The United States says talks in Beijing on ending a bruising trade war focused on Chinese promises to buy more American goods. But it gave no indication of progress on resolving disputes over Beijing’s technology ambitions and other thorny issues.

China’s Ministry of Commerce said Thursday the two sides would “maintain close contact.” But neither side gave any indication of the next step during their 90-day cease-fire in a tariff fight that threatens to chill global economic growth.

That uncertainty left Asian stock markets mixed Thursday. Share prices had risen Wednesday after President Donald Trump fueled optimism on Twitter about possible progress.

The U.S. Trade Representative, which leads the American side of the talks, said negotiators focused on China’s pledge to buy a “substantial amount” of agricultural, energy, manufactured goods and other products and services.

No signs of progress

However, the USTR statement emphasized American insistence on “structural changes” in Chinese technology policy, market access, protection of foreign patents and copyrights and cybertheft of trade secrets. It gave no sign of progress in those areas. 

Trump hiked tariffs on $250 billion of Chinese goods over complaints Beijing steals or pressures companies to hand over technology. 

Washington also wants changes in an array of areas including the ruling Communist Party’s initiatives for government-led creation of global competitors in robotics, artificial intelligence and other industries.

American leaders worry those plans might erode U.S. industrial leadership, but Chinese leaders see them as a path to prosperity and global influence and are reluctant to abandon them.

The two sides might be moving toward a “narrow agreement,” but “U.S. trade hawks” want to “limit the scope of that agreement and keep the pressure up on Beijing,” said Eurasia Group analysts of Michael Hirson, Jeffrey Wright and Paul Triolo in a report.

“The risk of talks breaking down remains significant,” they wrote.

​White House optimism

On Wednesday, White House press secretary Sarah Sanders expressed optimism to Fox Business Network. She said the timing was unclear but the two sides “are moving towards a more balanced and reciprocal trade agreement with China.”

The U.S. statement said negotiations dealt with the need for “ongoing verification and effective enforcement.” That reflects American frustration that the Chinese have failed to live up to past commitments.

Beijing has tried to defuse pressure from Washington and other trading partners over industrial policy promising to buy more imports and open its industries wider to foreign competitors.

Trump has complained repeatedly about the U.S. trade deficit with China, which last year likely exceeded the 2017 gap of $336 billion.

​Enthusiasm wears thin

U.S. stocks surged Wednesday on optimism higher-level U.S. and Chinese officials might meet.

That enthusiasm was wearing thin Thursday. Hong Kong’s Hang Seng index fell 0.5 percent while Tokyo’s Nikkei 225 dropped 1.4 percent.

Economists say the 90-day window is too short to resolve all the conflicts between the biggest and second-biggest global economies.

“We can confidently say that enough progress was made that the discussions will continue at a higher level,” said Craig Allen, president of the U.S.-China Business Council. “That is very positive.”

Chinese exports to the U.S. have held up despite tariff increases, partly because of exporters rushing to fill orders before more increases hit. Forecasters expect American orders to slump this year.

China has imposed penalties on $110 billion of American goods, slowing customs clearance for U.S. companies and suspending issuing licenses in finance and other businesses.

U.S. companies also want action on Chinese policies they complain improperly favor local companies. Those include subsidies and other favors for high-tech and state-owned industry, rules on technology licensing and preferential treatment of domestic suppliers in government procurement.

For its part, Beijing is unhappy with U.S. export and investment curbs, such as controls on “dual use” technology with possible military applications. They say China’s companies are treated unfairly in national security reviews of proposed corporate acquisitions, though almost all deals are approved unchanged.

This week’s talks went ahead despite tension over the arrest of a Chinese tech executive in Canada on U.S. charges related to possible violations of trade sanctions against Iran. 
…

Deep in a provincial region of northwestern Turkey, it looks like a mirage — hundreds of luxury houses built in neat rows, their pointed towers somewhere between French chateau and Disney castle.

Meant to provide luxurious accommodations for foreign buyers, the houses are however standing empty in what is anything but a fairy tale for their investors.

The ambitious development has been hit by regional turmoil as well as the slump in the Turkish construction industry — a key sector — as the country’s economy heads towards what could be a hard landing in an intensifying downturn.

After a long period of solid growth, Turkey’s economy contracted 1.1 percent in the third quarter, and many economists expect it will enter into recession this year.

The country has been hit by high inflation and a currency crisis in August. The lira lost 28 percent of its value against the dollar in 2018 and markets are still unconvinced by the readiness of the government under President Recep Tayyip Erdogan to tackle underlying economic issues.

The villas close to the town center of Mudurnu in the Bolu region are intended to resemble European architecture and are part of the Sarot Group’s Burj Al Babas project.

But the development of 732 villas and a shopping center — which began in 2014 — is now in limbo as Sarot Group has sought bankruptcy protection.

It is one of hundreds of Turkish companies that have done so as they seek cover from creditors and to restructure their debts.

Driving force 

Sarot Group filed for bankruptcy protection after some of their Gulf customers could not pay for the villas they had bought as part of the $200 million (175 million euros) project, Sarot’s deputy chairman, Mezher Yerdelen, said.

So far, $100 million has been spent on the project.

“Some of the sales had to be cancelled,” Yerdelen told AFP, after the company sold 351 villas to Arab investors.

The villas are worth between $400,000 and $500,000 each. They were designed with the Gulf buyers in mind, architect Yalcin Kocacalikoglu said.

While the drop in oil prices hurt its Gulf customers, Sarot Group was also hit by “the negative impact of the economic fluctuations on construction costs” in Turkey, Yerdelen said.

Despite a legal battle over its bankruptcy status, Yerdelen said the company can continue making sales and that he hopes the project will be inaugurated in October 2019.

Yet the Al Babas project is hardly alone. Unfinished and empty housing projects are strewn across the country, testimony to the trouble the construction sector, and the wider economy, now finds itself in. 

The construction sector has been a driving force of the Turkish economy under Erdogan, who has overseen growth consistently above the global average since he came to power in 2003.

But the sector contracted 5.3 percent on-year in the third quarter of 2018.

“Three out of four companies seeking bankruptcy protection or bankruptcy are construction companies,” said Alper Duman, associate professor at Izmir University of Economics.

Turkey’s ‘locomotive’

“Whether we call it a construction bubble or a housing bubble, there is a bubble in Turkey,” he said.

He pointed to unsold housing stock as the main indicator of this, with data showing in that over the past 16 years 10.5 million apartments have been built but only eight million have been approved for use. 

“There is a high risk this bubble will burst,” he said.

Trade Minister Ruhsar Pekcan said in mid-December that 846 companies had applied for bankruptcy protection since March 2018 but opposition daily Sozcu claimed in October the figure was more than 3,000.

Turkish Chamber of Civil Engineers head Cemal Gokce expressed pessimism, predicting “more bankruptcy protection applications, bankruptcies” among construction companies.

He said too many homes have been built in Turkey.

And most are not luxury villas like Burj Al Babas with its style reminiscent of the Sleeping Beauty Castle at Disney theme parks, but simple apartments and homes for ordinary Turks.

The construction confidence index of the Turkish Statistical Institute (TurkStat) fell 2.1 percent in December to 55.4, after 56.6 in the previous month. Anything below 100 indicates a pessimistic outlook.

However, Kerim Alain Bertrand, who previously headed up a firm that provided and analyzed data on Turkey’s real estate market, said recently he was more optimistic, partly due to the country’s growing population.

“The construction sector is this country’s locomotive sector,” he said. 

While there will be a consolidation in the sector, it will “continue to be kept alive” by the young population, he added.

The median age of the population in Turkey was 31.7 in 2017, according to TurkStat, compared to 42.8 in the European Union.
…

With the March deadline approaching for Britain to depart the European Union, there are concerns that Britain’s exit could undermine Western sanctions against countries like Iran, Syria and North Korea. Analysts note that Britain has been influential in persuading the EU to take action, saying there are risks Britain will seek a different path as it carves out new economic and strategic partnerships.

“Some estimates hold that up to 80 percent of the EU’s sanctions that are in place have been put forward or suggested by the UK,” said Erica Moret, chair of the Geneva International Sanctions Network.

She says Britain’s future absence from EU meetings will impact the bloc’s future relations. “The UK is also a very important player of course as a leading economic and political power, a soft power player in the world. Also the City of London means that financial sanctions are rendered much stronger through the UK’s participation.”

Britain was quick to coordinate expulsions of Russian diplomats among EU allies following the nerve agent attack in the city of Salisbury last year against a former double agent, an incident London blamed on Moscow.

Through EU membership, Britain enforces common sanctions against several other states and individuals, such as Syrian officials accused of war crimes.

After the Brexit deadline day on March 29, Britain will be free to implement its own sanctions.

“I wouldn’t see this happening in the short term, especially because again both sides have said they are committed to EU sanctions and they are also committed to projecting some political values that both EU and UK agree to,” says Anna Nadibaidze of the policy group Open Europe.

Britain, however, could seek a competitive advantage over Europe by diverging its sanctions policy, says Moret.

“It’s very unlikely that the UK would deliberately seek to gain commercial advantage over EU partners. But when you think about the tensions that will come into play post-Brexit, when it comes down to trying to negotiate new trade deals, seeking new foreign investment into the country. There will be pressure, a balance to be made between alignment with EU sanctions and domestic interests.”

That pressure could be felt first over Iran. Alongside European allies, Britain backs the 2015 Iran nuclear deal known as the Joint Comprehensive Plan of Action or JCPOA, which lifted some Western sanctions on Tehran in return for a suspension of its atomic enrichment program. U.S. President Donald Trump pulled out of the deal last year, saying Iran has violated the spirit of the agreement.

Britain urgently wants a trade deal with the United States after Brexit. Will the price be alignment with Washington’s policy on Iran?

“That is a key risk and it’s a very important one that will be in the forefront of policymakers’ minds,” adds Moret.

Britain was among EU nations backing sanctions against an Iranian intelligence unit this week, accusing Tehran of plotting attacks and assassinations in Europe. Both Brussels and London say they will continue to work together to counter common threats through a range of policy tools including sanctions.

 

 

 

 
…

Concerns have arisen that European sanctions against countries like Iran, Syria and North Korea could be undermined by Britain’s upcoming departure from the European Union. Britain will be free to implement its own sanctions regime — and while both Brussels and London insist they will continue to work together, analysts say there are risks that Britain will seek a different path as it carves out new economic and strategic partnerships after Brexit. Henry Ridgwell reports from London.
…

Another clutch of U.S. Federal Reserve officials said Wednesday they would be cautious about any further increases in interest rates so that the central bank could assess growing risks to an otherwise solid U.S. economic outlook.

The presidents of three of the 12 Fed regional banks, from Chicago, St. Louis and Atlanta, all pointed to a need for greater clarity on the state of the economy before extending the central bank’s rate hike campaign into a fourth year.

Two of the three, Charles Evans of Chicago and James Bullard of St. Louis, are voting members this year on the Federal Open Market Committee, the bank’s policy-setting panel. Bullard has long been critical of the Fed’s rate increases, begun in December 2015, but the caution from Evans is new, even if he still asserted that rates probably need to rise more.

The remarks from the three come less than a week after Fed Chairman Jerome Powell eased market concerns that policymakers were ignoring signs of an economic slowdown. Powell said he was aware of the risks and would be patient and flexible in policy decisions this year.

The new tone of caution comes after the U.S. stock market dropped precipitously in the fourth quarter of 2018, suffering its worst December performance since the Great Depression. Other signs of tightening financial conditions surfaced as well, including a sharp slowdown in issuance of corporate bonds.

Evans has been among the most vocal backers of gradually tightening U.S. monetary policy. In a speech in Riverwoods, Illinois, his first public comments since November, he nodded to an array of “tough-to-read” factors highlighted by the recent market sell-off, but penciled in a forecast for reasonably good U.S. growth and employment in 2019 and beyond.

His prepared remarks gave no hard timeline for further rate hikes, but they hinted he could agree to stand pat until around midyear to see how factors like global growth and U.S. trade and fiscal policy pan out.

Bullard, meanwhile, told the Wall Street Journal that while the Fed had “a good level of the policy rate today,” there was no rush to push them higher.

Latest hike

The Fed last raised rates in December, to a range of 2.25 percent to 2.50 percent, to conclude a full year of quarterly increases in its benchmark lending rate.

Minutes from that meeting will be released later Wednesday and could shed more light on how policymakers assessed the economy as they agreed to raise rates and, at that time, projected two more increases in 2019.

Overall, that marked the ninth increase of a quarter percentage point since December 2015, when the Fed began lifting interest rates from near zero, where they had been since the financial crisis in 2008.

Defensive decisions

Atlanta Fed President Raphael Bostic, who earlier this week said the Fed was likely to need at most a single rate increase this year, on Wednesday elaborated on that view as driven by conversations with business executives, who say they have become more defensive in preparing for slower growth by paying down debt and holding off on new plans.

Those conversations “are not consistent with the business sector ramping up,” Bostic said in remarks prepared for delivery to the Chattanooga Area Chamber of Commerce. Bostic, who backed all four rate hikes in 2018 as an FOMC voter, does not have a policy vote on the panel this year.

Meanwhile, back in November, Evans had said raising rates to about 3.25 percent would be a “reasonable assumption.” Powell and other top officials in recent weeks have stressed that they are listening to the concerns implied by the stock market sell-off that began in early October, and traders are very skeptical of much more tightening this year.

“A case can be made for a reasonably good 2019 economic outcome,” Evans said. “But I do not want to downplay the risks too much.”
…

The World Bank is downgrading its outlook for the global economy this year, citing rising trade tension, weakening manufacturing activity and growing financial stress in emerging-market countries.

In a report titled “Darkening Skies,” the anti-poverty agency said Tuesday that it expects the world economy to grow 2.9 percent in 2019, down from the 3 percent it forecast back in June. It would be the second straight year of slowing growth: The global economy expanded 3 percent last year and 3.1 percent in 2017.

‘Risks are rising’

“Global growth is slowing, and the risks are rising,” Ayhan Kose, the World Bank economist who oversees forecasts, said in an interview. “In 2017, the global economy was pretty much firing on all cylinders. In 2018, the engines started sputtering.”

The bank left its forecast for the U.S. economy unchanged at 2.5 percent this year, down from 2.9 percent in 2018. It predicts 1.6 percent growth for the 19 countries that use the euro currency, down from 1.9 percent last year; and 6.2 percent growth for China, the world’s second-biggest economy, versus 6.5 percent in 2018.

The bank upgraded expectations for the Japanese economy, lifting its growth forecast to 0.9 percent, up from 0.8 percent in 2018.

President Donald Trump, declaring that years of U.S. support for free trade had cost America jobs, last year slapped import taxes on foreign dishwashers, solar panels, steel, aluminum and $250 billion in Chinese products. Other countries retaliated with tariffs of their own in disputes that have yet to be resolved.

The exchange of tariffs is taking a toll on world trade. The bank predicts that the growth of world trade will slow to 3.6 percent this year from 3.8 percent in 2018 and 5.4 percent in 2017. Slowing trade is hurting manufacturers around the world.

Rising interest rates

Rising interest rates are also pinching emerging-market governments and companies that borrowed heavily when rates were ultra-low in the aftermath of the 2007-2009 Great Recession. As the debts roll over, those borrowers have to refinance at higher rates. A rising dollar is also making things harder for emerging-market borrowers who took out loans denominated in the U.S. currency.

“Now debt service is eating into government revenues, making it more difficult (for governments) to fund essential social services,” said World Bank CEO Kristalina Georgieva, who will replace bank president Jim Yong Kim on an interim basis when he leaves at the end of January.

The bank slashed its forecast for 2019 growth for Turkey, Argentina, Iran and Pakistan, among others.
…

Peru Attorney General Pedro Chavarry resigned on Tuesday after a public outcry over his handling of the high-profile corruption investigation involving Brazilian builder Odebrecht.

His departure from the public prosecutors office marks a fresh victory for President Martin Vizcarra and supporters of his measures to uproot entrenched corruption in one of Latin America’s fastest-growing economies.

Chavarry prompted widespread scorn and days of street protests after he announced on New Year’s Eve that he was removing two lead prosecutors from the Odebrecht inquiry, which has targeted former presidents and presidential candidates.

Vizcarra responded by sending Congress legislation to suspend Chavarry and overhaul the prosecutor’s office.

Resignation protects prosecutor?

Chavarry denied he was trying to meddle in the investigation and said he was stepping down to protect the independence of the prosecutor’s office, which he portrayed in his resignation letter as under attack by Vizcarra’s government.

Vizcarra had repeatedly called for Chavarry to step down since he was appointed by a panel of prosecutors in July despite his ties to an alleged criminal group of judges, lawmakers and businessmen. Chavarry was later named by a prosecutor in his office as a suspect in the probe. He denies wrongdoing.

A former vice president, Vizcarra has made fighting corruption a focus of his government since taking office last year to replace Pedro Pablo Kuczynski, who stepped down in one of several graft scandals to grip Peru in recent years.

Vizcarra, however, lacked the authority to dismiss Chavarry. Under Peru’s constitution, only Congress, where Chavarry enjoyed support with the opposition majority, can oust the attorney general.

Avalos is acting attorney general

Supreme Prosecutor Zoraida Avalos, one of several prominent prosecutors to call for Chavarry to resign in the past week, was named as acting attorney general on Tuesday.

The prosecutors whom Chavarry had dismissed last week — Rafael Vela and Jose Domingo Perez — were reinstated amid the outcry.

The two are seen as pivotal figures in the Odebrecht investigation and recently drew up a plea deal that commits the company to providing evidence on about $30 million in bribes it acknowledges it paid to local politicians.

‘Car Wash’ probe

Odebrecht is at the center of the “Car Wash” investigation in Brazil, which has rippled across Latin America and which U.S. prosecutors have said is the biggest political graft scheme ever uncovered.

In late 2016, Odebrecht acknowledged it had paid millions of dollars in bribes to officials in a dozen countries to secure public works contracts dating back over a decade. The company has committed to paying billions of dollars in fines.
…

Labor rights campaigners warned against complacency as the European Union on Tuesday withdrew its threat to ban Thai fishing imports into the bloc, saying that the country has made progress in tackling illegal and unregulated fishing.

The EU’s so-called “yellow card” on Thai fishing exports has been in place since April 2015 as a warning that the country was not sufficiently addressing the issues.

“Illegal, unreported and unregulated fishing damages global fish stocks, but it also hurts the people living from the sea, especially those already vulnerable to poverty,” Karmenu Vella, European Commissioner for environment and fisheries said.

“Today’s decision reverses the first step of a process that could have led to a complete import ban of marine fisheries products into the EU,” he said in a statement.

Thailand has amended its fisheries legal framework in line with international law, and improved its monitoring and surveillance systems, including remote monitoring of fishing activities and more robust inspections at port, the EU said.

The country’s multibillion-dollar seafood industry has also come under scrutiny for slavery, trafficking and violence on fishing boats and at onshore processing facilities.

After the EU threatened to ban fish exports, and the U.S. State Department said it was failing to tackle human trafficking, the Southeast Asian country toughened up its laws and increased fines for violations.

Thailand has introduced modern technologies — from satellites to optical scanning and electronic payment services — to crack down on abuses.

But the International Labor Organization said in March that fishermen remained at risk of forced labor, and the wages of some continued to be withheld.

The EU on Tuesday said it recognized efforts by Thailand to tackle human trafficking and to improve labor conditions in the fishing sector.

Thailand voted in December to ratify ILO convention 188 — which sets standards of decent work in the fishing industry — becoming the first Asian country to do so.

But important gaps remain, said Steve Trent, executive director at advocacy group Environmental Justice Foundation.

“We still have concerns about the workers. We need to see that the reforms are durable,” he said.

Thailand is yet to ratify two other ILO conventions on the right to organize and the right to collective bargaining, both of which are essential to protect workers, he told the Thomson Reuters Foundation.

This is particularly important in the fishing and seafood processing industries, as most of their estimated 600,000 workers are migrant workers.

“There is a risk that with the lifting of the yellow card, complacency will set in. We need to see a culture of compliance, and more being done to protect vulnerable workers in the industry,” Trent said.
…

Hospitals in Zimbabwe are turning away patients as a strike by doctors enters its sixth week. There is no end in sight to the strike, as President Emmerson Mnangagwa’s government says it cannot meet the doctors’ demands.

The Parirenyatwa Group of Hospitals, Zimbabwe’s largest treatment center, is largely empty as a doctors’ strike that began December 1 drags on.

Sixty-nine-year-old Kasirina Zibveka had a lung infection in September, according to her medical records. After numerous tests were done, it was confirmed that her right lung had gone bad and needed to be removed.

 

But by then, doctors were on strike. She was discharged December 13 and was told to return Monday for the ailing lung to be removed. But with the strike unresolved, that did not happen.

 

Her daughter, Margret Chikoti, says the family has paid for her treatment, but only nurses are attending to her mother.

 

“We have no idea what is really happening to her since December 13,” she said. “All we see is her discharging some blood stained stinking fluids [through a hole pierced by nurses under her right breast]. What is happening inside her body? Is it getting worse? We just give her painkillers and use ointment to clean her wound. We hope that their negotiations [doctors and government] bear fruit and they return to work.”

Doctors held a meeting Monday and resolved to remain on strike until their demands are met. The doctors want the government to equip hospitals with modern technology, sufficient medicine and protective clothing for doctors.

 

They also want to be paid in U.S. dollars instead of Zimbabwe’s depreciating currency, known as bondnotes.

 

“We will not accept the money that they are refusing. We want the money that buys,” Zimbabwe Hospital Doctors Association Vice President Marambire Sinaravo Jongwe said this to his members. “We are very understanding people, we are very lenient to our government. They are just trying to ignore us, they are very insincere to doctors. But yet we are saving the public, the general of Zimbabwe. For our patients we care, the government does not care.”

 

The doctors also say they do not want to prescribe drugs that are not in stock, a practice that forces patients to seek out black market drugs.

The Medicines Control Authority of Zimbabwe has warned about such drugs being fake, expired and unsafe to use.

 

The government, meanwhile, said last week it is not in a position to pay doctors or any civil servants in U.S. dollars.

Officials say they have imported medicines and are now stocking hospitals. But with doctors still on strike, that news might not be enough to help patients like Kasirina Zibveka.
…

U.S. Commerce Secretary Wilbur Ross said there is “a very good chance” that the United States and China will reach a trade agreement. 

Ross told CNBC he is hopeful such a deal would address “all the key issues.”

Working-level trade talks between the United States and China began Monday in Beijing with negotiators for the world’s two biggest economies trying to resolve tariff disputes that have roiled world markets in recent weeks.

In a sign the meeting was off to a good start, China’s economic czar, Vice Premier Liu He, dropped by the talks on Monday to encourage the negotiators.

While Chinese officials expressed optimism at the start of the two-day talks, Beijing at the same time complained about the sighting of the U.S.S. McCampbell, a warship, in what it said were Chinese waters near disputed islands in the South China Sea.

Chinese Foreign Ministry spokesman Lu Kang said China had made “stern complaints” with the United States about the sighting of the destroyer, but the trade talks went ahead as scheduled.

There was no immediate U.S. response to the Chinese complaint.

Few details have emerged from the trade talks, which are scheduled to run through Tuesday.

​The trade talks are the result of an agreement last month between U.S. President Donald Trump and Chinese President Xi Jinping to stop the tit-for-tat tariff conflict between the two countries for 90 days starting on New Year’s Day. 

Trump said last week, “I think we’ll have a deal with China.” 

Lu said the two countries have agreed to hold “positive and constructive” discussions.

“From the beginning we have believed that China U.S. trade friction is not a positive situation for either country or the world economy,” Lu said. “China has the good faith, on the basis of mutual respect and equality, to resolve the bilateral trade frictions.”

​The talks are occurring as Chinese growth — 6.5 percent in the July-to-September period — fell to its lowest point in a decade. There are concerns that U.S. growth, 3.4 percent in the third quarter, is also slowing even as the country’s unemployment rate remains nearly at a five-decade low.

Even so, Lu said, “China’s development has ample tenacity and huge potential. We have firm confidence in the strong long-term fundamentals of the Chinese economy.”

The United States has long complained about access to the vast Chinese market and Beijing’s demands U.S. companies reveal their technology advances.
…

Mexican President Andres Manuel Lopez Obrador said on Monday that his crackdown against fuel theft was yielding positive results, even as the intervention sparked severe fuel shortages in parts of the country and long lines of angry motorists.

In a bid to eliminate years of mounting theft, state oil firm Pemex has changed its distribution, triggering shortfalls in at least six states, including Guanajuato, a major car-making hub in central Mexico.

Guanajuato’s state government said that less than one third of the state’s gas stations were open on Monday.

Lopez Obrador told a news conference the government had not established a date for when operations would return to normal, but stressed that supply was not in danger.

“We are changing the whole distribution system, that’s the reason for the shortage. We have enough gasoline,” he said.

Mexican television showed long lines of drivers waiting to fill up in central states as well as Jalisco in the west and Tamaulipas in the north.

Years of fuel theft by criminal groups and others by tapping pipelines and stealing tanker trucks has led to losses totaling billions of dollars for public coffers.

Lopez Obrador’s government has ordered the armed forces to intervene in Pemex’s facilities, including one refinery.

“The supply will normalize, and at the same time we are going to guarantee that fuel is not stolen,” said Lopez Obrador, who took office in December. “We have seen a reduction in theft like never before … but we still have work to do.”

Guanajuato’s governor Diego Sinhue told local radio that of the state’s 415 gas stations, only 115 were open. In Leon, Guanajuato’s biggest city with a population of more than 1.5 million, only 7 of 196 stations were open on Sunday, he said.

“Fuel is becoming a serious problem,” said Sinhue, a member of the opposition center-right National Action Party (PAN). “People are really angry about this shortage.”

Sinhue said the army had informed him it had taken control of the state’s Salamanca refinery on Monday morning. There, members of the armed forces were monitoring tankers going in and out of the facility, as well as the pressure of pipelines.

Energy Minister Rocio Nahle offered an apology on Mexican radio for the shortages. Asked when the problem would be fixed, she said it was in the process of being “normalized.”
…

Tesla broke ground Monday on a new factory for its electric cars in China, the first of its factories to be located outside the United States.

Chief Executive Elon Musk appeared at a ceremony alongside local officials on the outskirts of Shanghai to mark the start of the project. He said the goal is to finish initial construction by summer and start production by the end of the year.

Tesla will build its Model 3 vehicles at the site and says it hopes to eventually have a production capacity of 500,000 vehicles per year. The factory is wholly owned by Tesla, a departure from usual Chinese policy for foreign businesses.

The new factory comes as the United States and China negotiate trade issues that have led each side to impose higher tariffs on the other’s goods, including the automotive sector.

By having a factory in China, Tesla will not have to worry about consumers there facing higher prices on cars imported from the United States.
…

A U.S. trade delegation has arrived in Beijing.

The group is in China to hold two days of talks, beginning Monday, focusing on how best to carry out an agreement reached by U.S. President Donald Trump and Chinese President Xi Jinping to postpone new tariff hikes.

On December 1, the two leaders agreed to complete talks about technology, intellectual property and cyber theft issues within 90 days, and hold off on new tariffs in the meantime.

U.S. officials have said that if the talks fail to produce a satisfactory agreement Washington will increase tariffs on $200 billion of Chinese goods from 10 percent to 25 percent.

 

 

 
…

China has sounded a positive note ahead of trade talks this week with Washington, but the two sides face potentially lengthy wrangling over technology and the future of their economic relationship.

Both sides have expressed an interest in settling their tariff fight over Beijing’s technology ambitions. Yet neither has indicated its stance has changed since a Dec. 1 agreement by Presidents Donald Trump and Xi Jinping to postpone further increases.

Envoys will have “positive and constructive discussions” during meetings Monday and Tuesday, said Chinese Foreign Ministry spokesman Lu Kang.

The American side is led by a deputy U.S. trade representative, Jeffrey D. Gerrish, according to the U.S. government. Neither side gave details of their agenda but Gerrish’s delegation includes agriculture, energy, commerce, treasury and State Department officials.

The Chinese government gave no details of who would represent Beijing.

The talks are going ahead despite tensions over the arrest of a Chinese tech executive in Canada on U.S. charges related to possible violations of trade sanctions against Iran.

Trump imposed tariff increases of up to 25 percent on $250 billion of Chinese imports over complaints Beijing steals or pressures companies to hand over technology. Beijing responded by imposing penalties on $110 billion of American goods, slowing customs clearance for U.S. companies and suspending issuing licenses in finance and other businesses.

Washington, Europe and other trading partners complain Beijing’s tactics violate its market-opening obligations.

The clash reflects American anxiety about China’s rise as a potential competitor in telecommunications and other technology. Trump wants Beijing to roll back initiatives like “Made in China 2025,” which calls for the state-led creation of global competitors in such fields as robotics and artificial intelligence. American officials worry those might erode U.S. industrial leadership.

The ruling Communist Party is reluctant to give up initiatives it sees as a path to prosperity and global influence.

China’s leaders have tried to defuse complaints by emphasizing the country’s potential as an export market. They have announced a series of regulatory changes over the past year to increase foreign access to their auto, finance and other industries.

Some Chinese officials suggest the technology initiatives might be opened to foreign companies. But they have given no details, leaving it unclear whether that will satisfy Washington.

Trump and Xi agreed to a 90-day postponement of additional tariff increases to take effect Jan. 1. But economists say that is too little time to settle all the disputes that bedevil U.S.-Chinese relations. They say Beijing’s goal probably is to show enough progress to persuade Trump to extend his deadline.

During that 90-day period, agreements “may not be reached until the last day,” said Tu Xinquan, director of the China Institute for World Trade Organization Studies at the University of International Business and Economics in Beijing.

This week’s talks will focus on technical details before higher-level leaders “make hard political decisions,” Tu said.

In the longer term, the final tariffs might “remain for several years,” Tu said. “I don’t think it will proceed that fast. It must take time.”

Cooling economic growth in both countries is turning up the pressure to reach a settlement.

Chinese growth fell to a post-global crisis low of 6.5 percent in the quarter ending in September. Auto sales tumbled 16 percent in November over a year earlier. Weak real estate sales are forcing developers to cut prices.

The U.S. economy grew at an annual rate of 3.4 percent in the third quarter, and unemployment is at a five-decade low. But surveys show consumer confidence is weakening because of concern that growth will slow this year.

Beijing has tried in vain to recruit France, Germany, South Korea and other governments as allies against Trump. They criticize his tactics but echo U.S. complaints about Chinese industrial policy and market barriers.

The European Union filed its own challenge in the World Trade Organization in June against Chinese rules that the 28-nation trade bloc said hamper the ability of foreign companies to protect and profit from their own technology.

For their part, Chinese officials are unhappy with U.S. curbs on exports of “dual use” technology with possible military applications. They complain China’s companies are treated unfairly in national security reviews of proposed corporate acquisitions, though almost all deals are approved unchanged.

Some manufacturers that serve the United States have shifted production to other countries to avoid Trump’s tariffs.

UBS said Friday that 37 percent of 200 manufacturers surveyed by the bank have shifted out of China over the past 12 months. The threat of U.S. tariff hikes was the “dominating factor” for nearly half, while others moved because of higher costs or tighter environmental regulation.

“Most firms expect the trade war to escalate,” the bank said.

 

 
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A surge in U.S. job creation and some reassuring words from the head of the U.S. central bank sent U.S. stocks soaring Friday.  

The Labor Department reported a net gain of 312,000 jobs in December, far more than economists predicted. The unemployment rate, however, rose slightly, to 3.9 percent.

Many analysts said the rising unemployment rate was probably good news because rising wages prompted many jobless people to start looking for work.

People are not counted as officially unemployed unless they have searched for work in the past four weeks. In December, the labor force expanded by a healthy 419,000 people as wages rose 3.2 percent over the past year.

PNC Bank Chief Economist Gus Faucher said the data meant worries about a possible recession were probably “overblown.” Worried investors have sent stocks mostly downward in recent months in a series of drastic gains and losses driven in part by concern that the U.S. central bank might raise interest rates too quickly and choke off growth.

Federal Reserve Chair Jerome Powell said Friday that Fed officials were “listening carefully” to markets that were weighing the impact of “concerns on global growth and trade negotiations.”

Dec Mullarkey of Sun Life Investment Management wrote that “markets were reassured” because the Fed made it clear it was not on course to automatically raise rates and would “dynamically adjust as new data and trends emerge.”

By the close of trading, the Dow advanced more than 700 points, as the major U.S. indexes rose more than three percent.  
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Marriott International Inc said Friday that fewer than 383 million customer records were stolen in a massive cyberattack disclosed last month, down from its initial estimate that up to 500 million guests were affected.

The hotel operator also said that some 25.55 million passport numbers were stolen in the attack on the Starwood Hotels reservation system, 5.25 million of which were stored in plain text. Another 8.6 million encrypted payment cards were also taken in the attack, it said.

Marriott previously confirmed that passport numbers and payment cards were taken, but not said how many.

The company disclosed on Nov. 30 that it had discovered its Starwood hotels reservation database had been hacked over a four-year period in one of the largest breaches in history.

At least five U.S. states and the UK’s Information Commissioner’s Office are investigating the attack.

Marriott also said that it had completed an effort to phase out the Starwood reservations database that it acquired in September 2016 with its $13.6 billion purchase of Starwood. The hack began in 2014, a year before Marriott offered to buy Starwood.
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It sounds like a Hollywood caper: A group of investors and officials convince European banks to loan a total of $2 billion to a resource-rich African nation trying to rebuild after a bruising civil war.  

The money promptly disappears, and then this caper turns tragic.  The government doesn’t learn of the loans until three years after they happen. It defaults on the loans, and that triggers an economic crisis: the currency tumbles, prices rise, hospitals run out of basic supplies and key roads go unrepaired.  Thousands of people contract cholera – an easily preventable and treatable illness that is often caused by a breakdown of health services.

This isn’t Hollywood. This, allegedly, is Mozambique, according to an indictment that has resulted in the arrests of at least four figures in recent days, including a former finance minister.  The men are now awaiting extradition to the U.S. for their role in defrauding U.S. investors when seeking the loans.

VOA obtained a redacted copy of the indictment, issued by the U.S. District Court’s Eastern District of New York.  It accuses the four, plus another man who has not been arrested and two others who were not named, of “creat(ing) the maritime projects as fronts to raise money to enrich themselves and intentionally divert(ing) portions of the loan proceeds to pay at least $200 million in bribes and kickbacks to themselves, Mozambican government officials and others.”

Last week, South African officials arrested Mozambique’s former finance minister, Manuel Chang, on an Interpol warrant as he transited through the country.  

This, says analyst Alex Vines of the Chatham House think tank, is a very big deal. This matter has been investigated by both an independent firm and also by the British government, and until now, nothing has come of it.

“So it looked as if nothing would happen about these many millions, probably billions, of U.S. dollars that were (un)accounted for,” Vines told VOA. “So the indictment that has occurred from the U.S. District Court, Eastern District of New York, for key characters involved in this loan scandal, is very very significant and is a game-changer, I think.”

The reaction: Public vs Party?

That’s certainly the case in Mozambique, where commentator Fernando Lima notes the public has largely applauded the arrests, while the ruling Frelimo party has been silent.

“There is a sentiment of huge enthusiasm and joy, which causes a lot of irritation on the other side, meaning people related to the Frelimo party,” he told VOA  “…It caused this huge, huge embarrassment for the current government. And up to now, which is also very, very surprising, no Mozambican authorities have said anything related to the arrest of Mr. Chang. Neither the government, neither Frelimo party, neither the attorney general’s office, or our parliament.”

Vines says it’s unclear how President Filipe Nyusi – who was defense minister at the time of the secret loans – will come out of this scandal, but he says there may be a bright side for investors who are eager to put money into the nation, which will start exporting natural gas in 2023.

“The International Monetary Fund, IMF, and bilateral donors to Mozambique had suspended lending to Mozambique, or direct government lending, should I say,” he said. “They do want to move on, and so again, I think this might help clear things up so that longer term, the relationship of Mozambique with some of its international creditors and international partners can be improved.”

Rudi Krause, the South African lawyer representing the former finance minister, Manuel Chang, says they’ll fight the U.S. extradition request.

Krause said attorneys had not been given a full copy of the indictment by South African officials at the time of Chang’s arrest and so could not comment on the allegations.

VOA was unable to reach Krause after receiving the U.S. copy of the indictment, for further comment.

Chang will appear in a South African court on January 8. But the court of public opinion will also have its chance to weigh in, when Mozambique goes to the polls in October.

 

 
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Asian markets Friday continued the global sell-off triggered by Apple’s warning of lower revenues and futures indicators predict a sharply lower opening for U.S. markets.

The Tokyo market dropped 3 percent in morning trading, and markets in Shanghai, Sydney, Seoul and Taipei were also down.

Stock markets across the globe dropped Thursday after tech giant Apple said sales of its devices had fallen sharply in China last month, perhaps signaling a broader slowing in the world economy.

Apple has blamed U.S. President Donald Trump’s trade dispute with China for its shrinking outlook, but the U.S. leader tweeted his defense Thursday, claiming, “The United States Treasury has taken in MANY billions of dollars from the Tariffs we are charging China and other countries that have not treated us fairly. In the meantime we are doing well in various Trade Negotiations currently going on. At some point this had to be done!”

US-China trade talks

On Friday China’s government said a U.S. trade delegation will visit Beijing next week for two days of talks on carrying out an agreement reached by Trump and Chinese President Xi Jinping to postpone new tariff hikes.

On Dec. 1 the two leaders agreed to complete talks about technology, intellectual property and cyber theft issues within 90 days, and hold off on new tariffs in the meantime. U.S. officials have said that if the talks fail to produce a satisfactory agreement Washington will increase tariffs on $200 billion of Chinese goods from 10 percent to 25 percent.

Apple chief executive Tim Cook blamed the company’s sales shortfall on the trade battle President Donald Trump is waging against China.

“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Cook wrote.

Not just Apple

Kevin Hassett, chairman of the White House Council of Economic Advisers, said the contentious U.S.-China relations will force other U.S. companies to cut their sales estimates in China.

“It’s not going to be just Apple,” Hassett told CNN. “There are a heck of a lot of U.S. companies that have sales in China that are going to be watching their earnings being downgraded next year until we get a deal with China.”

He said slowing consumer demand in China gives Trump an edge in ongoing trade negotiations.

“That puts a lot of pressure on China to make a deal,” he said. “If we have a successful negotiation with China then Apple’s sales and everybody else’s sales will recover.”

The U.S. economy remains strong, with the country’s 3.7 percent jobless rate at a nearly five-decade low. But economists say the U.S. economy could be slowing and uncertainty in global economic fortunes has led to volatile daily swings in stock indexes in recent weeks.

In 2018, U.S. stock indexes suffered their worst year in a decade, with most of the losses recorded in December. The Dow was off 5.6 percent for the year, with the broader Standard & Poor’s index of 500 stocks down 6.2 percent.
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Herb Kelleher, who changed the airline industry by helping create and lead Southwest Airlines, a low-fare carrier that made air travel more accessible to the masses, has died. He was 87. 

 

Southwest confirmed that Kelleher died Thursday. 

 

Kelleher was a lawyer in San Antonio when a client came to him in the late 1960s with the idea for a low-fare airline that would fly between big cities in Texas. Today, Southwest carries more passengers within the United States than any other airline. 

 

At a time when many other airlines were run by colorless finance wizards, Kelleher boasted about drinking whiskey and showed a gift for wacky marketing ploys.  
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Three former Credit Suisse Group AG bankers were arrested in London on Thursday on U.S. charges that they took part in a $2 billion fraud scheme involving state-owned companies in Mozambique, a spokesman for U.S. prosecutors said.

Andrew Pearse, Surjan Singh and Detelina Subeva were charged in an indictment in Brooklyn, New York federal court with conspiring to violate U.S. anti-bribery law and to commit money laundering and securities fraud, according to spokesman John Marzulli. They have been released on bail.

The arrests came five days after former Mozambique finance minister Manuel Chang was arrested in South Africa as part of the same criminal case, which was brought by federal prosecutors in Brooklyn.

The prosecutors will seek to have all of the defendants extradited to the United States, according to Marzulli. Lawyers for the defendants could not immediately be reached for comment after business hours in New York and London.

“The indictment alleges that the former employees worked to defeat the bank’s internal controls, acted out of a motive of personal profit, and sought to hide these activities from the bank,” Credit Suisse said in a statement. It added that the bank will continue to cooperate with authorities.

Chang oversaw Mozambique’s finances when it failed to disclose government guarantees for $2 billion in international borrowing by state-owned firms. The disclosure of those loans in 2016 plunged the southern African country into a suffocating debt crisis it is still struggling to climb out of two years later.
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