Economy

WASHINGTON D.C (Reuters) – A severe semiconductor shortage has resulted in record wire fraud cases last year reported by desperate buyers, a company that tracks counterfeit and fraud in the chip industry said on Tuesday.ERAI Inc said in 2021 there were 101 wire fraud cases reported to the U.S.-based firm, up from 70 in 2020 and 17 five years ago.Companies looking for chips they could not find through authorized and vetted distributors were trying to buy them from shadier brokers and transferring funds for goods that never got delivered, ERAI president Mark Snider said.Reporting is voluntary and most of the wire fraud was by chip brokers in China, he said.While there is a government counterfeit parts database called GIDEP, or Government-Industry Data Exchange Program, it doesn’t allow anonymous reporting, making ERAI the main database that companies use for navigating counterfeit chip problems and reporting fraud, according to industry experts.Still, the latest data showed that the number of counterfeit chip incidents reported to ERAI in 2021 was 504 and in 2020 463. That’s a sharp drop from 963 in 2019.Snider said China’s pandemic-related shutdowns could be making it harder for counterfeiters to operate and also said counterfeits are increasingly more sophisticated, evading detection.The data was released at the Symposium on Counterfeit Parts and Materials organized by the Center for Advanced Life Cycle Engineering, a research facility at University of Maryland and industry group SMTA.Diganta Das, the counterfeit researcher heading the conference said the ERAI data was a good indication of trends.The real number, however, was likely to be significantly larger because companies fearing brand damage often prefer not to report counterfeit chip purchases. More

The current contract covering more than 22,000 port laborers at 29 West Coast ports expires on July 1. Retailers, farmers and other U.S. shippers worry that any breakdown in the often-contentious West Coast port labor talks will further disrupt cargo flows and send inflation-fueling transportation costs even higher.Walsh said he checks in weekly with the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) employer group. They “continually tell me that we’re in a good place. It’s moving forward,” Walsh said.In a rare joint statement on June 14, the ILWU and the PMA said they are not planning any work stoppages or lockouts that would worsen supply chain logjams.Earlier this month, President Joe Biden met with the two sides as he grapples with supply-chain disruption and inflation that are fueling voter discontent ahead of key mid-term elections in November.Asked if port automation is a sticking point in the talks, Walsh said: “There’s been no issues that I’m aware of that have come up that have made either side concerned.”Meanwhile, wary shippers are routing cargo away from the West Coast to avoid potential labor-related slowdowns, particularly at the nation’s busiest seaport complex at Los Angeles/Long Beach.That change is giving those Southern California ports, which employ the lion’s share of ILWU workers, a chance to clear backlogs. But it is also causing cargo backups at East Coast and Gulf Coast ports like New York/New Jersey, Savannah and Houston. More

Manufacturers and retailers are bracing for chaos as US Customs begins to enforce a ban on imports from China’s Xinjiang region from June 21 in response to reports of forced labour.Companies are scrambling to gauge how the new rules could affect their business and supply chains, with Asian clothing suppliers, international retail chains, US solar-panel makers and Chinese floor tile material makers among scores of groups that could see US-bound shipments seized.The ban intensifies pressure on Beijing over allegations of widespread human rights violations — including torture, arbitrary detention and forced labour — against Muslim Uyghur and other minorities in the country’s far-western Xinjiang region. China denies the claims and has warned of retaliatory measures.Signed into law by president Joe Biden at the end of last year, the Uyghur Forced Labor Prevention Act presumes that all US-bound imports traced to Xinjiang, from cotton and tomatoes to floor tile and solar panel materials, were made using forced labour and brands them as “high priority” for seizure.More than 900 shipments from the region were seized in the last quarter of 2021 by US authorities under earlier trade restrictions.But trade and business groups said the new legislation’s vague wording threatened to put the bulk of China’s $500bn in annual shipments bound for the US at risk.“The way the law is written could be interpreted as applying to other kinds of goods from other parts of China that allegedly involved forced labour at some point along the supply chain,” Doug Barry, a senior director at the US-China Business Council, told Nikkei Asia in an email.There are reports of detainees being moved out of Xinjiang to work in other parts of the country, while components produced in the region have been traced to US-bound exports shipped from elsewhere in China.Barry warned that the law could heap more pressure on pandemic-hit supply chains and stoke US inflation, already running at 40-year highs.Companies are still awaiting clear instructions from US Customs and Border Protection, Barry said.“They have released little information beforehand, and companies won’t know many of the details of what they must comply with until the date they must comply,” he said. “We are expecting implementation to be messy.”US-based Mission Solar pledged to follow the new rules, but the equipment provider said it was “difficult to know what effect it will have at this point”.Hong Kong apparel supply chain manager Lever Style, whose clients include Fila, Hugo Boss and Theory, said it was pivoting to fabric made with Indian cotton for American customers ahead of the ban.“We still buy most of our cotton fabric in mainland China, but we can quickly switch to buying fabrics in other places,” said Stanley Szeto, the company’s executive chair.Xinjiang has a booming industrial, mining and agricultural sector. Everything from peppers and walnuts to electrical equipment and polysilicon, a key material for making solar panels, ship to the US from the region. It also accounts for 20 per cent of the world’s cotton and 80 per cent of China’s domestic production.In the week before the ban, US customs issued an operations guide for companies looking to prove their products were not made using forced labour, including supply chain maps and purchase orders.A new list published on June 17 bars goods that are produced by or contain material parts made by over 20 companies including Baoding LYSZD Trade and Business, Changji Esquel Textile and Hotan Haolin Hair Accessories.US customs said it would strictly enforce the rules, which threaten to aggravate already tense relations between Washington and Beijing.China’s state-owned Global Times reported that American shoe company Skechers organised an independent investigation of its supply chain after goods manufactured in China were seized by US customs. Companies including Nike and H&M previously faced questions about Xinjiang cotton used in their products.“If the act is implemented, it will severely disrupt normal co-operation between China and the US, and global industrial and production chains,” said Zhao Lijian, Chinese Ministry of Foreign Affairs spokesperson, the week before the ban. “If the US insists on doing this, China will take robust measures to uphold its own rights and interests as well as its dignity.”Concerns also exist that US agencies lack the resources to properly vet imports and enforce the new law. But authorities say they will use a multi-layered approach tapping information from vast systems.“We don’t stop shipments just on hearsay or on one piece of information,” JoAnne Colonnello, centre director at Customs and Border Protection, told a business briefing. “We look in total at the situation, and all of the evidence involved, to ensure that we have efficient and effective targeting.”Britain’s Sheffield Hallam University released a report in mid-June documenting the use of forced labour in Xinjiang to manufacture polyvinyl chloride, a core component in floor tiling. Academics and media organisations have published reports detailing systematic use of forced labour among Uyghurs held in what critics describe as internment camps.China, which initially denied the existence of such facilities, later said they were vocational training centres designed to combat the rise of religious and separatist extremism in the region.A sweeping crackdown in Xinjiang over the past few years has repressed cultural and religious practices and prompted allegations of forced sterilisation and arbitrary imprisonment — conditions that some western governments say amount to genocide.Rights groups have urged for years that companies and brands linked to shirts, trousers and other Xinjiang-made goods be held accountable for labour conditions in the region.“If governments make it mandatory for corporations and companies to conduct meaningful due diligence — which is not easy to do in China — before they engage in their activities, I think that is something we would welcome,” said Alkan Akad, China researcher at Amnesty International.But some major corporations including Apple and Coca-Cola lobbied against the Biden administration’s import ban, saying they found no evidence of forced labour in Xinjiang’s manufacturing or supply chains.Japanese retailers Muji and Uniqlo say they expect little impact on their operations.“We do not export any products made in Xinjiang Uyghur Autonomous Region to the United States,” said a spokesperson for Muji owner Ryohin Keikaku, referring to the region’s official name. “In our business activities, we comply with the laws and regulations of each country and region, and strive to respect human rights and manage labour standards.”Additional reporting by Rurika Imahashi, Peggy Ye and Jack Stone TruittA version of this article was first published by Nikkei Asia on June 20 2022. ©2022 Nikkei Inc. All rights reserved.Related StoriesDozens of countries condemn China over Xinjiang abuse claimsUN rights chief won’t seek new term amid China backlashChina’s Xinjiang faces ‘risk of genocide’: EU parliamentIntel apologizes after Xinjiang policy sparks China backlash More

Britain said the Secretary of State proposed to accept Parker’s undertakings but it has launched public consultations and will wait till the consultation period concludes on July 13 before making a final decision. The British government was probing the deal, the latest by a U.S. buyer of a British firm, over competition and national security concerns, as Meggitt’s customers include Boeing (NYSE:BA), Airbus, Britain’s Ministry of Defence (MoD) and Rolls-Royce (OTC:RYCEY).Parker in May had agreed to sell its aircraft wheel & brake division to industrial machinery maker Kaman (NYSE:KAMN) Corp for $440 million, which London said addressed its competition-related queries.Meggitt supplies wheel and brake systems for military fighter programmes, and Parker’s unit sale to Kaman resolves concerns about overlapping activities with Meggitt.The British government added that Parker also committed to honour its existing contracts to its defence ministry and agreed to protect sensitive government information in Meggitt.Following UK’s regulatory update, Parker said it still expected to close the deal in third quarter of this year.”We are pleased that following very constructive engagement with the UK Government, the Secretary of State is minded to accept the national security and competition undertakings we have offered,” Parkerom Williams, the chief executive of Parker said in a statement.The deal won EU antitrust approval in April.Meggitt did not respond to Reuters’ request for comment. ($1 = 0.8209 pounds) More

Turkey has dropped its opposition to Finland and Sweden becoming members of Nato, paving the way for the Nordic countries to join the alliance in response to Russia’s invasion of Ukraine.The three countries have signed a joint memorandum after hours of talks on Tuesday brokered by Nato, ending a six-week long veto by Ankara linked to terrorism concerns. The agreement on the eve of Nato’s annual summit in Madrid ends a dispute that threatened to overshadow an event billed as showing unity against Russia, support for Ukraine and the alliance’s 10-year “strategic concept” designed to revamp its approach to defending its eastern European allies.Nato officials drafting the 10-year strategy have also had intense discussions on China, people briefed on the process told the FT, reflecting the range of economic ties that Nato members have with Beijing and different perceptions of the threat posed by China. China dismissed the doctrine change as “old wine, new bottle”, accusing Nato of having a “cold war mentality” and “clinging to archaic security concepts”What do you think of the approach Nato is taking with China? Tell me what you think at [email protected]. Thanks for reading FirstFT Asia. — Emily Five more stories in the news1. China slashes quarantine restrictions as Covid cases fall China has cut its required quarantine period for international travellers by half, to one week, in the first significant nationwide relaxation of restrictions since Covid-19 outbreaks in Shanghai and Beijing this year prompted draconian curbs on travel and economic activity. 2. Trump wanted to march on Capitol with mob, ex-aide says Donald Trump tried to head to the Capitol with his mob of supporters on January 6 last year, even after being told they were carrying weapons, according to former White House aide Cassidy Hutchinson’s testimony to Congress. Trump was stopped by the Secret Service, leading to an altercation inside the presidential vehicle in which he tried to grab its steering wheel.Related read: Donald Trump’s chief of staff was warned by a White House lawyer that “blood’s going to be on your fucking hands” in the instance of any violence at the US Capitol on January 6, a congressional committee heard.

Cassidy Hutchinson testifies to the January 6 committee on Tuesday © AP

3. Maxwell sentenced to 20 years for aiding Epstein’s abuse Ghislaine Maxwell was sentenced to 20 years in prison after she was convicted for her years-long role helping to lure and groom underage girls for the late sex offender Jeffrey Epstein to abuse. Judge Alison Nathan announced the sentence on Tuesday in a federal courthouse in Manhattan. 4. G7 accused of ‘backsliding’ on climate goals In its final communiqué from this week’s summit, the G7 said investment in liquefied natural gas was a “necessary response to the current crisis”. Climate groups have criticised the G7 for failing to deliver new climate finance pledges, and for its renewed focus on gas.Explainer: How the G7 countries plan to hurt Russia’s oil bonanza5. KKR takes back seat in Toshiba bidding process US private equity firm KKR is stepping back from a potential $22bn bidding war for the future of Toshiba, people familiar with the talks said, leaving its main rival Bain Capital in pole position to pull off Japan’s biggest take-private deal.The day aheadJapan retail figures Data for May is set to be released today. Earlier this month, the head of Japan’s biggest discount store vowed to defend its price tag of ¥100 ($0.75) per item despite an existential threat to the business from global inflation and the plunging yen.UK Parliament hearing on UK-Australia trade deal MPs will question International Trade Secretary Anne-Marie Trevelyan on the UK’s free trade agreement with Australia. US GDP figures US gross domestic product figures for the first quarter will be released today. The IMF on Friday lowered its growth forecast for the US in 2022 to 3.7 per cent from 2.9 per cent. (Reuters) Opinion: The recession should kill off the romantic idea that growth is a mixed blessing, writes Janan Ganesh.Join us online today for our FT Live event, The Evolution of Thematic Investing, where we’ll discuss the next chapter in thematic investing and key trends in technology, innovation, and sustainability affecting investors in the APAC region. Register for free here.What else we’re reading and listening to China’s Covid health apps govern life but are ripe for abuse Everyday life for most of China’s 1.4bn citizens hinges on the colour of a health code on a smartphone app. The Chinese government insists the system is purely for health purposes, but they have already been used by some officials as a tool of social control.The billionaire who took down porn The biggest porn company in the world was transformed almost overnight by a hedge fund billionaire. It started with a scathing column he read about a popular porn site and an angry text to one of finance’s most powerful CEOs. The latest episode of the Hot Money podcast explores what happened next.Australia’s honey bees are on lock down Australia is locking down its honey bees as it applies the lessons learnt from implementing one of the world’s most restrictive Covid-19 regimes to block another threat — a parasite that is wiping out hives around the world.

Australia was the only region in the world that had managed to contain the varroa mite, a parasite that has been blamed in part for the decline of bee populations globally © Gavin John/Bloomberg

Foreign business in Hong Kong looks to the long term Despite erosion of freedoms, companies and investors are prioritising access to the capital markets oasis, writes Tom Mitchell. Most financial services professionals say the national security law is not an existential concern for their employers.China’s pivotal role under scrutiny as Zambia seeks debt relief With Beijing now the biggest bilateral lender to low-income countries, Zambia’s travails are a test case of its willingness to take the lead in restructuring the debt obligations of defaulting states. With Sri Lanka in default and Pakistan close to it, other countries that are heavily indebted to Beijing are keeping a close eye on proceedings in Lusaka.TravelAs a long-haul pilot, Mark Vanhoenacker has discovered several specialised tactics to beating jet lag. Among Vanhoenacker’s tried-and-tested strategies: ice-cold showers, catnaps and practising good “sleep hygiene”. More

WASHINGTON (Reuters) -U.S. President Joe Biden’s administration added five companies in China to a trade blacklist on Tuesday for allegedly supporting Russia’s military and defense industrial base, flexing its muscle to enforce sanctions against Moscow over its invasion of Ukraine.The Commerce Department, which oversees the blacklist, said the targeted companies had supplied items to Russian “entities of concern” before the Feb. 24 invasion, adding that they “continue to contract to supply Russian entity listed and sanctioned parties.”The agency also added another 31 entities to the blacklist from countries that include Russia, UAE, Lithuania, Pakistan, Singapore, the United Kingdom, Uzbekistan and Vietnam, according to the Federal Register entry. Of the 36 total companies added, 25 had China-based operations. “Today’s action sends a powerful message to entities and individuals across the globe that if they seek to support Russia, the United States will cut them off as well,” Under Secretary of Commerce for Industry and Security Alan Estevez said in a statement.The Chinese embassy in Washington did not respond to the allegations against the companies, but said Beijing had not provided military assistance to Russia or Ukraine. It said it would take “necessary measures” to protect the rights of its companies, arguing that the sanctions violate international law.Three of the companies in China accused of aiding the Russian military, Connec Electronic Ltd, Hong Kong-based World Jetta, and Logistics Limited, could not be reached for comment. The other two, King Pai Technology Co, Ltd and Winninc Electronic did not immediately respond to requests for comment.Hong Kong is considered part of China for purposes of U.S. export controls since Beijing’s crackdown on the city’s autonomy.The firms’ blacklisting means their U.S. suppliers need a Commerce Department license before they can ship items to them.The United States has set out with allies to punish Russian President Vladimir Putin for the invasion, which Moscow calls a “special operation”, by sanctioning a raft of Russian companies and oligarchs and adding others to a trade blacklist. While U.S. officials had previously said that China was generally complying with the restrictions, Washington has vowed to closely monitor compliance and rigorously enforce the regulations.”We will not hesitate to act, regardless of where a party is located, if they are violating U.S. law,” Assistant Secretary of Commerce for Export Administration Thea Rozman Kendler said in the same statement. More

In the lawsuit, 11 states, plus Brazil’s federal district, allege that the law represents an unprecedented intervention by the federal government.The tax cut, analysts say, weakens the competitiveness of ethanol against gasoline and could impact the global sugar market by prompting sugarcane processors to reduce ethanol production and increase sugar output.The move comes after the states of Sao Paulo and Goias voluntarily cut their own state ICMS taxes. More

The consumer sentiment index (CSI) dropped to 96.4 in June from 102.6 in May, marking the lowest since January 2021 and the biggest monthly fall since July 2021, according to the Bank of Korea’s survey of consumers.The index fell below the 100-mark, which is a dividing line between optimism and pessimism, for the first time since February 2021. Consumers’ inflation expectations for the next 12 months rose to 3.9% from 3.3% the previous month, hitting the highest since April 2012, according to the survey responses from more than 2,300 households.South Korea’s consumer inflation in May hit a near 14-year high of 5.4%, and the country’s finance minister said on Sunday it may top 6% as early as in June. More