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    Powell tells Congress the Fed is 'strongly committed' on inflation, notes recession is a 'possibility'

    Fed Chairman Jerome Powell said Wednesday that the central bank is “strongly committed” to bringing down inflation and can do so with its monetary policy tools.
    That means higher interest rates until “compelling evidence” emerges that inflation is coming down.

    Federal Reserve Chairman Jerome Powell told congressional lawmakers Wednesday that the central bank is determined to bring down inflation and has the ability to make that happen.
    “At the Fed, we understand the hardship high inflation is causing. We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so,” the Fed chief said in remarks for the Senate Banking Committee. “We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses.”

    Along with expressing resolve on inflation, Powell said economic conditions are generally favorable, with a strong labor market and persistently high demand.
    But Sen. Elizabeth Warren, D-Mass., warned Powell that the continued rate hikes could “tip this economy into recession” without stopping inflation.
    “You know what’s worse than high inflation and low unemployment is high inflation and a recession with millions of people out of work, and I hope you’ll reconsider that before you drive the economy off a cliff,” she said.
    Though Powell said he believes the economy is strong now, he acknowledged a recession could happen.

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    “It’s certainly a possibility,” he said. “It’s not our intended outcome at all, but it’s certainly a possibility, and frankly the events of the last few months around the world have made it more difficult for us to achieve what we want, which is 2% inflation and still a strong labor market.”

    Achieving a “soft landing,” in which policy tightens without severe economic circumstances such as a recession, will be difficult, he added.
    “It is our goal. It is going to be very challenging. It has been made significantly more challenging by the events of the last few months, thinking here of the war and commodities prices and further problems with supply chains.” Powell said. “The question of whether we’re able to accomplish that is going to depend to some extent on factors that we don’t control.”

    Jerome Powell, chairman of the US Federal Reserve, arrives to a Senate Banking, Housing, and Urban Affairs Committee hearing in Washington, D.C., U.S., on Wednesday, June 22, 2022.
    Ting Shen | Bloomberg | Getty Images

    Powell insisted that inflation is running too hot and needs to come down. The consumer price index in May increased 8.6% over the past year, the highest level since December 1981.
    “Over coming months, we will be looking for compelling evidence that inflation is moving down, consistent with inflation returning to 2%,” Powell said. “We anticipate that ongoing rate increases will be appropriate; the pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy.”
    He noted that the war in Ukraine and Covid-linked shutdowns in China are adding to inflation pressures, and added that the problem is not unique to the U.S. but is affecting many global economies.
    Powell’s remarks are part of a congressionally mandated semiannual report on monetary policy – more commonly known in markets as the Humphrey Hawkins report and testimony, for the act which mandated them.
    This is an especially delicate moment for Fed policy.
    Over its past three meetings, the central bank has raised rates a cumulative 150 basis points – 1.5 percentage points – in an effort to tackle inflation that is running at its fastest annual pace in more than 40 years.
    The 75 basis point increase at last week’s Federal Open Market Committee meeting marked the biggest single hike since 1994. Powell said he sees rates rising to a “moderately restrictive level.”
    Republican senators pressed Powell to clamp down on inflation, and asked whether White House policies such as regulations on the energy industry are intensifying price pressures.
    “Inflation’s hitting my people so hard they’re coughing up bones,” said Sen. John Kennedy, R-La.
    “We got a hell of a mess right now,” Kennedy added. “You’re the most powerful man in the United States, maybe in the world.”

    Powell has stressed that he thinks tighter monetary policy will be an effective tool against inflation, and has said he thinks the economy is well positioned to handle higher rates. However, he also told Warren that higher rates won’t do much to lower soaring food and gasoline costs.
    Cracks have been showing in the economy this year that indicate the higher rates are coming as the economy already is slowing.
    Gross domestic product declined at a 1.5% annualized pace in the first quarter and is on pace to be flat in the second quarter, according to the Atlanta Fed. Housing sales have been plunging and there even have been some signs that the jobs market is slowly decelerating at a time when inflation-adjusted wages have fallen 3% over the past year.
    Despite the economic wobbles, Powell and his fellow policymakers have indicated the rate hikes will continue. Projections released at the meeting last week point to the Fed’s benchmark short-term borrowing rate rising to 3.4% by the end of this year, from its current targeted range of 1.5%-1.75%.
    Correction: The Fed’s benchmark short-term borrowing rate is currently in a targeted range of 1.5%-1.75%. An earlier version misstated the range.

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    Inflation Complicates Biden’s Deliberations on Student Loan Forgiveness

    The president is trying to balance his campaign promise to cancel thousands of dollars in student debt for tens of millions of borrowers with concerns such a move would be seen as a handout.WASHINGTON — The soaring cost of food, gasoline and other staples is further complicating a fraught debate among President Biden and his closest advisers over whether to follow through on his campaign pledge to cancel thousands of dollars of student loan debt for tens of millions of people.While Mr. Biden has signaled to Democratic lawmakers that he will probably move forward with some form of student loan relief, he is still pressing his team for details about the economic ramifications of wiping out $10,000 of debt for some — or all — of the nation’s 43 million federal student loan recipients.In meetings this spring, Mr. Biden repeatedly asked for more data on whether the move would primarily benefit well-off borrowers from private universities who might not need the help, according to people involved in the process. The country’s 8.6 percent inflation rate, a four-decade high, has added another layer of complexity to the decision: What would it mean for the economy if the government forgives some $321 billion in loans?“You’re talking about millions, possibly billions of dollars that could be spent. You should do it with eyes wide open,” said Cedric Richmond, who stepped down as a senior adviser to Mr. Biden last month. “He wants to make sure that it’s based in equity and it doesn’t exacerbate disparities.”While Mr. Biden has yet to make a decision on student debt cancellation, his aides say he will before the end of August. The White House has been deeply divided over the political and economic effects of loan forgiveness. Mr. Biden’s chief of staff, Ron Klain, has argued that it would galvanize a base of young voters increasingly frustrated with the president. Other aides have presented data showing that many Americans who saved money to pay off tuition for themselves or their children would resent the move.Some economic advisers have made the case to Mr. Biden that the move might actually relieve inflation, at least a little, if he pairs debt forgiveness to a restart of the interest payments on student loans, which have been paused since early in the pandemic.Mr. Biden’s deliberations are emblematic of his attempts to straddle deep ideological divides in the country, often within his party. According to people familiar with his thinking, Mr. Biden is struggling to balance his promise to deliver sweeping proposals to address racial and economic disparities with concerns that loan cancellation would exacerbate inflation and be seen as a giveaway, undermining his image as a champion for labor and the working class.Mr. Biden is considering a framework for student debt relief that his economic aides have assured him would not exacerbate inflation and could potentially ease price growth slightly.Under the plan, Mr. Biden would cancel some debt for certain borrowers, likely up to $10,000 each, which would effectively give some of those borrowers more money to spend on goods and services, like buying furniture or dining out, potentially creating additional demand that could further push up prices. Any move to relieve debt would include some type of income limits on those who qualify.But at the same time, he would end a pause on student loan interest payments for all borrowers, which was imposed in March 2020 and has been extended seven times, most recently until Aug. 31. That would effectively force many of those borrowers to spend less on goods and services to resume their loan payments.Mr. Biden’s aides believe that pairing the two policies could pull a small amount of consumer buying power out of the economy. By some administration estimates, the two policies could bring inflation down very slightly. At minimum, aides say, they would cancel each other out.“Given that fighting inflation is the president’s top domestic priority,” Jared Bernstein, a member of the White House Council of Economic Advisers, said in an interview, “the key economic fact here is that if debt payment restart and debt relief were to occur at roughly the same time, the net inflationary effect should be neutral.”Designing a plan to be inflation-neutral, at worst, under the administration’s accounting would require limiting the debt relief to far less than what more liberal Democrats have pushed Mr. Biden to grant.Opponents of debt cancellation would prefer Mr. Biden restart loan payments and not forgive any debt, which they say would have a better chance of dampening inflation. And they say the administration is making its inflation math appear rosier by looking at the resumption of interest payments as a new policy that could work as a counterbalance to canceling some debt, when the pause was always intended to be only temporary.The administration’s math showing the paired policies to be neutral for inflation “is not the way I would prefer to think about it,” said Marc Goldwein, the senior policy director at the Committee for a Responsible Federal Budget, a nonpartisan fiscal watchdog group in Washington, and a critic of cancellation proposals. “But it’s not totally bizarre for somebody to think about it that way.”Mr. Biden told reporters this week that he was close to making a decision on student debt. A White House official, speaking on the condition of anonymity to discuss internal discussions, said the administration wanted to wait until the end of August to assess how much of a problem inflation is by then, as well as any legislative movement in Congress.The White House has said it would prefer that Congress pass legislation on student loan relief, but Senate Democrats lack the votes, leaving executive action as the only apparent pathway. And pressure is building from Democrats who want Mr. Biden to make good on his campaign promise.President Biden has signaled that he will probably move forward with some form of student loan relief.Haiyun Jiang/The New York TimesDuring a White House meeting in May, Senators Elizabeth Warren of Massachusetts, Chuck Schumer of New York and Raphael Warnock of Georgia, all Democrats, presented data to Mr. Biden showing that debt cancellation would benefit borrowers who failed to obtain a degree to rebut the notion that relief would be a giveaway to the privileged, according to a person briefed on the meeting. Vice President Kamala Harris has also met with Mr. Biden to break down the groups that would benefit, another official said.Democrats have often cited a report from Temple University showing that nearly 40 percent of full-time undergraduates who enrolled in the 2011-12 academic year accumulated some debt but did not have a degree after six years.Republicans in Congress have attacked the White House as fiscally irresponsible. Representative Virginia Foxx of North Carolina, the top Republican on the Education and Labor Committee, said in a letter to the Education Department this month that she was “gravely concerned the department will further harm borrowers and taxpayers if it acts on student loan forgiveness, in part because of its inability to follow through on its grandiose proposals.”Student Loans: Key Things to KnowCard 1 of 4Corinthian Colleges. More

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    Labor Agency Seeks Broad Order Against Starbucks in Federal Court

    Federal labor regulators have asked a court to force Starbucks to stop what they say is extensive illegal activity in response to a nationwide campaign in which workers at more than 150 corporate-owned stores have voted to unionize.In a petition filed Tuesday with U.S. District Court in Buffalo, officials with the National Labor Relations Board accused the company of firing and disciplining union supporters; intimidating and threatening workers to discourage them from voting for the union; and effectively offering benefits to workers if they opposed the union.The agency is also seeking the reinstatement of seven Buffalo-area employees whom, it said, Starbucks had illegally forced out in retaliation for their union-organizing activities, and an order effectively recognizing the union in a Buffalo-area store where the union lost a vote despite strong initial support.The agency said in its filings that the court’s intervention was necessary to stop Starbucks’s “virulent, widespread and well-orchestrated response to employees’ protected organizing efforts” and that without the proposed remedies, Starbucks would “accomplish its unlawful objective of chilling union support, both in Buffalo and nationwide.”Reggie Borges, a Starbucks spokesman, rejected the accusations. “As we have said previously, we believe these claims are false and will be prepared to defend our case,” Mr. Borges wrote in an email.Matt Bodie, a former lawyer for the labor board who teaches labor law at St. Louis University, said it was not unusual for the agency to seek reinstatement of ousted workers. But he said the nationwide breadth of the injunction the agency was seeking was far less common, as was the request for the court to order recognition of a union at a store where the union initially lost its election.“It’s a big step in line with the Biden board’s commitment to a more rigorous and aggressive approach to labor law enforcement,” Mr. Bodie wrote in an email.The labor board has already issued more than 30 formal complaints finding merit in allegations similar to the ones it cataloged in its petition on Tuesday. It typically takes months or years to adjudicate such complaints, and the board asserted that allowing the process to run its course while the company continued to break the law would “cement this chill and nullify the impact of a final remedy.”The agency said that unlawful anti-union activity had begun shortly after workers in Buffalo went public with their union campaign in late August, and that it had escalated after two Buffalo-area stores won union votes in December. It said Starbucks had forced out several union supporters for violating rules that the company had not previously enforced.The company “quickly jettisoned its past practices to target union supporters more effectively,” the labor board wrote.A federal judge recently denied the labor board’s request to reinstate pro-union workers it said Starbucks had unlawfully forced out in a similar, if narrower, case in Arizona.The judge found that in the case of two workers, there was not evidence of retaliation for union activities, or the evidence was “inconsistent” with the accusations.In the case of a third worker, the judge found that both sides had arguments supporting their positions and that an administrative proceeding might ultimately show that Starbucks sought to retaliate over the worker’s union activities. But the judge concluded that Starbucks would have fired the worker even absent her union involvement. More

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    Why the Fed Is Risking a Recession

    Home sales are flagging and the rest of the economy is expected to slow, maybe sharply, as rates increase. Why is the Federal Reserve doing this?Recession fears are ramping up as the Federal Reserve embarks upon an aggressive campaign to raise interest rates, and politicians and members of the public are increasingly questioning why central bankers are planning to cause the economy pain.The short answer is: This is the tool the Fed has to bring inflation under control.The central bank is trying to force price increases to slow down. It does that by raising interest rates, which makes mortgages, car loans and business borrowing more expensive. As money becomes pricier, it weighs on spending and hiring, weakening the job market and the broader economy — maybe notably. Slower growth will give supply a chance to catch up with demand.The adjustment process is already an unpleasant one: Stock prices have fallen, home sales are beginning to slow and unemployment is likely to rise. But the Fed has one way to beat inflation back in line, and that is by hammering households and companies until they stop spending so much. Central bankers have acknowledged that the transition could be bumpy and that a recession is a real risk.“Monetary policy is famously a blunt tool,” Jerome H. Powell, the Fed chair, said during testimony before senators on Wednesday. “There’s risk that weaker outcomes are certainly possible, but they are not our intent.”At the same time, they say that not trying to cool down inflation — allowing it to continue ratcheting higher, and to become entrenched — would be the bigger problem.“This is very high inflation, and it’s hurting everybody,” Mr. Powell said.Fed officials have argued that they might be able to slow down the economy enough to allow inflation to moderate without choking demand so much that it plunges America into recession. Central bankers forecast last week that they will push unemployment up slightly, but not sharply, this year and next.But that gentle landing is far from certain. As shocks continue to rock the economy — the war in Ukraine has pushed up food and fuel costs, Chinese lockdowns to contain the pandemic have slowed factory production and shipping snarls linger — it has meant that the central bank may have to slow down demand even more to bring it in line with a constrained supply of goods and services.“It’s certainly a possibility; it’s not our intention at all,” Mr. Powell said of a recession. “Certainly the events of the last few months around the world have made it more difficult for us to achieve what we want, which is 2 percent inflation and still a strong labor market.” More

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    Companies Brace for Impact of New Forced Labor Law

    Billions of dollars could be at stake as a law banning imports of products from China goes into effect.WASHINGTON — A sweeping new law aimed at cracking down on Chinese forced labor could have significant — and unanticipated — ramifications for American companies and consumers.The law, which went into effect on Tuesday, bars products from entering the United States if they have any links to Xinjiang, the far-western region where the Chinese authorities have carried out an extensive crackdown on Uyghur Muslims and other ethnic minorities.That could affect a wide range of products, including those using any raw materials from Xinjiang or with a connection to the type of Chinese labor and poverty alleviation programs the U.S. government has deemed coercive — even if the finished product used just a tiny amount of material from Xinjiang somewhere along its journey.The law presumes that all of these goods are made with forced labor, and stops them at the U.S. border, until importers can produce evidence that their supply chains do not touch on Xinjiang, or involve slavery or coercive practices.Evan Smith, the chief executive at the supply chain technology company Altana AI, said his company calculated that roughly a million companies globally would be subject to enforcement action under the full letter of the law, out of about 10 million businesses worldwide that are buying, selling or manufacturing physical things.“This is not like a ‘picking needles out of a haystack’ problem,” he said. “This is touching a meaningful percentage of all of the world’s everyday goods.”The Biden administration has said it intends to fully enforce the law, which could lead the U.S. authorities to detain or turn away a significant number of imported products. Such a scenario is likely to cause headaches for companies and sow further supply chain disruptions. It could also fuel inflation, which is already running at a four-decade high, if companies are forced to seek out more expensive alternatives or consumers start to compete for scarce products.Understand the Supply Chain CrisisThe Origins of the Crisis: The pandemic created worldwide economic turmoil. We broke down how it happened.Explaining the Shortages: Why is this happening? When will it end? Here are some answers to your questions.Lessons From History: Henry Ford believed short-term interests must not squeeze out investment in a business’ resilience. His management philosophy yields powerful insights about the current crisis.A Key Factor in Inflation: In the U.S., inflation is hitting its highest level in decades. Supply chain issues play a big role.Failure to fully enforce the law is likely to prompt an outcry from Congress, which is in charge of oversight.“The public is not prepared for what’s going to happen,” said Alan Bersin, a former commissioner of U.S. Customs and Border Protection who is now the executive chairman at Altana AI. “The impact of this on the global economy, and on the U.S. economy, is measured in the many billions of dollars, not in the millions of dollars.”Ties between Xinjiang and a few industries, like apparel and solar, are already well recognized. The apparel industry has scrambled to find new suppliers, and solar firms have had to pause many U.S. projects while they investigated their supply chains. But trade experts say the connections between the region and global supply chains are far more expansive than just those industries.According to Kharon, a data and analytics firm, Xinjiang produces more than 40 percent of the world’s polysilicon, a quarter of the world’s tomato paste and a fifth of global cotton. It’s also responsible for 15 percent of the world’s hops and about a tenth of global walnuts, peppers and rayon. It has 9 percent of the world’s reserves of beryllium, and is home to China’s largest wind turbine manufacturer, which is responsible for 13 percent of global output.Direct exports to the United States from the Xinjiang region — where the Chinese authorities have detained more than a million ethnic minorities and sent many more into government-organized labor transfer programs — have fallen off drastically in the past few years. But a wide range of raw materials and components currently find their way into factories in China or in other countries, and then to the United States, trade experts say.In a statement on Tuesday, Gina Raimondo, the secretary of commerce, called the passage of the law “a clear message to China and the rest of the global community that the U.S. will take decisive actions against entities that participate in the abhorrent use of forced labor.”The Chinese government disputes the presence of forced labor in Xinjiang, saying that all employment is voluntary. And it has tried to blunt the impact of foreign pressure to stop abuses in Xinjiang by passing its own anti-sanctions law, which prohibits any company or individual from helping to enforce foreign measures that are seen as discriminating against China.Though the implications of the U.S. law remain to be seen, it could end up transforming global supply chains. Some companies, for example in apparel, have been quickly severing ties to Xinjiang. Apparel makers have been scrambling to develop other sources of organic cotton, including in South America, to replace those stocks.But other companies, namely large multinationals, have made the calculation that the China market is too valuable to leave, corporate executives and trade groups say. Some have begun walling off their Chinese and U.S. operations, continuing to use Xinjiang materials for the China market or maintain partnerships with entities that operate there.Uyghur workers at a factory in Xinjiang, China, in 2019. A wide range of raw materials and components from Xinjiang currently find their way into factories in China or in other countries, and then to the United States.Gilles Sabrié for The New York TimesIt’s a strategy that Richard Mojica, a lawyer at Miller & Chevalier Chartered, said “should suffice,” since the jurisdiction of U.S. customs extends just to imports, although Canada, the United Kingdom, Europe and Australia are considering their own measures. Instead of moving their operations out of China, some multinationals are investing in alternative sources of supply, and making new investments in mapping their supply chains.How the Supply Chain Crisis UnfoldedCard 1 of 9The pandemic sparked the problem. More

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    Red Flags for Forced Labor Found in China’s Car Battery Supply Chain

    The photograph on the mining conglomerate’s social media account showed 70 ethnic Uyghur workers standing at attention under the flag of the People’s Republic of China. It was March 2020 and the recruits would soon undergo training in management, etiquette and “loving the party and the country,” their new employer, the Xinjiang Nonferrous Metal Industry Group, announced.But this was no ordinary worker orientation. It was the kind of program that human rights groups and U.S. officials consider a red flag for forced labor in China’s western Xinjiang region, where the Communist authorities have detained or imprisoned more than 1 million Uyghurs, ethnic Kazakhs and members of other largely Muslim minorities.The scene also represents a potential problem for the global effort to fight climate change.China produces three-quarters of the world’s lithium ion batteries, and almost all the metals needed to make them are processed there. Much of the material, though, is actually mined elsewhere, in places like Argentina, Australia and the Democratic Republic of Congo. Uncomfortable with relying on other countries, the Chinese government has increasingly turned to western China’s mineral wealth as a way to shore up scarce supplies.That means companies like the Xinjiang Nonferrous Metal Industry Group are assuming a larger role in the supply chain behind the batteries that power electric vehicles and store renewable energy — even as China’s draconian crackdown on minorities in Xinjiang fuels outrage around the world.The Chinese government denies the presence of forced labor in Xinjiang, calling it “the lie of the century.” But it acknowledges running what it describes as a work transfer program that sends Uyghurs and other ethnic minorities from the region’s more rural south to jobs in its more industrialized north.Xinjiang Nonferrous and its subsidiaries have partnered with the Chinese authorities to take in hundreds of such workers in recent years, according to articles displayed proudly in Chinese on the company’s social media account. These workers were eventually sent to work in the conglomerate’s mines, a smelter and factories that produce some of the most highly sought minerals on earth, including lithium, nickel, manganese, beryllium, copper and gold.It is difficult to trace precisely where the metals produced by Xinjiang Nonferrous go. But some have been exported to the United States, Germany, the United Kingdom, Japan, South Korea and India, according to company statements and customs records. And some have gone to large Chinese battery makers, who in turn, directly or indirectly, supply major American entities, including automakers, energy companies and the U.S. military, according to Chinese news reports.It is unclear whether these relationships are ongoing, and Xinjiang Nonferrous did not respond to requests for comment.But this previously unreported connection between critical minerals and the kind of work transfer programs in Xinjiang that the U.S. government and others have called a form of forced labor could portend trouble for industries that depend on these materials, including the global auto sector.A new law, the Uyghur Forced Labor Prevention Act, goes into effect in the United States on Tuesday and will bar products that were made in Xinjiang or have ties to the work programs there from entering the country. It requires importers with any ties to Xinjiang to produce documentation showing that their products, and every raw material they are made with, are free of forced labor — a tricky undertaking given the complexity and opacity of Chinese supply chains.A Critical Year for Electric VehiclesAs the overall auto market stagnates, the popularity of battery-powered cars is soaring worldwide.Charging Stations: The Biden administration unveiled proposed regulations that would require stations built with federal dollars to be located no more than 50 miles apart.General Motors: The company hopes to become a leading force in the electric vehicle industry. Its chief executive shared how G.M. intends to get there.Turning Point: Electric vehicles still account for a small slice of the market, but this year, their march could become unstoppable. Here’s why.New Materials: As automakers seek to electrify their fleets and to direct electricity more efficiently, alternatives to silicon are gaining traction.The apparel, food and solar industries have already been upended by reports linking their supply chains in Xinjiang to forced labor. Solar companies last year were forced to halt billions of dollars of projects as they investigated their supply chains.The global battery industry could face its own disruptions given Xinjiang’s deep ties to the raw materials needed for next-generation technology.Trade experts have estimated that thousands of global companies may actually have some link to Xinjiang in their supply chains. If the United States fully enforces the new law, it could result in many products being blocked at the border, including those needed for electric vehicles and renewable energy projects.Some administration officials raised objections to cutting off shipments of all Chinese goods linked with Xinjiang, arguing that it would be disruptive to the U.S. economy and the clean energy transition.Representative Thomas R. Suozzi, a Democrat from New York who helped create the Congressional Uyghur Caucus, said that while banning products from the Xinjiang region might make goods go up in price, “it’s too damn bad.”“We can’t continue to do business with people that are violating basic human rights,” he said. To understand how reliant the battery industry is on China, consider the country’s role in producing the materials that are critical to the technology. While many of the metals used in batteries today are mined elsewhere, almost all of the processing required to turn those materials into batteries takes place in China. The country processes 50 to 100 percent of the world’s lithium, nickel, cobalt, manganese and graphite, and makes 80 percent of the cells that power lithium ion batteries, according to Benchmark Mineral Intelligence, a research firm.“If you were to look at any electric vehicle battery, there would be some involvement from China,” said Daisy Jennings-Gray, a senior analyst at Benchmark Mineral Intelligence.The materials Xinjiang Nonferrous has produced — including a dizzying array of valuable minerals, like zinc, beryllium, cobalt, vanadium, lead, copper, gold, platinum and palladium — have gone into a wide variety of consumer products, including pharmaceuticals, jewelry, building materials and electronics. The company also claims to be one of China’s largest producers of lithium metal, and its second-largest producer of nickel cathode, which can be used to make batteries, stainless steel and other goods.Xinjiang Non-Ferrous Metal Industry Group was one of the region’s earliest miners, operating the state-owned No. 3 pegamite mining pit beginning in the 1950s.Shen Longquan/Visual China Group, via Getty ImagesIn recent years, the company has expanded into Xinjiang’s south, the homeland of most Uyghurs, acquiring valuable new deposits that executives describe as “critical” to China’s resource security.Ma Xingrui, a former aerospace engineer who was appointed Communist Party secretary of Xinjiang in 2021, has talked up Xinjiang’s prospects as a source of high-tech materials. This month, he told executives from Xinjiang Nonferrous and other state-owned companies that they should “step up” in new energy, materials and other strategic sectors.Xinjiang Nonferrous’s role in work transfer programs ramped up several years ago, as part of efforts by the Chinese leader Xi Jinping to drastically transform Uyghur society to become richer, more secular and loyal to the Communist Party. In 2017, the Xinjiang government announced plans to transfer 100,000 people from southern Xinjiang into new jobs over three years. Dozens of state-owned companies, including Xinjiang Nonferrous, were assigned to absorb 10,000 of those laborers in return for subsidies and bonuses.Transferred workers appear to make up only a minor part of the labor force at Xinjiang Nonferrous, perhaps a few hundred of its more than 7,000 employees. The company and its subsidiaries reported recruiting 644 workers from two rural counties of southern Xinjiang from 2017 to 2020, and training more since then.Some laborers were sent to the company’s copper-nickel mine and smelter, which are operated by Xinjiang Xinxin Mining Industry, a Hong Kong-listed subsidiary that has received investment from the state of Alaska, the University of Texas system and Vanguard. Other laborers went to subsidiaries that produce lithium, manganese and gold.Before being assigned to work, predominantly Muslim minorities were given lectures on “eradicating religious extremism” and becoming obedient, law-abiding workers who “embraced their Chinese nationhood,” Xinjiang Nonferrous said.Inductees for one company unit underwent six months of training including military-style drills and ideological training. They were encouraged to speak out against religious extremism, oppose “two-faced individuals” — a term for those who privately oppose Chinese government policies — and write a letter to their hometown elders expressing gratitude to the Communist Party and the company, according to the company’s social media account. Trainees faced strict assessments, with “morality” and rule compliance accounting for half of their score. Those who scored well earned better pay, while students and teachers who violated rules were punished or fined.Even as it promotes the successes of the programs, the company’s propaganda hints at the government pressure on it to meet labor transfer goals, even through the coronavirus pandemic.A 2017 article in the Xinjiang Daily quoted one 33-year-old villager as saying that he was initially “reluctant to go out to work” and “quite satisfied” with his income from farming, but was persuaded to go to work at Xinjiang Nonferrous’ subsidiary after party members visited his house several times to “work on his thinking.” And in a visit in 2018 to Keriya County, Zhang Guohua, the company president, told officials to “work on the thinking” of families of transferred laborers to ensure that no one abandoned their jobs.Chinese authorities say that all employment is voluntary, and that work transfers help free rural families from poverty by giving them steady wages, skills and Chinese-language training.“No one has been forced to become ‘transferred labor’ in Xinjiang,” Wang Wenbin, a spokesman for the Chinese foreign ministry, told reporters in Beijing this month.It is difficult to ascertain the level of coercion any individual worker has faced given the limited access to Xinjiang for journalists and research firms. Laura T. Murphy, a professor of human rights and contemporary slavery at Sheffield Hallam University in Britain, said that resisting such programs is seen as a sign of extremist activity and carries a risk of being sent to an internment camp.“A Uyghur person cannot say no to this,” she said. “They are harassed or, in the government’s words, educated,’ until they are forced to go.”Files from police servers in Xinjiang published by the BBC last month described a shoot-to-kill policy for those trying to escape from internment camps, as well as mandatory blindfolds and shackles for “students” being transferred between facilities.Other Chinese metal and mining companies also appear to be linked with labor transfers at a smaller scale, including Zijin Mining Group Co. Ltd., which has acquired cobalt and lithium assets around the globe, and Xinjiang TBEA Group Co. Ltd., which makes aluminum for lithium battery cathodes, according to media reports and academic research. Other entities that were previously sanctioned by the United States over human rights abuses are also involved in the supply chain for graphite, a key battery material that is only refined in China, according to Horizon Advisory, a research firm.An indoctrination center in Hotan, China. In 2017, the regional government announced plans to transfer 100,000 people from the cities of Kashgar and Hotan in southern Xinjiang into new jobs.Gilles Sabrié for The New York TimesThe raw materials that these laborers produce disappear into complex and secretive supply chains, often passing through multiple companies as they are turned into auto parts, electronics and other goods. While that makes them difficult to trace, records show that Xinjiang Nonferrous has developed multiple potential channels to the United States. Many more of the company’s materials are likely transformed in Chinese factories into other products before they are sent abroad.For example, Xinjiang Nonferrous is a current supplier to the China operations of Livent Corporation, a chemical giant with headquarters in the United States that uses lithium to produce a chemical used to make automobile interiors and tires, hospital equipment, pharmaceuticals, agrochemicals and electronics.A Livent spokesman said that the firm prohibits forced labor among its vendors, and that its due diligence had not indicated any red flags. Livent did not respond to a question about whether products made with materials from Xinjiang are exported to the United States.In theory, the new U.S. law should block all goods made with any raw materials that are associated with Xinjiang until they are proven to be free of slavery or coercive labor practices. But it remains to be seen if the U.S. government is willing or able to turn away such an array of foreign goods.“China is so central to so many supply chains,” said Evan Smith, the chief executive of the supply chain research company Altana AI. “Forced labor goods are making their way into a really broad swath of our global economy.”Raymond Zhong More

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    U.S. recession isn't 'inevitable,' but inflation is 'unacceptably high,' Treasury Secretary Yellen says

    The recession that many Americans fear is coming is not “at all imminent,” Treasury Secretary Janet Yellen told ABC News on Sunday.
    Talk of a recession has accelerated this year as inflation remains high and the Federal Reserve takes aggressive steps to counter.
    On Wednesday, the Fed announced a 75 basis point interest rate hike, its largest since 1994.

    U.S. Treasury Secretary Janet Yellen testifies before a House Ways and Means Committee hearing on President Biden’s proposed 2023 U.S. budget, on Capitol Hill in Washington, June 8, 2022.
    Jonathan Ernst | Reuters

    The recession that many Americans fear is coming is not “at all imminent,” Treasury Secretary Janet Yellen said Sunday.
    Talk of a recession has accelerated this year as inflation remains high and the Federal Reserve takes aggressive steps to counter it. On Wednesday, the Fed announced a 75 basis point interest rate hike, its largest since 1994. Fed Chair Jerome Powell also indicated the Federal Open Market Committee’s intent to continue its aggressive path of monetary policy tightening in order to rein in inflation.

    At the same time, many expect the combination of resilience in consumer spending and job growth to keep the U.S. out of recession.
    “I expect the economy to slow,” Yellen said in an interview with ABC’s “This Week.” “It’s been growing at a very rapid rate, as the economy, as the labor market, has recovered and we have reached full employment. It’s natural now that we expect a transition to steady and stable growth, but I don’t think a recession is at all inevitable.”
    Although Yellen seemed optimistic about avoiding recession, the global economy is still facing serious threats in the coming months with the continued war in Ukraine, soaring inflation and the Covid-19 pandemic. “Clearly, inflation is unacceptably high,” Yellen said.
    Still, she doesn’t believe a drop-off in consumer spending would be the cause of a recession. Yellen told ABC News that the U.S. labor market is the strongest of the post-war period and predicted that inflation would slow “in the months ahead.”

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