HONG KONG — Eight Chinese cities have joined a program allowing their residents to travel to Hong Kong on their own, rather than as part of a tour group, as part of efforts to boost Hong Kong’s economy. 

Hong Kong is battling to revive its economy following a national security crackdown and COVID-related controls, which led to many locals and expats leaving the city and caused tourist numbers to dwindle to a fraction of prepandemic levels. 

The Individual Visit Scheme began in 2003 as part of a cooperation agreement between mainland China and Hong Kong to boost the city’s economy by allowing Chinese residents to apply for individual travel, rather than in a tour group. 

Fifty-one cities have already joined the program and will be joined by Taiyuan in Shanxi Province, Hohhot in the Inner Mongolia Autonomous Region, Harbin in Heilongjiang Province, Lhasa in the Tibet Autonomous Region, Lanzhou in Gansu Province, Xining in Qinghai Province, Yinchuan in the Ningxia Hui Autonomous Region and Urumqi in the Xinjiang Uygur Autonomous Region. 

Hong Kong city leader John Lee said, “These eight cities are all provincial capital cities with large populations, significant economic growth and high spending power.” 

Although recent official figures showed the territory growing 2.7% in the first quarter compared with the year before, local businesses have described shopping malls as “dead,” with low foot traffic and shops covered with “for lease” or “coming up soon” signs. 

One lawmaker recently told the city’s legislature that more than 20,000 companies had deregistered in the first quarter of 2024, up more than 70% from the same period last year. 

China imposed a sweeping national security law in 2020 after months of pro-democracy protests in 2019. In March, authorities enacted another set of security laws that some foreign governments say further undermine rights and freedoms. 

The Hong Kong and Chinese governments have repeatedly said the security laws have brought stability.
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Taipei, Taiwan — Chinese President Xi Jinping concluded his high-profile European tour Friday after signing dozens of agreements with France, Hungary and Serbia, while reiterating Beijing’s desire to enhance “mutually beneficial cooperation” between China and Europe.

Some analysts say Xi’s trip to Europe is part of Beijing’s attempt to undermine European unity while deepening its foothold in the European Union through elevated economic ties with Hungary, a member of the 27-nation bloc.

“Beijing has identified France as a weak link in the EU” that it could potentially influence because of French President Emmanuel Macron’s efforts to prioritize his country’s “strategic autonomy,” and the Chinese government “thinks they can use Hungary and Serbia to influence Central and Eastern Europe,” said Sari Arho Havren, an associate fellow at the Royal United Services Institute in Brussels.

Chinese state media outlets are framing Xi’s European tour as a success by highlighting the positive aspects of the trip. The state-run Global Times described the 18 deals that China and France signed this week as “a positive signal for European entrepreneurs and a stabilizer to China-Europe trade ties against [the] decoupling push.”

Meanwhile, the state-run Xinhua News Agency said China’s decision to elevate ties with Hungary marks “the most recent stride in China’s effort to deepen cooperation with Central and Eastern European nations.”

Judging from the substance of his trip, Arho Havren said, Xi did achieve some success in testing unity in Europe.

Additionally, Arho Havren said Xi’s recent interactions with Macron and German Chancellor Olaf Scholz also expose a fault line between Germany and France — the EU’s top two economies — regarding how to handle relations with China.

“Since Scholz prioritized German interests due to fear of Chinese countermeasures during his trip to Beijing, [it’s clear] that Beijing has been successful in influencing the German businesses and through them, the chancellor,” she told VOA in a written response.

Unlike Scholz, some experts said Macron tried to show that he supports the EU’s common approach toward China by inviting European Commission President Ursula von der Leyen to join his initial meeting with Xi in Paris.

“I think conveying the sense that [projecting European unity] is the top priority for French diplomacy has been the successful part of Xi’s European tour for Paris,” Mathieu Duchatel, director of international studies at the French policy group Institut Montaigne, told VOA by phone.

Overall, Arho Havren said some European countries should understand they can’t influence China’s behavior by engaging with them individually. Rather, such practice runs the risk of creating disunity within the EU, which is what Beijing seeks.

“China will continue its efforts to keep the EU disunited by playing the target countries’ vulnerabilities and egos against one another,” she told VOA.

EU’s economic security agenda

Some observers say one of China’s initiatives to challenge the EU’s unity is to slow down the bloc’s efforts to carry out key parts of its economic security agenda. In recent months, the EU has launched anti-subsidy investigations into several Chinese products, including green energy and security devices.

During his meeting with Macron and von der Leyen, Xi said there is no such thing as “China’s overcapacity problem,” and he urged the EU to “develop the right perception of China and adopt a positive China policy.”

Despite Beijing’s denial, von der Leyen reiterated on Wednesday that Europe needs to stop China from flooding the European market “with massively subsidized electric cars.”

“We have to tackle this, [and] we have to protect our industry,” she said during the party convention of the Christian Democrats in Berlin.

Duchatel said China has not been “very successful” in slowing down the EU’s economic security agenda. “I don’t think China can turn away that wave because when it comes to using [the economic security] instruments to reestablish some form of balance in our relations with China, there is a broad agreement across Europe,” he told VOA.

While there is a consensus across Europe that the EU should strengthen its capacity to defend its interests, Duchatel said there is a lack of unity in the bloc about how to build leverage against China. “We are failing in terms of having a more offensive agenda to force some concessions [from Beijing],” he told VOA.

Countries may “get some nuances in the Chinese language regarding Ukraine, or words regarding withholding tariffs on [French] brandy. [They] don’t really get anything tangible [from Beijing],” Duchatel said.

Following his meeting with Xi and von der Leyen, Macron said he welcomed China’s pledge not to supply arms to Russia, while Xi said he supports Macron’s proposal for a global truce during the Olympic Games in Paris this summer.

No major changes

Despite Beijing’s attempt to portray Xi’s visit as productive regarding improving EU-China relations, some analysts say they don’t expect the trip to reshape the dynamics between Beijing and Brussels.

Justyna Szczudlik, deputy head of research at the Polish Institute of International Affairs, told VOA that since France is the most important stop for Xi’s trip and Macron showcased his support for the EU’s approach toward China, she doesn’t anticipate “any huge change to EU-China relations” following Xi’s visit.

While the economic security agenda will remain the EU’s main approach to handling trade relations with China, Duchatel said many European countries say that China’s investment environment “has become very risky” and that Beijing has failed to persuade European governments that its partnership with Russia “is not something that goes against European security.”

“I don’t think Xi’s words in Paris have changed this perception, so his visit [won’t] make up for the trust lost over the last few years,” he told VOA.
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WASHINGTON AND SAN FRANCISCO — U.S. President Joe Biden is set to announce new tariffs on China as soon as next week, targeting strategic sectors, including electric vehicles, according to two people familiar with the matter. 

The full announcement, which could take place as soon as Tuesday, is expected to largely maintain existing levies, according to one of the people. An announcement could also be pushed back, the person said. 

The tariffs were also set to include semiconductors and solar equipment, according to one of the people. 

Details on the precise value or categories of tariffs that would be imposed were sketchy, but the administration was said to have zeroed in on areas of interest within strategic competitive and national security areas, one of the people said. 

The U.S. Trade Representative’s office made its recommendations to the White House weeks ago, but a final announcement was delayed as the package was debated internally, according to one of the sources and an additional person familiar with the matter. 

Biden, a Democrat seeking reelection in November, is looking to contrast his approach with that of Republican candidate Donald Trump, who has proposed across-the-board tariffs that White House officials see as too blunt and prone to spark inflation. 

The White House and the office of the U.S. Trade Representative declined to comment. Bloomberg News first reported the story. 

The measures could invite retaliation from China at a time of heightened tensions between the world’s two biggest economies. Trump’s broader imposition of tariffs during his presidency prompted China to retaliate with its own levies. 

Biden has said he does not want a trade war with China even as he has said the countries have entered a new paradigm of competition. 

Both 2024 presidential candidates have sharply departed from the free-trade consensus that once reigned in Washington, a period capped by China’s joining the World Trade Organization in 2001. 

In 2022, Biden launched a review of the Trump-era policy under Section 301 of the U.S. trade law. Last month, he called for sharply higher U.S. tariffs on Chinese metal products, but the targeted products were narrow in range, estimated at more than $1 billion of steel and aluminum products, a U.S. official said. 

Biden also announced launching an investigation into Chinese trade practices across the shipbuilding, maritime and logistics sectors, a process that could lead to more tariffs. 

The Biden administration has also been pressuring neighboring Mexico to prohibit China from selling its metal products to the United States indirectly from there. 

China has said the tariff measures are counterproductive and inflict harm on the U.S. and global economy. 
…

The U.S. economy is one of the biggest issues for voters in the 2024 presidential contest between Joe Biden and Donald Trump. Biden campaigned this week on new tech investments. Trump says he will roll back Biden infrastructure spending and increase oil drilling. VOA’s Scott Stearns has the story.
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DETROIT — Federal investigators say they have “significant safety concerns” about a Ford SUV recall repair that doesn’t fix gasoline leaks that can cause engine fires.

The U.S. National Highway Traffic Safety Administration is demanding volumes of information from the automaker as it investigates the fix in a March 8 recall of nearly 43,000 Bronco Sport SUVs from the 2022 and 2023 model years, and Escape SUVs from 2022. All have 1.5-liter engines.

Ford says the SUVs have fuel injectors that will crack, allowing gas or vapor to leak near hot engine parts that can cause fires, fuel odors and an increased risk of injuries.

In an April 25 letter to Ford released Thursday, the agency’s Office of Defects Investigation wrote that based on its review of the recall repairs, it “believes that the remedy program does not address the root cause of the issue and does not proactively call for the replacement of defective fuel injectors prior to their failure.”

Ford’s remedy for the leaks is to add a drain tube to send the gas away from hot surfaces, and a software update to detect a pressure drop in the fuel injection system. If that happens, the software will disable the high-pressure fuel pump, reduce engine power and cut temperatures in the engine compartment. Owners also will get a “seek service” message.

But in the 11-page letter to the automaker, the agency asks Ford to detail any testing it did to verify the remedy resolved the problem and whether hardware repairs are needed. It also asks the company to explain any other remedies that were considered and any cost-benefit analysis the company did when it picked the fix.

Safety advocates have said Ford is trying to avoid the cost of replacing the fuel injectors and instead go with a cheaper fix that drains gasoline to the ground.

Ford said Thursday that it is working with the NHTSA during its investigation.

NHTSA also is asking ford to detail how the software will detect a fuel pressure drop, how much time elapses between cracking and detection, and what messages will be sent to the driver. It also asks what effect disabling the high-pressure fuel pump has on other fuel system parts, and how the SUVs will perform when the pump is disabled.

The agency also wants to know how much fuel will leak and whether the amount complies with federal environmental and safety standards. And it wants to hear Ford’s take on “its obligations (legal, ethical, environmental and other) to prevent and/or limit fuel leakage onto the roadway at any point during a vehicle’s lifespan.”

Ford has to provide information to the agency by June 21, the letter said. Depending on the results of its investigation, the agency can seek additional repairs that fix the fuel leaks.

The company has said in documents that it has reports of five under-hood fires and 14 warranty replacements of fuel injectors, but no reports of crashes or injuries.

In a previous email, Ford said it is not replacing fuel injectors because it is confident the recall repairs “will prevent the failure from occurring and protect the customer.” The new software triggers a dashboard warning light and allows customers to drive to a safe location, stop the vehicle and arrange for service, the company said. NHTSA documents filed by Ford say the problem happens only in about 1% of the SUVs.

The company also said it will extend warranty coverage for cracked fuel injectors, so owners who experience the problem will get replacements. Repairs are already available, and details of the extended warranty will be available in June, Ford said.

The recall is an extension of a 2022 recall for the same problem, according to Ford. The repair has already been tested on vehicles involved in the previous recall, and Ford said it’s not aware of any problems.

The company also said it isn’t recommending that the SUVs be parked only outdoors because there’s no evidence that fires happen when vehicles are parked, and the engines are off.

NHTSA said in documents that in the 2022 recall, which covered nearly 522,000 Bronco Sports and Escapes, Ford had the same remedy as the latest recall.

 
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MELBOURNE, Australia — Air Vanuatu filed for bankruptcy protection on Friday a day after the South Pacific state-owned carrier cancelled all international flights, stranding thousands of travelers.

The airline on Wednesday canceled more than 20 flights to and from the Australian cities of Sydney and Brisbane, and the New Zealand city of Auckland for the rest of the week. The airline said it was the result of “extended maintenance requirements” on their aircraft.

Ernst & Young Australia’s Morgan Kelly, Justin Walsh and Andrew Hanson were appointed liquidators in an equivalent of a U.S. Chapter 11 bankruptcy, the firm said in a statement. The liquidators said safety and maintenance checks would be made before normal operations resumed.

Kelly said the airline’s existing management team would remain in place.

“Air Vanuatu is critical to the people of the Republic of Vanuatu and a strategically important business to the nation,” Kelly said. “Our team is working closely with management to ensure continuity of service to customers and to ensure services continue as seamlessly as possible.”

“The outlook for the airline is positive, despite pressures on the broader industry, and we will be focused on securing the future of this strategically vital national carrier,” he added.

Affected travelers would be informed of this disruption and rebooked on flights as soon as operations resumed, the statement said.

Air Vanuatu operates four planes, including one Boeing 737 and three turboprop planes.

Tourism contributed 40% of Vanuatu’s gross domestic product.

The Vanuatu Tourism Office apologized to travelers for the disruption.

“This is an evolving situation and we will continue to post updates,” the office said in a statement.

The office’s chief executive Adela Issachar said the administrator was in discussions with Virgin Australia and Fiji Airways, airlines that currently service Vanuatu, about flying stranded passengers.

“The updated schedule should be advised soon so we’re all looking forward for that,” Issachar told Australian Broadcasting Corp.

Kelly said Air Vanuatu had been impacted by labor shortages, rising operating costs, elevated interest rates and tropical cyclones on tourist numbers in recent years.

“We’ll be looking at all options. And the Vanuatu government has indicated that they would prefer to resume operations as quickly as possible. Our role as voluntary liquidators will be to look at to assess all options to achieve that and make that sustainable,” Kelly told reporters.

“So that might involve some kind of sale process, it may involve some kind of partnership arrangement with another airline,” Kelly added.

Australian tourist Sally Witchalls said she and four friends had been checking out of their Port Vila hotel on Wednesday morning when they were told at reception that their Air Vanuatu flight would not fly that day.

She has since discovered that her travel insurance did not cover an airline going into voluntary administration, as Air Vanuatu had done, or bankrupt.

“We’re now on our own working out how we pay for the accommodation from here on out while we wait to see how the situation with Air Vanuatu unfolds,” Witchalls told ABC.
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Beijing — Two of China’s wealthiest cities said Thursday they would lift all restrictions on buying homes, joining a growing list of urban areas rolling back curbs as they look to prop up the faltering property market.

Many Chinese cities imposed restrictions and tough credit requirements on home purchases well over a decade ago in an effort to tamp down soaring prices and rampant speculation.

But they are now reversing those policies in a bid to stem an economic slump characterized by a debt crisis among developers, low demand and falling prices.

The eastern city of Hangzhou — home to 12.5 million people — said Thursday it had ditched all purchase restrictions “to promote the [market’s] stable and healthy development”.

“From the date of issuance… those who buy lodgings within the bounds of this city will no longer have their purchasing qualifications reviewed,” it said.

Hangzhou, a major innovation hub home to tech giants such as Alibaba, is one of the most desirable and expensive places to buy property in China.

In a separate announcement, the northwestern city of Xi’an, which has a population of 13 million, said it had also cancelled all such restrictions.

The announcements quickly racked up more than 230 million views on social media site Weibo, where many users were doubtful the policy would make any difference.

“With Hangzhou’s house prices, what’s the point of cancelling buying restrictions? I still can’t afford it,” wrote one commenter.

Bill Bishop, publisher of the influential Sinocism newsletter, called the move “a sign of desperation.”

“If this does not goose sales there will be more trouble as prices will have to adjust downward a lot,” he wrote on social media site X.

More than 20 cities have abolished home purchase restrictions since the beginning of last year, according to an AFP tally.

Chengdu in southwestern China said last month it would no longer look at prospective buyers’ household registration documents, social security and other conditions before greenlighting purchases.

Several of the biggest cities, including Beijing, Shanghai and Shenzhen, have partly lifted curbs but have resisted dumping them entirely.

Property and construction account for more than a quarter of China’s gross domestic product, but the sector has been under unprecedented strain since 2020.

That year, authorities tightened developers’ access to credit in a bid to reduce mounting debt.

Since then, major companies including Evergrande and Country Garden have teetered on bankruptcy, while falling prices have dissuaded consumers from investing in property.

Measures introduced by the central government to support the sector have so far had little effect.

And President Xi Jinping has largely stuck to his often-touted maxim that “houses are for living in, not for speculation.”

Last month, the International Monetary Fund said China’s economic recovery from the pandemic could falter if the crisis was not properly addressed.

“Without a comprehensive response to the troubled property sector, growth could falter, hurting trading partners,” it warned in its World Economic Outlook report.
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LONDON — Chinese President Xi Jinping offered few concessions to his counterpart and host Emmanuel Macron as he wrapped up a two-day visit to France on Tuesday evening. Both presidents are seeking to mend ties on Xi’s first trip to Europe in five years, after relations were soured by trade disputes and Beijing’s support for Russia in its invasion of Ukraine.

Macron invited Xi high into the Pyrenees Mountains, the home region of the French president’s maternal grandmother. Beneath snowy peaks shrouded in fog, the two leaders and their wives watched traditional dancers before dining on locally produced ham, lamb, cheese and blueberry pie.

French officials said the mountain trip on Tuesday would provide a chance for less- formal one-on-one discussions after the pomp and ceremony of Xi’s official state welcome in Paris on Monday.

Relations have worsened significantly since Xi last visited the region in 2019, before the coronavirus pandemic. Europe accuses Beijing of subsidizing industries that are undercutting its own companies in areas such as electric vehicles — but Macron told his Chinese guests that the European Union is not seeking to cut economic ties.

“Our shared objective is to continue our relationship,” Macron told delegates Monday at the Franco-Chinese Business Council in Paris. “There is no logic in decoupling from China. It’s a desire to preserve our national security, just as you do for your own. It’s a desire for mutual respect and understanding, and a desire to continue to open up trade, but to ensure that it is fully fair at all times, whether in terms of tariffs, aid or access to markets.”

WATCH: While visiting France, Xi offers few concessions over trade, Russia

China’s response

Xi made no immediate concessions, said analyst Steve Tsang, director of the China Institute at the University of London School of Oriental and African Studies.

“Xi Jinping does not feel that China has an overcapacity issue. And he feels that the European position on Chinese EVs, for example, is unreasonable. But then of course he is also trying to engage with the French and potentially having a leading Chinese car manufacturer setting up facilities in France, as a kind of incentive to persuade that maybe it’s in France’s interest to engage with China and welcome Chinese EVs,” Tsang told VOA.

The trade relationship is tilted in Beijing’s favor, according to Nicholas Bequelin, a senior fellow at Yale Law School’s Paul Tsai China Center.

China “has a major export economy towards Europe. The trade deficit in Europe is huge and growing. The de-risking or anti-subsidy policies that the European Union wants to put in place will take a lot of time — and because they affect the different countries in the European Union differently, it is very difficult to get to an agreement,” Bequelin said.

Russia threat

Europe faces the more pressing security threat of Russia, as the Kremlin’s forces slowly advance in eastern Ukraine. China has given Moscow diplomatic and economic support, despite Western appeals for Beijing to help end the illegal invasion.

Xi declared a “no limits” partnership when Russian President Vladimir Putin visited Beijing in February 2022, just days before the Kremlin’s tanks rolled across the Ukrainian frontier.

A recent U.S. assessment concluded that China is providing vital components such as machine tools and microelectronics that Russia is using to make weapons. Last year, trade between China and Russia hit a record $240 billion.

Speaking in Paris Monday, Xi rejected European accusations that China was aiding Russia’s war.

“China is neither the creator of the crisis, nor a party, a participant of the war. However, we didn’t just watch the fire burning across the river but have been playing an active role in achieving peace,” Xi told reporters.

Europe’s message

China’s claim is demonstrably false — and European leaders must take a tougher line, said analyst Igor Merheim-Eyre, a policy adviser at the European Parliament and research fellow at the University of Kent.

“We’ve already had [German] Chancellor Olaf Scholz, we’ve had Macron, we’ve had Charles Michel, the president of the European Council, we have [EU Commission] President [Ursula] von der Leyen, all making trips to Beijing and repeating the same message: that China should not be supporting Russia in its aggression against Ukraine. And in those two years, I see no change,” Merheim-Eyre told VOA.

“What they’ve really failed at is spelling out to Xi Jinping what will be the cost of China supporting Russia’s war of aggression — which it clearly is. I mean if it wasn’t, we wouldn’t already have four Chinese companies on the EU sanction list. And the circumventions are much broader than that,” he said.

Costs for China

Europe should make the costs clear, said analyst Tsang, because China’s “policy has always been one of declaring neutrality, supporting Putin and refusing to pay a price for that.”

Sanctioning Chinese companies that are supplying Russia’s military would likely be effective, he said. “For Xi Jinping, the important thing is that he stays in power, and that means he has to keep the Chinese economy on an even keel. Supporting Putin is a desirable thing — but fundamentally staying in power overrides the aspirational goal of undermining U.S. global preeminence and leadership.” Tsang said.

“Shared interest”

Von der Leyen on Monday urged Beijing to help end the war. “We agree that Europe and China have a shared interest in peace and security. We count on China to use all its influence on Russia to end Russia’s war of aggression against Ukraine,” she said in a recorded video address.

But European leaders should be more realistic about Beijing’s ambitions, argued analyst Merheim-Eyre.

“I’m looking at my world map, and I’m trying to see where exactly this common interest lies. Because wherever I look, from Africa to the South China Sea to Ukraine, China is playing a destructive role, and I do not see common areas of interest in these matters.”

After visiting France, Xi was headed Tuesday for Serbia, a key Balkan partner in Beijing’s Belt and Road investment program. On Wednesday, Xi is due to travel to Hungary, his closest European ally and a longtime thorn in the side of EU unity on Russia and China policy.

VOA’s Mandarin Service contributed to this story.
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KASHAN, Iran — The historic Kashan bazaar in central Iran once sat on a major caravan route, its silk carpets known the world over. But for the weavers trying to sell their rugs under its ancient arches, their world has only unraveled since the collapse of Iran’s nuclear deal with world powers and wider tensions with the West.

Rug exports, which exceeded $2 billion two decades ago, have plummeted to less than $50 million in the last year in the Persian calendar that ended in March, according to government customs figures. With fewer tourists coming and difficulties rising in making international transactions, Iranian rugs are going unsold as some weavers work for as little as $4 a day.

“Americans were some of our best customers,” said Ali Faez, the owner of one dusty carpet shop at the bazaar. “Rugs are a luxury product and they were eager to buy it and they used to make very good purchases. Unfortunately, this has been cut — and the connection between the two countries for visitors to come and go has gone away.”

Kashan’s rug-weaving industry has been inscribed in UNESCO’s list of the world’s “intangible cultural heritage.” Many of the weavers are women, with the skills needed for the Farsi weaving style passed down from generation to generation, using materials like vine leaves and the skins of pomegranate fruit and walnuts to make the dyes for their threads. A single rug can take months to make.

For decades, Western tourists and others would pass through Iran, picking up rugs as gifts and to take back home. After the 1979 Islamic Revolution, the U.S. increased sanctions on Iran’s theocratic government over the U.S. Embassy siege, Tehran’s links to militant attacks and other issues.

But in 2000, the outgoing administration of former President Bill Clinton lifted a ban on the import of Iranian caviar, rugs and pistachios.

“Iran lives in a dangerous neighborhood,” then-Secretary of State Madeleine Albright said at the time. “We welcome efforts to make it less dangerous.”

By 2010, with concerns rising over Iran’s nuclear program, the U.S. again banned Iranian-made Persian rugs. But in 2015, Iran struck a nuclear deal with world powers which greatly reduced and drastically lowered the purity of Tehran’s stockpile of enriched uranium. The rug trade was allowed once again.

Three years later, in 2018, then-President Donald Trump unilaterally withdrew the U.S. from the nuclear deal. Since then, Iran began enriching uranium at near-weapons-grade levels and has been blamed for a series of attacks at sea and on land, including an unprecedented drone-and-missile attack targeting Israel last month.

For the carpet weavers, that’s meant their wares were once again banned under U.S. law.

“It started when Trump signed that paper,” Faez told The Associated Press, referring to the renewed sanctions. “He ruined everything.”

Abdullah Bahrami, the head of a national syndicate for handwoven rug producers, also blamed the collapse of the industry on the Trump sanctions. He put the value of exports to the U.S. as high as $80 million annually prior to the sanctions.

“The whole world used to know Iran by its rugs,” Bahrami told the state-run IRNA news agency in March.

Making things worse is what carpet sellers see as a drop in tourists to Kashan as well. High-value American and European tourism in Iran has largely stopped, the daily Shargh newspaper warned last year. Ezzatollah Zarghami, Iran’s minister of tourism, insisted in April that 6 million tourists visited the country over the last 12 months, though that likely includes religious pilgrims as well as Afghans and Iraqis with less spending money.

But even those tourists that do show up face the challenge of Iran’s financial system, where no major international credit card works.

“I had a Chinese customer the other week. He was struggling to somehow make the payment because he loved the rug and didn’t want to let go of it,” Faez said. “We have to pay a lot of commission to those who can transfer money and have bank accounts abroad. Sometimes they cancel their orders because they don’t have enough cash with them.”

The collapse of the rial currency has left many Iranians also unable to purchase the handwoven rugs. Wages in the industry are low, leading to a growing number of Afghan migrants working in workshops around Kashan as well.

Designer Javad Amorzesh, one of just a few of Kashan’s old-school artists, said his orders have fallen from 10 a year to just two. He has laid off staff and now works alone in a cramped space.

“Inflation rose every hour. People were hit repeatedly by inflation,” he said. “I used to have four to five assistants in a big workshop.”

Offering a bitter laugh alone in his workshop, he added, “We’ve been left isolated.”
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WASHINGTON — The nation’s employers pulled back on their hiring in April but still added a decent 175,000 jobs in a sign that persistently high interest rates may be starting to slow the robust U.S. job market. 

Friday’s government report showed that last month’s hiring gain was down sharply from the blockbuster increase of 315,000 in March. And it was well below the 233,000 gain that economists had predicted for April. 

Yet the moderation in the pace of hiring, along with a slowdown last month in wage growth, will likely be welcomed by the Federal Reserve, which has kept interest rates at a two-decade high to fight persistently elevated inflation. Hourly wages rose a less-than-expected 0.2% from March and 3.9% from a year earlier, the smallest annual gain since June 2021. 

The Fed has been delaying any consideration of interest rate cuts until it gains more confidence that inflation is steadily slowing toward its target. Fed rate cuts would, over time, reduce the cost of mortgages, auto loans and other consumer and business borrowing. 

Stock futures jumped Friday after the jobs report was released on hopes that rate cuts might now be more likely sometime in the coming months. 

Even with the April hiring slowdown, last month’s job growth amounted to a solid increase, although it was the lowest monthly job growth since October. With the nation’s households continuing their steady spending, many employers have had to keep hiring to meet their customer demand. 

The unemployment rate ticked up 3.9% — the 27th straight month in which it has remained below 4%, the longest such streak since the 1960s. 

Last month’s hiring was led by health care companies, which added 56,000 jobs. Warehouse and transportation companies added 22,000 and retailers 20,000. 

The state of the economy is weighing on voters’ minds as the November presidential campaign intensifies. Despite the strength of the job market, Americans remain generally exasperated by high prices, and many of them assign blame to President Joe Biden. 

America’s job market has repeatedly proved more robust than almost anyone had predicted. When the Fed began aggressively raising rates two years ago to fight a punishing inflation surge, most economists expected the resulting jump in borrowing costs to cause a recession and drive unemployment to painfully high levels. 

The Fed raised its benchmark rate 11 times from March 2022 to July 2023, taking it to the highest level since 2001. Inflation did steadily cool as it was supposed to — from a year-over-year peak of 9.1% in June 2022 to 3.5% in March. 

Yet the resilient strength of the job market and the overall economy, fueled by steady consumer spending, has kept inflation persistently above the Fed’s 2% target. 

The job market has been showing other signs of eventually slowing. This week, for example, the government reported that job openings fell in March to 8.5 million, the fewest in more than three years. Still, that is nevertheless a large number of vacancies: Before 2021, monthly job openings had never topped 8 million, a threshold they have now exceeded every month since March 2021. 

On a month-over-month basis, consumer inflation hasn’t declined since October. The 3.5% year-over-year inflation rate for March was still running well above the Fed’s 2% target. 
…

Washington — U.S. consumers appear less optimistic about the jobs market and more worried about future financial conditions, bringing a closely watched confidence metric to its lowest level since July 2022, a survey showed Tuesday.

The consumer confidence index fell to 97.0 in April, said The Conference Board, significantly below the 104.0 reading that analysts anticipated.

This marks the third straight month consumer confidence has worsened, the report said, and comes as President Joe Biden struggles to boost perceptions about the economy as his reelection campaign ramps up.

“Consumers became less positive about the current labor market situation, and more concerned about future business conditions, job availability, and income,” said Dana Peterson, chief economist at The Conference Board.

But she added that despite the slip, “optimism about the present situation continues to more than offset concerns about the future.”

The biggest worries surrounded “elevated price levels, especially for food and gas,” said Peterson.

Meanwhile, politics and global conflicts were “distant runners-up,” she added.

While consumers rated current business conditions “positively,” their views of the labor market weakened with more reporting that jobs are hard to get, said The Conference Board.

Consumers also became less upbeat about their families’ financial situations, both currently and in the future.

“Perceptions about the labor market deteriorated even as job growth remains robust, and the unemployment rate is historically low,” noted Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

“A deteriorating trend in sentiment could persist,” she cautioned.

This risks bogging down spending and growth, given that inflation remains persistent and interest rate cuts are “not imminent,” she said.
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Paris, France — G7 environment ministers committed on Tuesday to ramp up the production and deployment of battery storage technology, an essential component for increasing renewable energy and combating climate change.  

Here is how and why batteries play a vital role in the energy transition:   

Growing demand

Batteries have been central to the rise of electric vehicles (EVs) but are also critical to wind and solar power because of the intermittent nature of these energy sources.  

Surplus electricity must be stored in batteries to stabilize distribution regardless of peaks in demand, or breaks in supply at night or during low winds.   

Battery deployment in the energy sector last year increased more than 130 percent from 2022, according to a report released last week by the International Energy Agency (IEA).    

The main markets are China, the European Union and the United States. 

Following closely are Britain, South Korea, Japan and developing nations in Africa, where solar and storage technology is seen as the gateway to energy access.  

Six-fold goal

To triple global renewable energy capacity by 2030 — a goal set at the UN climate conference in December — the IEA says a six-fold increase in battery storage will be necessary.  

Clean energy is essential to reduce emissions from burning fossil fuels and to hope to keep the international target of restricting global warming to 1.5 degrees Celsius above pre-industrial levels.   

The total storage capacity required to achieve this target is an estimated 1,500 gigawatts by 2030.  

Of this, 1,200 GW will need to be supplied by batteries.

Cost challenges

In less than 15 years, the cost of batteries has fallen by 90 percent.  

“The combination of solar PV and batteries is today competitive with new coal plants in India. And just in the next few years, it will be cheaper than new coal in China and gas-fired power in the United States,” IEA chief Fatih Birol said last week.   

“But still the pace is not fast enough to reach our goals in terms of climate change and energy security.”  

Costs will have to come down further, he said, while calling for supply chains to be diversified.   

Most batteries are currently produced by China.   

But some 40 percent of planned battery manufacturing projects are in the United States and Europe, according to the IEA.   

If those projects are realized, they would be nearly sufficient to meet the needs of those countries.

Metal matters

Another thorny issue is the availability of critical metals like lithium and cobalt that are essential to make batteries.  

Experts say the development chemical alternatives could complement the dominant lithium-ion technology.  

“Transition in the technology will reduce the amount of lithium” needed, said Brent Wanner, head of the IEA’s power sector unit, adding, “this includes shifting to sodium-ion batteries.” 

Beyond 2030, high-density solid-state batteries that offer a longer lifespan are expected to become commercially available. 

There are other storage options, although not as widely applicable or available as batteries.

Pumped storage hydropower has long been used in the hydroelectric sector.

The transformation of electricity into hydrogen, which can be stored and transported, is a new technology expected to become more readily available. 

Be flexible

Renewable energy is not entirely reliant on storage and measures can be taken to improve the flexibility of its production to meet demands.   

Industry and governments are gearing up for the transition.   

The European Union’s Energy Regulators Agency called on member states in September to assess their “flexibility potential” based on estimates that renewables will need to double by 2030.   

Such a rise requires greater “flexibility” in grids, meaning energy can be stored and distributed consistently despite fluctuating production and demand.   

The G7 said Tuesday it would not only support more production and use of battery storage, but promote technological advancements in the sector as well as grid infrastructure.

 
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HAVANA — Alejandro Fonseca stood in line for several hours outside a bank in Havana hoping to withdraw Cuban pesos from an ATM, but when it was almost his turn, the cash ran out. He angrily hopped on his electric tricycle and traveled several kilometers to another branch, where he finally managed to withdraw some money after wasting the entire morning.

“It shouldn’t be so difficult to get the money you earn by working,” the 23-year-old told The Associated Press in a recent interview.

Fonseca is one of an increasing number of frustrated Cubans who must grapple with yet another hurdle while navigating the island’s already complicated monetary system — a shortage of cash.

Long queues outside banks and ATMs in the capital, Havana, and beyond start forming early in the day as people seek cash for routine transactions such as buying food and other essentials.

Experts say there are several reasons behind the shortage, all somehow related to Cuba’s deep economic crisis, one of the worst in decades.

Omar Everleny Perez, a Cuban economist and university professor, says the main culprits are the government’s growing fiscal deficit, the nonexistence of banknotes with a denomination greater than 1,000 pesos (about $3), stubbornly high inflation and the nonreturn of cash to banks.

“There is money, yes, but not in the banks,” said Perez, adding that most of the cash is being held not by salaried workers but by entrepreneurs and owners of small- and medium-size business who are more likely to collect cash from commercial transactions but are reluctant to return the money to the banks.

This, Perez says, is either because they don’t trust the local banks or simply because they need the pesos to convert into foreign currency.

Most entrepreneurs and small business owners in Cuba must import almost everything they sell or pay in foreign currency for the supplies needed to run their businesses. Consequently, many end up hoarding Cuban pesos to later change into foreign currency on the informal market.

Converting those Cuban pesos to other currencies poses yet another challenge, as there are several, highly fluctuating exchange rates on the island.

For example, the official rate used by government industries and agencies is 24 pesos to the U.S. dollar, while for individuals, the rate is 120 pesos to the dollar. However, the dollar can fetch up to 350 Cuban pesos on the informal market.

Perez notes that in 2018, 50% of the cash in circulation was in the hands of the Cuban population and the other half in Cuban banks. But in 2022, the latest year for which information is available, 70% of cash was in the wallets of individuals.

Cuban monetary authorities did not immediately respond to AP’s emailed request for comment.

The shortage of cash comes as Cubans grapple with a complex monetary system in which several currencies circulate, including a virtual currency, MLC, created in 2019.

Then, in 2023 the government announced several measures aimed at promoting a “cashless society,” making the use of credit cards mandatory to pay for some transactions — including purchases of food, fuel and other basic goods — but many businesses simply refuse to accept them.

Making things worse is stubbornly high inflation, meaning more and more physical bills are needed to buy products.

According to official figures, inflation stood at 77% in 2021, then dropped to 31% in 2023. But for the average Cuban, the official figures barely reflect the reality of their lives, since market inflation can reach up to three digits on the informal market. For example, a carton of eggs, which sold for 300 Cuban pesos in 2019, these days sells for about 3,100 pesos.

All while the monthly salary for Cuban state workers ranges between 5,000 and 7,000 Cuban pesos (between $14 and $20).

“To live in an economy that, in addition to having several currencies, has several exchange rates and a three-digit inflation is quite complicated,” said Pavel Vidal, a Cuba expert and professor at Colombia’s Javeriana University of Cali.
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SYDNEY — The Asian Development Bank holds its annual meeting in Tbilisi, Georgia, next week, with discussions on climate change and the world’s aging population high on the agenda.

The four-day summit, starting Thursday, marks the first time that the ADB’s 68 members have gathered for a meeting in Georgia, which joined the multilateral development bank in 2007.

“Georgia sits at the crossroads of Europe and Asia,” said Shalini Mittal, a principal economist for Asia at the Economist Intelligence Unit.

“This meeting signifies ADB’s agenda of bridges to the future where technology and expertise from the West can be used to enhance structural reforms in Asia,” Mittal told VOA.

Alongside numerous panel discussions and a keynote speech from ADB President Masatsugu Asakawa, finance ministers from Association of Southeast Asian Nations member countries Japan, China and South Korea will also meet on the sidelines.

“Given the geopolitical uncertainty with the Ukraine-Russia war and tensions in Asia with China’s problematic relations with its neighbors, I think the meeting is taking place at a crucial time,” said Jason Chung, a senior adviser with the Project on Prosperity and Development at Washington’s Center for Strategic and International Studies.

“It provides an additional path to have meaningful discussions on global economic issues,” Chung told VOA.

Climate change stressed

The issue of climate change is set to headline proceedings at the conference, with the ADB now marketing itself as the climate bank for the Asia-Pacific region.

The bank pledged a record $9.8 billion of climate finance in 2023, supporting developing countries to cut greenhouse emissions and adapt to extreme conditions as global warming continues.

“Storm surges, sea level rise, heat waves, droughts, and floods — all our countries suffer from all of the imaginable impacts of climate change,” said Warren Evans, who, as senior special adviser on climate change in the ADB president’s office, acts as the institution’s climate envoy.

The bank says that the Asia-Pacific region was hit by over 200 disasters last year alone, with many of them weather related, a problem that shows no sign of letting up.

“Right now, there’s a heatwave in Bangladesh that is causing severe impacts. Schools are closed, they’re seeing a drop in agricultural productivity, hospitals are getting overloaded with people with heatstroke,” Evans told VOA.

“Mortality rates are going up and, of course, women and children are the most vulnerable to those impacts,” he said.

While much of the Asia-Pacific region is extremely vulnerable to climate change, it is also a huge driver of the phenomenon.

The region contributes more than half of global carbon dioxide emissions, with a heavy reliance on coal as a source of energy, according to the ADB.

To try to reach net zero targets, many Asia-Pacific nations require huge investment to convert to clean energy alternatives.

One way that the ADB is tackling this issue is through a program targeting coal-burning power plants, a major contributor to emissions.

“With private sector partners and sovereign funding, we’re refinancing coal-fired power plants in order to be able to close them down early,” Evans said. The ADB’s “energy transition mechanism” uses private and public capital to refinance investments in coal-fired power, allowing power purchase agreements to be shortened and plants to be closed as much as a decade earlier than planned. The financing is also used to fund clean energy projects to generate the power that would have come from the coal plant.

The project looks to replace these plants with clean energy alternatives, ensuring that power is generated more sustainably.

A coal-burning power plant in Indonesia’s West Java is set to become the first to be retired early under the initiative.

“The communities that are impacted will have support, allowing people to find new jobs or to get social welfare,” Evans said.

 

Aging population in Asia

During the Tbilisi summit, the ADB will also launch a major report on aging population, which also affects member countries’ economies.

According to the bank, 1 in 4 people in the Asia-Pacific region will be over 60 by 2050, close to 1.3 billion people.

“The speed of aging is very quick in Asia, because of the rapid progress in the social development that has taken place in the region,” said Aiko Kikkawa, a senior economist for the ADB’s Aging Well in Asia report.

Researchers have investigated the implications of this demographic transition, with Kikkawa finding that the Asia-Pacific region is currently “unprepared” for aging populations.

“Large numbers of older people do report a substantial disease burden, lack of access to decent jobs or essential services, such as health and long-term care, and even lack of access to pension coverage,” Kikkawa told VOA.

The ADB has pledged to help to improve the lives of older people across the Asia-Pacific region, by supporting the rollout of universal health coverage and providing infrastructure for ‘age-friendly cities’ that are more accessible for older people.

Poverty to be addressed

While much of the focus in Tbilisi will be on climate change and aging populations, the ADB’s core edict remains to eradicate extreme poverty in its many developing country members.

That task has become even more challenging in an environment of high inflation and growing government debt.

However, Chung, the former U.S. director of the ADB, told VOA he believes that this goal should be at the center of discussions in the Georgian capital.

“The ADB should focus on its core mission of alleviating poverty and creating paths for economic growth in the developing member countries.

“While climate risk is important, I think given the state of uncertainty, it is important to provide support to create economic conditions for growth,” he told VOA.
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WASHINGTON — The nation’s economy slowed sharply last quarter to a 1.6% annual pace in the face of high interest rates, but consumers — the main driver of economic growth — kept spending at a solid pace.

Thursday’s report from the Commerce Department said the gross domestic product — the economy’s total output of goods and services — decelerated in the January-March quarter from its brisk 3.4% growth rate in the final three months of 2023.

A surge in imports, which are subtracted from GDP, reduced first-quarter growth by nearly 1 percentage point. Growth was also held back by businesses reducing their inventories. Both those categories tend to fluctuate sharply from quarter to quarter.

By contrast, the core components of the economy still appear sturdy. Along with households, businesses helped drive the economy last quarter with a strong pace of investment.

The import and inventory numbers can be volatile, so “there is still a lot of positive underlying momentum,” said Paul Ashworth, chief North America economist at Capital Economics.

The economy, though, is still creating price pressures, a continuing source of concern for the Federal Reserve. A measure of inflation in Friday’s report accelerated to a 3.4% annual rate from January through March, up from 1.8% in the last three months of 2023 and the biggest increase in a year. Excluding volatile food and energy prices, so-called core inflation rose at a 3.7% rate, up from 2% in fourth-quarter 2023.

From January through March, consumer spending rose at a 2.5% annual rate, a solid pace though down from a rate of more than 3% in each of the previous two quarters. Americans’ spending on services — everything from movie tickets and restaurant meals to airline fares and doctors’ visits — rose 4%, the fastest such pace since mid-2021.

But they cut back spending on goods such as appliances and furniture. Spending on that category fell 0.1%, the first such drop since the summer of 2022.

The state of the U.S. economy has seized Americans’ attention as the election season has intensified. Although inflation has slowed sharply from a peak of 9.1% in 2022, prices remain well above their pre-pandemic levels.

Republican critics of President Joe Biden have sought to pin responsibility for high prices on Biden and use it as a cudgel to derail his re-election bid. And polls show that despite the healthy job market, a near-record-high stock market and the sharp pullback in inflation, many Americans blame Biden for high prices.

Last quarter’s GDP snapped a streak of six straight quarters of at least 2% annual growth. The 1.6% rate of expansion was also the slowest since the economy actually shrank in the first and second quarters of 2022.

The economy’s gradual slowdown reflects, in large part, the much higher borrowing rates for home and auto loans, credit cards and many business loans that have resulted from the 11 interest rate hikes the Fed imposed in its drive to tame inflation.

Even so, the United States has continued to outpace the rest of the world’s advanced economies. The International Monetary Fund has projected that the world’s largest economy will grow 2.7% for all of 2024, up from 2.5% last year and more than double the growth the IMF expects this year for Germany, France, Italy, Japan, the United Kingdom and Canada.

Businesses have been pouring money into factories, warehouses and other buildings, encouraged by federal incentives to manufacture computer chips and green technology in the United States. On the other hand, their spending on equipment has been weak. And as imports outpace exports, international trade is also thought to have been a drag on the economy’s first-quarter growth.

Kristalina Georgieva, the IMF’s managing director, cautioned last week that the “flipside″ of strong U.S. economic growth was that it was “taking longer than expected” for inflation to reach the Fed’s 2% target, although price pressures have sharply slowed from their mid-2022 peak.

Inflation flared up in the spring of 2021 as the economy rebounded with unexpected speed from the COVID-19 recession, causing severe supply shortages. Russia’s invasion of Ukraine in February 2022 made things significantly worse by inflating prices for the energy and grains the world depends on.

The Fed responded by aggressively raising its benchmark rate between March 2022 and July 2023. Despite widespread predictions of a recession, the economy has proved unexpectedly durable. Hiring so far this year is even stronger than it was in 2023. And unemployment has remained below 4% for 26 straight months, the longest such streak since the 1960s.

Inflation, the main source of Americans’ discontent about the economy, has slowed from 9.1% in June 2022 to 3.5%. But progress has stalled lately.

Though the Fed’s policymakers signaled last month that they expect to cut rates three times this year, they have lately signaled that they’re in no hurry to reduce rates in the face of continued inflationary pressure. Now, a majority of Wall Street traders don’t expect them to start until the Fed’s September meeting, according to the CME FedWatch tool.
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Paytm, a popular payment app in India, faces government restrictions on business because of its Chinese connections, local media say. India is ramping up scrutiny and restrictions on other Chinese tech companies, too, amid concerns about security and geopolitics. Henry Wilkins has the story from Mumbai.
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Washington — U.S. officials are considering a request from Vietnam to be removed from a list of “nonmarket” economies, a step that would foster improved diplomatic relations with a potential ally in Asia but would anger some U.S. lawmakers and manufacturing firms.

The Southeast Asian country is on the list of 12 nations identified by the U.S. as nonmarket economies, which also includes China and Russia because of strong state intervention in their economies.  

Analysts believe Hanoi is hoping for a decision before the November U.S. election, which could mean a return to power of Donald Trump, who during his previous term as president threatened to boost tariffs on Vietnam because of its large trade surplus with the United States.

Under the Trump administration, the Department of Treasury also put Vietnam on a list of currency manipulators, which can lead to being excluded from U.S. government procurement contracts or other remedial actions. The Treasury, under the Biden administration, removed Vietnam from this list.

On the eve of President Joe Biden’s September visit to Hanoi, where he and Vietnamese Secretary-General Nguyen Phu Trong elevated the U.S.-Vietnam relationship to a comprehensive strategic partnership.

Vietnam formally asked U.S. Department of Commerce to remove it from the list of nonmarket economies on the grounds that it had made economic reforms in recent years.  

The Biden administration subsequently initiated a review of Vietnam’s nonmarket economy (NME) status. The Department of Commerce is to issue a final decision by July 26, 270 days after initiating the review.  

“Receiving market economy status is the highest diplomatic priority of the Vietnamese leadership this year, especially after last fall’s double upgrade in diplomatic relations,” said Zachary Abuza, a professor at National War College where he focuses on Southeast Asian politics and security issues.

He told VOA Vietnamese that the Vietnamese “are really linking the implementation of the joint vision statement to receiving that status.”

The U.S. is Vietnam’s most important export market with two-way trade totaling more than $125 billion in 2023, according to U.S. Census data. But Washington has initiated more trade defense investigations with Vietnam than with any other country, mainly anti-dumping investigations. Vietnam recorded 58 cases subject to trade remedies of the U.S. as of August 2023, in which 26 were anti-dumping, according to the Vietnam Trade Office in the U.S.

Vietnam has engaged a lobbying firm in Washington to help it win congressional support for a status upgrade. A Foreign Agents Registration Act’s statement filed to the U.S. Department of Justice shows that Washington-based Steptoe is assisting the Vietnamese Ministry of Industry and Trade and supporting the Vietnamese government in “obtaining market economy status in antidumping proceedings.”

“I understand why Vietnamese are lobbying,” said Murray Hiebert, a senior associate of the Southeast Asia Program at the Center for Strategic and International Studies (CSIS).

“One reason is U.S.-Vietnam relations have come so far, and to hold the non-market [status] is a little bit disingenuous because most of the countries that have this status are countries like China, Russia, North Korea, who are not so friendly with the United States. So I think [the U.S. recognition of Vietnam as a market economy] would be a sign that relations have improved.”

US election key

Both Abuza and Hiebert believe that Vietnam is pushing hard to secure the upgrade before the November U.S. election that could bring Trump back into office.

“Trump began an investigation of Vietnam’s dumping just before the end of his administration. He may again start that process,” said Hiebert, who was senior director for Southeast Asia at the U.S. Chamber of Commerce before joining CSIS.

But Vietnam’s campaign faces opposition from within the U.S.

More than 30 U.S. lawmakers in January sent joint letters to U.S. Secretary of Commerce Gina Raimondo urging the Biden administration not to grant market economy status to Vietnam. They argued that Vietnam did not meet the procedural requirements for a change of status and that granting Hanoi’s wish would be “a serious mistake.”

The U.S. designated Vietnam as a nonmarket economy in 2002 during an anti-dumping investigation into Vietnamese catfish exports. Over the past 21 years, the U.S. has imposed anti-dumping duties on many Vietnamese exports, including agricultural and industrial products.

In a request sent to Raimondo to initiate a changed circumstances review, the Vietnamese Ministry of Industry and Trade said that over the past 20 years, the economy of Vietnam “has been through dramatic developments and reforms.” It said 72 countries recognize Vietnam as a market economy, notably the U.K., Canada, Australia and Japan.

‘Unfairly traded Chinese goods’

U.S. manufacturing groups have expressed opposition to Vietnam’s request, arguing that Vietnam continues to operate as a nonmarket economy. In comments sent to Raimondo, the Alliance for American Manufacturing (AMM) said that Vietnam “cannot reasonably be understood to demonstrate the characteristics of a market economy.”

“There’s still heavy intervention by the governing Communist Party [of Vietnam],” said Scott Paul, president of AMM. “There’s a lot of indication that China may be using Vietnam as a platform to also export to the U.S., which is obviously concerning to firms here,” he said.

In a letter dated January 28, eight senators wrote “Granting Vietnam market economy status before it addresses its clear nonmarket behavior and the severe deficiencies in its labor law will worsen ongoing trade distortions, erode the U.S. manufacturing base, threaten American workers and industries, and reinforce Vietnam’s role as a conduit for goods produced in China with forced labor.”  

Many Chinese products have been found to be disguised or labeled as “Made in Vietnam” to avoid U.S. tariffs since Trump launched a trade war with China in 2018. Vietnam has promised to crack down on the practice.

Abuza pointed out what he called a contradiction in U.S. policy.

“Vietnam is too important to the United States economically in terms of trade and foreign direct investment, and we cannot look to Vietnam for supply chain diversification out of China if it doesn’t have market economy status.”

Hiebert said the U.S. “should do this and get moving” as Vietnam is “one of the U.S.’ best friends in Asia and Southeast Asia and help stand up to China.”
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The U.S. economy is always a major factor in the presidential campaign because the president plays a key role in setting and shaping trade and economic policies. VOA’s Senior Washington Correspondent Carolyn Presutti reports on how the economy is doing and the difference between how the two presidential contenders would handle it. Camera: Mike Burke
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