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    China’s Extreme Floods and Heat Ravage Farms and Kill Animals

    China’s leader has made it a national priority to ensure the country can feed its large population. But weather shocks have disrupted wheat harvests and threatened pig and fish farming.The downpour began in late May, drenching the wheat crops in central China. As kernels of wheat blackened in the rain, becoming unfit for human consumption, the government mobilized emergency teams to salvage as much of the harvest as possible. In a viral video, a 79-year-old farmer in Henan Province wiped away tears as he surveyed the damage.The unusually heavy rainfall, which local officials said was the worst disruption to the wheat harvest in a decade, underscored the risks that climate shocks pose to President Xi Jinping’s push for China to become more self-reliant in its food supply.Ensuring China’s ability to feed 1.4 billion people is a key piece of Mr. Xi’s goal of leading the country to superpower status. In recent years, tensions with the United States, the coronavirus pandemic and Russia’s war on Ukraine have all created more volatility in global food prices, heightening the urgency for China to grow more of its own crops.The country has not experienced food price inflation at the levels seen in other major economies, but officials are concerned about the vulnerability of its food supply to global shocks. Last summer, prices for pork, fruit and vegetables spiked in China, prompting the government to release pork from its strategic reserves to stabilize prices. Afterward, Chinese leaders reiterated their call to prioritize food security.In recent weeks, extreme heat has killed fish in rice paddies in southern China’s Guangxi Province and thousands of pigs at a farm in the eastern city of Nantong, according to local news reports. The fire department in the northeastern city of Tianjin was called in to spray water on pigs that were suffering heat strokes while riding in a truck. Officials have warned about extreme heat and flooding damaging wheat crops in the northwestern region of Xinjiang.In a country where famines have destabilized dynasties throughout history, the ruling Communist Party is also aware that fulfilling basic needs is a prerequisite for political stability.Harvesting wheat in early June in Zhumadian, Henan Province, China.Josh Arslan/ReutersLast year, food shortages became a potent source of unrest after the government imposed a draconian lockdown on Shanghai, a city of 25 million people, to control the spread of the coronavirus. Online videos showed fighting among residents in the streets and in grocery stores to grab food. In the nationwide protests that ensued against China’s “zero Covid” policies, protesters shouted, “We want food, not Covid tests.” Already, farmland in China is shrinking, as rapid urbanization has polluted large swaths of the country’s soil and governments have sold rural land to developers. The distribution of water between northern and southern China is uneven, leaving some crop-growing regions vulnerable to droughts and others to flooding. The war in Ukraine has threatened China’s access to wheat and fertilizers. And a trade war with the United States that began in 2018 made it more expensive for China to buy soybeans and other foods from America.Mr. Xi has depicted self-reliance in food as a matter of national security, often saying, “Chinese people should hold their rice bowls firmly in their own hands.” He has set a “red line” that the country must maintain 120 million hectares of farmland, and has declared war on food waste, especially in restaurants. The Chinese government frequently points out that it has to feed one-fifth of the world’s population with less than 10 percent of the world’s arable land.Farmers spreading fertilizer in a recently harvested wheat field, now newly planted with corn, in Luohe, Henan Province, this month.Qilai Shen for The New York TimesTo create a more stable food supply, China has stockpiled crops and purchased more farmland overseas. It has been developing heat-resistant rice strains, genetically modified soybeans and new seed technologies, an effort that has triggered accusations of intellectual property theft from the United States.An article on the front page of the People’s Daily newspaper on Monday said Mr. Xi had a “special affection” for farmers and prioritized increasing their incomes. Last month, he visited a wheat field in northern China’s Hebei Province, where farmers were attempting to boost grain production by growing wheat varieties that could withstand drought.In a state-produced video of Mr. Xi’s visit, local officials showed off the breads and noodles that could be made with the new wheat varieties. “President Xi hopes that we can lead a happier life,” a local farmer said in the video, “and we will work harder toward that goal.”But weather-related shocks to the food supply are a far more unpredictable challenge.“You can impose more regulations to dis-incentivize local governments from selling farmland. You can subsidize farmers,” said Zongyuan Zoe Liu, a fellow for international political economy at the Council on Foreign Relations, a U.S.-based research institute. “But when extreme weather conditions happen, it not only creates damage, but it’s also very expensive to fix.”This month, record rainfall flooded the city of Beihai in southern China. And parts of China, including major cities like Shanghai and Beijing, have already experienced unusually early heat waves this year, with temperatures this month exceeding 106 degrees Fahrenheit in some areas.But the most recent fears about food security stemmed from the flooding in Henan Province and the surrounding regions in central China, which produce more than three-quarters of the country’s wheat.A farmer planting soy beans in a recently harvested wheat field in Luohe on Wednesday.Qilai Shen for The New York Times“During harvest season, the thing wheat farmers fear the most is long-lasting rains,” said Zhang Hongzhou, a research fellow who studies China’s food strategy at Nanyang Technological University in Singapore. “This is happening at the worst time.”The rains hit just as farmers were preparing to begin this year’s harvest, causing some of the wheat to sprout. This lower-quality wheat is unsuitable to process into flour and is typically sold at a lower price as animal feed.The extent of the damage to this year’s crop is still unclear. A lower wheat yield could force China to import more wheat this year and raise global grain prices, analysts said.China is the world’s largest producer and consumer of wheat. Demand has risen along with incomes as people in cities buy more Western-style breads and desserts. Soaring meat consumption in China has also necessitated more wheat, which is used for animal feed.In response to the rainfall in Henan, the Chinese government authorized 200 million yuan, or about $28 million, in disaster relief to help dry the wet grains and drain the soaked fields. Rural officials set up a 24-hour hotline for farmers and urged local governments to find corporate buyers for damaged wheat that is still edible.A farmer watering a recently harvested wheat field in Luohe.Qilai Shen for The New York TimesState media outlets have said the government’s efforts minimized losses for farmers, with a front-page article in a recent People’s Daily newspaper trumpeting the progress of the harvest. CCTV, the state broadcaster, aired a 15-minute video segment showing government officials warning farmers to harvest early.China’s fixation on food security has global implications, in large part because it maintains huge stockpiles of food, including what the U.S. Department of Agriculture estimates is about half of the world’s wheat reserves. Last year, U.S. officials accused China of hoarding food stocks and causing global food prices to rise, particularly in poorer countries. In response, China blamed the United States for instigating a global food crisis, saying American sanctions against Russia were hurting wheat exports to African countries.Gauging the stability of China’s food supply is difficult because information about the exact quantity and quality of its crop stockpiles is treated like a state secret. Although the country’s official data regularly shows record high wheat output, for instance, analysts have questioned the reliability of the data.But in January 2022, the government offered a rare glimpse. In response to the accusations by Western countries that China was hoarding food, a commentary published in The Economic Daily, a state-controlled newspaper, revealed that China had enough wheat and rice reserves to feed its people for at least 18 months, which the article suggested was a reasonable amount of stockpiling.“To be prepared for unexpected incidents is a principle of governing a nation,” the commentary said.Farmers planting soy beans in Luohe. A trade war with the United States that began in 2018 has made it more expensive for China to buy soybeans and other foods from America.Qilai Shen for The New York TimesZixu Wang More

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    High interest rates and economic uncertainty are behind recent rise in corporate defaults

    Corporate defaults rose last month, with 41 in the U.S. so far this year. That’s more than double the same period last year, according to Moody’s Investors Service.
    Companies are defaulting on their debt due to uncertain economic conditions and heavy debt loads. High interest rates have made it difficult to refinance, as debt is more expensive.
    The number of bankruptcy filings in the U.S. this year has also sharply risen, to levels not seen since 2010.

    Federal Reserve Board Chairman Jerome Powell departs after speaking during a news conference following the Federal Open Market Committee meeting, at the Federal Reserve in Washington, DC, on June 14, 2023. 
    Mandel Ngan | AFP | Getty Images

    The Federal Reserve plans to keep hiking interest rates to stem inflation, which means an increase in corporate default rates is likely in coming months.
    The corporate default rate rose in May, a sign that U.S. companies are grappling with higher interest rates that make it more expensive to refinance debt as well as an uncertain economic outlook.

    There have been 41 defaults in the U.S. and one in Canada so far this year, the most in any region globally and more than double the same period in 2022, according to Moody’s Investors Service.
    Earlier this week, Fed Chairman Jerome Powell said to expect more interest rate increases this year, albeit at a slower rate, until more progress is made on lowering inflation.
    Bankers and analysts say high interest rates are the biggest culprit of distress. Companies that are either in need of more liquidity or those that already have hefty debt loads in need of refinancing are faced with a high cost of new debt.
    The options often include distressed exchanges, which is when a company swaps its debt for another form of debt or repurchases the debt. Or, in dire circumstances, a restructuring may take place in or out of court.
    “Capital is much more expensive now,” said Mohsin Meghji, founding partner of restructuring and advisory firm M3 Partners. “Look at the cost of debt. You could reasonably get debt financing for 4% to 6% at any point on average over the last 15 years. Now that cost of debt has gone up to 9% to 13%.”

    Meghji added that his firm has been particularly busy since the fourth quarter across numerous industries. While the most troubled companies have been affected recently, he expects companies with more financial stability to have issues refinancing due to high interest rates.
    Through June 22, there were 324 bankruptcy filings, not far behind the total of 374 in 2022, according to S&P Global Market Intelligence. There were more than 230 bankruptcy filings through April of this year, the highest rate for that period since 2010.

    Bed Bath & Beyond logo is seen on the shop in Williston, Vermont on June 19, 2023.
    Jakub Porzycki | Nurphoto | Getty Images

    Envision Healthcare, a provider of emergency medical services, was the biggest default in May. It had more than $7 billion in debt when it filed for bankruptcy, according to Moody’s.
    Home security and alarm company Monitronics International, regional financial institution Silicon Valley Bank, retail chain Bed Bath & Beyond and regional sports network owner Diamond Sports are also among the largest bankruptcy filings so far this year, according to S&P Global Market Intelligence.
    In many cases, these defaults are months, if not quarters, in the making, said Tero Jänne, co-head of capital transformation and debt advisory at investment bank Solomon Partners.
    “The default rate is a lagging indicator of distress,” Jänne said. “A lot of times those defaults don’t occur until well past a number of initiatives to address the balance sheet, and it’s not until a bankruptcy you see that capital D default come into play.”
    Moody’s expects the global default rate to rise to 4.6% by the end of the year, higher than the long-term average of 4.1%. That rate is projected to rise to 5% by April 2024 before beginning to ease.
    It’s safe to bet there will be more defaults, said Mark Hootnick, also co-head of capital transformation and debt advisory at Solomon Partners. Until now, “we’ve been in an environment of incredibly lax credit, where, frankly, companies that shouldn’t be tapping the debt markets have been able to do so without limitations.”
    This is likely why defaults have occurred across various industries. There were some industry-specific reasons, too.
    “It’s not like one particular sector has had a lot of defaults,” said Sharon Ou, vice president and senior credit officer at Moody’s. “Instead it’s quite a number of defaults in different industries. It depends on leverage and liquidity.”
    In addition to big debt loads, Envision was toppled by health-care issues stemming from the pandemic, Bed Bath & Beyond suffered from having a large store footprint while many customers opted for shopping online, and Diamond Sports was hurt by the rise of consumers dropping cable TV packages.
    “We all know the risks facing companies right now, such as weakening economic growth, high interest rates and high inflation,” Ou said. “Cyclical sectors will be affected, such as durable consumers goods, if people cut back on spending.” More

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    Harvard’s Francesca Gino, Dishonesty Expert, Is Accused of Fraud

    Questions about a widely cited paper are the latest to be raised about methods used in behavioral research.Over the past two decades, dozens of behavioral scientists have risen to prominence pointing out the power of small interventions to improve well-being.The scientists said they had found that automatically enrolling people in organ donor programs would lead to higher rates of donation, and that moving healthy foods like fruit closer to the front of a buffet line would result in healthier eating.Many of these findings have attracted skepticism as other scholars showed that their effects were smaller than initially claimed, or that they had little impact at all. But in recent days, the field may have sustained its most serious blow yet: accusations that a prominent behavioral scientist fabricated results in multiple studies, including at least one purporting to show how to elicit honest behavior.The scholar, Francesca Gino of Harvard Business School, has been a co-author of dozens of papers in peer-reviewed journals on such topics as how rituals like silently counting to 10 before deciding what to eat can increase the likelihood of choosing healthier food, and how networking can make professionals feel dirty.Maurice Schweitzer, a behavioral scientist at the Wharton School of the University of Pennsylvania, said the accusations were having large “reverberations in the academic community” because Dr. Gino is someone who has “so many collaborators, so many articles, who is really a leading scholar in the field.”Dr. Schweitzer said that he was now going through the eight papers on which he collaborated with Dr. Gino for indications of fraud, and that many other scholars were doing so as well.Behavioral work is common in psychology, management and economics, and scholars can straddle these disciplines. According to her résumé, Dr. Gino has a Ph.D. in economics and management from an Italian university.Questions about her work surfaced in an article on June 16 in The Chronicle of Higher Education about a 2012 paper written by Dr. Gino and four colleagues. One of Dr. Gino’s co-authors — Max H. Bazerman, also of Harvard Business School — told The Chronicle that the university had informed him that a study overseen by Dr. Gino for the paper appeared to include fabricated results.The 2012 paper reported that asking people who fill out tax or insurance documents to attest to the truth of their responses at the top of the document rather than at the bottom significantly increased the accuracy of the information they provided. The paper has been cited hundreds of times by other scholars, but more recent work had cast serious doubt on its findings.Dr. Gino did not respond to a request for comment, and Harvard Business School declined to comment. Reached by phone, a man who identified himself as Dr. Gino’s husband said, “It’s obviously something that is very sensitive that we can’t speak to now.”Dr. Bazerman did not respond to a request for comment for this article, but told The Chronicle of Higher Education that he had had nothing to do with any fabrication.On June 17, a blog run by three behavioral scientists, called DataColada, posted a detailed discussion of evidence that the results of a study by Dr. Gino for the 2012 paper had been falsified. The post said that the bloggers contacted Harvard Business School in the fall of 2021 to raise concerns about Dr. Gino’s work, providing the university with a report that included evidence of fraud in the 2012 paper as well as in three other papers on which she collaborated.The blog — by Uri Simonsohn of ESADE Business School in Barcelona, Leif Nelson of the University of California, Berkeley, and Joseph Simmons of the University of Pennsylvania — focuses on the integrity and reliability of social science research. The post on Dr. Gino noted that Harvard had placed her on administrative leave, a fact that was reflected on her business school web page, though no reason was given. The Internet Archive, which catalogs web pages, shows that Dr. Gino was not on leave as recently as mid-May.The 2012 paper was based on three separate studies. One study overseen by Dr. Gino involved a lab experiment in which about 100 participants were asked to complete a worksheet featuring 20 puzzles and were promised $1 for every puzzle they solved.The study’s participants later filled out a form reporting how much money they had earned from solving the puzzles. The participants were led to believe that cheating would be undetected, when in fact the researchers could verify how many puzzles they had solved.The study found that participants were much more likely to report their puzzle income honestly if they attested to the accuracy of their responses at the top of the form rather than the bottom.But in their blog post, Dr. Simonsohn, Dr. Nelson and Dr. Simmons, analyzing data that Dr. Gino and her co-authors had posted online, cited a digital record contained within an Excel file to demonstrate that some of the data points had been tampered with, and that the tampering helped drive the result.Last week’s post was not the first time the DataColada watchdogs had found problems with the 2012 paper by Dr. Gino and her co-authors. In a blog post in August 2021, the same researchers found evidence that another study published in the same paper appeared to rely on manufactured data.That study relied on data provided by an insurance company, to which customers reported the mileage of cars covered by their policy. The study purported to find that customers who were asked at the top of the form to attest to the truthfulness of the information they would provide were significantly more honest than customers who were asked to attest to their truthfulness at the bottom of the form.But through analysis of the raw data, Dr. Simonsohn, Dr. Nelson and Dr. Simmons concluded that many of the data points were created by someone connected to the study, not based on customer information. The journal that published the 2012 paper, the Proceedings of the National Academy of Sciences, retracted it the month after the blog post appeared.In that case, another of the paper’s co-authors, Dan Ariely of Duke University, was the scholar who procured the data from the insurance company. Dr. Ariely, one of the world’s best-known behavioral scientists, said in an email on Friday that he had been “stunned and surprised” to learn that some of the insurance data in the paper had been fabricated, “which led me to proactively retract it.”DataColada has since published blog posts laying out evidence that results were fabricated in two other papers of which Dr. Gino was a co-author. The bloggers have written that they plan to publish one more post laying out issues in an additional paper on which she collaborated.In interviews and comments on social media, some scholars said that findings in the genre of behavioral research that Dr. Gino specializes in, which is closer to psychology, often resemble findings generated by questionable research methods.One category of questionable methods, said Colin Camerer, a behavioral economist at the California Institute of Technology, is p-hacking — for example, testing a series of arbitrary data combinations until the researcher arrives at an inflated statistical correlation.In 2015, a team of scholars reported that they had tried to replicate the results of 100 studies published in prominent psychology journals and succeeded in fewer than half the cases. The behavioral studies proved especially hard to replicate. More

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    Starbucks Union Raises Pressure With Plan to Strike Over Pride Décor

    Walkouts were called at more than 150 stores in the next week after workers said Pride Month decorations had been banned in some, a claim the company denied.Thousands of workers at organized Starbucks stores across the nation will stage strikes over the next week, their union said on Friday, after workers in some states said management prohibited them from putting up decorations for Pride Month.The company denied the accusations and issued a statement declaring that it “has been and will continue to be at the forefront of supporting the LGBTQIA2+ community.”Starbucks Workers United said employees at more than 150 stores would strike over the company’s labor practices and its “hypocritical treatment of LGBTQIA+ workers.”The union represents about 8,000 of the company’s workers in more than 300 stores.Starbucks workers in a number of stores said this month that they had been told that no decorations for the annual L.G.B.T.Q. celebration, such as rainbow flags, were allowed this year, a shift from previous years. In interviews arranged through their union, workers said the given reasons varied.Starbucks, which has roughly 9,300 corporate-owned stores in the United States, has said decoration policies are often specific to each store.A Starbucks official involved in the response to the union campaign said the company decided last year, after the union campaign began to spread across the country, to be more aggressive in enforcing dress codes and policies on what could be posted in stores. The official, who spoke on the condition of anonymity, attributed the change to concern that many stores would otherwise become inundated with union paraphernalia.But a Starbucks spokeswoman on Friday called the claim “false” and said there had been no change in the company’s guidance on displays and decorations in the past nine years.A corporate statement — over the names of Laxman Narasimhan, the chief executive, and Sara Trilling, executive vice president and president, North America — did not address store-by-store practices. But it noted that for Pride Month, the rainbow flag was being flown over the company’s Seattle headquarters and in thousands of Starbucks stores.“We continue to encourage our store leaders to celebrate with their communities including for U.S. Pride Month in June,” it said.Casey Moore, a union spokeswoman, derided the corporate statement, saying, “Instead of apologizing for there being upper management across the country who made the decision to not allow Pride decorations, they’ve doubled down that it didn’t happen.”In addition to its complaints over the Pride decoration issue, the union said it was striking over the company’s broader response to the organizing campaign, including widespread retaliation against union supporters. The union said in its statement that workers were “demanding that Starbucks negotiate a fair contract with union stores and stop their illegal union-busting campaign.”The company has consistently denied accusations of illegality.Starbucks workers and the union say rules on employee conduct have been enforced more aggressively as a way to intimidate and retaliate against union supporters.“They’re trying to make people feel unwelcome in whatever way possible — through more strict enforcement of the dress code or anything,” said Ms. Moore, the union spokeswoman. “The Pride decorations are another level of that.”In a sweeping ruling in March, a federal administrative law judge found that Starbucks had repeatedly violated labor law by “more strictly enforcing the dress code and personal appearance policy in response to union activity.” The judge also found that the company had more strictly enforced its attendance policy and its policy on soliciting and distributing notices within stores.Starbucks has disputed the findings and is appealing the decision to the National Labor Relations Board in Washington.Unionized Starbucks workers have staged waves of strikes in the last several months over what they say are the company’s delay tactics at the bargaining table and other anti-union tactics like retaliatory firings and store closings. The administrative judge’s ruling in March also found that Starbucks had illegally dismissed seven Buffalo-area workers last year in response to union activity.In April, the labor board issued a complaint accusing the company of failing to bargain in good faith at more than 100 stores. It was one of dozens of complaints tied to labor law violations that the board has issued since the union first filed petitions seeking votes in three Buffalo-area stores in August 2021.The company has denied the accusations and blames the union for bargaining delays, citing the union’s insistence on using video-chat software to broadcast sessions to employees not at the bargaining table.Howard Schultz, shortly after stepping down as Starbucks’ chief executive in March, denied allegations of anti-union conduct in testimony before a Senate committee. More

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    European business activity slows in June as higher interest rates begin to bite

    S&P Global’s Chris Williamson described the numbers as “worrying” as the euro zone’s flash composite PMI dropped to 50.3 in June.
    Earlier data from Germany also showed a slowdown in Europe’s largest economy and it was a similar story for France.
    Euro zone bond yields dropped following the German and French data releases.

    Business activity growth in Europe slowed in June, pointing to a difficult end to the second quarter, according to preliminary data Friday.
    The euro zone’s flash composite Purchasing Managers’ Index dropped to 50.3 in June from 52.8 in the previous month. This was below the 52.5 expected by analysts. A reading above 50 marks an expansion in activity, while one below 50 marks a contraction.

    “Eurozone business output growth came close to stalling in June, according to the latest HCOB flash PMI survey data produced by S&P Global, pointing to renewed weakness in the economy after the brief growth revival recorded in the spring,” S&P Global said in a release.
    “Although energy and supply chain worries have eased since late last year, June has seen a further escalation of concerns over demand growth, and in particular the impact of higher interest rates, and the resulting possibilities of recessions both in domestic markets and further afield.”
    Speaking to CNBC’s Street Signs Europe, Chris Williamson, chief business economist at S&P Global Market Intelligence, described the numbers as “worrying.”
    “Higher interest rates, the rise in the cost of living, all beginning to take their toll,” he said.
    The European Central Bank has been increasing interest rates consistently for the past 12 months in an effort to bring down inflation. Higher rates can lead to higher costs for companies across the bloc, however, and so often become a drag on output.

    Fresh PMI data came in below expectations and pointed to an economic slowdown.
    Bloomberg | Bloomberg | Getty Images

    On a country-by-country basis, data earlier in the day from Germany also showed a slowdown in Europe’s largest economy. The German flash composite PMIs fell to 50.8 in June from 53.9 in May. This was below market expectations.
    “These data are consistent with our view that GDP (gross domestic product) growth in Germany will remain subdued in second and third quarters after the economy registered a technical recession,” Claus Vistesen, chief euro zone economist at Pantheon Macroeconomics, said in a note to clients.
    Germany entered a technical recession in the first quarter of the year, after contracting 0.3% over the three-month period. In the final quarter of 2022, Germany’s economy shrunk by 0.5%.
    It was a similar story in France, where the composite PMI sunk to 47.3 from 51.2 in May, well below the 51 expected. This was primarily due to weakness in the services sector.
    Euro zone bond yields extended their falls following data, with the yield on the 2-year German bund dropping to 3.17% in early trade and the yield on the 10-year benchmark lowering to 2.36%. An economic slowdown tends to be negative for bond yields. More

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    Chinese Firm Sent Large Shipments of Gunpowder to Russian Munitions Factory

    The previously unreported shipments between a state-owned Chinese company and a Russian munitions factory last year raise new questions about Beijing’s role in Russia’s war against Ukraine.On two separate occasions last year, railroad cars carrying tens of thousands of kilograms of smokeless powder — enough propellant to collectively make at least 80 million rounds of ammunition — rumbled across the China-Russia border at the remote town of Zabaykalsk.The powder had been shipped by Poly Technologies, a state-owned Chinese company on which the United States had previously imposed sanctions for its global sales of missile technology and providing support to Iran. Its destination was Barnaul Cartridge Plant, an ammunition factory in central Russia with a history of supplying the Russian government.These previously unreported shipments, which were identified by Import Genius, a U.S.-based trade data aggregator, raise new questions about the role China has played in supporting Russia as it fights to capture Ukrainian territory. U.S. officials have expressed concerns that China could funnel products to Russia that would help in its war effort — what is known as “lethal aid” — though they have not said outright that China has made such shipments.Speaking from Beijing on Monday, Antony J. Blinken, the U.S. secretary of state, said China had assured the United States that it was not providing lethal assistance to Russia for use in Ukraine, and that the U.S. government had “not seen anything right now to contradict that.”“But what we are concerned about is private companies in China that may be providing assistance,” Mr. Blinken said.Some experts said the shipments Poly Technologies had made to Barnaul Cartridge Plant since the invasion, which totaled nearly $2 million, according to customs records, constituted such lethal assistance. According to the customs records, Poly Technology intended its shipments to be used in the kinds of ammunition fired by Russian Kalashnikov assault rifles and sniper rifles.William George, the director of research at Import Genius, said that Poly Technologies “may be toeing the line on exactly what constitutes lethal aid to Russia,” but that the implications of the shipments were clear.“When shipping large quantities of gunpowder intended for the creation of military cartridges to a country at war, it’s unreasonable to imagine that the finished product won’t be used to lethal effect on the battlefield,” Mr. George said.“It is lethal support,” said Alexander Gabuev, director of the Carnegie Russia Eurasia Center. “The question is, how impactful and large scale is that?”Spent Russian ammunition casings near a destroyed Russian armored vehicle at a frontline position in the northern region of Kyiv in March 2022.Mr. Gabuev said that China had generally refrained from any actions that would “in a visible, forceful way” cross red lines the U.S. government had detailed at the beginning of the war about what would constitute a violation of Western sanctions. Since Poly Technologies has a history of shipments to the Barnaul plant before the war though, China might see those shipments as part of regular trade flows.“By and large, China tries to stick to those red lines,” he said. “Having said that, we see that there are some contracts and transactions going on.”Poly Technologies is a subsidiary of China Poly Group Corporation, which is owned by the Chinese government. Previous reports by The Wall Street Journal and CNN documented shipments of navigation equipment and helicopter parts from Poly Technologies to Russian state-backed firms.Barnaul Cartridge Plant, the recipient of the powder shipments, is privately owned. But Russian procurement records provided to The New York Times by C4ADS, a Washington, D.C.-based global security nonprofit, show the company had numerous contracts with divisions of the Russian government and military over the past decade, including the Russian Ministry of Defense.Barnaul Cartridge Plant was added to a list of companies sanctioned by the European Union in December. Open source information suggests the plant may have served as a training camp linked with the Wagner Group, a private Russian military force with ties to Russian President Vladimir V. Putin.There is no known direct link between these particular shipments of smokeless powder and the Ukrainian battlefield, and in customs paperwork Poly Technologies described the powder as being “for assembly of foreign-style hunting cartridges.”But Brian Carlson, a China-Russia expert and the head of the global security team of the think tank at the Center for Security Studies, said that while such cartridges could be used for hunting, this was rare. “These are military cartridges,” he said.Most modern firearms and other weapons used by soldiers and civilians alike rely on smokeless powder to propel a bullet to its target. When the trigger is pulled, a firing pin strikes the rear of the ammunition cartridge, igniting the powder, which burns extremely fast and forces the bullet down the barrel of a firearm.This kind of powder is also used by militaries as the propellant for mortar ammunition, launching explosive-laden projectiles weighing from four pounds to 30 pounds or more.Poly Technologies and Barnaul Cartridge Plant did not respond to requests for comment.The war in Ukraine, now in its 17th month, has intensified in recent weeks. The ability of both militaries to obtain munitions and equipment has become a crucial factor that could influence the war’s outcome.Ukrainian soldiers after firing a rocket-propelled grenade at Russian troops. The type of powder sent by a Chinese company to a Russian ammunition factory is used as the propellant for mortar ammunition.Tyler Hicks/The New York TimesWestern countries clamped down on their trade with Russia following the invasion, to try to starve the country of military goods as well as supplies that feed their economy and help the government generate revenue.But countries like China, India, the United Arab Emirates, Kyrgyzstan and Turkey stepped in to provide Russia with goods ranging from mundane products like smartphones and cars to aircraft parts and ammunition.Both state-owned and private Chinese companies have sold Russia products that could plausibly be used by either civilians or the military — including drones, semiconductors, hunting rifles, navigation equipment and airplane parts.China has remained officially unaligned in the war. Officials there argue Beijing is a neutral party and a peacemaker. In practice, however, China has become an important diplomatic, economic and security partner for Russia, after proclaiming a “no limits” partnership early last year.In a speech in April in Washington, Treasury Secretary Janet L. Yellen called that partnership a “worrisome indication” that China is not serious about ending the war. And she warned that the consequences for China of providing Russia with material support or assisting in evading sanctions “would be severe.”In recent months, U.S. officials have also privately reached out directly to Chinese financial institutions to discuss the risks of facilitating the evasion or circumvention of sanctions and export controls.Chinese companies “have a choice to make,” Wally Adeyemo, the deputy Treasury secretary, said in an interview on Fox Business TV earlier this month. “They can provide Russia with material support for their military and continue to do business with an economy that represents maybe $1.5 trillion and is getting smaller, or you can continue to do business with the rest of the world.”Poly Technologies is one of China’s largest arms exporters. It produces equipment for police and military forces, including weapons, personal protective gear, explosives and missile systems. It attracted censure in past decades for shipping small arms to Zimbabwe. In the last few years, it has sent weapons shipments to Pakistan, Sri Lanka and Nigeria, according to records accessed through Sayari Graph, a mapping tool for corporate ownership and commercial relationships.Barnaul products have been common on American shelves in recent years, including ammunition for military-style rifles, hunting rifles and American handguns. The goods came to America through several importers, including MKS Supply, LLC, a wholesale ammunition distributor in Dayton, Ohio.According to an MKS Supply official, the company stopped working with Barnaul Cartridge Plant early last year following a U.S. government ban on imports of Russian ammunition.Edward Wong More

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    Congress Spotlights Forced Labor Concerns With Chinese Shopping Sites Shein and Temu

    A congressional investigation into Temu and Shein offered new insight into services that are delivering a deluge of cheap and little-regulated products.Lawmakers are flagging what they say are likely significant violations of U.S. law by Temu, a popular Chinese shopping platform, accusing it of providing an unchecked channel that allows goods made with forced labor to flow into the United States.In a report released Thursday, the House Select Committee on the Chinese Communist Party said Temu, a rapidly growing site that sells electronics, makeup, toys and clothing, had failed “to maintain even the facade of a meaningful compliance program” for its supply chains and was likely shipping products made with forced labor into the United States on a “regular basis.”The report stems from a continuing investigation into forced labor in supply chains that touch on China. Lawmakers said the report was based on responses submitted to the committee by Temu, as well as the fast fashion retailer Shein, Nike and Adidas.The report offered a particularly scathing assessment of Temu, saying there is an “extremely high risk that Temu’s supply chains are contaminated with forced labor.” The site advertises itself under the tagline “Shop like a billionaire” and is now the second most downloaded app in the Apple store.The report also criticized Shein’s use of an importing method that allows companies to bring products into the United States duty-free and with less scrutiny from customs, as long as packages are sent directly to consumers and valued at under $800. Some lawmakers have been pushing to close off this shipping channel, which is called de minimis, for companies sourcing goods from China.Lawmakers said that they were troubled by what the bipartisan committee’s investigation had uncovered so far, and that Congress should review import loopholes and strengthen forced labor laws.“Temu is doing next to nothing to keep its supply chains free from slave labor,” said Representative Mike Gallagher, a Wisconsin Republican who heads the committee. “At the same time, Temu and Shein are building empires around the de minimis loophole in our import rules: dodging import taxes and evading scrutiny on the millions of goods they sell to Americans.”“The initial findings of this report are concerning and reinforce the need for full transparency by companies potentially profiting from C.C.P. forced labor,” said Representative Raja Krishnamoorthi, an Illinois Democrat and a co-author of the report, referring to the Chinese Communist Party.Temu, which began operating in the United States in September, told the committee that it now brought millions of shipments into the United States annually through a network of more than 80,000 suppliers that sell directly from Chinese factories to U.S. consumers. The site sells clothing, temporary tattoos, modeling clay, electronics and other items directly to consumers for low prices, like $3 for a baby romper, $6 for sandals and $8 for a vacuum.The report also contained new data showing that Temu and Shein make heavy use of the de minimis rule, together accounting for almost 600,000 such packages shipped to the United States daily.The shipping method allows retailers to sell their goods to consumers at cheaper prices, since they are not subject to duties, taxes or government fees that apply to traditional retailers that typically ship overseas goods in bulk.A Shein pop-up store last year at the Shops at Willow Bend in Plano, Texas.Cooper Neill for The New York TimesDe minimis shipping also requires far less information to be disclosed about the products and the companies involved in the transaction, making it harder for U.S. customs officials to detect packages with narcotics, counterfeits and goods made with forced labor. The number of de minimis packages entering the United States more than tripled between 2016 and 2021, when it reached 720 million.At an annualized rate, the shipments reported by Shein and Temu would represent more than 30 percent of the de minimis shipments that came into the United States last year, and nearly half of those packages from China, the report said.Both Shein and Temu have steadily taken market share from U.S. brick-and-mortar retailers and won over younger consumers by investing in sophisticated e-commerce technology and offering hundreds more new products than competitors. Among teenagers, Shein was the third most popular e-commerce site behind Amazon and Nike, according to a Piper Sandler report this spring.As their popularity has grown, so has congressional scrutiny of the firms, given their ties to China. Shein was originally based in China but has moved its headquarters to Singapore. Temu, which is based in Boston, is a subsidiary of PDD Holdings, which moved its headquarters to Ireland from China this year.Lawmakers have been questioning their relationship with the Chinese government, as well as the companies’ ability to vet their supply chains to ensure they don’t contain materials or products from Xinjiang. Last year, the U.S. imposed a ban on products from Xinjiang, citing the region’s use of forced labor in factories and mines.The Chinese government has carried out a crackdown in Xinjiang on Uyghurs and other ethnic minorities, including the organized use of forced labor to pick cotton; work in mines; and manufacture electronics, polysilicon and car parts. Because of this, the U.S. government now presumes all materials from the region to be made with forced labor unless proved otherwise.A young Uyghur women working in a garment factory in Xinjiang in 2019.Gilles Sabrié for The New York TimesShein said in a statement that it had zero tolerance for forced labor and had a robust compliance system, including a code of conduct, independent audits, robust tracing technology and third-party testing. It provided detailed information to the House committee and will continue to answer its questions, the company said.“We have no contract manufacturers in the Xinjiang region,” it said. “As a global company, our policy is to comply with the customs and import laws of the countries in which we operate.” Temu did not respond to a request for comment.Laboratory tests commissioned by Bloomberg News in November found that some Shein clothing had been made with cotton from Xinjiang. Shein didn’t dispute those findings, but said in a statement to Bloomberg that it took steps in all global markets to comply with local laws and had engaged another lab, Oritain, to test its materials.The congressional report also criticized Temu’s failure to set up a compliance or auditing system that could independently verify that its sellers were not sourcing products from Xinjiang.Temu told the committee that it had a reporting system that consumers and sellers could use to file complaints, and that it asked its sellers to sign a code of conduct specifying a “zero-tolerance policy” for the use of forced, indentured or penal labor. Temu’s code of conduct also says the company reserves the right to inspect factories and warehouses to ensure compliance.But the code does not mention Xinjiang or the U.S. ban, and Temu told the House committee that it did not prohibit vendors from selling products made in Xinjiang, the report said.Temu also argued that its use of direct shipping meant that the U.S. consumer, not Temu, would bear the ultimate responsibility for adhering to the ban on Xinjiang goods.“Temu is not the importer of record with respect to goods shipped to the United States,” the report quoted it as saying.Customs lawyers said that it was not entirely clear which party would be liable for complying with the U.S. ban, but that any company facilitating the importation of goods from Xinjiang could face civil or criminal penalties.The committee report also pictured a key chain that was listed on Temu’s website this month and labeled “pendant with Xinjiang cotton.” The key chain itself is shaped like a bud of cotton, and the report said that the Xinjiang label “may refer to the materials, the supplier, the pattern or the origin of the product.”Temu’s “policy to not prohibit the sale of products that explicitly advertise their Xinjiang origins, even in the face of mounting congressional and public scrutiny on related topics, raises serious questions,” the report said.The New York Times was not able to verify whether the product is made using Xinjiang cotton, which is barred under U.S. law. The Times found an identical product listed for sale on a Chinese wholesale site that was described as manufactured in Henan Province, outside Xinjiang.A Times review of information shared by Temu vendors on Chinese social media sites also suggested that Temu did not require sellers to provide detailed information about where their products were made or which companies manufactured them.Vendors sharing tips online about Temu’s product review process gave several reasons that Temu commonly rejected new listings: for example, if the price was too high, if the samples were inconsistent with the photos or if the goods lacked consumer warning labels. But none mentioned concerns about links to Xinjiang or the U.S. import ban.Jordyn Holman More

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    Bank of England Raises Rates More Than Expected, as Inflation Persists

    ‘We know this is hard,’ the central bank’s governor said, after increasing interest rates by a half point, to 5 percent.The Bank of England raised interest rates by half a percentage point on Thursday, a larger-than-expected move, as policymakers struggle to bring down Britain’s persistently high rate of inflation.The central bank’s rate-setting committee lifted rates for a 13th consecutive time, to 5 percent, the highest since early 2008. The move is likely to intensify fears about the depth of Britain’s cost-of-living crisis, as homeowners prepare for jumps in monthly repayments while millions of households are already struggling to pay higher energy and food bills.The action came a day after the latest inflation data underscored the bank’s challenge: Consumer prices rose 8.7 percent in May from a year earlier, the same as the previous month, instead of falling as economists had predicted.The Bank of England’s decision is in sharp contrast to some of its international peers. Last week, the Federal Reserve decided to hold interest rates steady, at a range of 5 to 5.25 percent, and the European Central Bank raised rates by a quarter point.“The economy is doing better than expected, but inflation is still too high and we’ve got to deal with it,” Andrew Bailey, the Bank of England governor, said in a statement on Thursday. “We know this is hard — many people with mortgages or loans will be understandably worried about what this means for them. But if we don’t raise rates now, it could be worse later.”Indeed, there is accumulating evidence that inflation will be harder to stamp out than previously expected. In the past week, data has shown that pay in Britain has increased faster than expected, inflation in the services sector has accelerated and food inflation is still near the highest level in more than 45 years.The scale of the surprises in the data, especially for wage growth and services inflation, suggested a half-point rate increase “was required,” the minutes of the committee’s meeting said.The data “indicated more persistence in the inflation process, against the background of a tight labor market and continued resilience in demand,” the minutes said.The Bank of England’s rate increases could end up outlasting the recent rate-raising periods of both the Fed and the European Central Bank. Fed officials paused after 10 consecutive increases, and after eurozone policymakers raised rates for an eighth consecutive time last week, analysts predicted there would only be one or two more increases.The British central bank has pushed through a dramatic tightening of monetary policy in the last year and a half, raising interest rates from near zero since December 2021, in order to restrain the economy. But as British inflation data continues to take policymakers and other economists by surprise, traders are betting that the bank will have to raise interest rates higher and for longer to get inflation down to the 2 percent target. Before the policy decision was announced, traders were betting interest rates would reach 6 percent by early next year.The persistent price pressures in Britain are causing turmoil in the mortgage market, because they raise expectations that the bank will need to increase rates further. Traders, betting that the Bank of England will continue raising rates, have pushed up yields on government bonds. As mortgage offers reflect those higher interest rates, homeowners are growing concerned about jumps in their monthly repayments. Recently, some lenders pulled mortgage deals, in response to the rapid changes in the market.On Thursday, the central bank said is was monitoring closely the impact of its “significant” increases in interest rates, noting that because more people have fixed-terms on their mortgages, the full impact of higher interest rates “will not be felt for some time.”About 80 percent of mortgage holders have fixed-rate terms now, compared to about a third a decade ago. By the end of the year, about 1.3 million households are expected to reach the end of their fixed-rate term by the end of the year, prompting a reset in the rate that applies to their loan, the Bank of England said last month. The average mortgage holder in that group will see their monthly interest payments increase by about 200 pounds ($255), or £2,400 over the course of a year, if their mortgage rate rises 3 percentage points, which is what mortgage quotes suggested last month, the bank said.Since then, rates have risen even higher. Last weekend, the average rate for a two-year fixed-rate mortgage hit 6 percent for the first time this year.The extra financial burden on mortgage payers compounds the stubborn cost-of-living crisis, as inflation has outpaced pay for the past year and a half. About two-thirds of adults in Britain said their cost of living had increased in June compared with a month ago, and almost all of them said it was because of the higher cost of grocery shopping, according to a survey by the Office for National Statistics.Two members of the nine-person committee, Swati Dhingra and Silvana Tenreyro, voted to hold interest rates flat at 4.5 percent, arguing that the impact of past rate increases were still working through the economy, and so the bank was at risk of tightening policy more than necessary. They also said there were forward-looking indicators that suggested inflation and wage growth would fall significantly.But they were outvoted by all seven of the other members who chose a half-point increase, concerned that the impact on domestic prices and wages from external shocks, such as the war in Ukraine, would take longer to fade than they did to emerge. They predicted that lower wholesale energy prices would bring down the headline rate of inflation later in the year, but services inflation, which is dominated by companies’ wage costs and reflect domestic price pressures, would be “broadly unchanged” in the short term.As prices in Britain have continued to rise faster than expected, and faster than in the United States and Western Europe, the Bank of England has come under increasing scrutiny. Last month, the central bank’s governing body decided to commission a “a broad review” into the institution’s “forecasting and related processes during times of significant uncertainty.” More