YCLOAK

The global economy has picked up and prospects for the next few months are the best in a long time.

 

But the recovery is maturing and faces risks from populist rejection of free trade and from high debt that could burden consumers and companies as interest rates rise.

 

Those were key takeaways from a review of the global economy released Sunday by the Bank for International Settlements, an international organization for central banks based in Basel, Switzerland.

 

The report said that “the global economy’s performance has improved considerably and that its near-term prospects appear the best in a long time.” Global growth should reach 3.5 percent this year, according to a summary of forecasts, not quite what it was before the Great Recession but in line with long-term averages. Meanwhile, financial markets for stocks and bonds have been unusually buoyant and steady.

 

On top of that, forecasts by governments and international organizations as well as by private analysts point to “further gradual improvement” in coming months.

 

Key risks include a possible weakening of consumer spending across different economies. So far, the recovery has been largely fueled by people being willing and able to spend more. But that trend could fall victim to higher levels of debt as interest rates rise in some countries and as the amount people need to spend to service their debts takes a bigger chunk of income.

 

Countries that were slammed by collapsing real estate markets during the Great Recession seem less vulnerable now, such as the United States, the U.K., and Spain. But debt burdens are more worrisome in a range of other countries mentioned in the report, including China, Australia and Norway.

 

Another risk comes from weak business investment, typically the second stage of recovery after consumers start spending more; yet that kind of spending has lagged its pre-recession levels for reasons that aren’t always clear to economists.

 

The BIS urged governments around the world to take advantage of the economic recovery as an opportunity to make growth more resistant to trouble by implementing pro-business and pro-growth measures.

 

In particular, the report warned against a backlash against globalization, saying that trade and interconnected financial markets had led to higher standards of living and lifted large parts of the world’s population out of poverty. It called for domestic policies to address inequality and lost jobs, saying that changing technology was often to blame, not free trade. “Attempts to roll back globalization would be the wrong response to these challenges,” it said.

 

 

 
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A second U-turn this year by Ford Motor Co. in Mexico has raised the specter of Chinese competition for local carmaking, adding to pressure on the industry after repeated threats by U.S. President Donald Trump to saddle it with punitive tariffs.

Ford announced on Tuesday it would move some production of its Focus small car to China instead of Mexico, a step that follows the U.S. automaker’s January cancellation of a planned $1.8 billion plant in the central state of San Luis Potosi.

The scrapping of the Ford plant was a bitter blow, coming after U.S. President Donald Trump had blamed the country for hollowing out U.S manufacturing on the campaign trail, and threatened to impose hefty tariffs on cars made in Mexico.

Since then, rhetoric from the Trump administration has become more conciliatory, and Mexico and the United States have expressed confidence that the renegotiation of the NAFTA trade deal, expected to begin in August, could benefit both nations.

But the loss of the Focus business is an unwelcome reminder of competition Mexico faces from Asia at a time China’s auto exports and the quality of its cars are rising.

“For a long time, the quality of vehicles coming out of China was not to global standards. There was a gap in quality that [favored] Mexico – but that is closing,” said Philippe Houchois, an analyst covering the auto industry at investment bank Jefferies. “That is probably a threat to Mexico.”

In the past decade, global automakers have invested heavily in Chinese factories to make them capable of building cars at quality levels that make the grade in developed markets.

Ford’s decision to shift Focus production for the United States market to China from Mexico shows automakers have increasing flexibility to choose between the two countries to supply niche vehicles to American consumers or other markets.

‘Very Troubling’

Demand for small cars in the United States is waning and General Motors Co. faces a similar situation to Ford’s with its Chevrolet Cruze compact.

Were GM to go down the same path with the Cruze and shift its production out of U.S. factories, it could give more work to its Mexican plants – but might also bring its Chinese operations in Shenyang or Yantai into play.

GM did not immediately reply to a request for comment on its plans for the Cruze.

Studies show Mexican manufacturing is competitive, and business leaders believe that NAFTA talks between Mexico, the United States and Canada could ultimately yield tougher regional content rules for the region that benefit local investment.

Ford said its decision balanced cheaper Chinese labor rates against pricier shipping, but that in the end an already-planned refit of its Chinese factory saved it some $500 million over retooling both that facility and its Hermosillo plant in Mexico.

The volatile state of U.S.-Mexican trade relations also carries big risks if Trump renews his threats to impose 35-percent tariffs on cars made in Mexico.

To be sure, Trump has also threatened to levy 45-percent tariffs on Chinese goods and his Trade Representative Robert Lighthizer said he found Ford’s China move “very troubling.”

Trump’s threats have battered the peso, ironically making Mexico’s goods cheaper. Uncertainty over the future of NAFTA pushed the currency to a record low in January, although it has since rebounded.

That same month, the Boston Consulting Group published an assessment of manufacturing competitiveness that gave Mexico an 11-percent lead over China.

That advantage has prompted global firms to plow billions of dollars into the Mexican auto industry, pushing output to record highs. Some officials in the automotive sector painted Ford’s move as a one-off decision.

“There’s still very dynamic investment and growth in plants,” said Alfredo Arzola, director of the automotive cluster in Guanajuato state, one of Mexico’s top carmaking hubs.

Still, there have been “significant quality improvements” in Chinese cars, consultancy J.D. Power said in a 2016 study.

Chinese car manufacturing could catch up with international standards in China by 2018 or 2019, said Jacob George, general manager of J.D. Power’s Asia Pacific Operations, citing the consultancy’s gauge of “hard quality”, or failures.

However, when measured in terms of “perceptual” quality, China was probably still some 4 to 6 years behind, he added.
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After starting work in a hotel kitchen, Zhai Meiqin began selling furniture and built a billion-dollar conglomerate, but she took great pride in being recognized this week for driving a new phenomenon in China: philanthropy.

Zhai, one of China’s richest women and president of the privately owned HeungKong Group Ltd., said she never forgot her humble upbringing in Guangzhou in southern China, where her father was an architect and her mother worked in a store.

This made her determined to help others, and she started donating to charity shortly after setting up the business with her husband in 1990.

As their business grew, taking in real estate, financial investment and health care, Zhai broke new ground in 2005 by establishing China’s first nonprofit charitable foundation.

Since then, the HeungKong Charitable Foundation has helped an estimated 2 million people, by funding 1,500 libraries, providing loans for women to start businesses, and funding orphans, single mothers, handicapped children and the elderly.

“I realized there were a lot of poor people in China and this drove me to earn more money so I could help them,” said Zhai, 53, who was one of nine philanthropists named Thursday as winners of the 2017 Carnegie Medal of Philanthropy.

Zhai and her husband, Liu Zhiqiang, whose HeungKong Group with 20,000 staffers has made them worth about $1.4 billion, according to Forbes magazine, are known for being leaders of the culture of philanthropy in China.

Their foundation was listed as number 001 by the Ministry of Civil Affairs. Zhai said at the end of 2015 there were 3,300 registered nonprofit charitable foundations in China.

Next generation

“By setting up the foundation, I wanted to encourage other people, other entrepreneurs, to also donate to charity,” she told the Thomson Reuters Foundation in a phone interview from Guangzhou translated by her daughter.

“Now I want to make sure that the next generation continues this culture of philanthropy in China,” she added, with two of her four children taking an active role in her foundation.

The other philanthropists to win the Carnegie Medal — which was established in 2001 and is awarded every two years — came from around  the globe.

The list included India’s education-focused Azim Premji, Canadian-born social enterprise pioneer Jeff Skoll and American-Australian lawyer and former World Bank Group President James Wolfensohn.

The winners were chosen by a committee made up of seven people representing some of the 22 Carnegie institutions in the United States and Europe.
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Cambodian activists fighting plans to transform Phnom Penh’s largest lake into a luxury development made a tactical decision when they took to the streets: put women on the frontline to show a “gentle” face and prevent violence.

But it was wishful thinking.

The women of Boeung Kak Lake, once home to a thriving community, have been kicked, manhandled, threatened and jailed, one of many land battles globally where women are bearing the brunt of the crackdown on protesters.

“We are mostly women because we are more gentle so we face less violence. This is our strategy,” said Im Srey Touch, a 42-year-old activist from Boeung Kak Lake.

“If we let men participate in our protests, we let them stand behind us or outside, and we stand in the front to reduce the likelihood of violence.”

​Evictions began in 2007

In fact, as the number of people killed in land conflicts around the world soars, more than half of the dead have been women, rights watchdogs say.

In Phnom Penh the conflict began in 2007 when nearly 4,000 families were stripped of their housing rights after the Cambodian government leased the Boeung Kak Lake area in the nation’s capital to make way for an upmarket mini city.

Since then, the lake has been filled with sand and most of the 4,000 families evicted, with little to no compensation, amid complaints about the social and environmental impact.

Over the years, more than a dozen activists protesting the evictions have been arrested, most of them women through whom land is passed down in many parts of Cambodia.

Whose courts?

In February, a court sentenced Tep Vanny, the most high-profile lake activist, to two and a half years in jail for inciting violence and assaulting security guards.

Rights observers say the government is using the courts and jails to muzzle activists, including those defending their land rights against government officials and their business cronies.

“It is a signal to civil society that ‘We can come after you whenever we want. The courts are ours. We can make anything we say about you stick,’“ said Phil Robertson, deputy director of Asia for New York-based nonprofit Human Rights Watch.

The government of Minister Hun Sen’s ruling Cambodian People’s Party (CPP) rejects such criticism and says it respects due process.

“The court makes decisions based on the constitution and, like every open society, the court provides justice to everyone no matter who they are,” said government spokesman Phay Siphan.

​Long history of land disputes

Amnesty International has criticized the Cambodian government for “bending the law to their will” to crack down on dissent. It said 42 criminal cases have been brought against the Boeung Kak Lake activists since 2011.

“Nobody believes Tep Vanny was assaulting these security guards,” said Robertson, who accused the judges of being “stooges” of the CPP.

Home to 15 million people, impoverished Cambodia has a long history of disputes over land rights, many dating back to the 1970s when the communist Khmer Rouge regime destroyed property records, and all housing and land became state property.

Cambodia began to privatize land after 1989, when Hun Sen’s CPP-led government shed its communist past and courted foreign investment, paving the way for economic land concessions.

“After privatization, land prices started going up, and people were at risk of land grabbing by companies, the state and well-connected individuals,” said Naly Pilorge, director of the nonprofit Cambodian League for the Promotion and Defense of Human Rights (LICADHO).

LICADHO says the lack of a publicly available land register detailing boundaries means authorities could confiscate land, claiming that affected families were living on state property.

Between 2000 and 2014, about 770,000 Cambodians were affected by land conflicts, according to charges presented by lawyers at the International Criminal Court in the Hague.

“Because Cambodia is lawless … with close ties between companies, government, the military and police, it’s a recipe for violence,” Pilorge said by phone from Phnom Penh.

A broken family

Despite the court cases and jail time, the Boeung Kak Lake women persist. They protest loudly and lie on the ground when ringed and roughed up by authorities. They are arrested in groups, sometimes just two, and, once, 13 of them.

Pilorge says authorities now appear to be trying a new tack, turning their energies onto Vanny on whom it is taking its toll.

During a brief recess before her guilty verdict Feb. 23, the 37-year-old divorcee who was arrested last August described the impact of her detention on her son, 11, and daughter, 13.

“I lost my role as a mother. I have a broken family. My child is sick,” she said, adding that she could not be there for her daughter’s surgery to remove her appendix.

“During the last hearing, my daughter cried until she fainted … I am a mother but I’m in prison. I can’t take care of her,” she said.

Activists suspect authorities are using her in a bid to silence other activists ahead of local elections this month and next year’s national vote.

A lake activist who was arrested with Vanny last year, Sophea Bov, was convicted for insulting authorities and fined $20. So far Bov has refused to pay the fine, Pilorge said, but no one has come for yet although the judge could imprison her.

“She was hoping that if she refused to pay the fine, she could go to prison to be with Vanny. Imagine where they are now, to think like that,” Pilorge said. “As human beings, we grow and we become stronger with challenges … these women have been tested, and they’ve overcome a lot of obstacles.”

 
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Soaring temperatures and a lack of rainfall across Italy have cost farmers 1 billion euros ($1.12 billion) so far this year, the national agricultural association said on Friday.

The government declared a state of emergency in the gastronomic heartland around the northern cities of Parma and Piacenza, a usually lush valley that produces tomatoes, cheese, and high-quality ham.

Wine grapes growing near Venice will be harvested early, mozzarella makers near Naples have been thrown into crisis, and Sardinian shepherds have taken tractors onto main roads to call for help to save their livelihoods, the Coldiretti group said.

The group’s chairman, Roberto Moncalvo, said the climate was becoming “tropical.”

“If we want to maintain high quality in agriculture we need to organize ourselves to collect water during rainy periods, doing structural work that cannot be put off any longer,” Moncalvo said.

($1 = 0.8935 euros)
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China is probing the loan practices of a group of big private sector conglomerates who have been on a high-profile global spending spree over the past few years.

And although the review targets only a few of the country’s most politically-connected companies, some analysts see an attempt to increase government control over the role played by the private sector in foreign markets.

“I think this is an attempt to change the direction (of) the role these Chinese companies play in the Chinese economy,” says Paul Gillis, a professor at Peking University’s Guanghua School of Management. “To align them more closely with the policies of the government and to reduce the risks that actions of these private companies could end up having a shock effect on the economy as a whole.”

Chinese authorities say they launched the probe because of worries that highly leveraged overseas deals pose risks to China’s financial system. Officials have already expressed worries over mounting debt among Chinese lenders, some of which may remain hidden by China’s opaque lending networks.

Notable companies targeted

According to media reports, the list of companies under review is a relative who’s who of Chinese enterprises.

Among those reportedly targeted are Dalian Wanda, which owns the AMC Theaters chain in the United States and has been actively courting deals in Hollywood. High-flying insurance company Anbang, which owns New York’s Waldorf Astoria and Essex House hotels. Also on the list is Hainan Airlines, which bought a 25 percent stake in Hilton Hotels last year and another insurance company Fosun, which owns Cirque de Soleil and Club Med.

Over the past few years, China has seen massive amounts of capital moving overseas with companies and wealthy individuals buying assets abroad. Authorities began taking steps late last year to tighten controls. But many big conglomerates view foreign investment as a golden opportunity – given the low global interest rate environment – and worth the risk of highly-leveraged investments.

Peking University’s Gillis says it appears the Chinese government is coming to terms with how to effectively regulate private enterprises, companies that behave more aggressively than their state-owned counterparts. But he also sees the move as a further consolidation of power by President Xi Jinping, bringing companies more under the control of the central government.

“I think many of the companies had a pretty favorable treatment from prior administrations, and I think Xi Jinping is less enamored of these large private companies than some of his predecessors were.”

Expensive acquisitions by companies like Wanda and Anbang have thrust China into the global spotlight. But the news and commentary that followed the companies’ mega-deals has not always been positive.

In some cases, the deals have given China a black eye, says Fraser Howie, author of the Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise. Anbang’s attempt last year to purchase Starwood Hotels is one example, he says.

“This is high profile, global Bloomberg headline, Chinese company buys Starwood Group, next week it’s all off because the funding was never there, the due diligence could never be completed there, it made all Chinese bidders look horrible,” said Howie. “It looks dreadful for the party and for the leadership that these private entrepreneurs are running out there and yet China as a country is being impacted by it.”

Earlier this month, the head of Anbang was the latest to be swept up in the ongoing financial crackdown.

Regulating private spending?

Authorities so far have not said specifically what the targeted companies may have done wrong, if anything. Some analysts argue that the probe is just a part of a process that began six month ago to curtail the flight of capital from China.

“If cross-border M&A deals make sense, if they deliver strong returns, then there should be no problem either for bankers or those doing the buying. But, if Chinese groups overpay and get the money to do so from Chinese banks providing risky or underpriced loans, then Chinese regulators have an obligation to step in,” Peter Fuhrman, Chairman and Chief Executive Officer of China First Capital tells VOA in an emailed response.

Others see a deeper message about Xi Jinping’s view on the role that private companies should serve broader national goals.

Howie says the probe challenges assumptions about the role of private enterprises in China.

“If anyone ever thought these companies were truly private in the sense of being independent or beyond government reach. Clearly that was never true,” he says. “Everyone operates at the discretion of the Communist Party, even if you’ve done nothing wrong and clearly even if you are wealthy.”
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China let through the first shipments of beef from the United States in 14 years on Friday, after the two nations agreed to resume the trade in May, state media reported.

The imports were brought in by Cofco Meat Holdings Ltd from U.S. meat processor Tyson Foods Inc., China National Radio (CNR) reported on Friday, citing Beijing Entry-Exit Inspection and Quarantine Bureau.

China officially allowed U.S. beef imports from Tuesday this week after the two sides settled the conditions for exports last week.

Under the new rule, boneless and bone-in beef from cattle under 30 months of age will be eligible for imports. Beef destined for China must also be from cattle that can be traced to its birth farm, according to the rule.

Chinese importers are racing to bring in American beef to meet increasing demand for premium meat in the $2.6 billion beef import market.

Cofco’s imports, the first to have landed in China, will be sold on Cofco’s e-commerce platform Womai.com, according to CNR.

Arrivals of U.S. beef could erode sales of Australian beef in China’s lucrative premium meat market, as U.S. beef is expected to be cheaper because of low grain prices in the nation.
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Demeaning images in advertising of women doing domestic chores or scantily clad act as stubborn obstacles to gender equality, the head of U.N. Women said Thursday, urging the global ad industry to become a weapon for good.

Advertising has the power to create positive portrayals of women and eliminate stereotypes, Phumzile Mlambo-Ngcuka, executive director of the United Nations’ agency on women, told the Thomson Reuters Foundation.

Mlambo-Ngcuka spoke from France, where she is calling on advertising leaders who are attending the industry’s annual Cannes Lions Festival of Creativity to eliminate stereotypes and commit to gender equality.

“People are more likely to see adverts in their lives than read books,” she said. “It’s a waste if we are not using this opportunity for good.”

​Stereotypes everywhere

Stereotypes of women permeate the globe, she said, be it in nations such as Iceland with high gender equality or those with very little in the way of equal rights, like Yemen.

“Of the many things that we’ve tried to do to obtain gender equality, we are not getting the kind of traction and success that we are looking for, because of the underlying stereotypes and social norms in existence in society,” she said.

“Adverts create a role model that people look up to, even mimic and try to be like,” said the veteran South African politician.

“If they see men in powerful positions most of the time and do not see women and people who look like them … then they think this is not for them.”

Research illustrates issue

Research by the Geena Davis Institute on Gender in Media illustrates the issue, said Philip Thomas, chief executive of the annual advertising event in Cannes, who also participated in the interview with the Thomson Reuters Foundation.

One in 10 female characters in advertising is shown in sexually revealing clothing, six times the number of male characters, he said.

Of characters portrayed as intelligent, such as doctors or scientists, men are 62 percent more likely than women to play those roles, he said. Women are 48 percent more likely to be shown in the kitchen, he said.

Creative teams at advertising agencies are predominantly male, and just 11 percent of creative directors around the world are female, he said.

The industry can make an effort to mentor women, employ and promote more female creative teams and reward work that promotes positive images, he said.

Mlambo-Ngcuka said she welcomed efforts such as one in Berlin, where the city’s ruling coalition has agreed on a ban on degrading or sexist advertising.

An expert committee will examine and prevent discriminatory advertising on both privately and publicly owned advertising billboards and hoardings.

Opposition parties in Berlin say such a ban infringes on free speech.

“When it’s so much that is against us, I think we are allowed sometimes to make some extreme measures even if there’s a controversy,” she said. “Let’s have the discussion.”
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Minnesota’s government and businesses will continue to engage with Cuba in the areas they can, like agricultural trade, despite U.S. President Donald Trump’s partial rollback of the detente, Lieutenant Governor Tina Smith said on Thursday.

The first U.S. state representative to make an official visit to Communist-run Cuba since Trump’s announcement on Friday, Smith said authorities there were worried about the setback to bilateral relations.

Leading a bipartisan trade delegation from Minnesota, she said she was therefore glad to carry the message that there was still plenty of support for continuing to normalize relations.

“There is no denying the actions Trump took last Friday are a real setback,” Smith, a Democrat, said in an interview in the gardens of Havana’s iconic Hotel Nacional. “But the important thing to me is that there is bipartisan support at the federal level for normalizing and modernizing our relationship.”

U.S. Sen. Amy Klobuchar, a Minnesota Democrat, in May led a bipartisan coalition of lawmakers, including Republican Sen. Jeff Flake of Arizona, to introduce legislation to lift the U.S. trade embargo on Cuba.

Minnesota is one of the largest U.S. farming states, and Smith’s delegation included its agriculture commissioner and the head of its corn growers association. The delegation hopes to improve ties with and promote exports to Cuba.

U.S. farm groups have been particularly critical of the decision by Trump, a Republican, to retreat from Democratic predecessor Barack Obama’s opening toward Cuba, saying it could derail huge growth in agricultural exports that totaled $221 million last year.

U.S. law exempts food from a decades-old embargo on U.S. trade with Cuba, although cumbersome rules on executing transactions have made deals difficult and costly.

While Trump’s new Cuba policy does not directly target agriculture, it damages improved relations, the farm groups say.

Trump ordered tighter restrictions on Americans traveling to Cuba and a clampdown on U.S. business dealings with the island’s military, which manages much of the economy.

The Minnesota delegation met this week with officials of the Cuban ministries of foreign affairs and agriculture, while also visiting a cooperative and local food markets.

But the tour did not include the usual trip to the Mariel port and special development zone, which Cuba hopes will attract foreign investment and become a major shipping hub in the Caribbean. It is controlled by a military-affiliated company.

“In Minnesota we don’t have a lot of cocoa or coffee or pineapples, but we do have a lot of corn and beans,” Smith said. “We need each others’ products.”

Cuba invited the Minnesota delegation to a trade show later in the year, Smith said, while Minnesota invited Cuban officials to visit.

“I am very hopeful all of those things will lead us to a place where we can move forward.”
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