U.S. President Joe Biden touted a $20 billion investment by American technology company Intel to build a semiconductor factory in Ohio to address a global shortage that has been exacerbated by the COVID-19 pandemic and the U.S.-China trade war.

In a speech from the White House on Friday, Biden said the Intel factory, part of the administration’s effort to work with the private sector, would create thousands of jobs. He urged Congress to pass legislation to further expand domestic chip manufacturing, framing it in the context of strategic competition with China.

“Today 75% of the production takes place in East Asia; 90% of the most advanced chips are made in Taiwan,” Biden said. “China is doing everything it can to take over the global market so they can try to outcompete the rest of us.”

Semiconductor chips function as the brains of cars, medical equipment, household appliances and electronic devices.

The $20 billion factory is an initial investment, said Patrick Gelsinger, chief executive officer of Intel, at the White House event.

“This site alone could grow to as much as $100 billion of total investment over the decade,” he said.

The White House pointed to other investments in semiconductor manufacturing in the United States earlier this year by Samsung, Texas Instruments and Micron.

“Congress can accelerate this progress by passing the U.S. Investment and Competition Act, also known as USICA, which the president has long championed and which he called for action on today,” said White House press secretary Jen Psaki, referring to legislation that aims to strengthen research, development and manufacturing for critical supply chains to address semiconductor shortages.

Driven by Washington’s desire to retain an edge over China’s technological ambitions, USICA was passed with rare bipartisan Senate support in June but still needs to be passed by the House of Representatives. It includes full funding for the CHIPS for America Act, which provides $52 billion to catalyze more private sector investments in the semiconductor industry.

“The Chinese have been really clear. They want an indigenous chip industry. They want to be globally dominant, and that means displacing the U.S. and others,” James Lewis, director of the technology and public policy program at the Center for Strategic and International Studies, told VOA.

The U.S. share of global semiconductor production has fallen from 37% to 12% over the past 30 years, according to government data.

Pandemic impact

The COVID-19 pandemic and extreme changes in consumer demand during lockdowns have exacerbated fragility in the global semiconductor supply chain.

“Consumer demand increased rapidly for items such as home computers, while supply could not keep up and many Chinese manufacturers were locked down,” Nada Sanders, professor of supply chain management at the D’Amore-McKim School of Business at Northeastern University, told VOA.

Meanwhile, the U.S.-China tariff war that began under the Trump administration and geopolitical conflicts between the two global rivals have made the environment even less conducive for cooperation, Sanders said.

The Intel factory will not be operational until 2025, but analysts say the initiative will still be effective to secure the supply of chips in the long run.

“You cannot underestimate demand for this stuff. It grows at about 10% a year,” Lewis said.

As the U.S. expands its domestic chip manufacturing capacity, analysts say a key component is working with international partners, including South Korea, Taiwan and Japan, to fill in the supply gap.

Earlier Friday, Biden discussed semiconductor supply chain resilience in his virtual summit with Japanese Prime Minister Fumio Kishida.

“The leaders did discuss the importance of cooperation on supply chain security, including semiconductors, and the president described what we are doing at home and underscored the importance of working together on it,” a National Security Council spokesperson told VOA.

The spokesperson added that the two countries have been working closely in this area bilaterally through the Quad, a security dialogue forum involving the U.S., Australia, India and Japan.

“The new ministerial-level Economic Policy Consultative Committee (the Economic ‘2+2’) established by the leaders today will also cover this important issue,” the spokesperson said.

Taiwan, home to the Taiwan Semiconductor Manufacturing Company (TSMC) and the leading producer of advanced chips in the world, is another key partner.

“If China was to take over Taiwan, and use TSMC as a leverage point, that would be hugely disruptive,” Lewis said. “Taiwan and its proximity to China and China’s hostility drives a lot of the concern.”

The global chip shortage has pushed up inflation rates and hamstrung the administration’s economic recovery efforts. It contributed to the sharp increases in the price of new and used automobiles, which account for one-third of the annual price increases in the consumer price index.

Biden’s approval in the polls has been lagging recently, partly driven by inflation. Consumer prices jumped 7% in December compared with a year earlier, the highest inflation rate in 40 years. It has dampened economic recovery in a year that the administration says has shown the biggest job growth in American history.
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South Africa’s Indigenous Khoi and San people are in court to block construction of the planned African headquarters for online retail giant Amazon. Opponents say the project will ruin a historically significant riverside site in Cape Town and harm the environment. 

Closing arguments are being heard Friday. 

The site is slated to be developed into a 70,000-square-meter complex that will house Amazon, along with other businesses. City authorities approved construction of the nine-story complex last year. 

But some Indigenous Khoi San leaders and community groups are trying to reverse the decision, saying it undermines the city’s own heritage and environmental standards. 

“We’re in a situation where a terrain that is so sacred to the people of our country is not just under threat, but being damaged and destroyed as we speak,” said Tauriq Jenkins, high commissioner of the Goringhaicona Khoi Khoin Indigenous Traditional Council, which is among the groups fighting the project.

Construction has already begun at the site, which is currently occupied by a restaurant and golf course. 

Property owners Liesbeek Leisure Properties Trust, or LLPT, said it did consult Indigenous groups while planning the site’s redevelopment. 

In a statement, company spokesperson James Tannenberger said the opposing community group and Indigenous council led by Jenkins “have been driving a misinformation campaign …after their concerns were validly dismissed by the competent authorities during the comprehensive three-year development approval process.” 

Other Indigenous leaders have given their approval to the project, Tannenberger added. 

He said the new site will also pay tribute to their history by including a museum and memorial site, along with creating low-income housing and jobs. 

The current divide within the Indigenous community is complex. 

The Khoi Khoi and San were some of the country’s first inhabitants and their presence in the southern tip of Africa dates back thousands of years. 

Their lands were lost to colonial settlements in the 1600s. 

“They’re enslaved, they’re oppressed, they’re exploited,” said June Bam-Hutchison, a researcher with the Center for African Studies at the University of Cape Town. “Their language was also taken away, their culture was taken away, their knowledge systems that sort of helped us in so many ways to build a more peaceful and healthier society, that has also taken away.” 

She said their unique cultural identity was only acknowledged by South Africa in more recent decades. 

“Today, they are now being recognized. That took some time. The land question remains very much unresolved, highly disputed,” she added. 

The riverside development is contentious because of the site’s history. 

The Khoi San say it lies on a battlefield where they defended their territory from Portuguese colonizers in 1510. 

Jenkins said losing the case would set a dangerous precedent for giving up historic sites to corporate interests. 

Amazon, which does not own the site but will be leasing the space once constructed,declined to comment. 

 
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French oil giant TotalEnergies on Friday said it would withdraw from Myanmar over “worsening” human rights abuses committed since the country’s military took power in a February 2021 coup.

“The situation, in terms of human rights and more generally the rule of law, which have kept worsening in Myanmar… has led us to reassess the situation and no longer allows TotalEnergies to make a sufficiently positive contribution in the country,” the company said.

Total will withdraw from its Yadana gas field in the Andaman Sea, which provides electricity to the local Burmese and Thai population, six months at the latest after the expiry of its contractual period.

The company said it had not identified any means to sanction the military junta without avoiding stopping gas production and ensuing payments to the military-controlled Myanmar Oil and Gas Enterprise (MOGE).

Around 30% of the gas produced at Yadana is sold to the MOGE for domestic use, providing about half of the largest city Yangon’s electricity supply, according to Total.

International diplomatic pressure and sanctions have been building against Myanmar’s military junta since last year’s coup ousted civilian leader Aung San Suu Kyi.

The European Union has imposed targeted sanctions on the Myanmar military, its leaders and entities, while Norwegian telecoms operator Telenor this week sold its stake in a Burmese digital payments service over the coup.

More than 1,400 civilians have been killed as the military cracks down on dissent, according to a local monitoring group, and numerous anti-junta militias have sprung up around the country.

Suu Kyi this month was convicted of three criminal charges and sentenced to four years in prison and now faces five new corruption charges. 

 
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For Sammy Abdella, the new year has brought bad tidings: the prospect of a steep drop in sales of scarves, rugs, baskets and other textile goods produced by Sammy Handmade in Ethiopia.

“The U.S. market is our main destination,” said Abdella, who estimates it accounts for nearly two-thirds of sales for his Addis Ababa-based home decor and fashion company. “So, losing that put us in a very, you know, bad situation.”

The source of Abdella’s stress? Effective January 1, Ethiopia was one of three countries — including Guinea and Mali — dropped from a U.S. trade program authorized by the African Growth and Opportunity Act of 2000.  AGOA gives sub-Saharan African countries duty-free access to U.S. markets for 6,500 products — if those countries meet eligibility requirements such as promoting a market-based economy and good governance and eliminating barriers to U.S. trade and investment.

Ethiopia lost its AGOA trade benefits for alleged “gross violations” of human rights in the conflict spreading beyond the northern Tigray region, and the West African nations of Guinea and Mali were disqualified for “unconstitutional change” in their respective governments, the U.S. Trade Representative’s office said.  Guinea experienced a coup d’etat in September. Mali has had two coups since 2020, and its military-led transitional government recently delayed elections. Mali also had been suspended from AGOA for all of 2013 after an earlier coup

A second AGOA delisting will have “serious consequences on the trade in Mali,” Mamadou Fofana, a Mali Chamber of Commerce and Industry spokesman, told VOA.

Mohamed Kaloko, head of Guinea’s Export Promotion Agency, said losing AGOA status raises the duty fee from zero to “at least 35%” for Guinean textiles, which he said were “well sought after on the American market.”

Gracelin Baskaran, a development economist at Cambridge University, predicted the suspensions would have limited impact on Guinea and Mali. Each sends relatively little to U.S. markets — less than 1% of their total exports, based on 2019 trade data.

But Ethiopia likely will feel “much larger effects,” Baskaran said. While the country ranks 88th among U.S. trade partners, its export-driven economic growth model has the American market as a key destination.

“China is the biggest destination,” accounting for 16.6% of Ethiopian exports, “but the U.S. is only one percentage point behind,” at 15.6%, she said, citing data from the Observatory of Economic Complexity.

‘Transformative’ program

Through AGOA, African businesses overall exported $8.4 billion worth of goods to U.S. markets in 2019, according to the U.S. Trade Representative’s office. 

“AGOA has been transformative for the continent,” Baskaran said, noting that textile and apparel imports from Africa to the U.S. “skyrocketed” through the program, “increasing from $356 million in 2001 to $1.6 billion within three years.”

But when a country gets suspended from AGOA, it loses its competitive edge and increases the chance that investors and businesses will seek other, more stable markets. 

“What we’ve seen over and over is that they [countries] don’t necessarily recover,” Baskaran said, “even years after benefits have been reinstated.”

She cited the experience of Eswatini (formerly Swaziland). In 2015, the U.S. government cut AGOA access to the tiny, landlocked southern African nation over labor and human rights violations. Many of the 30 textile and apparel factories established to produce for the American market closed down or moved to nearby Lesotho, and the value of Eswatini textile and apparel exports to the U.S. fell from $73 million in 2011 to just $319,000 in 2017, Baskaran said.

“Uncertainty around AGOA benefits creates long-term effects that undermine growth,” Baskaran said.

Kassahun Follo, president of the Confederation of Ethiopian Trade Unions, estimated that more than 200,000 jobs will be directly affected and more than 1 million indirectly, mostly in textiles, apparel and leather, by the loss of Ethiopia’s AGOA benefits.

Abdella expressed concern for Sammy Handmade and its 57 full-time workers.

“We also outsource to about 135 people,” he said, including weavers and others who produce handicrafts such as ponchos, baskets and leather purses.

The loss will also be felt in the United States, Abdella said. Along with his company’s direct sales to high-end department stores and boutiques, “we’ve had many wholesalers that actually buy from us, and then they in turn sell to retailers. Our wholesale clients are worried. … The market has become so competitive.”

‘People will be scared’

The Ethiopian Economic Association’s executive chairman, Mengistu Ketema, suggested the loss might prompt the Horn of Africa country to turn more to China, already Ethiopia’s top source of direct foreign investment. 

China pays little heed to a trading partner’s internal affairs, in contrast with the U.S. government, Mengistu told VOA.

“They don’t have any conditions attached when they support or do business with you,” he said of Chinese officials. “So, if you see where Ethiopia is now, when the U.S. and so many countries are turning their backs on her, considering China as an alternative is a good move. At least that would help her during her difficult time.”

In an emailed response to VOA, the U.S. State Department called China “a global strategic competitor. We offer alternatives in collaboration with our African and other partners consistent with our shared values.”

The email also said, in part: “The United States promotes democratic governance, respect for human rights, and transparency. Our focus is on strengthening local capacity, creating African jobs, and working with our allies and partners to promote economic growth that is beneficial, sustainable, and inclusive over the long term.”

Trade and statecraft

Trade is a tool of economic statecraft, “one of the best ways of promoting democracy,” said economist Baskaran, noting how economic sanctions effectively pressured South Africa to end apartheid in the 1990s.

Unfortunately, Baskaran said, “there are trade-offs” with sanctions. Businesses and individuals can “fall victim to the drive for large-scale change.”

In Mali’s capital, Bamako, Moussa Bagayoko weaves and dyes cotton fabric for a living. He sees the AGOA delisting as another blow on top of the pandemic, one that will land heavily on tradespeople like him.

“There is no more work for America,” Bagayoko said. “The coronavirus had completely shut us out of everything. … The U.S. government suspends us based on the fact that we do not have a good model of democracy at home. This suspension affects us craftsmen, not authorities.”

Bagayoko has participated in the trade program since 2013. “I earn my living through AGOA,” he said, “but not if it is taken away from me.”

The U.S. Trade Representative’s office has said it would help the governments of each delisted country work toward “clear benchmarks for a pathway to [AGOA] reinstatement.” Each country’s status could be reviewed as soon as it meets the program’s statutory requirements.

The overall AGOA trade program is up for renewal in 2025.

Contributors to this VOA report were Moctar Barry in Bamako, Mali, and Kadiatou Traore for the Bambara Service; and Zakaria Camara in Conakry, Guinea, for the French Service. Dereje Desta of the Horn of Africa Service and Carol Guensburg also reported from Washington.
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First-time claims for U.S. unemployment compensation increased sharply last week to their highest level since October 2021, suggesting that some employers may be laying off workers as the omicron variant of the coronavirus surges throughout the country and curtails business operations. 

The Labor Department said Thursday that 286,000 jobless workers filed for benefits, up 55,000 from the week before, surpassing the 256,000 figure recorded in mid-March, 2020, when the coronavirus first swept into the United States and businesses started laying off workers by the hundreds of thousands.

In recent weeks, the U.S. has been recording 750,000 or more new cases of the coronavirus every day, largely because of the highly transmissible omicron variant. In some instances, that has played havoc with sectors of the world’s biggest economy.

For the most part, employers have been retaining their workers and searching for more as the United States continues its rapid economic recovery from the coronavirus pandemic. The country’s unemployment rate dropped in December to 3.9%, not far above the five-decade low of 3.5% recorded before the pandemic took hold.  

Many employers are looking for more workers, despite about 6.9 million workers remaining unemployed in the United States.  

At the end of November, there were 10.4 million job openings in the U.S., but the skills of available workers often do not match what employers want, or the job openings are not where the unemployed live. In addition, many of the available jobs are low-wage service positions that the jobless are shunning.  

U.S. employers added only 199,000 new jobs in December, a lower-than-expected figure. But overall, 6.3 million jobs were created through 2021 in a much quicker recovery than many economists had originally forecast a year ago.  

The U.S. economic advance is occurring even as President Joe Biden and Washington policymakers, along with consumers, are expressing concerns about the biggest increase in consumer prices in four decades — 7% at an annualized rate in December. 

The surging inflation rate has pushed policymakers at the country’s central bank, the Federal Reserve, to move more quickly to end the asset purchases they had used to boost the country’s economic recovery, by March rather than in mid-2022 as originally planned.  

Minutes of the Fed board’s most recent meeting showed that policymakers are eyeing a faster pace for raising the benchmark interest rate that they have kept at near 0% since the pandemic started. 

The Federal Reserve has said it could raise the rate, which influences the borrowing costs of loans made to businesses and consumers, by a 0.25 percentage point three times this year to tamp down inflationary pressures. 

Meanwhile, government statistics show U.S. consumers are paying sharply higher prices for food, meals at restaurants, gasoline and for new and used vehicles.
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North Korea this week resumed railway imports from China for the first time since its lockdown began in 2020, potentially signaling a new phase in its approach to the pandemic. 

Since Sunday, North Korean freight trains have made several round trips across the Yalu River separating the North Korean city of Sinuiju and the Chinese city of Dandong. 

That is a significant relaxation of COVID-19 measures for North Korea, which has taken perhaps the world’s most severe pandemic precautions. 

However, there are more questions than answers about what the move says about North Korea’s future pandemic approach and when it will attempt to fully resume trade with China, its economic lifeline. 

Why did North Korea resume trade now?

It is possible the decision was driven by desperation spurred by shortages of food or other supplies. There could also be far duller explanations, though, said Peter Ward, a Seoul-based specialist on North Korea’s economy. 

“There are loads of reasons why you’d want to reopen it. And those reasons may not be, ‘Well, there’s going to be a revolution next week unless people in north Pyongyang get their food rations,’” he said. 

North Korea, Ward suggested, might be increasing entry options for imports from China, which was already sending some goods to North Korea by ship. It is also possible a well-connected official in Sinuiju, which relies on trade with China and has suffered economically during the pandemic, may have lobbied North Korean leader Kim Jong Un to restart the railway imports. 

Or it could be that North Korea is now confident enough in its import safety measures, following months of preparation.

What goods are North Korea importing so far? 

During the pandemic, North Korea has experienced shortages of food, medicine, fertilizer, and construction supplies. Some of those items appeared to be included in the first shipments from China, according to video broadcast by several Japanese and South Korean media outlets. 

“But I think there is a strong chance Kim Jong Un also used the deliveries to Pyongyang to stock up on the gifts he intends to dole out for upcoming celebrations in order to maintain loyalty to the Kim family,” Jean Lee, a senior fellow at the Wilson Center, a Washington-based research organization, said. 

On Thursday, a state media readout of a high-profile Politburo meeting mentioned that North Korea should prepare to “grandly” celebrate the coming birthdays of late leaders Kim Il Sung and Kim Jong Il, which are major public holidays. 

The Daily NK, a Seoul-based publication with a network of sources in North Korea, reported this week at least some of the initial shipments included soybean oil, a cooking staple, which will be distributed as gifts on the holidays, known as the Day of the Sun and the Day of the Shining Star.

“Everything right now is focused on preparations to glorify the Kim family — not necessarily on the well-being of the North Korean people,” Lee said.

What safety precautions is North Korea taking with the import process?

A lot. In fact, North Korea appears to be so cautious that it may not even be allowing any North Koreans to enter China to facilitate the shipments. Video of the transfers appears to show a Chinese locomotive dropping off train cars full of goods to North Korea, before bringing empty cars back to China to reload.

Once in North Korea, the cargo appears to enter a disinfection facility recently constructed at an airport near the border, according to commercial satellite photos reported by NK News, a Seoul-based outlet that covers North Korea. At the facility, the goods will likely be sterilized and quarantined, possibly for weeks, analysts say. 

Many scientific studies conclude it is very difficult for people to be infected with COVID-19 through contact with contaminated surfaces or objects. However, North Korea is taking no chances, Colin Zwirko, senior NK News correspondent, said.

 

“North Korea maintains the most severe ‘zero-COVID’ policy in the world because an outbreak could lead to the collapse of the entire system, they admit this in state media. This means they are willing to prevent infections at all costs, even if it requires quarantining objects for long periods that might stand little chance of transmitting the virus. It’s a better-safe-than-sorry approach,” Zwirko says. 

In the past, North Korean officials have embraced numerous scientifically questionable theories about how COVID-19 spreads. The virus, state media have reported, could spread through migratory birds, snow, air pollution, or anti-Pyongyang propaganda leaflets sent by South Korean activists.

How much trade will North Korea allow? 

So far, Japanese and South Korean media have reported at least three roundtrips by freight trains from Sunday through Wednesday. South Korean officials said Thursday they have “steadily detected” train activity, but they could not say how long the train service will continue.

On Monday, China’s Foreign Affairs Ministry confirmed that rail traffic between North Korea and China had “resumed operation,” suggesting the activity could become regular. It is not clear, however, how quickly the quarantine and disinfection facilities will fill up. Some analysts speculate that that process could be a choke point limiting a wider resumption in trade. 

So far, it appears that the trains have only sent goods in one direction, to North Korea, but Daily NK reported Thursday that some North Korean trading companies have begun preparing items for export to China, following an order from authorities.

Both sides have a long way to go to restore pre-pandemic trade levels. According to Chinese government data released this week, China’s trade with North Korea in 2021 fell about 90% compared to 2019, the year before the pandemic restrictions began. 

How will North Korea handle the pandemic moving forward?

While many analysts think North Korea’s trade with China will gradually increase this year, others warn there could be setbacks, especially as China calibrates its own “zero-COVID” policy and struggles to keep out the more transmissible omicron variant. 

It is also not clear whether North Korea will loosen other pandemic restrictions, such as its domestic travel restrictions and border security policies. Since the pandemic began, North Korea has dramatically increased patrols along its border with China, reportedly even issuing shoot-to-kill orders for illegal crossers. The measures have led to a drastic reduction in the number of North Korean escapees and cut off virtually all informal trade, such as smuggling and remittance payments.

Pyongyang may not feel comfortable easing many of those restrictions until it has tools, beyond lockdowns, to combat the virus.

North Korea has refused offers of COVID-19 vaccines from other countries and the United Nations-backed COVAX vaccine distribution initiative. According to the World Health Organization, it is one of only two countries yet to begin vaccination campaigns, the other being Eritrea. 
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