “We stand prepared to build constructive and stable relations with China” | Pool phot by Stefan Rousseau/Getty Images The joint call for diverse sources of critical minerals, while stopping short of naming China, is widely seen as targeted against the Asian superpower that controls, for instance, 70 percent of global rare earths output. The G7 countries “support open, fair, transparent, secure, diverse, sustainable, traceable, rules and market-based trade in critical minerals” and “oppose market-distorting practices and monopolistic policies on critical minerals,” according to the statement.
They also vow to deliver the goal of mobilizing up to $600 billion in financing for quality infrastructure through the Partnership for Global Infrastructure Investment, a rival to China’s Belt and Road initiative. “We will mobilize the private sector for accelerated action to this end,” they said.
In a bilateral in Hiroshima, British Prime Minister Rishi Sunak and French President Emmanuel Macron “welcomed the strong unity of purpose at the G7 on … our collective approach to the economic threat posed by China,” a spokesperson for Sunak’s office said.
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Stuart Lau and Eli Stokols
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Import prices rise in April for first monthly gain this year
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The numbers: The cost of U.S. imported goods rose 0.4% in April, the Labor Department said Friday. This was the first increase this year.
Economists polled by the Wall Street Journal had forecast a 0.3% gain.
Over the past 12 months, the costs of imports has dropped 4.8%. That followed a 12.5% gain in the prior year.
Key details: The cost of imported fuel rose 4.5% in April after a 3.9% drop in the prior month. This was the first increase since last June.
The cost of imports excluding fuel were flat in April after a 0.5% decline in the prior month. Over the past year, nonfuel import prices are down 1.9%.
Exports prices rose 0.2% in April. They are down 5.9% over the past year.
Big picture: The stronger dollar last year dampened import prices and was a source of disinflation, but with the dollar softer this year, prices are firming.
One sign perhaps of the weaker dollar is that consumer goods prices ex-autos rose 0.2% in April and are up 1.1% annualized over the past three months, said Michael Gapen, U.S. economist at Bank of America Securities.
What are they saying? “Perhaps imported inflation is the first early signal of how brutal the fight against inflation will be in the coming months. Investors and traders should remember that the Fed’s target is 2%,” said Alex Kuptsikevich, senior market analyst at FXPro.
Market reaction: Stocks
DJIA,
-0.03% SPX,
-0.16%
were lower in volatile morning trading on Friday. The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.468%
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U.S. April producer prices rise 2.3% over past year, smallest increase since January 2021
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The numbers: U.S. producer prices rose 0.2% in April, the Labor Department said Thursday.
Economists polled by the Wall Street Journal had forecast the PPI would rise 0.3%.
In the 12 months through April, the PPI increased 2.3%. It follows a 2.7% gain in March. This is the lowest rate since January 2021.
Key…
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Parenting 101: Mother’s Day gift guide
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Mother’s Day is right around the corner, and we have some great gift ideas to appeal to every mom: the one who has a sweet tooth, the one who loves a little indulgence, the practical mom, the sporty mom, and the one who loves beauty products. Tap into your mom’s interests and you’re sure to spoil this special lady like she deserves on Mother’s Day.
For Mother’s Day, BKIND will be offering three body care gift sets to spoil mom or a loved one starting April 8! The gift sets will contain one Moisturizing Body Lotion, a Nourishing Hand Balm, a Lip balm and a Plantable Card. The card is made of seeded paper; it can be planted to grow pretty Canadian wildflowers! Customers will have the choice between the sweet, fruity and fresh set, with soft and natural fragrances! All gift sets contain only natural, eco-friendly, vegan, cruelty-free and made in Quebec products.
Baskin-Robbins Canada reintroduced Mom’s Makin’ Cookies as its May Flavour of the Month. First introduced to Canadians ten years ago, the popular, seasonal flavour is a delicious ode to freshly baked chocolate chip cookies, featuring brown sugar-flavoured ice cream filled with chocolate chip cookie pieces and chocolate chips and is topped with a delicious cookie dough batter-flavoured ribbon.The flavour joins another sweet treat, Mother’s Day Cake, in spoiling motherly figures with a symbol of the sweetness and affection so appreciated in motherly love. As with most other Baskin-Robbins cakes, Mother’s Day Cake is available with your choice of cake – chocolate or white – and is topped with delectable and colourful flowers.
The Scented Market is a Canadian, female-led company founded by Kristy Miller. After being pregnant with her third son, she was looking for healthier, safer alternatives to traditional candles (the ones she was using were leaving black soot on her ceiling!). Today they sell delicately fragranced candles that come in recycled packaging and have lovely spring fragrances including Lily of the Valley, Lilac Breeze and Freshen Up. It’s a great non-conventional fragranced bouquet for mom and a great way to remind moms to slow down and take a break.
– Jennifer Cox
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China’s exports rose 8.5%, continuing its growth streak at a slower pace
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QINGDAO, CHINA – MAY 06: Aerial view of illuminated Qingdao Qianwan Container Terminal at dusk on May 6, 2023 in Qingdao, Shandong Province of China.
Vcg | Visual China Group | Getty Images
China’s exports grew 8.5% in April in U.S. dollar terms, marking a second-straight month of growth, while imports fell 7.9% compared with a year ago.
Economists polled by Reuters estimated exports would rise 8% in April, while imports were forecast to remain unchanged. In March, imports declined 1.4% year-on-year while exports saw a surprise jump of 14.8%, government data showed.
related investing news
China’s trade surplus grew to $90.21 billion in April, up from the surplus of $88.2 billion in March.
Softer trade data in April is likely to reflect “residual seasonality” after this year’s Lunar New Year, economists at Goldman Sachs said in a Monday note.
Goldman Sachs economists expected to see “the dissipation of this seasonal bias to slow export growth in April,” they wrote in a note earlier this month previewing China’s trade data.
Recent economic data released from the world’s second-largest economy showed that China’s service sector remained a bright spot despite disappointing factory data.
The National Bureau of Statistics’ manufacturing purchasing manager’s index reading missed expectations and fell into contraction territory with a reading of 49.2 in April from March’s reading of 51.9.
“China is past the fastest stage of its reopening,” Goldman Sachs economists wrote in a separate Friday note. It reiterated its forecast for China’s economy to see full-year growth of 6% in 2023.
“Recent meetings with clients in the mainland suggest gradually fading pessimism on near-term growth, but some concern around deflationary pressures, though in our view this is not a major risk for 2023-24,” they wrote.
Inflation ahead
China’s inflation data is slated for release Thursday. Economists expect inflation slowed to a 0.3% year-on-year rise, according to a Reuters poll.
Month-on-month, prices are predicted to remain flat, according to the survey.
The economy’s producer price index is forecast to mark its seventh-straight month of declines after the index fell 2.5% in March. Economists polled by Reuters expect to see a drop of 3.2%.
“Central bankers in China seemed to have little concerns about deflation, judged by the PBoC quarterly monetary policy reports and meeting minutes,” BofA Global Research economists including Helen Qiao wrote in a note, adding that officials seem confident in a rebound for inflation ahead.
BofA economists said they “expect inflationary pressure to rise as the output gap narrows in 2H23, especially on the back of a new credit cycle kicking off.”
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