Chinese President Xi Jinping pledged this week to help advance four economic powers, despite pandemic problems at home and knock-on effects from Russia’s war in Ukraine. Analysts expect the pledges to take time, with no immediate results.

Xi made his remarks Thursday at the virtual BRICS Summit hosted by Beijing.

The other countries are Brazil, Russia, India and South Africa, which together with China make up the grouping known as BRICS. These large emerging economies see themselves as an alternative to the U.S.-led world order.

The leader of China advocated BRICS cooperation in cross-border payments and credit ratings, the official Xinhua News Agency in Beijing reported Thursday. The report says he further recommended “facilitation” of trade, investment and financing.

Xi as host of the group’s 14th summit said he would work with the BRICS countries to support global development that is “stronger, greener and healthier,” Xinhua added.

The leader urged more countries to join the New Development Bank, a concessional lender founded by BRICS countries in 2015. He called, too, for improving the group’s emergency balance-of-payments relief mechanism, the Contingent Reserve Arrangement, Xinhua added.

View toward future deals

Substantive progress on these goals will likely take time, analysts say, as the member countries do not always get along with one another and China’s ambitions may take time to evolve given issues at home and abroad.

“At the highest level, there’s a little bit of a discussion, then that may lead to further opportunities to be further engaged down the road,” said Song Seng Wun, a Singapore-based economist in the private banking unit of Malaysian bank CIMB.

China’s economy has outgrown the others after decades of export manufacturing for much of the world. But the keeper of a $17.5 trillion GDP has teetered this year amid lockdowns to contain a COVID-19 surge — which snarled world supply chains originating in China.

BRICS member Russia faces economic sanctions from the West over its war in Ukraine, which has sparked food shortages and inflation. China still faces tariffs on goods shipped to the United States, fallout from a bilateral trade dispute.

India and China have their own differences. The world’s two most populous countries contest sovereignty over mountain territories between them, and China bristles at India’s geopolitical cooperation with the West.

Developing countries, including those among the BRICS, can easily turn to Japan, the European Union and other alternatives to China for economic support, said Stuart Orr, School of Business head at Melbourne Institute of Technology in Australia. Those choices will slow China’s ambitions to sow BRICS cooperation as developing states prefer not to over-rely on Beijing, he said.

“There’s a lot of talk but probably not so much real progress in that regard and I suspect things will probably end up sort of getting pushed back to the next BRICS meeting for further progress once the dust has settled,” Orr said.

China still “struggles with health issues” while its historic political rival the United States is finding new suppliers and customers for soy exports, Orr said.

Officials in Beijing want to expand cooperation with other countries as the United States sanctions Russia over the war and China over trade, said Huang Kwei-bo, associate professor of diplomacy at National Chengchi University in Taipei.

The BRICS countries might reassure one another over energy and food shortages linked to the war, Song said. Later, he said, they could “flesh out” substantive agreements.

Anti-West position

China regularly offers economic aid, investments and COVID-19 vaccines to friendly developing countries from Africa into Central Asia. Its flagship is the Belt and Road Initiative, a 9-year-old, $1.2 trillion list of foreign infrastructure projects aimed at opening China-linked trade routes.

Chinese officials feel the BRICS nations will welcome their support, and in turn, accept some of their political views, analysts say. Of the BRICS states, only Brazil voted against Russia’s invasion of Ukraine at the United Nations earlier this year. China, India and South Africa abstained.

India, despite its West-leaning political activity and reservations about China’s Belt-and-Road, still takes Russian oil.

“India-China relations are very sensitive, but outside these existing relations, like in the Caribbean and Latin America, those spots are where India and China wouldn’t have clashes of interest,” Huang said.

Brazil in particular is looking for more international support to overcome the “devastating impacts” of COVID-19 in the country, Orr said.

“There should be some other countries that would think about joining this kind of regime,” Huang said. “Then, if a lot of those countries don’t have such good relations with the U.S. side, doesn’t that mean it’s one more thing causing a headache for the United States in terms of geopolitics?”

A declaration issued at the summit Thursday says the five countries support talking further about expanding their group. 
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President Joe Biden’s proposed Indo Pacific Economic Framework with key Asian nations signals a new approach for U.S. trade policy in the region. As VOA’s Kane Farabaugh reports, U.S. farmers are optimistic the Framework will provide new markets for their goods.
Camera: Kane Farabaugh Producer: Kane Farabaugh
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Cameroon’s President Paul Biya has for the first time sent a delegation to Europe to try to encourage well-off Cameroonians living there to invest back home. But members of Cameroon’s diaspora say undemocratic practices and corruption in Biya’s government put off investors.

Government officials say a delegation led by Youth Affairs and Civic Education Minister Mounouna Foutsou was dispatched to Germany this week to ask Cameroonians there to invest in their country of origin.

Foutsou said his wish is for all Cameroonians in the diaspora to put aside their differences and help develop Cameroon.

“The head of state reiterated his call to the Cameroonian diaspora to come and build Cameroon. We seize this opportunity to come and exchange with the whole Cameroonian diaspora here in Europe so that we can present the different opportunities offered by the president of the republic and his government so that the Cameroonian diaspora can come back and participate in the development of the nation,” said Foutsou.

Foutsou said the government will offer tax exemptions of up to 40 percent for diaspora investments in Cameroon, and loans of up to $10,000 with no interest rates for diaspora youths who return to invest in agriculture and livestock.

Kennedy Tumenta is a Cameroonian investor who lives in Germany. He said many in the diaspora find it hard to trust promises made by their government.

He said corruption, high taxes and a lack of confidence in President Biya, who has been in power for 40 years, scare investors.

“Freedom is restricted and they are afraid to move around in Cameroon and do their businesses and speak freely. Most diasporans believe that there is widespread corruption when it concerns opening businesses in the country or the Northwest-Southwest crisis is not being taken into consideration seriously by the government in place. It makes them frustrated and the only way to express this frustration is either to withdraw their investments in the country or attacking the head of state,” said Tumenta.

Separatists have been fighting to carve out an independent English-speaking state in mainly French-speaking Cameroon, since 2016. The U.N. says 3,300 people have died in the fighting.

Some disgruntled Cameroonians in the diaspora have become hostile to the government, and at least seven Cameroonian embassies have been attacked or ransacked since January 2020.  

Felix Mbayu is a top official with Cameroon’s Ministry of External Relations. He said Cameroonians taking part in such protests are hurting the country’s image.

“Those who left Cameroon unhappy and have not been able to make it there are those who would speak ill of Cameroon. Those who left Cameroon to better their lot in life and have made it there are those who come back to invest in Cameroon. That is why you see medical doctors who have built hospitals, built clinics, who bring back home medical supplies. You don’t see them in the idle marches abroad. In fact, when you talk ill of your own home, you tarnish your own image,” said Mbayu.

An estimated five million Cameroonians live abroad. The government says the largest diaspora population is in Nigeria where about two million live.

There are also high concentrations in Belgium, France, Germany, the United Kingdom and the United States.
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The war in Ukraine is causing disruptions around the world, from what President Joe Biden terms a “Putin price hike” for American petroleum consumers to an impending global food crisis. On Wednesday, Biden said he was taking steps to try to offset the effects, something he said he’ll be focusing on ahead of two key summits and a Mideast trip. Anita Powell reports from the White House.
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U.S. tariffs on Chinese goods offer a key element of leverage over Beijing, something Washington should be reluctant to relinquish, the top American trade official said Wednesday. 

Progress with China’s unfair trade practices has been elusive, which makes the tariffs an important tool, U.S. Trade Representative Katherine Tai told lawmakers. 

“The China tariffs are, in my view, a significant piece of leverage and a trade negotiator never walks away from leverage,” she said in testimony before the Senate Appropriations Committee. 

“The United States has repeatedly sought and obtained commitments from China, only to find that lasting change remains elusive,” she added. 

President Joe Biden has said he is considering lifting some of the tariffs imposed by his predecessor, Donald Trump, and also plans to talk with Chinese leader Xi Jinping. 

White House press secretary Karine Jean-Pierre said Wednesday that no decision has been made on the tariffs. 

“The president has been discussing this with his team,” she told reporters, adding that there is no timeline for an announcement. 

But any decision would likely have to come soon, as some of the tariffs are to expire starting July 6 unless they are renewed. 

Successive rounds of tariffs imposed by Trump eventually covered about $350 billion in annual imports from China in retaliation for Beijing’s theft of American intellectual property and forced transfer of technology. 

Treasury Secretary Janet Yellen is among those arguing that removing the tariffs could ease inflation, which has reached a 40-year high and is squeezing American families. 

“The tariffs we inherited; some serve no strategic purpose and raise costs to consumers,” Yellen said on Sunday. 

The administration is looking at “reconfiguring some of those tariffs so they make more sense and reduce some unnecessary burdens,” Yellen said. 

But Tai said there is a limit to what can be done to address rising prices in the short term. 

Meanwhile, U.S. homebuilders issued a statement urging the administration to remove tariffs on Canadian lumber to ease the pressure on homebuyers. 

“If the administration is truly interested in providing U.S. citizens relief from high inflation by removing costly tariffs, it should ensure that Canadian lumber is among the tariffs it targets for elimination,” Jerry Konter, chairman of the National Association of Home Builders, said in a statement. 

Washington lowered lumber tariffs in January to 11.64%, but NAHB calculates the duties have added more than $18,600 to the price of a new home since last August. 

Tai told lawmakers she regularly discusses the issue with her counterparts in Ottawa to try to resolve the issue. 

But she added: “That requires the Canadian government to be willing to address the fundamental challenges that we have with respect to an unlevel playing field for our industry with respect to how they govern their harvesting in their industry.”
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From multinational makers of clothing to consumer electronics, companies are reassessing their sources of raw materials, parts and factory assembly because of the pandemic, experts say.

That means countries in Southeast Asia and Latin America are becoming key go-to places in the global supply chain as businesses shift away from China post-pandemic.

China had attracted foreign-invested factories since the 1980s for cheap labor and high productivity. But since the pandemic, China’s traditional role as the world’s factory will be reduced, as American and European multinationals look for parts, labor and assembly at home for higher-end goods — nearby or wherever subsidies are available — according to Jayant Menon, a visiting senior fellow with the ISEAS-Yusof Ishak Institute’s Regional Economic Studies Program in Singapore.

“Countries like China that mismanage COVID will suffer greatly,” Menon told VOA via WhatsApp. “That’s because their zero COVID approach has been very disruptive to supply chains.”

While Southeast Asian countries including Vietnam, Thailand and Indonesia have been lifting pandemic restrictions this year, China reinstated lockdowns in two major cities. The lockdowns upset factory orders — and raised consumer prices — because of shipping slowdowns and worker shortages.

Seeking alternatives to China

In addition to pandemic-related disruptions in China, delays caused by worker shortages at major global ports and airports, including South Korea and the United States, have stifled the flow of consumer goods into Europe, North America and parts of Asia.

Taiwan-based PC developer Acer, for example, is addressing lockdown-driven supply chain problems by qualifying “second sources for materials where needed,” a spokesperson told VOA. The world’s No. 5 PC vendor by market share manufactures largely in China. The second sources will “come from various countries,” the spokesperson said without giving details.

American firms intend to stay in China overall but diversify, said Douglas Barry, communications vice president with the U.S.-China Business Council advocacy group in Washington. “We hear over and over that it’s a mistake to put all your eggs in one basket,” Barry said. “China’s response to COVID and growing geopolitical tensions are reminders of this truism.”

Southeast Asia

Nations such as Vietnam and Thailand were taking business from China before 2020, as investors faced rising Chinese labor costs and higher tariffs thanks to the Sino-U.S. trade dispute that began in 2018.

“I think Southeast Asia will clearly be a beneficiary of all this reconfiguration taking place. Countries like Vietnam, and to a lesser extent Thailand and Malaysia, have already seen gains from restructuring of supply chains,” Menon said.

Vietnam, he said, has a lead because of its workforce talent, pro-business reforms and network of free trade agreements. Electronics giant Samsung and American chip developer Intel both operate in Vietnam, as do foreign-invested car factories.

Malaysia is trying to capture more multinational tech, he noted. Last month, a subsidiary of giant Taiwanese electronics assembler Foxconn Technology signed an agreement with its Malaysian partner Dagang NeXchange to set up a factory, possibly for electric vehicles.

Malaysia, along with Thailand, Indonesia and the Philippines, offer “moderate wages” compared to China, said Rajiv Biswas, Asia-Pacific chief economist with S&P Global Market Intelligence in Singapore.

Multinationals, he said, are likely to expand industrial capacity in multiple places but stay in China for its market of a billion-plus people.

“They will still continue producing in China, but they will create additional production capacity in other hubs, and because of what we’ve seen during the pandemic when you can see disruptions in multiple locations, the resilience in the supply chain comes from having multiple production facilities, which also, I think, includes producing outside of Asia,” Biswas said.

Latin America

In Latin America, especially its industrial hub Mexico, products have been selling to the all-important U.S. market as a border nation. Mexico stands to benefit more from a trend known as near-shoring, analysts say.

A shared border, common time zones and linguistic similarities bring Mexico especially close to the United States, said Evan Ellis, a research professor of Latin American studies at the U.S. Army War College Strategic Studies Institute. The workforce is relatively educated, too, he said.

“Mexico is generally more accessible to many businesses in the United States in terms of the language and the culture and things than, for example, setting up shop in some cases in an Asian country or some other country that’s out of the hemisphere,” Ellis said.

Mexico has attracted American firms since the 1990s and retains “strong advantages,” Ellis said, but drug crimes and electricity costs loom as drawbacks.

Mexico is enticing some investors because its goods can enter the United States duty free under trade agreement rules, communications executive Barry said.

Brazil makes sense for companies that need its natural resources, such as ore or petroleum — or that sell cars for example — to its market of 212 million people, many in middle class cities, Ellis said. He noted that costs and regulations, however, challenge investors in Brazil.

“Manufactures are competing for limited supply of key commodities and logistical capacity, leading to consumers experiencing empty shelves and long purchase lead times,” stated professional services firm KPMG on its website. Now, it adds, “industry is evaluating and investing in their long-term supply chain strategies, paving the way for a new post pandemic normal,” which includes finding alternative customers, markets and suppliers to avoid overdependence on just one.
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Sri Lanka’s debt-laden economy has “collapsed” after months of shortages of food, fuel and electricity, its prime minister told lawmakers Wednesday, in comments underscoring the country’s dire situation as it seeks help from international lenders.

Prime Minister Ranil Wickremesinghe told Parliament the South Asian country is “facing a far more serious situation beyond the mere shortages of fuel, gas, electricity and food. Our economy has completely collapsed.”

While Sri Lanka’s crisis is considered its worst in recent memory, Wickremesinghe’s assertion that the economy has collapsed did not cite any specific new developments. It appeared intended to emphasize to his critics and opposition lawmakers that he has inherited a difficult task that can’t be fixed quickly, as the economy founders under the weight of heavy debts, lost tourism revenue and other impacts from the pandemic, as well as surging costs for commodities.

Lawmakers of the country’s two main opposition parties are boycotting Parliament this week to protest against Wickremesinghe, who became prime minister just over a month ago and is also finance minister, for not having delivered on his pledges to turn the economy around.

Wickremesinghe said Sri Lanka is unable to purchase imported fuel, even for cash, due to heavy debt owed by its petroleum corporation.

“Currently, the Ceylon Petroleum Corporation is $700 million in debt,” he told lawmakers. “As a result, no country or organization in the world is willing to provide fuel to us. They are even reluctant to provide fuel for cash.”

Wickremesinghe took office after days of violent protests over the country’s economic crisis forced his predecessor to step down. In his comments Wednesday, he blamed the previous government for failing to act in time as Sri Lanka’s foreign reserves dwindled.

The foreign currency crisis has crimped imports, creating severe shortages of food, fuel, electricity and other essentials such as medicines, forcing people to stand in long lines to obtain basic needs.

“If steps had at least been taken to slow down the collapse of the economy at the beginning, we would not be facing this difficult situation today. But we lost out on this opportunity. We are now seeing signs of a possible fall to rock bottom,” he said.

So far, Sri Lanka has been muddling through, mainly supported by $4 billion in credit lines from neighboring India. But Wickremesinghe said India would not be able to keep Sri Lanka afloat for long.

It also has received pledges of $300 million-$600 million from the World Bank to buy medicine and other essential items.

Sri Lanka has already announced that it is suspending repayment of $7 billion in foreign debt due this year, pending the outcome of negotiations with the International Monetary Fund on a rescue package. It must pay $5 billion on average annually until 2026.

Wickremesinghe said IMF assistance seems to be the country’s only option now. Officials from the agency are visiting Sri Lanka to discuss a rescue package. A staff-level agreement is likely to be reached by the end of July.

“We have concluded the initial discussions and we have exchanged ideas on various sectors such as public finance, finance, debt sustainability, stability of the banking sector and the social security network,” Wickremesighe said.

Representatives of financial and legal advisers to the government on debt restructuring, Lazard and Clifford Chance, are also visiting the island and a team from the U.S. Treasury will arrive next week, he said.
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Drivers around the world are feeling pain at the pump with fuel prices soaring, and costs are surging to heat buildings, generate power and operate industries.

Prices were elevated before Russia invaded Ukraine on February 24. But since mid-March, fuel costs have surged while crude prices have increased only modestly. Much of the reason is a lack of adequate refining capacity to process crude into gasoline and diesel to meet high global demand. 

How much can the world refineries produce daily?

Overall, there is enough capacity to refine about 100 million barrels of oil a day, according to the International Energy Agency (IEA), but about 20% of that capacity is not usable. Much of that unusable capacity is in Latin America and other places where there is a lack of investment. That leaves somewhere around 82 million to 83 million bpd in projected capacity. 

How many refineries have closed? 

The refining industry estimates that the world lost 3.3 million barrels of daily refining capacity since the start of 2020. About a third of these losses occurred in the United States, with the rest in Russia, China, and Europe. Fuel demand crashed early in the pandemic when lockdowns and remote work were widespread. Before that, refining capacity had not declined in any year for at least three decades.

Will refining pick up?

Global refining capacity is set to expand by 1 million bpd per day in 2022 and 1.6 million bpd in 2023.

How much has refining declined since before the pandemic? 

In April, 78 million barrels were processed daily, down sharply from the pre-pandemic average of 82.1 million bpd. The IEA expects refining to rebound during the summer to 81.9 million bpd as Chinese refiners come back online. 

Where is most of the refining capacity offline, and why? 

The United States, China, Russia and Europe are all operating refineries at lower capacity than before the pandemic. U.S. refiners shut nearly 1 million bpd of capacity since 2019 for various reasons.

Nearly 30% of Russia’s refining capacity was idled in May, sources told Reuters. Many Western nations are rejecting Russian fuel. 

China has the most spare refining capacity. Refined product exports are allowed only under official quotas, mainly granted to large state-owned refining companies and not to smaller independent companies that hold much of China’s spare capacity.

As of last week, run rates at China’s state-backed refineries averaged around 71.3% and independent refineries were around 65.5%. That was up from earlier in the year, but low by historic standards.

What else is contributing to high prices? 

The cost to carry products on vessels overseas has risen because of high global demand, as well as sanctions on Russian vessels. In Europe, refineries are constrained by high prices for natural gas, which powers their operations.

Some refiners also depend on vacuum gasoil as an intermediate fuel. Loss of Russian vacuum gasoil has prevented certain refineries from restarting certain gasoline-producing units. 

Who is benefiting from the current situation? 

Refiners, especially those that export a lot of fuel to other countries, such as U.S. refiners. Global fuel shortages have boosted refining margins to historic highs, with a key spread nearing $60 a barrel. That has driven big profits for U.S.-based Valero and India-based Reliance Industries. 

India, which refines more than 5 million bpd, according to the IEA, has been importing cheap Russian crude for domestic use and export. It is expected to boost output by 450,000 by year-end, the IEA said. 

More refining capacity is set to come online in the Middle East and Asia to meet growing demand.
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U.S. President Joe Biden is due to speak Wednesday about gas prices and economic effects of Russia’s war in Ukraine as he considers whether to support suspending the nation’s federal gas tax. 

Biden has said he would make his decision by the end of the week. 

The gas tax is set at 18.4 cents per gallon, with most of the money going toward road construction projects. 

Average gas prices in the United States are at about $5 per gallon. Fuel prices around the world have risen in recent months, with rebounds in demand, refining capacity challenges, and sanctions against major oil producer Russia among the contributing factors. 

White House press secretary Karine Jean-Pierre told reporters Tuesday that the issue is a top priority for Biden and “all options are on the table.” 

“He’s going to do everything that he can to make sure he relieves some pain and some pressure that Americans are feeling at the pump,” Jean-Pierre said. 

Opponents of suspending the tax, including some Democratic lawmakers, say the move would not address supply problems and would take money away from infrastructure needs. 

Some information for this report came from The Associated Press and Reuters.
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A group of U.S. solar energy project developers on Tuesday said they would jointly spend about $6 billion to support expansion of the domestic solar panel supply chain. 

The U.S. Solar Buyer Consortium, which includes developers AES Corporation AES.N, Clearway Energy Group, Cypress Creek Renewables and DE Shaw Renewable Investments, said in a statement that the funds would address current supply chain issues. 

Since the start of the pandemic, companies that buy solar panels for large power plants have struggled with global supply chain disruptions that have driven up costs, as well as potential U.S. tariffs on imported panels from Asia. Duties on those products, which supply most U.S. projects, would make solar energy more expensive and less competitive with power produced by fossil fuels. 

The consortium will invest $6 billion as it recruits solar panel manufacturers in a long-term strategic plan to supply up to 7 gigawatts (GW) of solar modules per year from 2024 — which could power nearly 1.3 million homes. 

“Our joint commitment to procure at this scale can provide the certainty suppliers need to ramp up capacity and overcome current supply chain constraints,” David Zwillinger, chief executive of DE Shaw Renewable Investments, said in a statement. 

The United States installed 23.6 gigawatts of solar capacity in 2021, according to industry trade group the Solar Energy Industries Association. 

Asian imports account for most U.S. panel demand from solar facility developers. In response, the tiny domestic manufacturing sector in recent years has sought tariffs on Asia-made panels repeatedly, saying their products cannot compete with cheap overseas-made components. 

U.S. President Joe Biden this month waived tariffs on solar panels from four Southeast Asian nations for two years and invoked the Defense Production Act to spur solar panel manufacturing at home. 

In their statement, the panel consortium said more needed to be done and called on Congress to pass proposed legislation to support domestic solar manufacturing. 

 
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