Economy

LONDON (Reuters) – Turkey has under-delivered on rate hikes for a second month, but foreign investors are as yet unfazed and expect fresh money flows, cooling domestic credit and rising currency reserves to provide some breathing space to the battered emerging market.Policymakers hiked interest rates by 250 basis points to 17.5% in their second meeting under new Governor Hafize Gaye Erkan on Thursday, continuing to reverse the low-rates policy that had been favoured by President Tayyip Erdogan and promising more tightening and additional measures. While that leaves the benchmark well short of inflation, which is running at almost 40%, the direction of travel is the right one, fund managers and analysts said. “The country should avoid large balance of payments challenges for now,” said Nick Eisinger, fund manager for emerging markets fixed income at Vanguard. “It is hard to establish when pressure will arise again, but it might not be for a while.”The country’s international bond prices clung to multi-month highs, with shorter-dated bonds trading just below par.Investors were betting the government would try to avert a recession ahead of local elections in March, and were reassessing the timing of much needed further rate hikes, said Liam Peach, senior emerging markets economist at Capital Economics.”There is a huge gap between rates and inflation, but investors still have faith in this policy shift,” Peach said. “They will tolerate a gradual tightening cycle if the key rate rises towards 30% at the end of the year.”International bonds are still widely held by foreign investors, though much less so the domestic ones exposed to the lira currency’s wild swings. However, that might also be changing said Paul McNamara, a London-based investment director at GAM Investments, pointing to the lower trajectory of domestic credit growth – a potential signal that Turkey might be moving away from red-hot growth that had fuelled recent boom-and-bust cycles. “As long as credit growth keeps heading down, we are becoming more positive on Turkey,” he said. “We haven’t put money to work yet, but I’d say we’re an awful lot closer to it.”The central bank on Thursday introduced a 15% minimum reserve requirement for FX-protected lira deposits in a move that bankers estimated would suck 450-500 billion Turkish lira of liquidity from the market.BETTER BUFFERSRising central bank reserves are another positive sign. Net international reserves rose to $13.25 billion in the week to July 14, continuing a rebound from record lows after the bank stopped using them to support the lira. The currency has lost more than 30% so far this year and hit a record low of 27 to the dollar this week.. Investors are focused on Thursday’s central bank’s inflation report, the first under Erkan and the first time she will hold a news conference since her appointment. “I would strongly expect a clear roadmap, especially when there are increased pressures of further inflation,” said Emre Akcakmak, a senior consultant at emerging markets fund manager East Capital. JPMorgan (NYSE:JPM) raised its inflation outlook for Turkey after the rate hike, now expecting year-end inflation at 57% versus 50% previously.Meanwhile, new money flows provide much needed relief. Summer tourism will boost hard-currency revenues though investors want to see more details on new loans from the Gulf, after the United Arab Emirates and Turkey inked several deals estimated to be worth $50.7 billion.”It’s still not clear in what shape and timing the country will get the flows, but it will definitely help,” said Cagri Kutman, senior fixed income sales at KNG Securities. “That is why people are still giving (the government) the benefit of the doubt.” More

TOKYO (Reuters) – Japan’s top financial diplomat on Friday suggested the central bank may tweak its approach to monetary stimulus at its next policy meeting, due to “signs of changes” in corporate behaviour on wage growth and price rises. In rare remarks on monetary policy, Masato Kanda, vice finance minister for international affairs, said he expects the Bank of Japan (BOJ) to make a judgment on policy by analysing the conditions and outlook for prices at every review. The next meeting is on July 27-28.Kanda’s remarks came hours after government data showed core consumer inflation grew 3.3% in June – above the BOJ’s 2% target for the 15th straight month – and as Japanese firms offered the biggest pay hikes in three decades this year.Looking at the underlining trend of prices and wages, there are signs of changes in the corporate wage- and price-setting behaviour that has been in place during the period of deflation, Kanda told Reuters.”Various expectations and speculations are spreading about the possibility of some kind of tweak to monetary policy,” he said.The BOJ, under Governor Kazuo Ueda’s predecessor Haruhiko Kuroda, launched an unprecedented round of monetary stimulus in 2013, pledging to inflate the economy to meet a 2% inflation target in two years. That has been extended ever since with the inflation goal proving a tall order.The BOJ is leaning towards keeping its yield control policy unchanged at next week’s meeting, five sources familiar with its thinking said, as policymakers prefer to scrutinise more data to ensure wages and inflation keep rising.But there is no consensus within the central bank on how soon it should start phasing out its massive stimulus, which could make next week’s decision a close call.Earlier, the Jiji newsagency reported Kanda as saying he was watching the currency market with a sense of urgency after the yen fell versus the dollar, warning that authorities will consider all options to deal with excess volatility in the currency market. The dollar rose 1.3% at a nearly two-week high of 141.91 yen. More

Russia is pushing a plan to supply Africa with grain and cut Ukraine out of global markets after withdrawing from a UN-backed deal this week, according to three people familiar with the matter.President Vladimir Putin has proposed a replacement initiative whereby Qatar would pay Moscow to ship its grain to Turkey, which would distribute the crop to “countries in need”, the people said. Neither Qatar nor Turkey have agreed to the idea, which Moscow had not raised to formal levels, they added. Kyiv and its western backers are likely to be deeply suspicious of Russia’s offer, which would effectively secure Moscow’s naval blockade of Ukraine’s Black Sea ports that are a vital economic lifeline for the country.Russia first floated the idea of supplying its grain to Africa last year, the people familiar with the matter said, after it briefly pulled out of the Black Sea accord brokered by the UN and Turkey that has allowed 33mn tonnes of Ukrainian grain to be exported. Moscow rejoined the deal a few days later.Under that offer, according to a draft memorandum seen by the Financial Times, Russia was to send up to 1mn tonnes of grain to Turkey “on a preferential basis”. Qatar would foot the bill entirely and the grain would be supplied to Turkey to be shipped onwards to Africa. After Putin pulled out of the grain deal again this week, people involved in those talks said they expected Russia to push its own proposal at the summit with African leaders in St Petersburg next week and when he visits Turkey in August.“It’s quite a stunt,” a person involved in the grain talks said. “It’s macho, just to show they can.” A person familiar with the matter said Moscow had not formally approached Doha about the initiative, but added that Qatar would be unlikely to agree if it did. Dmitry Peskov, Putin’s spokesman, declined to comment. Turkey, Ukraine and Qatar did not immediately respond to requests for comment.Putin said Russia withdrew from the grain deal over the EU’s reluctance to roll back sanctions on payments, shipping and insurance for Moscow’s own agricultural exports. He claimed he would be prepared to rejoin as soon as those conditions were met.Turkey’s president Recep Tayyip Erdoğan said this week that Russia was still “in favour” of the Black Sea deal, and called on the west to offer concessions to Putin over the issue.Ukraine’s backers, however, believe the Russian proposal is in effect a way of putting additional pressure on Kyiv while exporting grain from parts of the country currently occupied by its army, two western diplomats said.“Last time they were mooting this [idea] we had very strong suspicions that the grain would effectively be grain stolen from Ukraine,” a senior EU official said.Moscow has publicly framed the idea as an offer of free grain for the poorest countries ahead of the Russia-Africa summit. It has used the grain issue as a wedge to rally sympathy for its position on Ukraine in the global south and create a groundswell of sentiment against western sanctions. Putin complained this week that western countries were blocking Moscow’s attempts to send free fertiliser to Africa. On grain, he said: “Our country is capable of replacing Ukrainian grain on a commercial and a gratuitous basis,” adding that “continuing the grain deal in its current form had lost all sense”.However, the exit from the Black Sea agreement has angered some governments in Africa, especially those facing pressure at home stemming from rising food prices since Russia’s full-scale invasion of Ukraine last year.Kenya, which is a consumer of Russian grain and fertiliser, said this week that the Russian move was a “stab on the back” that “disproportionately impacts countries” in its region. Other African leaders are coming under US pressure to condemn Russia on the grain issue and not to travel to St Petersburg, according to African officials. This creates a bind for some as they often need Russian and US assistance on economic and security issues.Additional reporting by Adam Samson in Istanbul More

SANTIAGO (Reuters) – Chilean President Gabriel Boric is struggling to replicate the success of other Latin American leftist leaders in reforming tax codes after vowing as a candidate in 2021 to undertake a restructuring of his country’s free-market system.Propelled into office by a popular revolt over the shortcomings of Chile’s longtime orthodox economic consensus, Boric was part of a pink tide of South American leaders elected on platforms that promised higher social spending and other policies to reduce inequality. Colombian President Gustavo Petro was able to pass a tax reform in the first few months of his administration and Brazilian President Luiz Inacio Lula da Silva has seen early success in doing the same.Boric, however, has faced a tougher climb passing a tax bill that he sees as key to funding investments in healthcare, education, public transportation and other elements of his government’s ambitious economic and social agenda.An initial legislative proposal, which included hikes on high earners and would have generated revenue equivalent to 2.7% of the country’s GDP, was rejected by lawmakers in March.Finance Minister Mario Marcel, who helped pass a mining royalty bill despite early opposition from industry and investors, has been meeting with political leaders, business groups and others to build support for a revised tax bill.That version, which is expected to be scaled down and includes measures to reduce tax evasion and the use of informal labor as well as boost investment incentives, faces an uncertain future.Unlike the mining royalty bill, the proposed tax reform will require a two-thirds majority in the opposition-controlled Senate before it can be sent to the lower house of Congress. Boric wants the Senate to take up the bill by the end of this month.”Today, those votes aren’t there,” said Jose Garcia Ruminot, a conservative senator, who added that Boric’s government would have to wait until next year to try to get a tax bill passed.That task may prove Herculean in light of an economic slowdown and political setbacks that have led to a sharp drop in public support for the government. A rebound in the fortunes of the political right and a recent scandal that led prosecutors to investigate high-ranking officials in Boric’s administration for possible embezzlement of funds or tax fraud have further clouded the tax reform agenda.Boric’s government now faces the tall order of convincing the country it won’t misuse public funds on top of getting the opposition on board with tax hikes during an economic downturn, said Nicholas Watson, a managing director at Teneo Consultancy in London.SLIPPERY PATHBoric is not the first leftist leader to find the path to tax reform slippery in Chile, a country that has largely attributed its economic success to free-market policies.Former President Michelle Bachelet faced opposition in her quest to pass a bill through a divided congress in 2014, prompting her government to pull back on many proposed tax hikes and other measures to secure its passage. Boric’s effort in that regard was dealt a blow last September when voters widely rejected a progressive new constitution that he had backed and which had dominated the early days of his administration.”Chile’s government was counting on the new constitution being approved,” said Andres Pardo, chief Latin America analyst for XP (NASDAQ:XP) Investments in Bogota. “And if that had happened, the political environment would be different now.” Senator Ricardo Lagos Weber, a pro-government center-left lawmaker who chairs the Senate Finance Committee, said that while the current situation is difficult, “the government cannot be paralyzed and must go ahead with the votes.”Many investors and Chilean business leaders opposed to the tax reform warn that passage of even a watered-down bill could dent the economy and point another dagger at its key mining sector. Analysts say there’s been a drop in mining investment and extraction in Colombia since its tax reform was passed.Opposition to the Lula government’s spending plans also has forced his government to tailor its proposed reform to focus on simplifying the current tax code and merging multiple taxes into a single value-added tax.”It will be difficult for the (Chilean) government to counter this reasoning given that public opinion has turned against Boric and (his coalition),” Teneo Consultancy’s Watson said. More

ANKARA (Reuters) – Turkey’s latest monetary and fiscal moves are steps in the right direction, though regaining credibility in economic policy remains a challenge, a European Bank for Reconstruction and Development (EBRD) executive said on Friday.Turkey’s central bank on Thursday hiked its benchmark interest rate by 250 basis points to 17.5% and promised more tightening. The country is beset by high inflation and a weak lira currency. It also introduced tax hikes this month in an effort to keep a growing budget deficit in check. EBRD vice president for policy and partnerships Mark Bowman said during a visit that the bank had been “impressed by the strength and resilience of private sector companies.”The policy steps of the last few weeks were “movements in the right direction”, though concerns remained about the macroeconomic backdrop.”Macroeconomic stability and regaining credibility in macro policy is an ongoing challenge and there is obviously more work that still needs to be to be done,” he told Reuters. After holding talks with Turkish officials, he said the EBRD had monitored the macroeconomic situation very closely, and all ministers were committed to the policy agendas that the bank discussed with them.The EBRD is the leading institutional investor in Turkey, having invested more than 18 billion euros in the country since 2009, mostly in the private sector.Bowman said the bank would support Turkey’s green transition and had provided 400 million euros ($445 million) in recovery funds for the region hit by devastating earthquakes in February, a sum it aimed to increase as quickly as possible.Damage caused by the earthquakes, which killed more than 50,000 people, is estimated at more than $100 billion.($1 = 0.8989 euros) More

It was the first time the bank had raised rates in more than a year, having gradually reversed an emergency hike to 20% made in February last year after Russia sent its armed forces into Ukraine, which prompted the West to impose sanctions on Moscow. Its last cut, to 7.5%, was in September.”Pro-inflationary risks have increased significantly over the medium-term horizon,” the bank said in a statement. “The increase in domestic demand surpasses the capacity to expand production, including due to the limited availability of labour resources.” This was reinforcing persistent inflationary pressure, it said, while the rouble’s depreciation this year was “significantly amplifying pro-inflationary risks”. The central bank raised its year-end forecast for inflation – now just below 4% – to 5.0-6.5% from 4.5-6.5%, and said it was holding open the possibility of further hikes at future meetings. SURPRISE DECISIONThe decision surprised analysts polled by Reuters, who had forecast a 50-basis-point hike.However, some analysts had revised their forecasts in recent days to anticipate an even larger rise as inflation data this week showed a jump in households’ inflationary expectations for July and an acceleration in Russia’s weekly consumer prices.”The much larger-than-expected 100bp interest rate hike … underscores policymakers’ concerns about inflation risks,” said William Jackson, Chief Emerging Markets Economist at Capital Economics. “And while we don’t think monetary tightening will continue quite as aggressively at subsequent meetings, we now expect at least another 100bp of hikes before the end of the year.”Annual inflation had fallen below the bank’s 4% target in recent months, due to the high base effect from last year when inflation spiked to its highest level for over 20 years.It is now running at 3.86%, the economy ministry said this week, and rising once more.Alfa Bank Chief Economist Natalia Orlova said the rate hike looked like a reaction to the situation on the currency market, given that the other inflation pressures mentioned had been evident at the previous central bank meeting on June 9.Pressure on the rouble has increased since an abortive armed mutiny by the Wagner mercenary group in late June. Attacks on Russian infrastructure, which Moscow has blamed on Ukraine, have also dampened risk appetite. Central Bank Governor Elvira Nabiullina will shed more light on the bank’s forecasts and policy in a media briefing at 1200 GMT.    The next rate-setting meeting is scheduled for Sept. 15. More

The Nasdaq Composite suffered its biggest one-day drop in more than four months yesterday as investor disappointment with results from Netflix and Tesla called into question the strong, months-long rally in the tech sector. The tech-heavy index dropped 2.1 per cent, its biggest daily decline since March 9. The broader S&P 500 index fell 0.7 per cent.Tesla shares tumbled 9.7 per cent, its biggest single-day drop since early January, after the electric-car maker said its profit margins slipped as a series of price cuts aimed at boosting sales weighed on earnings.Netflix fell 8.4 per cent, having missed sales estimates and posting lower than expected guidance for the third quarter. It was the stock’s biggest one-day drop since December 2022.Even after yesterday’s sell-off, the Nasdaq Composite index is still up more than 35 per cent this year following a wave of investment into artificial intelligence-related companies. The presumption that interest rates in the US are nearing their peak has also helped drive up equity prices this year. The US central bank will announce the outcome of its latest rate-setting meeting on Wednesday next week and it is widely expected to increase its main policy rate by a quarter of a percentage point but that is predicted by many economists to be the final rise in the current tightening cycle. Futures contracts tracking the Nasdaq 100 point to the index opening 0.3 per cent higher later today, while those tracking the benchmark S&P 500 rose 0.2 per cent ahead of the New York open.Here’s what else I’m keeping tabs on today and over the weekend:Results: Credit card group American Express and SLB, formerly Schlumberger, the oilfield services group, report second-quarter earnings today.Women’s football World Cup: The US team begins the defence of its title against Vietnam in Auckland at 9pm ET.Spanish elections: The Vox party is expected to notch wins on Sunday, potentially bringing the hard right into central government for the first time since Spain’s return to democracy.Five more top stories1. The Federal Reserve yesterday launched a new real-time payments system, called FedNow, to speed up the antiquated money transfer system in the US. It is the first new government-backed US payments system or “rail” since the start of the Automated Clearing House network in the 1970s. Read more on the changes.2. FTX, the bankrupt cryptocurrency exchange, has sued its founder Sam Bankman-Fried and three other former executives to claw back more than $1bn they allegedly misappropriated in the months leading up to its collapse last year. Read more on the lawsuit filed yesterday in a Delaware bankruptcy court.3. US cinema owners are looking to cash in on the meme-driven “Barbenheimer” phenomenon, which has led hundreds of thousands of film-goers to buy tickets to see Barbie on the same day as Oppenheimer this weekend. Read more on the rush to buy tickets for two wildly different films.4. Exclusive: The Asian Infrastructure Investment Bank has secured a $1bn deal with the World Bank to issue credit guarantees against sovereign-backed loans made by the latter’s lending arm. The agreement is one of the Beijing-backed group’s highest-profile partnerships and comes just weeks after it was accused of being infiltrated by China’s Communist party. Read the full story.China Focus: Check out the Financial Times’s hub that brings together our best work on Asia’s biggest economy.5. A shortage of Nvidia’s latest chips has provided start-ups with an opening to challenge the dominance of the world’s most valuable semiconductor company. Surging demand for the specialist chips that power artificial intelligence is expected to outstrip supplies well into next year. Here are the fledgling companies hoping to get a slice of the pie.How well did you keep up with the news this week? Take our quiz. News in-depth

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Nearly a year and a half into President Vladimir Putin’s war on Ukraine, fewer than 300 of the more than 3,350 large foreign companies with assets in Russia have managed to leave. The situation for those that remain has taken a turn for the worse, with a dearth of buyers and hardening Kremlin attitudes. “This is like Venezuela,” said a senior Moscow businessman. “They’re giving the best to their cronies.”We’re also reading and watching . . . Gillian Tett: New research highlights two issues that have hitherto been largely ignored following the collapse of Silicon Valley Bank in the spring.ATM attacks: Germany’s love of banknotes and a fragmented police force have made the country Europe’s centre for Dutch gangs using bombs to raid cash machines.‘Lure of the forbidden’: After a US army private made a sudden dash across the border into North Korea, focus is now turning to how he was able to do it and why.Chart of the day

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Would humanity settle on a new planet where going outdoors during daylight hours would be potentially lethal, asks the FT’s chief data reporter John Burn-Murdoch. Back on Earth, he points out that Phoenix, Arizona, where maximum temperatures have now exceeded 40C for 26 successive days, is America’s fastest-growing big city. He tries to explain this irrational behaviour in his latest column.Take a break from the newsThe Adirondacks region of New York state is known for its lakes and mountain retreats. The FT’s property section has listed five properties currently for sale.

This two-bedroom, two-bathroom house on the eastern side of Buck Island costs $2.4mn

Additional contributions by Tee Zhuo and Benjamin Wilhelm More

Republicans are raising fresh concerns about CATL, the battery maker Ford is working with to bring new technology to the U.S., and its connections to Xinjiang.A partnership between Ford Motor and a major Chinese battery maker is facing scrutiny by Republican lawmakers, who say it could make an American automaker reliant on a company with links to forced labor in China’s Xinjiang region.In a letter sent to Ford on Thursday, the chairs of the House Select Committee on the Chinese Communist Party and the House Ways and Means Committee demanded more information about the partnership, including what they said was a plan by Ford to employ several hundred workers from China at a new battery factory in Michigan.Ford announced in February that it planned to set up the $3.5 billion factory using technology from Contemporary Amperex Technology Ltd., known as CATL, the world’s largest maker of batteries for electric vehicles. CATL produces about a third of electric vehicle batteries globally and supplies General Motors, Volkswagen, BMW, Tesla and other major automakers.Ford has defended the partnership, saying it will help diversify Ford’s supply chain and allow a battery that is less expensive and more durable than current alternatives to be made in the United States for the first time, rather than imported.But lawmakers, who previously criticized the partnership, cited evidence that CATL had not relinquished its ownership of a company it helped set up in Xinjiang, where the United Nations has identified systemic human rights violations.CATL publicly divested its share of the company, Xinjiang Zhicun Lithium Industry Company, in March, after its deal with Ford was announced. But the shares were bought by an investment partnership in which CATL owned a partial stake and a former CATL manager who holds leadership roles in other companies owned by the battery maker, corporate records show.The circumstances of the sale raise “serious questions about whether CATL is attempting to obscure links to forced labor,” wrote Representatives Mike Gallagher of Wisconsin, the chairman of the select committee, and Jason Smith of Missouri, the chairman of the Ways and Means Committee. The lawmakers, citing details of Ford’s licensing agreement that are on file with the select committee, also criticized the automaker’s commitment to employ several hundred Chinese workers. Employees from China would set up and maintain CATL’s equipment at the Michigan factory until about 2038, the lawmakers said. The factory is expected to employ 2,500 U.S. workers, Ford has said.“Ford has argued that the deal will create thousands of American jobs, further Ford’s ‘commitments to sustainability and human rights’ and lead to American battery technology advancements,” they wrote. “But newly discovered information raises serious questions about each claim.”T.R. Reid, a spokesman for Ford, said the company was going through the letter and would respond in good faith. He said that human rights were fundamental to how Ford did business, and that the automaker was thorough in assessing such issues.“There has been an awful lot said and implied about this project that is incorrect,” Mr. Reid said. “At the end of the day, we think creating 2,500 good-paying jobs with a new multibillion investment in the U.S. for great technology that we’ll bring to bear in great electric vehicles is good all the way around.”CATL’s collaboration with Ford could be a bellwether for the electric vehicle industry in the United States. Critics have labeled the agreement a “Trojan horse” for Chinese interests and called for scuttling the partnership. If it succeeds, they say, reliance on Chinese technology could become the norm for the U.S. electric vehicle industry.Ultimately, China’s control over key technologies like batteries could leave the United States “in a far weaker position,” said Erik Gordon, a clinical assistant professor at the University of Michigan’s Ross School of Business.“The profit margins go to the innovators who provide the advanced technology, not the people with screwdrivers that assemble the advanced technology,” he said.But CATL and other Chinese companies have battery technology not readily available from suppliers in the United States or Europe. The Michigan plant would be the first in the United States to produce so-called LFP batteries that use lithium, iron and phosphate as their main active materials.They are heavier than the lithium, nickel and manganese batteries currently used by Ford and other automakers but less expensive to make and more durable, able to withstand numerous charges without degrading. They also do not use nickel or cobalt, another battery material, which are often mined in environmentally damaging ways, and sometimes with child labor.Without the most advanced or least expensive batteries, U.S. carmakers could fall behind Chinese rivals like BYD that are pushing into Europe and other markets outside China. Americans may also have to pay more for electric cars and trucks, which would slow sales of vehicles that do not emit greenhouse gases.A battery unveiled by CATL last year delivers hundreds of miles of driving range after a charge of just 10 minutes.“The hard truth is that the Chinese took a huge gamble on electric vehicles and plopped down over a trillion Chinese dollars and subsidies on this industry, and it just so happens that gamble came up all aces,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies.“If you decide not to partner with a very large battery maker, then you’re essentially committing to delaying the U.S. energy transition,” he added.Ford plans to use batteries made with CATL technology in lower-priced versions of vehicles like the Mustang Mach-E and F-150 Lightning pickup. The least expensive version of Tesla’s Model 3 sedan comes with an LFP battery that CATL is widely reported to have supplied.For decades, Western companies have had a monopoly on the world’s most advanced technologies, and have sought access to the Chinese market while also safeguarding their intellectual property.But China’s dominance in electric vehicle batteries, as well as in the production of solar panels and wind turbines, has flipped that dynamic. It has created a particularly tricky dilemma for the Biden administration and other Democrats, who want to reduce the country’s reliance on China but also argue that the United States must quickly make a transition to cleaner energy sources to try to mitigate climate change.The solar and electric vehicle battery industry’s exposure to Xinjiang further complicates the situation. The Biden administration has condemned the Chinese government for carrying out genocide and crimes against humanity in the region.The United States last year barred imports of products made in whole or in part in Xinjiang, saying companies operating in the region are not able to ensure that their facilities are free of forced labor.In 2022, CATL and a partner registered a lithium processing company in the region called Xinjiang Zhicun Lithium Industry Company, which promoted plans to become the world’s largest producer of lithium carbonate, a key battery component.Through a series of subsidiaries and shareholder relationships, that Xinjiang lithium company has financial ties to a Chinese electricity company, Tebian Electric Apparatus Stock Company, or TBEA, according to records that The New York Times reviewed through Sayari Graph, a mapping tool for corporate ownership. TBEA has participated extensively in so-called poverty alleviation and labor transfer programs in Xinjiang that the United States considers a form of forced labor.A CATL battery plant under construction in Ningde, China, in 2021. The company has said it prohibits any form of forced labor in its supply chain.Qilai Shen for The New York TimesWhile the Chinese government argues that labor transfer and poverty alleviation programs are aimed at improving living standards in the region, human rights experts say that they are also directed at pacifying and indoctrinating the population, and that Uyghurs and other minority groups there cannot say no to these programs without fear of detention or punishment.CATL did not respond to a request for comment. In December, it told The Times that it was a minority shareholder in the Xinjiang company and strictly prohibited any form of forced labor in its supply chain.The Republican lawmakers also raised concerns about whether batteries made at Ford’s Michigan plant would qualify for tax credits that the Biden administration was offering consumers who bought electric vehicles as part of the Inflation Reduction Act.The law prohibits “foreign entities of concern” — like companies in China, Russia, Iran or North Korea — from benefiting from government tax credits. But because Ford is licensing CATL technology for the plant — rather than forming a joint venture, as has often been the case with automakers and battery suppliers — the batteries made in Michigan may still qualify for those incentives.The Biden administration has not yet clarified exactly how the restriction on foreign entities will be applied. But Ford officials said they had been in conversation with the administration about the Michigan plant, and were confident that the partnership would qualify for all of the law’s benefits.“We think batteries built by American workers in an American plant run by the wholly owned subsidiary of an American company will and should qualify,” Mr. Reid, the Ford spokesman, said. More