The U.S. Federal Reserve launched a high-risk effort Wednesday to tame the worst inflation since the early 1980s, raising its benchmark short-term interest rate and signaling up to six additional rate increases this year. 

The Fed’s quarter-point hike in its key rate, which had been pinned near zero since the pandemic recession struck two years ago, marks the start of its effort to curb the high inflation that followed the recovery from the recession. The rate hikes will eventually mean higher loan rates for many consumers and businesses. 

The central bank, in a policy statement, along with quarterly projections and remarks by Chair Jerome Powell at a news conference, pointed to a somewhat more aggressive approach to rate hikes than many analysts had expected. 

The projections showed that seven of the central bank’s 16 policymakers favor at least one half-point rate hike this year, suggesting that such a large increase is possible, said Michael Feroli, an economist at JPMorgan Chase. 

At his news conference, Powell stressed his confidence that the economy is strong enough to withstand higher interest rates. But he also made clear that the Fed is focused on doing whatever it takes to reduce inflation, over time, to its 2% annual target. Otherwise, Powell warned, the economy might not sustain its recovery from the pandemic recession. 

“We’re acutely aware of the need to restore price stability,” the Fed chair said. “In fact, it’s a precondition for achieving the kind of labor market that we want. You can’t have maximum employment for any sustained period without price stability.” 

Quarterly projections  

The Fed also released a set of quarterly economic projections Wednesday that underscored the potential for extended interest rate increases in the months ahead. Seven hikes would raise its short-term rate to between 1.75% and 2% at the end of 2022. Fed officials also forecast four more rate increases in 2023, which would boost its benchmark rate to 2.8%. 

That would be the highest level since March 2008. Borrowing costs for mortgage loans, credit cards and auto loans will likely rise as a result. 

“Clearly, inflation has moved front and center into the Fed’s thinking,” said Tim Duy, chief U.S. economist at SGH Macro Advisors. 

The central bank’s policymakers expect inflation to remain elevated, ending 2022 at 4.3%, according to quarterly projections they released Wednesday. The officials also forecast a much slower economic growth of 2.8% this year, down from a 4% estimate in December. 

But many economists worry that with inflation already so high — it reached 7.9% in February, the worst in four decades — and with Russia’s invasion of Ukraine driving up gas prices, the Fed may have to raise rates even higher than it now expects and potentially cause a recession. 

By its own admission, the central bank underestimated the breadth and persistence of high inflation after the pandemic struck. And many economists say the Fed has made its task riskier by waiting too long to begin raising rates. 

The Fed’s projections show that by the end of next year, the policymakers expect their short-term rate to be above “neutral” — the level at which they think the rate neither fuels nor slows economic growth. 

Roberto Perli, an economist at Piper Sandler, questioned Powell’s assurances that the economy could withstand such higher rates. 

“In the past, whenever the Fed has approached — let alone exceeded — neutral, the economy weakened sharply,” Perli wrote in a note to clients. “The risk of recession in 2023 and beyond is increasing.” 

Powell’s predictions 

Yet Powell downplayed the likelihood of an economic setback. 

“The probability of a recession in the next year is not particularly elevated,” he said. 

At his news conference, Powell said he believed that inflation would slow later this year as supply chain bottlenecks clear and more Americans return to the job market, easing upward pressure on wages. 

He also suggested that over time, the Fed’s higher rates will reduce consumer spending on interest rate-sensitive items such as autos and cars. Americans may also buy less as credit card rates increase. Those trends would eventually reduce businesses’ demand for workers and slow pay raises, which are running at a robust 6% annual rate, and ease inflation pressures. 

Powell noted that there are a near-record number of job openings, leaving 1.7 available jobs, on average, for every unemployed person. As a result, he expressed confidence that the Fed can lower demand for workers and wage growth without increasing unemployment. 

“All signs are that this is a strong economy,” he said, “one that will be able to flourish in the face of less accommodative monetary policy.” 

The Fed’s forecast for numerous additional rate hikes in the coming months initially disrupted a strong rally on Wall Street, weakening stock gains and sending bond yields up. But stock prices more than recovered their gains soon after the press conference began. 

Most economists say that sharply higher rates are long overdue to combat the escalation of inflation across the economy. 

“With the unemployment rate below 4%, inflation nearing 8%, and the war in Ukraine likely to put even more upward pressure on prices, this is what the Fed needs to do to bring inflation under control,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association. 

Powell is steering the Fed into a sharp U-turn. Officials had kept rates ultra-low to support growth and hiring during the recession and its aftermath. As recently as December, Fed officials had expected to raise rates just three times this year. 

One member of the Fed’s rate-setting committee, James Bullard, head of the Federal Reserve Bank of St. Louis, dissented from Wednesday’s decision. Bullard favored a half-point rate hike, a position he has advocated in interviews and speeches. 

The Fed also said it would begin to reduce its nearly $9 trillion balance sheet, which has more than doubled in size during the pandemic, “at a coming meeting.” That step will also have the effect of tightening credit for many consumers and businesses. 

Since its last meeting in January, the challenges and uncertainties for the Fed have escalated. Russia’s invasion has magnified the cost of oil, gas, wheat and other commodities. China has closed ports and factories again to contain a new outbreak of COVID-19, which will worsen supply chain disruptions and likely further fuel price pressures. 

In the meantime, the sharp rise in average gas prices since the invasion, up more than 60 cents to $4.31 a gallon nationally, will send inflation higher while also probably slowing growth — two conflicting trends that are notoriously difficult for the Fed to manage simultaneously. 

 
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Traditional Kashmiri carpet weavers are turning to a 21st century technology already embraced by French winemakers and other international purveyors to boost sales by reassuring buyers that they are buying authentic made-in-Kashmir carpets, not cheap imitations.

The technology, used to authenticate wine from Cabo Verde, watches made in Switzerland, Bashkir honey from Russia and Tushuri Guda cheese from Georgia, combines a digital QR code with geo-locational features to guarantee to buyers that a carpet was actually woven in Kashmir.

Carpets from the region are ranked among the finest in the world because of the fineness of the weaving and the quality of the wool and silk yarn.

Mahmood Ahmad Shah, director of Handloom & Handicrafts in Kashmir, says this is the first time the region’s pashmina or Kashmir silk carpets have received QR code-based geographical indications.

With QR code tagging, Shah expects to attract more clients, benefiting local artisans in Indian-administered Kashmir.

“We are optimistic that it would give boost to the $40 million [export] business and would benefit 54,000 artisans registered with the Department of Handloom & Handicrafts in Kashmir,” he told VOA.

The origin of Kashmir’s hand-knotted carpets, locally called as “Kalbaffi,” dates back to the 15th century. Sultan Zain-ul-Abidinis is believed to have sent Persian and Central Asian carpet weavers to Kashmir to teach the locals.

But Shah said the widespread sale of misbranded Kashmiri carpets has eroded trust among the consumers and led to the marginalization of local weavers such as Nissar Ahmad, a 50-year-old weaver from the outskirts of Srinagar who told VOA he works from 9:30 a.m. until 5 p.m. earning the equivalent of just $4.15.

“I have been into carpet weaving for over 35 years and at this age I can’t shift to any other economic activity to earn my living. With this earning, it is hard to manage daily expenses,” he said.

Shah said the certification will help the industry to regain customer trust, leading to a better life for the artisans.

From Gruyère cheese to Tequila, appellations of origin are jealously guarded by local growers and makers, especially in industries in which the quality of the product is directly linked to the place where it was made or grown. Many agricultural products, for example, are impacted by factors such as the climate and quality of soil.

The Srinagar-based Indian Institute of Carpet Technology (IICT) started labeling the Kashmiri carpets earlier this month, embedding such factors into the QR codes as the identity of the weaver, district, raw material, size, knots per square inch, pile height, quality and whether the weaver is an authorized GI user.

That information is readable on digital devices including smart phones, marking the first time the technology has been used in India. “Every piece of information you could ever want to know about a piece of carpet may be found in its QR code,” said Zubair Ahmad, director of the IICT.

Customers who are unable to scan the barcode can verify the product’s legitimacy by typing an alphanumeric code found on the label into a web browser. Ahmad said the label also bears certain information that can be read with infrared equipment, and which cannot be reproduced or damaged.

In order to participate in the program, artisans and manufacturers needs to register with the Indian federal government’s office of the Controller General of Patents, Designs & Trade Marks. According to the Geographical Indications Registry of India, so far there are 25 authorized users in Kashmir.

Shah said the government will be able to map the movement of each carpet in order to better evaluate the international market.

“When a customer scans the QR-tag through a smart phone fixed on the carpet, the department through block-chain technology will be able to trace the geographic location of the carpet and assess the demand from the various countries and will accordingly formulate market strategy.”

The institute has already received hundreds of carpets for labeling and expects the process to standardize the quality of hand knotted carpets. Shah hopes that will lead to Kashmiri carpets being valued on a par for price and quality with the best Iranian and Turkish hand knotted carpets.

A geographical indication can also highlight a product’s human-made attributes, such as manufacturing skills and traditions. The quality of handicrafts often depends on local natural resources and techniques handed down from one generation to the next.
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India is exploring the possibility of buying oil from Russia amid sanctions imposed by Western countries in the wake of its invasion of Ukraine.

India’s petroleum and natural gas minister, Hardeep Singh Puri, said in parliament Tuesday that the government was having discussions with Russia on crude oil purchases.

“I myself have had a conversation with the appropriate levels of the Russian federation. There are discussions currently underway,” he told lawmakers. Puri said that the government was looking at issues such as availability and payment for the crude.

A report in the Times of India newspaper said that India is close to finalizing a deal to buy 3.5 million barrels of Russian crude at “deep discounts.” It attributed the report to people aware of the development but who requested anonymity to discuss the matter.

India is the world’s third largest importer of oil, depending on crude from overseas for over 80% of its needs.

The bulk of its supplies come from the Middle East and the United States, with Russian crude accounting for only about three per cent of its imports.

But the wild fluctuation in international prices following the outbreak of fighting in Ukraine has raised worries about the impact of a ballooning oil import bill on the nascent economic recovery that the country has posted in the last year.

Analysts say New Delhi’s talks on the purchase of crude from Moscow signal that India will keep the doors to trade with Russia open.

Russia has urged India to increase oil exports and investment. In a statement last Friday, Russian Deputy Prime Minister Alexander Novak said that Russia’s oil and petroleum product exports to India have approached $1 billion and there are “clear opportunities to increase this figure.” He also told Petroleum Minister Puri that Moscow was “interested in further attracting Indian investment to the Russian oil and gas sector and expanding Russian companies’ sales networks in India.”

Asked about the possibility that India could take up the Russian offer of discounted crude oil at her daily press briefing on Tuesday, White House Press Secretary Jen Psaki said, “Our message to any country continues to be that abide by the sanctions that we have put in place and recommended. But I don’t believe this would be violating that (sanctions).”

“But also think about where you want to stand when history books are written in this moment in time. And support for the Russian leadership is support for an invasion that obviously is having a devastating impact,” she added.

While the United States has banned Russian oil imports, the European Union has issued sanctions against some Russian companies without banning the purchase of Russian oil.

Resisting pressure from the United States and other Western allies, India has abstained from voting against Moscow at the United Nations. Analysts cite the country’s huge dependence on Russian weapons for its position.

India has called for an end to violence and a diplomatic solution to the crisis in Ukraine. But New Delhi has found itself in a difficult situation as it tries to balance its longstanding ties with Russia with its growing strategic partnership with Washington, that is seen as critical in countering China.
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A massive container ship, owned by the same company whose vessel last year blocked the Suez Canal, has run aground near the U.S. port of Baltimore, U.S. officials said Monday.

The Ever Forward, a 1,096-foot (334-meter) vessel ran aground in the Chesapeake Bay shortly after leaving a Baltimore port Sunday night, William Doyle, the executive director of the Maryland Port Administration, said in a statement.

“There have been no injuries or spills,” Doyle clarified.

“The ship’s grounding is not preventing other ships from transiting to the Port of Baltimore,” he added, noting that efforts had been underway since Sunday night to free the stranded vessel.

The accident came almost exactly a year after the 200,000-ton container ship MV Ever Given became wedged in the Suez Canal during a sandstorm, blocking the key waterway for six days.

The Suez Canal is a vital artery from Asia to Europe that carries 10% of global maritime trade and provides Egypt with vital revenues.

Both vessels are owned by the Evergreen Marine Corp., which is based out of Taiwan.

The Ever Forward was bound for Norfolk, Virginia, when the accident happened, U.S. media reported. 
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Russian officials have said that they will move to nationalize the assets of Western companies that pull out of their country over its invasion of Ukraine, a decision that will cause significant economic harm to hundreds of businesses while, at least temporarily, preserving the jobs of the tens of thousands of Russians employed by them. 

As of Monday, at least 375 companies had announced some sort of pullback from Russia, according to a list maintained by the School of Management at Yale University. The list includes companies that have cut ties with Russia completely, as well as those that have suspended operations there while attempting to preserve the option to return. 

According to multiple media reports, dozens of Western companies have been contacted by prosecutors in Russia with warnings that their assets, including production facilities, offices, and intellectual property, such as trademarks, may be seized by the government if they withdraw from the country. 

Endorsed by Putin 

Russian President Vladimir Putin last week endorsed the proposed seizure of Western assets, a plan that was originally aired by a senior member of United Russia, the country’s dominant political party. 

United Russia’s proposal went beyond asset seizures, advocating a policy of arresting executives of foreign business who criticize the actions of the Russian government. According to Reuters, another proposal under consideration would target public companies if more than 25% of their shares are held by individuals from “unfriendly states.” A bill put forward by United Russia legislators would allow the government to force such firms into “external administration,” leading to the elimination of existing shareholder rights and the auctioning of new shares recognized by the Russian government. 

On Twitter last week, White House press secretary Jen Psaki warned that Russia could face further sanctions or legal action if it goes forward with the nationalization plan. “Any lawless decision by Russia to seize the assets of these companies will ultimately result in even more economic pain for Russia,” she wrote. 

New sort of expropriation 

There is a long history of governments expropriating the assets of foreign firms, but experts said that what Russia is threatening falls outside the typical pattern. In the past, governments have nationalized foreign businesses in the name of ideology, as Cuba did in the wake of the Communist revolution there, or because they want to capture the revenue going to private enterprise, as with Iran in the nationalization of its oil industry in 1951. 

Elisabeth Braw, a senior fellow at the American Enterprise Institute, told VOA that is not what is happening in Russia. 

“It’s not about Russia saying, ‘Well, we think we can run these companies better on our own,'” she said. “It’s really about punishing those companies, which makes it so different from various revolutionary governments that have seized Western companies’ assets in the past.” 

In other cases of nationalization, Braw said, the government seizing assets typically did so strategically. They chose business sectors, at least in part, based on the assumption that they had, or could quickly develop, the capacity to operate them independently. 

But Russia’s threat of blanket nationalization of foreign companies that leave the country would effectively put the Kremlin into the role of operating everything from McDonald’s fast-food franchises to Gillette razor factories to Mercedes-Benz car manufacturing plants. 

Success unlikely 

Experts said that Russia is likely to have a difficult time finding people with the expertise to run many of the foreign firms that might be subject to nationalization. The management ranks of most non-Russian firms have historically been heavily weighted with expatriates, many of whom have been rushing to get out of the country. 

“Some businesses, some manufacturing operations, might well fit the Russian model,” James O’Rourke, a professor of Management at the University of Notre Dame’s Mendoza College of Business, told VOA. 

Certain kinds of companies, he said, “might be run by an oligarch or a friend of the regime, and it might work out. But I don’t think most of them will.” 

O’Rourke said that even if Russia were able to find the managers needed to keep foreign businesses running, supply chain problems may prove insurmountable. McDonald’s, for example, sources its produce and baked goods from multiple different countries, most of which are actively engaged in the international effort to cut off trade with Russia. Gillette’s manufacturing facilities in Russia use machines made in the U.S. and Germany, which will be unwilling to supply spare parts. 

Political benefits 

The Russian government might be able to score a short-term public relations victory with its own people if it can portray the nationalization of Western businesses as an effort to retain jobs that might otherwise have been lost, said Braw, of the American Enterprise Institute. 

However, she said, unless the Kremlin can find a way to successfully perpetuate the companies’ operations without Western expertise or supplies, the PR benefits of nationalization are likely to be short-lived. 

 
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EU foreign policy chief Josep Borrell has confirmed the bloc is poised to impose a fourth round of sanctions against Russia for its invasion of Ukraine.

Speaking in Skopje during a visit to the North Macedonian capital on Monday, the EU’s top diplomat accused Moscow of targeting civilians in its war against Ukraine, noting that “more than” 2,400 civilians had died in the besieged port city of Mariupol alone.

“Putin’s war is not only about Ukraine, it’s about security and stability of our European continent. It affects all of us,” Borrell said, adding that another package of sanctions targeting Russia’s steel, coal, and energy sectors, as well as its market access and membership in international financial institutions.

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“This will be another major blow to the economic and logistic base upon which the Kremlin is building the invasion and taking the resources to finance it,” Borrell said. He gave no further details.

Some of the most severe fighting is taking place in Mariupol, a major port city in eastern Ukraine, where Russian forces have shelled a maternity ward and blasted apartment buildings, leaving the city in ruins.

The unceasing barrages into the city have also thwarted repeated attempts to bring in food and water and evacuate tens of thousands of trapped civilians.

Russia on Monday said it had created conditions to open humanitarian corridors and that a mass evacuation of people had begun.

Ukrainian Deputy Prime Minister Iryna Vereshchuk said a convoy had been trying to reach the city to deliver aid and help evacuate women and children, but, as with similar attempts over the past week, that as of early in the afternoon it had not been able to reach the city.

 
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The Ukrainian government is doing what it can to keep the country’s economy running. Still, its money is running out fast. The IMF executive board approved a $1.4 billion loan to Ukraine on March 10. But experts say it won’t last for long. Oksana Bedratenko has the story, narrated by Anna Rice.
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Germany plans to buy up to 35 U.S.-made F-35 fighter jets and 15 Eurofighter jets, a parliamentary source said Monday, as part of a major push to modernize the armed forces in response to Russia’s invasion of Ukraine.

The F-35 jets made by Lockheed Martin would help replace Germany’s decades-old Tornado fleet, according to media reports confirmed by the source.

Tornados are the only jets capable of carrying U.S. nuclear bombs stationed in Germany that are a key part of NATO deterrence.

Lockheed’s F-35 stealth jets are considered the most modern combat aircraft in the world, and their unique shape and coating make them harder to detect by enemy radar.

The additional Eurofighter jets Germany plans to purchase, made by a consortium that includes Airbus, would reportedly be used for other operations, including electronic warfare and escort missions.

German Chancellor Olaf Scholz last month pledged to invest $112 billion in the nation’s chronically underfunded Bundeswehr.

The spending boost marks a major reversal for Europe’s top economy, upending its policy of keeping a low military profile in part out of guilt over World War II.

After years of criticism that the country wasn’t shouldering enough of the financial burden in the NATO military alliance, Scholz also vowed to spend more than two percent of Germany’s gross domestic product annually on defense, surpassing NATO’s target.

The shift was prompted by the return of war to the European continent following Russia’s invasion of Ukraine on February 24, shaking Germany’s sense of security and shining a harsh spotlight on the state of its armed forces.

The F-35 purchase however raises questions about the future of a common European fighter jet being developed with Spain and France.

Known as the Future Combat Air System (FCAS), the plane is slated to replace French-made Rafale jets and German and Spanish Eurofighter planes by 2040.

Scholz sought to allay fears that the project might become unnecessary late last month, by saying the joint European project was an “absolute priority.”

“It is important to me… that we build the next generation of combat aircraft and tanks in collaboration with European partners,” he said.

But the German Bundeswehr must replace its Tornado fleet in the short term because it has become “obsolete,” Scholz added.
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Russia may default on its debts in the wake of unprecedented sanctions over its invasion of Ukraine, but that would not trigger a global financial crisis, International Monetary Fund Managing Director Kristalina Georgieva said on Sunday.

Georgieva told CBS’s “Face the Nation” program that sanctions imposed by the United States and other democracies were already having a “severe” impact on the Russian economy and would trigger a deep recession there this year.

The war and the sanctions would also have significant spillover effects on neighboring countries that depended on Russian energy supplies and had already resulted in a wave of refugees compared to that seen during World War II, she said.

Russia calls its actions in Ukraine a “special operation.”

The sanctions were also limiting Russia’s ability to access its resources and service its debts, which meant a default was no longer viewed as “improbable,” Georgieva said.

Asked if such a default could trigger a financial crisis around the world, she said, “For now, no.”

The total exposure of banks to Russia amounted to around $120 billion, an amount that while not insignificant, was “not systemically relevant,” she said.

Asked if Russia could access the $1.4 billion in emergency IMF funding approved for Ukraine last week if Moscow won the war and installed a new government, Georgieva said the funds were in a special account accessible only by the Ukrainian government.

An IMF official said that referred to the “internationally recognized government of Ukraine.”

The IMF last year blocked access to Afghanistan’s funds by the Taliban after they seized control of the government, citing lack of clarity over recognition of the Taliban rulers within the international community.

Georgieva last week said the IMF would downgrade its previous forecast for 4.4% global economic growth in 2022 as a result of the war, but said the overall trajectory remained positive.

Growth remained robust in countries like the United States that had been fast to recover from COVID-19 pandemic, she told CBS.

The impact would be most severe in terms of driving up commodity prices and inflation, potentially leading to hunger and food insecurity in parts of Africa, she said.
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David Hoffman remembers a time when the interests of the U.S. business community carried great weight in Washington, especially regarding U.S. economic policy toward China. Hoffman, who formerly worked at PricewaterhouseCoopers, once led the firm’s technology and entertainment advisory practices in that country.

But sympathy for those interests disappeared during the administration of former President Donald Trump, Hoffman says. And it has not gotten any better under President Joe Biden.

“Business is vilified by its China presence in all respects,” said Hoffman, now at The Conference Board, a global business and research think tank.

An annual survey released this week by the American Chamber of Commerce in China found China remains a “top global priority,” but that many businesses are not planning on any major investments there this year.

Geo-political challenges

Sino-U.S. relations continue to be strained and further exacerbated by China’s close ties with Russia and Beijing’s desire to stay neutral on the war in Ukraine.

Even before Russian troops entered Ukraine, U.S. regulators and lawmakers had been weighing policies aimed at curtailing business and investment between the two nations over a range of competitive, national security and human rights concerns. China’s crackdown on its own businesses has also affected U.S. investors and firms, some of which have pulled out of the country over the past year.

“One of the things I noticed about the difficulty American companies face is pleasing Beijing and Washington,” said Scott Kennedy, a senior adviser at the Center for Strategic and International Studies at a recent event.

The China market

For multinational corporations, there is still no substitute for being in China, which after the U.S., is the world’s second largest economy with 1.4 billion people. Despite the at-times hostile political rhetoric, China remains the U.S.’s largest trading partner.

During his administration, Trump accused China of not offering an even playing field for foreign businesses to compete. The result was a trade war in which the two countries imposed high tariffs on each other’s products.

De-coupling efforts

While dialing down the rhetoric, the Biden administration has continued with Trump’s hard line. “Engagement,” Washington’s approach toward China for decades, has given way to harsher rhetoric of de-coupling or even punishing China, complain business community members.

In Washington, some recent China-focused legislation and proposals have the business community’s attention. They include a regulatory battle over Chinese companies listed on U.S. stock exchanges and proposals to review U.S. investments in Chinese companies.

U.S. business concerns

At a recent Asia Society of Northern California event on the future of U.S.-China relations, some speakers said they were worried about measures emanating from Washington and Beijing that seem to be pulling apart business ties between the two nations.

Nicholas Borst, vice president and director of China research at Seafarer Capital Partners, argued that the U.S. business community should have a voice when it comes to U.S. policy toward China.

“It’s one of the few areas between the U.S. and China where we can really get away from a lot of the zero-sum thinking, where China’s economic development doesn’t have to come at the expense of the U.S.,” he said.

Myron Brilliant, executive vice president at the U.S. Chamber of Commerce, told the gathering that Washington is going to tighten export controls and investment screenings.

“The political environment in Washington is that one thing that unites the two parties is China and the threat of competition,” he said.

Washington is going to put pressure on U.S. companies “to divest a little bit, to bring back resources here, to invest domestically and think about our own national security in the lens of economic competitiveness, which puts at risk U.S. engagement over a long time in China,” he said.

Washington’s concerns

In Washington, where U.S. business focuses its considerable lobbying efforts, the consensus has shifted to a more aggressive stance toward the Chinese government because of the increasing role of the Chinese government, under President Xi Jinping, in taking over large parts of the economy, says one lawmaker.

“The development of state champions in key industry sectors should have been a warning signal to the businesses in the U.S. business community,” said Rep. Rick Larsen, a Democrat congressman from Washington state and chair of a bipartisan U.S. China Working Group.

“If there are individuals and companies or industries within the business community who feel aggrieved or not being listened to, the government they need to first look at is the government of Xi Jinping. The Chinese government policy has been very clear over the last decade plus about its direction — further regulation, further state involvement in the economy, in fact, not just state involvement but the state taking over large parts of the economy.”

However, there is a role for U.S. business to help the administration and Congress understand the implications of its decisions, Larsen said.

“That doesn’t mean it’s going to change those decisions, just that we might make those with our eyes opened wider,” he said.

Business climate in China

Ken Wilcox, former CEO of Silicon Valley Bank, went to China in 2010-11 to set up a joint venture. From experience, he says the Chinese Communist Party controls the outcome of foreign and domestic businesses there and “the party wants to control the entire economy.”

Both Washington and business are too extreme in their views about China, the former too negative, the latter too positive, “giving China a hall pass,” said Wilcox.

In the current climate, businesses would be wise to rethink their China strategy, said Martijn Rasser, a former senior intelligence officer at the U.S. Central Intelligence Agency and now senior fellow and director of the Technology and National Security Program at the Center for a New American Security.

“Yes, there’s a lot of money to be made, but these companies have to think much longer term and ultimately devise business strategies that don’t rely on the Chinese domestic market for long term growth, because that is ultimately ephemeral and there is a time limit on it,” he said.

Hoffman encourages U.S. companies to work with regulators to address national security concerns while doing business in China.

If they don’t, he argues, “any forthcoming ‘safe trade’ regulations will likely be more restrictive, less efficient, and more costly than they need to be.”
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The United States has banned Russian energy imports and wants Saudi Arabia to increase oil production to mitigate a dramatic spike in gas prices. But just how willing Gulf states are to help bring oil prices down remains to be seen. VOA’s Senior Diplomatic Correspondent Cindy Saine reports.
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