China, the world’s third-largest bond market accounting for $9 trillion in debt instruments, has started the process of opening up to foreign investors. Two major investment banks, including Citigroup, have announced plans to join the fray and several others are expectantly watching the unfolding situation.

It’s not a sudden desire to liberalize, but pressure from shrinking foreign capital inflows and expanding outflows that has motivated Beijing’s communist leaders into this new and uncertain path.

“China’s purpose is to attract capital inflows from investors needing RMB [Chinese yuan] assets for their portfolio,” said Jacob Kirkegaard, economist with the Peterson Institute of International Affairs. “This will also help to stabilize RMB exchange rate.”

China has suffered some serious loss of capital because of uncontrolled outflows and a recent decline in its foreign direct investments, which saw a drop of 9.2 percent in January. The country also suffered its first trade deficit in three years last month.

To overcome the situation, Beijing recently allowed overseas investors to hedge their currency risks at the local derivative market. This partially opened the doors to foreign players who saw currency risk as a major deterrent in the Chinese bond market.

Chinese Premier Li Keqiang threw in a sweetener in mid-February, saying the government would launch a trial program to connect the bond market in mainland China with Hong Kong, which is the base of operations for a large number of foreign investors. The bond connect will make it easier for Hong Kong-based investors to access domestic Chinese instruments without leaving the city.

“I see that as a part of China of becoming a major player and becoming an important destination for financial investors, ” Lourdes Casanova, Director of Emerging Markets Institute at Cornell University’s SC Johnson School of Management, said.

International currency

This move is also meant to promote the use of RMB as an international currency.

“These efforts indicate that China wants to assert its economic, business and financial power with all the inherent advantages and risks,” Casanova said.

The past few weeks have seen Bloomberg Barclays become the first major index provider to include Chinese yuan bonds in its global offerings. Citigroup has announced plans to embed China bonds into its bond market benchmark WGBI-Extended. JPMorgan Chase & Co., another index maker, said it is evaluating the entry of China markets into its JPMorgan Global Emerging Market Bond Index.

This is not surprising because the RMB, or the Chinese yuan, is now part of the International Monetary Fund’s coveted special drawing-rights basket.

“There are global investors who wish to shadow the IMF SDR basket, and needs RMB exposure,” Kirkegaard said.

At present, foreign investments account for just about $120 billion, or 1.33 percent, of China’s bond market. But the situation is expected to change soon as investment banks and index makers have started the process of measuring steps before entering the market in a big way.

Given China’s role as the second-biggest economy, it is natural for Chinese investors to want Chinese bonds in their portfolio, Casanova said. In fact, foreign investors face fewer challenges in China’s bond market compared to what they are up to in other emerging markets, she said.

“Yes, there are many doubts, there are many doubts in many countries. I am European, I am from Spain, there are doubts about the viability of the euro. In the U.S. there are other types of worries,” she said adding, “That’s why also for the international investors, China is not as risky as it used to be.”

Casanova said, “The risk of default is minimal given the amount of Chinese reserves and the risk related to currency swings are also much less than, let’s say, Argentina, which has been issuing debt recently.”

Doubts and challenges

But foreign investors will have to tread carefully because it is not easy to seriously analyze credit risk in China where the markets are not transparent and there is not much information available about issuers and major buyers of debt instruments, he said.

“Their [foreign investors’] willingness to invest will be dependent on the implicit government guarantee against default… foreign investors won’t be able to seriously analyze credit risk in China,” he said.

Casanova sees the situation differently. She points out there are risks in most markets across the globe, and international investors will choose what suits them best.
…

German Chancellor Angela Merkel and Japan’s Prime Minister Shinzo Abe spoke up for free trade at a major technology fair on Sunday with jabs clearly pointed at an increasingly protectionist United States.

Both called for a free trade deal to be reached quickly between Japan and the European Union, in comments made after G-20 finance ministers and central bankers dropped a long-standing mention of open trade in their final communique after a two-day meeting in Germany.

Neither leader named the U.S. government as they opened the CeBIT technology fair in Hanover, but both used the opportunity to distance themselves from protectionist tendencies coming from the Trump administration.

“In times when we have to argue with many about free trade, open borders and democratic values, it’s a good sign that Japan and Germany no longer argue about this but rather are seeking to shape the future in a way that benefits people,” Merkel said.

As G-20 president, Germany feels especially committed to these principles, she added.

After meeting President Donald Trump in Washington on Friday for the first time, Merkel said she hoped the United States and the European Union could resume discussions on a trade agreement. Trump said he did not believe in isolationism but that trade policy should be fairer.

Merkel stressed that Germany was strongly in favour of free trade and open markets.

“We certainly don’t want any barriers but at a time of an ‘Internet of things’ we want to link our societies with one another and let them deal fairly with one another, and that is what free trade is all about,” she said.

Speaking at the same event, Abe said: “Japan, having gone through reaping in abundance the benefits of free trade and investment, wants to be the champion upholding open systems alongside Germany.”

He added: “Of course to do so it will be necessary to have rules that are fair and can stand up to democratic appraisal.”

He also said the European Union and Japan should soon reach an economic deal. Merkel welcomed his comments, saying: “It’s very, very good that Japan says we want a free trade agreement, we want it soon because that could be the right statement and Germany would love to be a driving force behind this.”

European Commission President Jean-Claude Juncker told Bild am Sonntag newspaper he was pleased that he would be meeting Abe on Tuesday and said the bloc wanted to conclude a free trade deal with Japan this year.
…

U.S. Treasury Secretary Steve Mnuchin said the meeting of finance ministers of the G20 countries was a success Saturday despite the ministers not reaching agreement on trade protectionism.

“I will leave here confident that my colleagues and I are able to work in partnership to …foster and promote global growth and financial stability,” he said.

Citing President Donald Trump’s commitment to American companies and workers, Mnuchin pushed back on and effectively omitted a ban on protectionism from the joint statement released at the end of the summit.

Mnuchin did, however, say that the United States still believed in free trade.

“We believe in free trade, we’re one of the largest markets in the world, we’re one of the largest trading partners in the world,” Mnuchin said. “Having said that, we want to re-examine certain agreements,” he continued, speaking specifically about NAFTA.

Other world powers present played down any disagreement between the countries.

“It’s not true we are not agreed. It’s completely clear we are not for protectionism,” Wolfgang Schaeuble, finance minister of host country Germany, told reporters, though he did, without mentioning a country by name, say that “maybe one or the other important member state needs to get a sense of how international cooperation works.”

The G20 is a informal forum on economic cooperation between 19 countries plus the European Union. Representatives from the 19 countries and the EU will meet for a formal summit in July.

 
…

In Greece’s grinding economic crisis, a home for abused children is now taking in those whose parents are struggling to feed them.

It is perhaps the darkest sign of economic devastation in Greece, where traditionally strong family ties are starting to crumble after years of depression.

A quarter of Greece’s workforce is unemployed and a quarter of its children live in poverty, according to United Nations figures, forcing parents to depend on grandparents for handouts.

But pensions too have been cut a dozen times.

In Athens, the Model National Nursery, set up a century ago for orphans of war, can hardly keep up with the number of parents turning to it for help. Unable to cover their basic needs, parents leave their children in the home all week.

Iro Zervaki, its head, says at least 40 children are on the waiting list, four times as many as a couple of years ago.

The home sleeps 25 in a bare room with rows of beds draped in blue blankets, and lacks the staff and funds to increase capacity, she said. Most places are for abused children.

Dozens of other children, all aged two to five, come in daily, but the days away from their parents are long.

“We had incidents where children even attempted to leave, to run away, to go to their mother,” Zervaki said.

In the buzzing playground, a little girl tugged the social worker’s blouse and yelled: “Miss! When will I go to my mum?” “They can’t tell the days apart so every day they ask: ‘Is it Friday?'” Anthoula Zarmakoupi, the social worker, said. “They know mum will pick them up at the weekend.”

But sometimes even that was not possible, she said. “We have children whose parents are homeless so it’s very difficult for them to even collect them for the weekend.”

 

For the home too, brighter days seem as far away as ever.

State funding has been cut and covers just half of the staff’s wages. The home depends on donations for food and clothes, and Zervaki says it is hard to tell if she will be able to make next month’s payments.

“It doesn’t look like tomorrow will be any better,” she said. “It will take some years. I hope not too many.”
…

It could be a Hollywood screenplay. Juliana Armelin and her husband Paulo Siqueira decided to radically change their lives in 2010, quitting jobs in Sao Paulo’s financial sector and moving to a farm seven hours away to start growing coffee.

Seven years later, they clinched for a second consecutive year Brazil’s most prestigious coffee award, beating hundreds of established producers in a country that has exported coffee for more than 200 years.

“I would never imagine we could reach this status in such a short period,” Siqueira told Reuters on Friday after the couple received the annual award from Italian roaster Illy.

“I used to say that we don’t have a story on coffee, but only some chapters so far,” said Armelin.

The couple met during college, graduating in engineering from Brazil’s top ranked university, USP. They spent some years together in the United States getting Master of Business Administration degrees at the University of Chicago before starting careers in Sao Paulo.

Armelin is a former Mckinsey & Company consultant, while Siqueira held positions as a fund manager at Credit Suisse and boutique investment firm Vector Investimentos.

They ended up in the coffee business due to Armelin’s father, who decided to start producing the beans.

“I helped him in the research and started to like the idea.

We already had thoughts at running something together,” Armelin said.

After studying the possibility, they bought a 210-hectare (518 acres) farm in the municipality of Ibiá in a coffee-producing region known as the Cerrado Mineiro, in Minas Gerais state.

“It was an old cattle ranch, only pasture,” Siqueira recalled. They planted the first trees in 2011, collected the first beans two years later and had their first full harvest in 2015. Within a year, they received the first award.

The couple’s farm is a state-of-the-art facility. The fields are 100 percent irrigated, with a fully mechanized harvest. The washed arabicas are put to dry in raised beds to avoid contact with the soil, which could affect the flavor.

“We studied a lot, talked to a lot of people who knew how to produce high quality coffee and we did everything they said we should,” said Armelin. “Some people used to say that we were nerds that went to coffee production. And we used to say, ‘yes, we are.'”

The Terra Alta farm was chosen for aspects like the plentiful availability of water and its flat terrain to allow for mechanization.

The couple used as much government-backed credit as they could to buy all the equipment. “We have debt for the rest of our lives,” said Armelin, smiling.

The farm today exports 80 percent of its production, which varies from 10,000 to 13,000 60-kg bags per year. Many deals are done directly with gourmet coffee sellers in the United States.

Siquiera said the coffee community in the Cerrado region has always been very receptive, despite their unusual background.

But the couple stops short of recommending their experience to others.

“Even if you have the money, it really is not easy. Growing coffee requires extreme dedication,” Armelin said, adding that she takes care of the financial details while her husband likes to be out in the fields.

But they have no regrets. “We like this a lot. We will probably be coffee growers for the rest of our lives,” she said.
…

Airbnb expects to maintain its rapid growth in Africa this year and double its customer numbers to 1.5 million, its Chief Executive Brian Chesky and regional head told Reuters on Friday.

The number of people using the online room rental service on the continent rose by 143 percent to about 765,000 guests in 2016 from the year before, said Nicola D’Elia, the firm’s Africa and Middle East chief.

“If you just look at 2017, it’s going to double, you will have 1.5 million people at the end of this year,” added D’Elia.

Airbnb CEO Chesky confirmed that the California-based company expected to double African customer numbers this year.

“Certainly that would be the forecast,” he said in an interview in Cape Town, adding: “This is literally just the beginning. It [Africa] is still relatively under-penetrated.”

Chesky said the company had 77,000 homes across Africa – out of its 3 million globally – but that it could easily have “hundreds of thousands” in a continent that’s home to over a billion people.

The 77,000 homes represented an increase of 95 percent from 2015 to 2016, the company said.

South Africa, which was an early adopter of Airbnb, is the top-ranked country in Africa in terms of listings and visitors, who mainly come from the United States, Germany, Britain and the Netherlands.

The top five cities in Africa are Cape Town, Marrakesh, Johannesburg, Nairobi and Casablanca, although listings are found in diverse locations from St Helena island in the south Atlantic Ocean to Freetown in Sierra Leone, and even a smattering in Somalia.

Chesky, who described Africa as “an incredibly exciting emerging market for travel”, was speaking to Reuters in Langa, Cape Town’s oldest township where he put in an appearance to surprise graduates from an Airbnb training program.    
…

In the latest outreach effort following a contentious campaign, top Trump administration officials – as well as first daughter Ivanka Trump – met Thursday with Hispanic business leaders.

 

Underscoring her unusual role working outside the administration, Ivanka Trump attended a round-table discussion Thursday morning with Hispanic women business owners in Washington.

 

Later, White House officials, including chief of staff Reince Priebus, held a meeting with other Hispanic business leaders, focused on jobs, the economy and access to capital.

 

The meetings were organized by the U.S. Hispanic Chamber of Commerce, whose president, Javier Palomarez, slammed Donald Trump during the presidential campaign, calling him a buffoon, among other slights. He has since joined the president’s National Diversity Coalition and says he’s open to working with the president on issues they agree on.

 

“The reality of it is,” Palomarez said, “I’d much rather campaign from the inside than complain from the outside.”

Trump has been eyed warily by the Hispanic community since the beginning of his presidential campaign, when he claimed Mexico was sending its criminals over the border and railed against illegal immigration. Nonetheless, Trump won about 28 percent of the Latino vote – a similar share to Mitt Romney in 2012, according to exit polls.

 

“My representatives had a great meeting w/ the Hispanic Chamber of Commerce at the WH today,” the president tweeted after the meetings.”Look forward to tremendous growth & future mtgs!”

Palomarez said Ivanka Trump, who has no official role in the administration, spent an hour and a half with the women business owners, talking about issues such as entrepreneurship and science education.

 

“She made it clear that she has a passion around empowering women,” Palomarez said in an interview between the two meetings, adding that the topics of Trump’s proposed border wall and his crackdown on people living in the U.S. illegally had not been raised.

 

“There will be time and the circumstances to do that,” said Palomarez, adding: “They’re not done deals. The negotiation, the conversation continues.”

 

Trump said Thursday night at a rally in Nashville that his wall is “way ahead of schedule,” and he has signed orders making it easier to deport people living in the U.S. illegally.

 
…

Foreign tourism to the United States, which supports millions of American jobs, is slowing, possibly because President Donald Trump sought controversial travel restrictions on some Muslim-majority nations. Online searches for flights to the United States are down in most major nations, not just those hit by restrictions. Jim Randle reports some travel experts say the push to restrict immigration is making some foreign tourists and students wary of visiting.
…

Africa’s rising youth population is outpacing available jobs in the public and private sectors, leaving would-be workers vulnerable to exploitation, terrorism and human rights abuses. Nigerian entrepreneur Tony Elumelu believes the solution to Africa’s unemployment problem is for the private sector to lead and drive growth, a philosophy he calls “africapitalism”. He was on a two-day working visit to Ghana.

The president of Coca-Cola, Central, East and West Africa, Kelvin Balogun, says almost 50 percent of graduates churned out by universities in Africa each year do not find jobs.

 

The International Labor Organization (ILO) estimates the youth unemployment rate in sub-Saharan Africa is nearly 12 percent. A World Bank report in 2016 said nearly half, (48 percent) of Ghanaian youth are unemployed. Analysts blame the country’s poor macroeconomic performance and a surge in population growth for the problem.

 

African leaders have committed to reduce poverty in the continent to below 20 percent by 2030, but the entrepreneur Tony Elumelu said this cannot be achieved if entrepreneurs are not empowered.

 

Elumelu believes the solution to unemployment is his ‘africapitalism’ philosophy- a concept in which the private sector leads and transforms development in Africa.

 

Elumelu says African entrepreneurs must partner to create more jobs for its youth. VOA caught up with him after he gave a lecture to students at the University of Ghana.

 

“Partnerships don’t work well in Africa and we must address this because collective effort is better than singular effort,” said Elumelu. “From my experience I think trust is very important. So alignment of interest is key panacea for addressing partnership failures in Africa.

 

VOA: And africapitalism is the solution?

 

Elumelu: “Africapitalism is the solution because (of) Africans coming together from (the) private sector perspective to address the development of our continent. Africans realizing that (there is) no one but us to develop Africa. Africans realizing that saving our monies abroad is not the solution. We need to let our governments know that what is good for private sector is good for the society.”

 

In Accra, John Amoah Kusi, enrolled in a master’s degree program in business at the University of Ghana, hoping to be more employable. But if a job doesn’t come his way Kusi says he’ll go back to school again.

 

“One other option is trying to look for PhD programs outside Ghana or probably in Ghana,” said Kusi. “It’s not just about the jobs. Yes, I want to get the experience but . . .

VOA: So if the job doesn’t come you’ll further your education?

 

Kusi: “Sure.”

 

VOA: And you’re certain that with the PhD you’ll get a job?

 

Kusi: “That’s a high possibility.”

 

Parry Allotey, a freshman at the University of Ghana, is also worried about not finding a job after graduating.

 

“I feel very worried because being unemployed is not a good thing,” said Allotey. “So I think going for leadership roles or you can go for internship or your masters. Like doing something that would make you look solid (for work).”

 

In Ghana, the unemployment problem was worsened by four years of interrupted electricity supply, which resulted in the loss of thousands of existing jobs and closure of many businesses.

 
…

Zimbabwe has opened its 2017 tobacco-selling season with hopes the “golden leaf” will change the economic fortunes of the southern African nation. Officials say the tobacco yield has been increasing after a downward turn in 2000 when the government chased white commercial farmers off their land.

Zimbabwean farmers applauded after the 2017 tobacco selling season began Wednesday in Harare at the country’s biggest auction floor.

Reserve Bank of Zimbabwe Governor John Mangudya saluted the farmers.

“Producers of tobacco are indeed our heroes. You are important to this economy. The foreign currency you produce is above $800 million a year.  That amount is enough to [buy oil for] Zimbabwe throughout the whole year. Zimbabwe spends about $60 million in fuel per month. You do produce enough fuel in this economy, therefore your importance can never be underestimated,” Mangudya said.

This year, the government says it expects 205 million kilograms, three million kilograms more than last year. That is more than in the early 2000’s when the agriculture industry took a nosedive after President Robert Mugabe’s government took white commercial farmers’ land and replaced them with black farmers.  

Zimbabwe Minister of Agriculture Joseph Made said the yield and quality of tobacco are due to good rains.

“As a result, the nation is naturally elated by the prospects of growth in the agriculture sector. Already the minister of finance [Patrick Chinamasa] has revised his [national] projections on the back of that anticipated performance [to 3.7 percent]. I really commend farmers for doing so well,” Made said.

Farmers still face uphill battle

But farmers at the auction said they do not feel enough gratitude from the government. Besides delays in payments, the farmers said they spend days queueing to withdraw cash from banks, due to a national cash shortage.  

Farmer Laina Magombedzi says she can spend up to a week at the auction floors waiting to be served.

She says the farmers get “a raw deal” because the buyers re-sell the tobacco on the black market for more money. She says she has been waiting five hours and the farmers are not told how the sales are progressing and are not allowed at the auction of their tobacco. She adds that a new electronic auction system has not improved the process.

No improvement is what many Zimbabweans have been saying for years.  

Independent economist John Robertson says this year’s tobacco yield is higher, but will not quickly improve Zimbabwe’s economy.

“We need to … greatly broaden the agriculture aspect. We need to bring the large commercial farmers back. Small-scale farmers cannot feed the nation. Now that half the nation is nearly urbanized, we need [to get] large-scale farmers into wheat growing, cotton growing, soybean growing, all the things we used to do better than we are doing now. We will be importing food this year, in spite of a better season.”

Before Mugabe’s land reform, Zimbabwe was a breadbasket of southern Africa. The United Nations says about five million Zimbabweans are now relying on food handouts.
…

President Donald Trump is to tell American autoworkers Wednesday in the state of Michigan that he is setting aside strict fuel-economy requirements imposed by the previous administration in its waning days.

The Trump White House contends that action broke an earlier agreement with the auto industry to wait until 2018 to review the standards.

“The auto industry, rightly, cried foul,” a senior White House official told reporters Tuesday. “We’re going to get this midterm review back on track.”

Advocates of the tougher standards dispute that.

The year 2018 “was the deadline by which they were obligated to complete the review. No agreement was broken,” Therese Langer, transportation program director at the American Council for an Energy Efficient Economy (ACEEE) told VOA News.

“The agencies completed a comprehensive technical assessment report in July 2016, which made clear that the standards as adopted remained feasible and cost-effective. At that point, making the decision promptly was consistent with the goal of providing adequate lead time for manufacturer product planning.”

Setting standards

The Trump administration wants to set standards “that are technologically and economically feasible,” according to the official who briefed reporters on condition he not be named.

Some automakers argued that the tougher standards, set just prior to the January inauguration, will be too costly.

The pro-business president and his new head of the Environmental Protection Agency, Scott Pruitt, who has expressed skepticism about the scientific consensus on climate change, support rolling back the stricter standards.

But the administration cannot scrap the Corporate Average Fuel Economy (CAFE) mandate completely without Congress’ consent. Lawmakers originally approved the CAFE regulations in the mid-1970s, following the oil embargo by OPEC members.

The current issue deals with rules on fuel economy and emissions affecting automobiles that will appear in showrooms from the years 2022 through 2025.

The proposed vehicle standards for those model years “will save consumers tens of billions of dollars at the pump and help domestic automakers stay competitive in a global vehicle market that is moving steadily toward highly efficient vehicles,” ACEEE executive director Steve Nadel told VOA.

Detroit automakers

But the move to cars and trucks that do not rely on conventional fossil fuels, such as gasoline and diesel, has slowed, say those in the Trump administration and in the auto industry.

“Because we have low gas prices, consumers just aren’t buying those vehicles” that run on batteries in addition to or instead of fuel, said the Trump administration official briefing reporters at the White House.

Trump’s trip to Michigan will include meetings with Detroit automakers, suppliers and unions, and then attending a rally of automakers.

At the last event Wednesday, the president is to announce his intention to stall the goal of having a fleet average of 54.5 miles per gallon (23.2 kilometers per liter) by the year 2025.

One hitch for the industry and other proponents of the looser standards is that 13 states say they will follow California in adhering to stricter fleet fuel efficiencies – a market that makes up more than 40 percent of the U.S. automotive sales market.

“That’s an issue we’ll have to confront, but it’s farther down the road,” the senior White House official said when asked about that issue by reporters.
…

China is warning about the possible impact of a trade war with the United States, even as the world’s two biggest economies take steps to map out relations under the administration of President Donald Trump.

Speaking at an annual news conference Wednesday, at the end of high-level political meetings in Beijing, Chinese Premier Li Keqiang talked up the benefits of good relations between the two countries. He said he was optimistic about ties, but also warned a trade war would hurt American businesses first.

“We do not want to see any trade war breaking out between the two countries. That would not make our trade fairer and would harm both sides,” Li said. “Our hope on the Chinese side is that no matter what bumps the China-U.S. relationship hits, we hope it will continue to move forward in a positive direction.”

Getting personal

Chinese state media this week have been releasing a steady drumbeat of opinion pieces and editorials supporting that view. Some even going so far as to highlight the personal benefits Trump’s business empire would reap through better economic relations with China.

One opinion piece in the Communist Party-backed Global Times highlighted the huge business interests Trump’s commercial empire has in China and Beijing’s recent and unprecedented “preliminary approval” of more than 30 Trump trademarks. The approval of so many trademarks at once – covering business ventures such as golf clubs, hotels and restaurants – has surprised analysts.

Much like Li did in the press conference Wednesday, the Global Times article argued that American businesses would suffer if there was a trade war. It also added a not so subtle threat: “Trump’s position as U.S. president would not offer his business immunity from a trade war with China and would be impacted just as other U.S. enterprises if Sino-U.S. relations were to suffer.”

The piece ended by arguing that one tough test of Trump’s political wisdom will be how he manages following through on his pledge to put “America First” while avoiding setbacks in U.S.-China relations.

Tough talk

On the campaign trail and since his election, President Trump’s blunt criticisms of China have unnerved leaders in Beijing. Trump has talked and Tweeted about a wide range of issues from trade to the South China Sea, as well as Beijing’s handling of North Korea.

But it is his threats on the campaign trail to label China a currency manipulator and to impose huge tariffs on Chinese goods that worry Beijing the most. So far, he has not followed through on either of those pledges, but the U.S. Treasury will issue a semi-annual currency report in April.

 

That continues to unnerve Beijing despite recent signs that the two sides are beginning to engage.

 

Reports this week have suggested that Trump and Xi could meet in early April in Florida. On Saturday, Secretary of State Rex Tillerson will make his first trip to Beijing.

 

Fairer trade

 

In an interview with CNBC earlier this week, Acting Assistant Secretary of State Susan Thornton said Tillerson’s visit would help set up the relationship going forward and lay out a framework for issues on which Washington wants to see progress.

 

And one of the key issues for that visit that she highlighted in that interview was fairer trade.

 

“While we have a very important economic relationship with China, it hasn’t been a level playing field vis a vis U.S. companies and U.S. interests,” Thornton said. “We are going to be insisting that there be fair trade measures that be put in place and that be observed and implemented.”

 

Concerns about the lack of a level-playing field for American businesses in China and the impact of trade on U.S. jobs persist. Last year, the United States trade deficit with China was $347 billion, down only slightly from the previous year.

 

At his press conference, Li pledged that China would continue to open up its economy and argued that American companies and others were already seeing benefits.

 

 “We may have different statistical methods, but I believe whatever differences we may have, we can always sit down and talk to each other, and work together to reach consensus,” Li said.

 

China’s premier also added that statistics show that trade and investment between the two countries created over one million jobs in the United States last year.
…

Asia needs to make extra efforts to defeat hunger after progress has slowed in the last five years, including promoting so-called “smart crops” as an alternative to rice, the head of the U.N. food agency in the region said.

Kundhavi Kadiresan, representative of the Food and Agriculture Organization (FAO) in Asia, said the region needs to focus on reaching the most marginalized people, such as the very poor or those living in mountainous areas.

The Asia-Pacific region halved the number of hungry people from 1990 to 2015 but the rate of progress slowed in many countries – such as Afghanistan, Bangladesh, India and Cambodia – in the last five years, according to a December FAO report.

“The last mile is always difficult.. so extra efforts, extra resources and more targeted interventions are needed,” she told the Thomson Reuters Foundation on the sidelines of a business forum on food security in Jakarta on Tuesday.

She said government and businesses needed to develop policies to help make food more affordable, while changing Asians’ diets that rely heavily on rice.

“We have focused so much on rice that we haven’t really looked at some of those crops like millets, sorghum and beans,” she said.

A campaign is underway to promote these alternatives as “smart crops” to make them more attractive, Kadiresan said.

“We are calling them smart crops to get people not to think about them as poor people’s food but smart people’s food,” she said, adding that they are not only nutritious but also more adaptable to climate change.

Soaring rice prices, slowing economic expansion and poorer growth in agricultural productivity have been blamed for the slowdown in efforts to tackle hunger.

More than 60 percent of the world’s hungry are in Asia-Pacific, while nearly one out of three children in the region suffers from stunting, according to the FAO.

Achieving zero hunger by 2030 is one of the U.N.’s Sustainable Development Goals adopted by member states in 2015.
…

Niagara Falls, whose most famous thrill-seekers have gone over the brink in barrels, wants to be the place the rest of us go for outdoor adventure, too.

 

A new marketing effort launched Tuesday rebrands the American shore of the falls as a natural playground to be explored on foot, bike, boat or helicopter.

 

U.S. tourism officials, ever in competition with their counterparts on the heavily developed Canadian side of the binational attraction, say their new focus embraces the American side’s less commercial feel in a way they hope will attract more visitors for longer stays.

 

“What people are wanting to have on a getaway or a vacation is a time of experience and not just to come and witness or see and hear, but actually experience and touch and feel and do,” said John Percy, president and chief executive of Niagara Tourism & Convention Corp., which has been renamed Destination Niagara USA.

 

“Niagara Falls is the embodiment of America’s adventurous spirit,” he said.

 

The refocusing, coming just in time for the busy season, followed interviews, focus groups and visitor surveys that found that those who visit and live in the region most value its scenic, historical and natural attributes and are drawn to outdoor adventure, officials said.

 

The findings align with support in recent years for the ongoing removal of a highway that was built along the Niagara River, which will increase access to the water’s edge, as well as strong opposition to a proposal to build a lodge on rustic Goat Island inside Niagara Falls State Park. Opponents of the lodge cite renowned landscape architect Frederick Law Olmsted’s declaration more than 100 years ago that the area should be off-limits to developers.

 

It’s a marked contrast to Niagara Falls, Ontario, where neon-lit museums, rides and restaurants offer a carnival-like atmosphere at the water’s edge.

 

Niagara Falls State Park sees about 8 million visitors every year from all over the world, a number that has been steadily rising, Percy said, along with hotel visits and dollars spent.
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Brazil’s top public prosecutor asked the Supreme Court to open 83 new investigations into senior politicians on Tuesday, reportedly including five ministers and leading lawmakers, in a dramatic escalation of a graft probe threatening the government.

Prosecutor General Rodrigo Janot also requested that the Court send 211 other requests to lower courts based on much-anticipated testimony by dozens of executives of engineering group Odebrecht SA in Brazil’s biggest-ever corruption scandal.

Brazilian newspapers reported that Janot called for an investigation of five members of President Michel Temer’s cabinet, along with his most senior allies in Congress, raising concerns about the stability of his administration and the fate of fiscal reforms cheered by investors.

Temer said last month that he would suspend any cabinet member who is placed under investigation and would dismiss them only if they are indicted for corruption.

Under Brazilian law, cabinet ministers, federal senators and lower house lawmakers can be tried only in the Supreme Court, where cases often take years to come to trial.

Janot could not disclose the names of the politicians and others covered by his request as the Odebrecht testimony and related investigations are still under seal. He asked Supreme Court Justice Edson Fachin to lift the judicial secrecy on the case for the sake of transparency and the public interest.

In a letter to explain the operation, Janot said his actions on Tuesday will remind Brazilians “of the sad reality of a democracy under attack by the corruption and the abuse of political and economical powers.”

President Temer himself has not been directly implicated in illicit party funding and has denied any wrongdoing in the sprawling three-year corruption scandal centered on overpriced contacts at state-run oil company Petroleo Brasileiro SA.

Dozens of politicians reportedly named for taking kickbacks in the testimony by Odebrecht executives included senators in Temer’s Brazilian Democratic Movement Party (PDMB) and the allied Brazilian Social Democracy Party (PSDB), which led the impeachment of leftist Dilma Rousseff last year.

Janot called for lower courts to investigate Rousseff and her predecessor and political mentor Luiz Inacio Lula da Silva, according to newspapers O Globo, O Estado de S.Paulo and Folha de S.Paulo. Both former presidents have repeatedly denied any involvement or knowledge of alleged corruption.

Test for Temer

The new investigations will be a test for Temer as he strives to pull Latin America’s largest nation out of its worst recession in more than a century.

Temer succeeded Rousseff in May, vowing to eliminate corruption and restore fiscal discipline, but he has already lost several ministers to bribery allegations.

His chief of staff, Eliseu Padilha, a key organizer of political support in Congress for a crucial reform of Brazil’s costly pension system, is on thin ice after an Odebrecht executive was reported to have said he asked for a cash donation for Temer’s 2014 campaign.

Newspapers Globo, Folha and Estado reported that Padilha and four other members of Temer’s cabinet were on Janot’s list: Foreign Minister Aloysio Nunes, Science Minister Gilberto Kassab, Cities Minister Bruno Araújo and Wellington Moreira Franco, the head of Temer’s high-profile infrastructure privatization program.

Janot also called for the investigation of key Temer allies in Congress, according to the newspapers, including lower House Speaker Rodrigo Maia and the three most senior PMDB senators: Senate President Eunicio Oliveira and senators Romero Juca and Renan Calheiros.

Foreign Minister Aloysio Nunes said he required access to Janot’s accusations and will only comment when he is aware of the content. Cities Minister Araújo said he has asked for campaign donations from Odebrecht in the past, but did so in accordance with the law.

Senator Romero Jucá said he is available to collaborate with investigations and believes facts will be clarified.

Reuters was not able to confirm the media reports. The other politicians cited were not immediately available for comment, but they all have consistently denied wrongdoings.

The PMDB released a statement on Tuesday expressing support for the investigations and calling for “the clarification of the facts of the matter.”

PSDB said it has always defended the Car Wash investigation, believing that it is the only way to separate guilty from innocent.

Finance Minister Henrique Meirelles said news of the investigation should not hurt progress on the government’s pension reform.

Janot first opened investigations of seated politicians implicated in the kickback scandal in March 2015, but only five have been indicted and none convicted.

The new round of investigations fueled by the Odebrecht testimony follows 10 months of negotiations with the family-owned firm, Latin America’s largest engineering group.

In December, Odebrecht signed a leniency accord with prosecutors, agreeing to pay 6.7 billion reais ($1.9 billion), admit guilt and offer details of bribes it paid.

Seventy-seven of its executives, including family patriarch and Chairman Emilio Odebrecht and his jailed son and former Chief Executive Marcelo Odebrecht, made some 950 statements to a team of 116 prosecutors across the country, Janot’s office said.
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Airline industry group IATA said it remains concerned about protectionist rhetoric from the United States and other governments, but also sees the new U.S. administration’s plans to invest in infrastructure as positive for the industry.

IATA’s Director General Alexandre de Juniac told reporters in Abu Dhabi on Tuesday that the group had recently held a meeting with U.S. President Donald Trump’s administration, which he described as “positive”. However, he also said the group was “heavily concerned” about plans by governments “to raise barriers on borders for trade and for travel.”

He did not say when the meeting took place.

“It was the opportunity for us to meet the new administration, to express our view and to understand what the new administration had in mind for aviation,” de Juniac said, adding that U.S. plans looked positive in terms of investment in infrastructure and regulation.

IATA and its members were critical of President Trump’s Jan. 27 executive order that blocked refugees and nationals of seven Muslim majority countries from traveling to the United States.

Many in the industry have said the ban was rolled out haphazardly without clear communication, causing chaos and confusion at airports globally. The Trump administration’s revised travel ban is due to come into effect on Thursday.

As well as in the United States, IATA is still concerned about “significant” protectionist rhetoric in Europe and other parts of the world, although it would take time before protectionist measures are felt in the industry, De Juniac said.

This year has started off better than expected, he said.

Passenger demand reached a five-year high in January.

However, IATA said in December that it expects profit in the airline industry to fall this year after a five-year rally and de Juniac said that view remained unchanged.
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Most analysts predict the U.S. central bank will boost interest rates slightly on Wednesday as the economy nears full employment and inflation rises modestly.

Leaders of the U.S. Federal Reserve are gathered in Washington through Wednesday to debate interest rate policy.  

Experts at Moody’s Investor Service say the Fed will raise rates a quarter of a percent and predicts a couple of similar increases later this year.  Moody’s says even with several increases, rates will still be low enough to encourage growth.

The Fed slashed the benchmark interest rate nearly to zero during the recession to bolster growth and fight unemployment.  Many economists say declines in unemployment mean the economy no longer needs such help.

If officials keep interest rates too low for too long, they risk sparking an abrupt inflationary jump that could force the Fed to raise rates high and fast, disrupting the economy.  Officials raise interest rates to cool the economy and fend off inflation.  Overall, the Fed is trying to guide the economy toward full employment while keeping prices increases around two percent a year.

More evidence of economic strength was published Tuesday, as leaders of many of the largest U.S. companies raised their outlook for hiring, sales, and investment for the next six months.  The Business Roundtable represents companies that employ 15 million people and generate $6 trillion in annual revenues.  

These CEOs are eager to see promised cuts in taxes and regulation carried out in ways that help their businesses grow.
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Aspiring property moguls take note – the town of Tiller, Oregon, is for sale, asking price just $3.5 million. For an extra $350,000, you can have the old school too.

The mostly uninhabited, unincorporated town about 225 miles (362 km) south of Portland originally went up for sale in 2015, but that did not include the building that used to house the school, said Garrett Zoller, the owner of Land and Wildlife, the real estate firm selling the 250-acre (100-hectare) town.

The current deal, at a reduced price, includes six houses and an apartment, industrial and commercial lots, and a building that once housed a gas station and general store. Adding the school, on an adjacent parcel, swing sets and all, would set a buyer back about $3.85 million.

About 250 people live in the surrounding area. But aside from the family that owns and is now selling the town, only two residents remain in Tiller itself, a former teacher who lives next to the school, and the pastor of the local church. Neither of their parcels is for sale, Zoller said in a phone interview on Monday.

The emptying out of the town came as timber harvesting declined in the region and the town’s mill closed, he said.

“When the federal money started dwindling away for timber, basically the mill shut down,” Zoller said. “And when the mill shut down, a lot of the loggers started having to go away.”

The family that owns Tiller now, he said, accumulated the town lot by lot as other families left.

Daydreamers aside, a complete town could also be an opportunity for a developer, Zoller said, since part of the town has already been divided for a 13-acre (5-hectare) subdivision.

He said he had fielded calls from would-be buyers ranging from Chinese investors to people interested in starting medical facilities and hemp-growing operations.
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China is witnessing a rare protest from heads of some major Chinese companies who say government controls on the outflow of funds are hurting their ability to strike business deals overseas. Starting late last year, the government began imposing strict controls on currency transfers in a desperate bid to curb outbound investments and stop the yuan from weakening. 

 

Last year alone, Chinese companies struck deals overseas worth $225 billion; but according to data compiled by Bloomberg, there have only been $19 billion in acquisitions abroad, announced by Chinese companies so far this year, a 74 percent drop from the previous year. 

Beijing asked banks to closely scrutinize money transfers, and reject requests from certain companies to move funds to foreign countries for investments in late 2016, a year when Chinese companies struck deals overseas worth $225 billion. China feels that massive fund outflows put pressure on the Chinese Yuan, which has been steadily devaluing against the U.S. dollar since early last year. 

The government clampdown has had a significant effect. According to Bloomberg’s data, there has only been $19 billion in acquisitions abroad announced by Chinese companies so far this year, a 74 percent drop from the previous year. 

Feeling the pinch

 

On the sidelines of high-level political meetings in Beijing, a time typically seen as an opportunity to build consensus and not air dissent, business leaders who attended the talks were blunt in their criticism of the controls.

 

Zhang Yichen, chief executive officer of investment firm Citic Capital Holdings, told reporters that it is almost impossible to use the yuan to invest overseas.

 

“To say that capital controls don’t have any impact – it’s a lie,” said Zhang.

 

Zheng Yuewen, chairman of Chinese drugmaker Creat Group, said, “The foreign exchange management is so strict now that it’s almost impossible to move funds out.”

 

Investments plunge 

 

Over the past two months, China’s outbound investments have nearly been cut in half and government controls are a key reason for this, Julian Evans-Pritchard, China economist for Capital Economics, told VOA.

 

“It has certainly hurt a lot of Chinese companies who are active in the overseas market,” he said. “But I don’t think the government is going to ease controls until outbound flows come down to the level it is comfortable with.”

 

According to China’s Ministry of Commerce, outbound investments plunged by 39.5 percent in December 2016 and 35.7 percent in January of this year as the government began applying the brakes. The drop was dramatic when compared to the surge seen in the previous two months when outbound investments increased 48.4 percent in October and 76.5 percent in November of last year. 

 

The government’s control of fund outflows could become even more stringent as the U.S. Federal Reserve is expected to review interest rates this week. A rate increase would make it more lucrative to invest in the United States, and make it increasingly difficult for Beijing to stem the exodus of money, analysts said. 

 

Standing firm

 

Although the blunt remarks from CEOs were aimed at persuading officials such as the head of the People’s Bank of China and others to loosen restrictions, the government is showing little sign of budging.

At a press conference on the sidelines of the Beijing meetings, People’s Bank of China Chairman Zhou Xiaochuan stuck to the government’s view that curbs were necessary to manage the currency. He also blamed “irresponsible investments” made by Chinese companies in foreign markets for causing the problems.

 

Zhong Shan, China’s minister of commerce, said a small number of companies was investing “blindly and irrationally overseas” and running into a range of financial problems. He said that is hurting the image of Chinese investors overseas; but, he did assure investors that what he called “normal investments” would not be impacted.

 

“There are clearly some who are of the view that China is cooling down, that it is not encouraging investments overseas, but this view is incorrect,” said Zhong.

 

Analysts agree that not all investments are off limits, but the government’s statements downplay the impact controls are having. A quick glance at the numbers reveals that clearly there are some types of investments authorities are looking to slow.

 

No superheroes

 

Right now, there is a big focus on property developers looking to invest overseas, said Andrew Collier, managing director of Orient Capital Research. Media and entertainment investments are also facing challenges, he said, but adds the government is being very selective about just who it is saying no to.

 

“They are focusing most of their opposition on deals where they feel have no value to the Chinese country,” Collier said. In some cases, the government is saying, “It might be nice for you and your business to expand your business overseas, but we don’t think that making films about superheroes is going to benefit the Chinese economy.”

 

Chinese companies such as Dalian Wanda have been ramping up investments in Hollywood and entertainment over the past year. Last Friday, however, a $1 billion deal for the Chinese conglomerate to purchase Dick Clark Productions – which produces the Golden Globe Awards – fell through.

 

At the same time, however, a $43 billion deal between ChemChina and Swiss crop protection and seed group Syngenta is moving forward.

 

“That is a very large deal, and so far there has been no opposition to it,” Collier said. “If you have a deal for a-half-a-billion or a billion dollars it might get a lot of attention in the press, but it is actually not that much money compared to some of the other stuff that is still committed to be going forward.

 
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Political tension between China and Taiwan has affected cooperation on safety standards leading to a large number of cosmetic and food imports being stopped from entering China, the head of China’s quality watchdog said on Tuesday.

China deems Taiwan a wayward province to be taken back by force if necessary, though proudly democratic Taiwan has shown no interest in being ruled by autocratic China.

China is deeply suspicious of Taiwan President Tsai Ing-wen, who took office last May, believing she wants to push for the island’s independence, a red line for Beijing. Tsai says she wants to maintain peace with China.

Beijing has cut off official communication with Taipei because Tsai has refused to accept China’s view that the island is a part of China, and has put pressure on the trade-reliant island diplomatically and economically.

China’s quality chief Zhi Shuping told reporters on the sidelines of China’s annual meeting of parliament that, although cosmetic and food imports do not account for a large percentage of China’s imports from Taiwan, a large number of imports of those products were substandard.

“Originally we had lots of cooperation, but now certainly it has been obstructed. Some information is not as smooth as it had been in the past,” Zhi said, referring to the period after Tsai took office.

Things would get better if Taiwan recognized the “1992 consensus”, he said.

The “1992 consensus”, agreed with Taiwan’s previous China-friendly Nationalist government, acknowledges Taiwan and China are part of a single China, but allows both sides to interpret who is the ruler.

“Communication would be a lot smoother,” Zhi said. “We all belong to one China, and blood is thicker than water.”

Defeated Nationalist forces fled to Taiwan in 1949 after losing a civil war with the Communists.

Some Taiwanese companies also don’t really understand China’s standards, Zhi said, and Taiwan’s own quality standards have weak points and loopholes.

“We give feedback on each batch, but rectification is not good enough,” he said.

“We treat everyone in the world the same when it comes to safety. Brothers are brothers, but principles are principles.

Just because you’re a brother doesn’t mean we make things easier for you,” he Zhi said.

There have been repeated safety scandals over made-in-China goods, from tainted baby milk formula and rotten meat to fake rice and toxic toothpaste, unsettling consumers around the world, including in Taiwan.
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U.S. President Donald Trump this week will unveil a budget expected to massively increase military spending while slashing other federal programs.

The proposal, set to be released Thursday, will offer the most detailed look yet at how Trump intends to move ahead with his so-called “America First” policy.

The budget will likely face significant opposition in Congress, where lawmakers are already bickering over a plan to overhaul the nation’s health care program.

Many of Trump’s fellow Republicans support his plan for a larger military; but, unlike Trump, some want to pay for it by cutting Social Security and Medicare – the two largest federal programs.

Democrats are alarmed about the entire proposal, particularly his plan to cut domestic government programs aimed at protecting the environment and helping the poor.

State Dept., foreign aid cuts

Lawmakers in both parties have also expressed concerns about Trump’s steep proposed cuts to the State Department and foreign aid budgets – a move they say will reduce U.S. influence abroad.

White House officials point out the president’s proposals are only a blueprint and that ultimately Congress must agree on a final budget, but they insist difficult decisions must be made.

“Unfortunately, we have no alternative but to reinvest in our military and make ourselves a military power once again,” White House National Economic Council Director Gary Cohn told Fox News Sunday.

“It’s no different than every other family in America that has to make the tough decisions when they need to spend money somewhere, they have to cut it from somewhere else,” Cohn said.

Defense spending

In a blueprint released last month, White House officials said Trump intends to boost the military budget by $54 billion – one of the largest ever increases in national defense spending. This week’s proposal will outline how the president intends to pay for it.

According to budget documents leaked to the media, Trump will offset the military costs with far-reaching reductions in discretionary spending — the part of the budget that pays for various federal government agencies.

Trump is reportedly considering slashing up to 25 percent of the Environmental Protection Agency budget, 30 percent of the Energy Department budget, and 37 percent of the State Department and foreign aid budget.

Reduction in federal workforce

If passed, those cuts would result in a massive reduction of the federal government workforce, which Trump and his fellow Republicans have long said is bloated and inefficient. It is not clear, however, whether Trump’s plans would actually fulfill his campaign promise to reduce the national debt.

That won’t be clear until May, when the White House releases its plans to reform the tax code and its proposals for mandatory spending, which covers existing programs like Medicare and Social Security.

Trump has said it is not politically possible to reduce spending on Medicare and Social Security – which together account for nearly 40 percent of the federal budget. He is also considering a $1 trillion infrastructure plan to upgrade the country’s roads, airports and rail lines.

According to most analysts, that means Trump will likely continue to run a budget deficit.

The federal debt is expected to grow by nearly $10 trillion over the next decade, according to a recent projection by the nonpartisan Congressional Budget Office.

 
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U.S. chipmaker Intel agreed to buy driverless technology firm Mobileye for $15.3 billion on Monday, positioning itself for a dominant role in the autonomous-driving sector after missing the market for mobile phones.

The $63.54 per share cash deal is the biggest technology takeover in Israel’s history and the largest purchase of a company solely focused on the self-driving sector.

Intel will integrate its automated driving group with Mobileye’s operations, with the combined entity being run by Mobileye Chairman Amnon Shashua from Israel.

Intel Chief Executive Brian Krzanich said the acquisition, which unites Intel’s processors with Mobileye’s computer vision, was akin to merging the “eyes of the autonomous car with the intelligent brain that actually drives the car.”

Mobileye accounts for 70 percent of the global market for driver-assistance and anti-collision systems. It employs 660 people and had adjusted net income of $173.3 million last year.

Intel said it expected the transaction to close within the next nine months and to immediately boost its non-GAAP earnings per share and free cash flow.

The price represents a premium of around 33 percent to Mobileye’s Friday closing price of $47 a share.

“It’s an area where the company (Intel) has had very little presence – the automotive market, and so this is a tremendous opportunity for them to get into a market that has significant growth opportunities,” said Betsy Van Hees, an analyst at Loop Capital Markets who has a “buy” rating on Intel shares.

“Mobileye’s technology is very critical … The price seems fair,” she added.

Because Mobileye’s Shashua will remain in charge and the combined entity will be based in Israel, analysts said they expected it to be far more difficult for rivals to mount a counter offer for Mobileye.

Shashua and two other senior Mobileye executives stand to do well by the deal: together they own nearly 7 percent of the company. Shmuel Harlap, Israel’s biggest car importer and one of Mobileye’s earliest investors, also holds a 7 percent stake.

Yossi Vardi, seen as the godfather of Israeli high-tech, said the deal was a big endorsement of the whole sector.

“I’m sure that this … will be a very important impetus to create a whole industry related to autonomous and connected vehicles (in the country),” he said.

Battle for self-control

Automakers and their suppliers have been expanding alliances in the race to develop self-driving cars, a sector that once seemed a science-fiction dream but is drawing closer to reality month after month.

Mobileye and Intel are already collaborating with German automaker BMW on a project to put a fleet of around 40 self-driving test vehicles on the road in the second half of this year.

At the same time, Mobileye has teamed up with Intel for its fifth-generation of chips that will be used in fully autonomous vehicles that are scheduled for delivery around 2021.

While Intel is known for hardware chips and Mobileye for collision detection software, their merger promises to create the most complete portfolio of technologies needed for driverless vehicles, including cameras, sensor chips, in-car networking, roadway mapping, machine learning and cloud software, as well as the data-centres needed to manage all the data involved.

Last October, Qualcomm announced a $47 billion deal to acquire the Netherlands’ NXP, the largest automotive chip supplier, putting pressure on other chipmakers seeking to make inroads into the market for autonomous driving components, including Intel, Mobileye and rival NVIDIA.

The Qualcomm-NXP deal, which will create the industry’s largest portfolio of sensors, networking and other elements vital to autonomous driving, is expected to close later in 2017, subject to regulatory and shareholder approvals.

For a dozen years, Mobileye has relied on Franco-Italian chipmaker STMicroelectronics to produce chips that the Israeli company sells to many of the world’s top automakers for its current, third-generation of driver-assistance systems.

Mobileye’s relationships with automakers, leading suppliers and STMicroelectronics will continue uninterrupted, the companies said in their statement, and Mobileye’s current product roadmap will not be affected.

Founded in 1999, Mobileye made its mission to reduce vehicle injuries and fatalities. After receiving an investment of $130 million from Goldman Sachs in 2007, it listed on the New York Stock Exchange in 2014.
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Vietnam will test U.S. President Donald Trump’s openness to one-on-one trade deals as it starts nudging Washington for an eventual agreement to replace its role in the defunct Trans Pacific Partnership (TPP).

Official media outlets in Vietnam say Prime Minister Nguyen Xuan Phuc told an American business delegation last week he was ready to visit the United States, and that he hoped to meet Trump for a discussion about trade, among other topics.

Vietnam depends heavily on factory exports, which are about 19 percent of a $200 billion economy.

“A trade agreement with the U.S., a very large market, would certainly bring some benefits, that’s clear,” said Marie Diron, senior vice president at Moody’s Investors Service in Singapore. “It would be about, kind of about anchoring these export markets with a trade agreement in place.”

Trump is not expected to prioritize free trade deals in the short term, analysts say, but he may someday consider them. Trade deals usually obligate signatories to cut tariffs on each other’s good or services.  

US companies eye Vietnam market

Nguyen may have a chance at working out a trade deal with the United States because American firms selling products such as fast food, mobile phones and even insurance want more access to Vietnam’s fast-growing middle class.

More than one-third of the country’s roughly 93 million people will be middle class or higher by 2020, according to a Boston Consulting Group study.

“You would expect the direction of goods coming from Vietnam to the U.S. picking up more sharply than the other way around,” said Rahul Bajoria, a regional economist with Barclays in Singapore.

But, he said, “it could be the case there might be some pressure from the large [American] industrial manufacturers like the aircraft manufacturers or train companies. All of them may be much more interested in exporting to Vietnam.”

The United States is Vietnam’s top export market, giving the Asian country a trade surplus last year, with exports worth $38.1 billion and imports of $8.7 billion.

But in January, imports increased 14.6 percent, pointing to a possible soft spot in Vietnam for Western brands. American names such as Apple, Dell and Starbucks are easy to find in cities such as the financial center Ho Chi Minh City.

“The U.S. could export to Vietnam, to a market that’s growing so fast, with 90 plus million people who are very brand conscious, where Western brands have a very high reputation,” said Vojislav Milenkovic, analyst with the business advisory BDG Insights in Ho Chi Minh City.

“You can see this every day on the street. You can see that people are trying to save and to buy high-quality products from the foreign countries,” he said.

But Vietnamese consumers still earn just half of their counterparts in China, Diron said. “For some companies, that could be a hurdle,” she said. China’s market is also much larger that Vietnam’s.

End of TPP

Leaders in Hanoi had hoped the TPP would give them access to the U.S. market plus 10 other countries, including Japan. Trump withdrew the United States from the TPP in January, saying it would hurt the country.

Because of the size of the U.S. economy, Trump’s withdrawal made it effectively impossible for other countries to keep the TPP alive.

Trump said shortly after taking office he could consider one-on-one free trade agreements instead of regional ones.

Japanese Prime Minister Shinzo Abe has said he is open to the idea of a bilateral trade pact with the United States, and members of the U.S. Congress advocate an agreement with Britain.

In a phone call after his election in November, Trump told Nguyen he wanted to strengthen ties with Vietnam and that he was willing to meet in the United States.

In exchange for trade favors, Trump might ask Vietnam to support the U.S. presence in the South China Sea where the United States is trying to resist Chinese maritime expansion, said Oscar Mussons, international business advisory associate with the Dezan Shira & Associates consultancy in Ho Chi Minh City.

Vietnam may need to wait out most of Trump’s current term before getting any trade deals, Bajoria cautioned.

Any deal takes time to negotiate, he said, and the U.S. government may try first to build its relations with China, the world’s number two economy after the United States. “I don’t think there’s scope for an FTA over the next 12 months,” Bajoria said.

Since Trump was elected, Vietnamese leaders afraid that the TPP would die began looking instead to other trade deals.

An agreement reached with the European Union in 2015 is due to take effect next year if it clears hurdles in the European bloc’s parliament.

China is also keen to bolster trade ties, but Vietnam hopes to avoid dependence on the long-time political rival that’s known for unloading cheap mass-produced goods in Vietnam at prices lower than what local companies can charge.
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King Salman and hundreds of business leaders from Saudi Arabia are in Japan for talks Monday mainly expected to focus on economic ties.

The visit is the first by a Saudi king in 46 years, though Salman visited more recently as crown prince.

Saudi Arabia is one of Japan’s biggest suppliers of crude oil, accounting for about a third of its total imports of oil from the Middle East.

The kingdom is striving to diversify its economy away from its heavy reliance on oil exports, and Salman is on a month-long tour of Asia to advance his kingdom’s economic and business interests.

Japan’s Chief Cabinet Secretary Yoshihide Suga told reporters Monday that Japan is willing to provide support for the economic power in the Middle East.

“We will discuss growth strategy, including our `Saudi Vision’ project,” he said, referring to Japanese collaboration with Vision 2030, a roadmap adopted by the kingdom last year for its development and economic objectives  

He did not confirm reports that the countries would agree to set up a special economic zone in Saudi Arabia.

Salman met with Japanese Foreign Minister Fumio Kishida and was to meet Prime Minister Shinzo Abe later Monday.

Reports say Japan plans to urge that Saudi Aramco, the state-run oil company that is being partially privatized, seek a share listing on the Tokyo Stock Exchange.

Separately, Saudi Arabia’s sovereign wealth fund and Japanese telecoms provider and energy company Softbank have joined forces in setting up a $25 billion private fund for technology investments.

Trade between the countries fell overall last year as oil prices dropped. Japan’s 2.1 trillion yen ($18.6 billion) in imports from Saudi Arabia in 2016, mostly oil and gas, dwarfed its exports of 546.3 billion yen ($4.8 billion). 

The delegation arrived late Sunday on about 10 aircraft. Officials said top hotels and car hire services would be busy handling the unusually large group during its four-day visit.

Salman’s stop in Japan follows visits to Indonesia and Malaysia. He is due to travel on to Brunei, China and the Maldives.

While seeking investment and help with Saudi industrialization and development of its services sector, Salman has also offered help. Earlier, he pledged $1 billion in development finance for Indonesia and closer cooperation for combating transnational crime such as human trafficking, terrorism and the drugs trade.
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