Sanctions Imposed on Russia Hurt Chinese Economy

New Delhi — 

As the world’s biggest trader and buyer of crude oil, China has been hit hard by the economic sanctions unleashed on Russia over its invasion of Ukraine. Even Chinese government officials have begun to predict economic difficulties on the horizon.

“This year, the pressure on foreign trade will be huge, and the situation will be very severe,” Commerce Minister Wang Wentao said at a recent press conference.

The current sanctions regime has pushed up the price of crude oil. This will result in a heavy financial burden on China, which is the world’s biggest oil importer. The economic restrictions may also affect the $147 billion annual trade between China and Russia. Fund transfers to Russian entities can no longer occur in U.S. dollars, the currency of choice for 86% of international transactions.

“Chinese firms are caught between a rock and a hard place,” Jacob Gunter, senior analyst at the Berlin-based Mercator Institute for China Studies, told VOA.

Chinese companies with operations in the U.S. or the European Union may fall victim to secondary effects of the sanctions if parent corporations in China maintain business links with Russia, he said.

Four pallets of Lenovo Chromebook laptops sit in a Denver Public Schools warehouse after arriving, Friday, Aug. 21, 2020, in Denver.

Two Chinese firms, Lenovo and Didi, which recently announced plans to cease doing business in Russia, faced a storm of ridicule and criticism on Chinese social media for “pandering to American whims.” This has caused a lot of concern among dozens of Chinese firms, which fear losing the domestic market if they cut ties with Russia.

Energy imports constitute two-thirds of China’s purchases from Russia. For now, the ban on Russia-related SWIFT fund transfers does not affect energy payments. This safeguard primarily shields European countries that are heavily dependent on Russian gas supplies, but it will also protect Chinese energy-related transactions. SWIFT, which stands for Society for Worldwide Interbank Financial Telecommunication, is an international bank-to-bank transfer system.

Some experts also predict China will end up importing inflation. The prices of many imported commodities have risen since the Russian invasion, said Mark Williams, chief Asia economist for Capital Economics.

“If the situation escalates further and energy trade between Russia and the West is cut off, then the impact would be even larger,” he said.

On the other hand, Williams said, the war offers some economic opportunities for China.

“With much of the world cutting off ties with Russia, China is in a strong position to negotiate long-run energy supply contracts on favorable terms. Meanwhile, bans on Western exports of certain goods may allow some Chinese suppliers to take their place instead,” he said.

Russian President Vladimir Putin attends the opening ceremony of the 2022 Winter Olympics, in Beijing.

An important question is whether Beijing will stick to its recent deal with Russia for enhanced trade, including expanded purchases of Russian gas. Russian President Vladimir Putin signed the agreement February 4, the opening day of the Winter Olympics, during a visit to Beijing.

“I think Beijing is frustrated by Russia’s actions in Ukraine so soon after the deal, but it is unlikely to walk away from it,” Gunter said, adding that although China will become a crucial lifeline for Russia, there are limitations to the extent Beijing can offer support without drawing the ire of the West.

Besides, demand for energy, one of Russia’s most important exports, cannot increase significantly in the short term, because importing quantities of Russian gas in excess of what has been contracted will require additional pipeline facilities, which take time to build.

China has for years been trying to reduce its dependence on U.S. dollars and has signed currency swap agreements with several trading partners, including Russia. In 2015, Beijing launched the Cross-Border Interbank Payment System, an international yuan payment and clearing system, as an alternative to SWIFT.

“It remains to be seen how CIPS will work and if it could act as a possible ‘competitor’ for the SWIFT,” Lourdes Casanova, director of the Emerging Markets Institute at Cornell University, told VOA.

The CIPS system may not be entirely immune to U.S. intervention if it is used by China for transactions with countries other than Russia, said Williams of Capital Economics. At present, 17 Russian banks are connected to the CIPS system.

“It is also subject to Western sanctions on transactions involving Russian banks,” he said. “While the CIPS payments system doesn’t touch the U.S. banking system, payments through it that were deemed to be intended to circumvent U.S. sanctions could trigger sanctions for those involved. That effectively limits the use of CIPS to bilateral transactions between Russia and China.”

Peasants bet on the solidarity economy

Interviewed credits:

Eduardo Patiño – Peasant

Luceli Torres – Coordinator of Peasant Markets

Rafael González – Director of the UAEOS.

RPTV NEWS AGENCY team:

Journalist: Nicholas Amaya

Camera and Edition: John Reyes

BOGOTA COLOMBIA). Thursday, March 3, 2022 (RPTV NEWS AGENCY). One of the main problems in agriculture is the logistics and marketing of crops, which generates cost increases from the time the product leaves the farm until it reaches the supply centers. These inconveniences are more frequent in small families that have few fields of cultivation.

Today, small farmers in the country have decided to no longer depend on intermediaries and potentiate their markets 100%. Ensuring the sale of their crops and by the way improving their quality of life.

“The food sells well because they are products that are collected fresh and at good prices,” says Eduardo Patiño, a farmer from Boyacá who, along with other farmers, arrives weekly at the meeting point to sell their products at the Peasant Markets, located in the large cities.

“This has made farmers in general improve their quality of life and products, avoiding intermediaries, which was what had been overwhelming us,” highlights Luceli Torres, who coordinates the Farmers’ Markets.

Thanks to the Peasant Markets, these producers obtain all of their profits, which previously remained in the hands of the merchants. “It has given these farmers the opportunity to continue with their crops, making their products visible,” he added.

In the main squares where fresh produce arrives, the peasants themselves have managed to enhance their vegetables, fruits, cereals, honey and other production, thanks to this program, led by the Special Administrative Unit of Solidarity Organizations (UAEOS), an entity attached to the Ministry Labor, so that these small farmers can continue to live on their plots.

“The farmer produces on his land and we, with the ‘Faith in Colombia’ program, collect these products on their farms and bring them to the different cities that set up the Farmers’ Markets so that they can be distributed without intermediaries and fresh products reach the family market. ”, explained Rafael González, director of the UAEOS.

The strategy facilitates sales and is presented as an agile alternative to market the products harvested by peasants like Eduardo. “We liked coming to the Farmers’ Market because no matter what, you earn a little more, and that’s where we go.”

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2021

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Ukraine, Pandemic, Economy, Political Divisions, to Dominate Biden’s 1st State of the Union Address

WHITE HOUSE — 

Escalating conflict in Ukraine, the COVID-19 pandemic and — as always — the economy, are likely to dominate President Joe Biden’s first State of the Union speech on Tuesday.

The constitutionally mandated address is the rhetorical highlight of the year for the U.S. president. Joe Biden is no exception, but this year’s State of the Union — his first, although he has previously addressed a joint session of Congress — comes at an especially fraught time.

As if to underscore that, Capitol police said Sunday that they were taking extra precautions at the site of the speech.

A barrier is placed behind a security fence in preparation for President Joe Biden’s State of the Union address on Capitol Hill in Washington, Feb. 27, 2022.

“Out of an abundance of caution, and in conjunction with the United States Secret Service, a plan has been approved to put up the inner perimeter fence around the Capitol building for the State of the Union Address,” said United States Capitol Police Chief Tom Manger. “I have also requested support from outside law enforcement agencies as well as the National Guard to assist with our security precautions.”

Ukraine crisis

The White House says Biden is likely, during the Tuesday night speech, to discuss Russia’s invasion of Ukraine and, his wider view of the world. But press secretary Jen Psaki stressed that the situation is rapidly changing — and the president’s words may evolve before he speaks in front of legislators.

FILE – White House press secretary Jen Psaki speaks during a press briefing at the White House, Dec. 22, 2021, in Washington.

“We are in the middle of an active invasion,” she said Friday. “So I just can’t give you a preview of what that will look like in the State of the Union. As it relates to how the president views his approach to foreign policy — you know, the president ran for president wanting to return America’s seat at the world, wanting to return to a time where other leaders around the world could trust the word and the commitments of the United States, and what you have seen over the last few months, is the president deliver on exactly that.”

In the past week, Biden has delivered three speeches on the escalating crisis in Ukraine; but, in his deeply politically divided nation, analysts say Biden should expect a frosty reception when talking about what he describes as the greatest threat to global security since World War II.

FILE – People coming from Ukraine descend from a ferry boat to enter Romania after crossing the Danube river at the Isaccea-Orlivka border crossing between Romania and Ukraine on Feb. 26, 2022.

“The country generally rallies behind a president when we face an international crisis,’ said Norman Ornstein of the American Enterprise Institute. “If you watch [Fox News TV host] Tucker Carlson, or listen to Donald Trump, or know what many Republicans in Congress have been saying, we’re not going to get that rallying around the president by a significant share of the population. The tribal divisions are there now, for even things that affect American national security.”

Recent public opinion polls indicate the president’s approval rating has dipped since the early days of his administration, when the Gallup survey reported 57% of Americans said they approved of the job he was doing. The same group’s poll conducted in the first half of February reported Biden now has a 41% job approval rating.

FILE – President Donald Trump gestures while speaking as Russian President Vladimir Putin looks on during their joint news conference at the Presidential Palace in Helsinki, Finland, July 16, 2018.

Trump, the former president, has been outspoken in his support of Russian President Vladimir Putin and his animus toward Biden. On Monday, Trump criticized Biden’s energy policy and said, “This war should never have started in the first place.”

Trump continues to maintain, in the face of overwhelming evidence otherwise, that the November 2020 election was rigged, and said that under his leadership, the U.S. “would right now continue to have record-low gas prices, as it was under my administration, and we would be supplying the world with oil and gas.”

It’s the economy, always

Presidents typically use this speech to sell Congress on their domestic agenda and bills they want to pass. And there is one topic every president is expected to cover in the State of the Union address, says Jeremi Suri, a historian at the University of Texas at Austin.

“He will argue that the economy is growing, that unemployment is low, and that we are going in the right direction and that inflation has to do with supply difficulties and pandemic difficulties, which he is working diligently to solve, and which will be resolved soon,” he said. “And every president comments on the economy because they all want to say the state of the economy is such that we are getting richer, we are doing better than ever before. The only exceptions when presidents don’t talk about the economy are when we are at war ourselves.”

One thing that is certain: America, and the world, will be listening to what he has to say. The address begins at 9 p.m. Washington time, on Tuesday.

Ukraine, Pandemic, Economy Likely to Lead Biden’s First State of the Union Address

President Biden to use annual address to push agenda, and to discuss current hot topics including Ukraine, pandemic and economy. VOA’s Anita Powell has a preview.

Brussels presents a plan of 48,000 million euros to produce more chips | Economy

The European Commission will present a plan tomorrow with which it plans to mobilize up to 48,000 million euros so that the European Union quadruples its production of semiconductors until 2030 and can ensure the supply of some components for which it now depends on Asian manufacturers.

“Today 50% of semiconductors are produced in Taiwan. If for one reason or another Taiwan couldn’t export them, it would only take three weeks for almost all the factories we have – automobiles, meat, electrical appliances – to stop working, because they would not have semiconductors. This is not acceptable, we have to equip ourselves with the capacity to respond to this eventuality,” the European Commissioner for the Single Market, Thierry Breton, told Efe on Monday.

US Economy Defies Omicron and Adds 467,000 Jobs in January

WASHINGTON — 

In a surprising burst of hiring, America’s employers added a robust 467,000 jobs last month, a sign of the economy’s resilience in the face of a wave of omicron infections.

The government’s report Friday also drastically revised up its estimate of job gains for November and December by a combined 709,000. It also said the unemployment rate ticked up from 3.9% to a still-low 4%, mainly because more people began looking for work and not all of them found jobs right away.

The strong hiring growth for January, which defied expectations for only a slight gain, demonstrated the eagerness of many employers to hire even as the pandemic raged. Businesses appear to have regarded the omicron wave as having, at most, a temporary impact on the economy and remain confident about their longer-term prospects.

“Employers have assumed that omicron would be painful but short term, so they haven’t changed their hiring plans,” said Mathieu Stevenson, the CEO of Snagajob, a job listings site focused on hourly workers. “Demand from employers is as strong as ever.”

January’s hiring gain and sharp upward revisions to previous months mean that the United States has 1.1 million more jobs than government data had indicated only a month ago. The solid hiring, along with steady wage gains, are boosting consumer spending, which has collided with snarled supply chains to accelerate inflation to a four-decade high.

Adjusted for price increases, Americans’ paychecks on average don’t go as far as they did a year ago, even though many workers have received raises. Many households, especially lower-income families, are struggling to afford necessities like gas, food, rent and child care.

FILE – The Federal Reserve building is seen before the Federal Reserve board is expected to signal plans to raise interest rates as it focuses on fighting inflation in Washington, Jan. 26, 2022.

Those trends will give the Federal Reserve more leeway to raise interest rates, perhaps even faster than it had planned, to cool inflation. The Fed has indicated that it will begin raising rates in March, and it could do so again at its next meeting in May. Faster rate hikes could reduce borrowing and spending and possibly weaken the economy.

Stocks initially fell on the expectation that the Fed will tighten credit more quickly, before share prices recovered in early afternoon. But the yield on the 10-year Treasury jumped nearly one-tenth of a percentage point, to 1.91%, a sign that investors anticipate higher borrowing costs.

Across the economy, most industries hired workers last month, including retailers, which added more than 61,000 jobs, and restaurants and hotels, which gained 131,000. Shipping and warehousing firms added 54,000. Many companies in those industries likely held onto some of the workers they had hired over the winter holidays, economists said, rather than laying them all off.

Omicron did leave some fingerprints on the report: The percentage of Americans who were working from home rose to more than 15%, up from 11% in December. And the number of people out sick last month soared to 3.6 million, up from fewer than 2 million in the previous January and about triple the pre-pandemic level. This forced many companies, from restaurants to retailers to manufacturers, to reduce their hours or even close because of staff shortages.

Among the workers who were out sick was Perla Hernandez, whose entire family of eight contracted COVID last month. Hernandez and her husband and 20-year old daughter all missed work, a major blow to the family’s finances.

Hernandez, 42, who lives in the San Jose, California, area, missed six days from her job as a Burger King cook and janitor. Because she has no paid sick leave, the paycheck she receives every two weeks amounted to just $230.

About one-fifth of U.S. workers receive no sick pay, and the proportion is far higher among lower-paid service workers. Only 33% of workers who are at the bottom 10% of the pay scale receive paid sick leave, compared with 95% of employees in the top 10%.

“Thank God that we already had paid the rent for January,” she said through an interpreter. “We had to go to a food bank.”

Hernandez said she earns $15.45 an hour, after having received a 45-cent raise six months ago. But she and her colleagues, including managers, have been working especially long hours because the restaurant has had difficulty hiring.

Daniel Zhao, senior economist at the employment website Glassdoor, said the healthy hiring — not only for January but also for November and December — is a sign that last month’s gains weren’t merely a blip.

“This is an actual trend, and job growth was faster than we realized,” Zhao said.

A greater proportion of Americans are also now working or looking for work, the report showed, a trend that makes it easier for companies to find workers. It suggests that concerns about long-term labor shortages may have been overblown, at least in some industries.

“There are workers out there — it’s just taking time to integrate them back into the labor force,” Zhao said.

Grady Cope, the CEO of Reata Engineering and Machine Works, said nine of his 43 staffers were out sick last month — the most he can remember in nearly 30 years of running the company.

But Cope’s company, which makes parts for airplane and medical device manufacturers, also has the biggest order backlog it’s ever had. He wants to add at least eight employees, including machinists, assemblers and engineers. Last month, he raised pay 18%, far more than the usual 3%-4% increases. His company is based near Denver, where rents and other costs are rising fast.

“People have to have wages so they can support themselves and raise families,” he said.

Still, Cope has been increasing his own prices to offset his workers’ higher pay. The competition for workers, he said, is the toughest he’s ever seen. In October, four of his workers quit. Only one gave notice.

“That’s never happened in 28 years,” he said.

The overall outlook for the job market remains bright, with openings near a record high, the pace of layoffs down and the unemployment rate having already reached a healthy level. The nation gained more jobs last year, adjusted for the size of the workforce, than in any year since 1978. Much of that improvement represented a rebound from record job losses in 2020 that were driven by the pandemic recession.

Von der Leyen works on the idea of ​​common gas purchases and common reserves | Economy

The President of the European Commission (EC), Ursula von der Leyen, is working with the member countries on the idea of ​​”establishing common strategic gas reserves” and carrying out “common gas purchases”, after the bad experience this winter with Russian supply and political tensions with Moscow.

In an interview published this Friday by the French economic newspaper Les Echos, Von der Leyen reviews everything that the European Union (EU) does to face a possible gas supply crisis, whose prices have skyrocketed in part also due to the context of geopolitical tension between Russia and Ukraine.

Unemployment in Japan remained at 2.8% in 2021 due to the pandemic | Economy

The unemployment rate in Japan remained at 2.8% in 2021 due to the persistence of the covid-19 pandemic, whose prolonged impact led Japanese companies to offer fewer jobs throughout the year.

The job availability index fell for the third consecutive year in the archipelago in the annual balance of 2021.

Iran Supreme Leader Says 'Wrong Decisions' Have Hurt Economy

TEHRAN — 

Iran’s Supreme Leader Ali Khamenei said Sunday that the country’s poor economic situation was not only due to international sanctions but also to government mismanagement.

“Wrong decisions and shortcomings” were part of the reason for the Islamic republic’s “unsatisfactory” economic data, he said about the decade from March 2011 to last year.

Indicators such as “GDP growth, capital formation, inflation, housing and liquidity growth were not satisfactory,” Khamenei said.

“The main cause of these problems is not only sanctions, but also wrong decisions and shortcomings,” he told a meeting with economic officials.

“If the authorities had cooperated more with the producers in these 10 years, the damage would have been less, and the successes would have been greater,” he added in an implicit attack on former president Hassan Rouhani’s governments from 2013 to 2021.

Iran, which last year elected President Ebrahim Raisi, has been hit by severe economic sanctions imposed in 2018 by the United States, and has seen its inflation rate surge to close to 60 percent.

Khamenei criticized the high prices and low quality of some home-made products, especially cars.

He also charged that “despite the government’s support,” the price of some domestically-produced home appliances had doubled.

Iran has witnessed a number of protest rallies in the past few weeks by civil servants, including from the judiciary, against tough economic conditions.

Regarding companies operating despite the sanctions, Khamenei said that “we have successful examples and businesses that did not wait for the lifting of sanctions.”

Iran has been negotiating in Vienna — directly with Britain, China, France, Germany and Russia, and indirectly with the United States — to revive its tattered 2015 nuclear deal.

The landmark agreement offered Tehran sanctions relief in exchange for curbs on its nuclear program.

But the U.S. unilaterally withdrew from it in 2018 under then-president Donald Trump and reimposed biting economic sanctions on Iran.

NH owner group plans to open 100 hotels in China in 5 years | Economy

The Thai company Minor International, owner of the Spanish hotel chain NH, plans to open 100 hotels in China over the next 5 years, revealed the group’s president, William Heinecke, in an interview with Nikkei Asia.

Heinecke indicated, during an interview published this Thursday with the Japanese weekly, that the project in China aims to diversify growth, in a context where the pandemic has affected the company’s operations.

Chinese industrial companies earned 34.3% more in 2021 | Economy

The profits of China’s major industrial companies rose 34.3% year-on-year in 2021, according to official data released today by the National Bureau of Statistics (ONE).

In the recently ended year, the profits of the companies analyzed jointly reached 8.71 billion yuan (1.37 billion dollars, 1.22 billion euros).

Sánchez asks the EU partners not to create blocs in the face of fiscal rules | Economy

The President of the Government, Pedro Sánchez, asked the EU partners this Wednesday not to form blocs in the face of the debate on the future of fiscal rules and that, together, they share opinions on how to reconcile fiscal sustainability and investments for economic transformation.

Sánchez has advocated that formula when addressing the reestablishment of the EU fiscal rules that are currently on hold at the press conference he has offered together with the Prime Minister of Finland, Sanna Marin.