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Digital currency asset manager Grayscale is in a legal fight with the U.S. Securities and Exchange Commission over its latest rejection of the company’s prospective spot bitcoin exchange-traded fund.
Last Wednesday, the SEC denied Grayscale’s application to convert its bitcoin trust to a spot ETF. The company filed a lawsuit the same day. 

Grayscale Bitcoin Trust, under the ticker GBTC, is the world’s biggest publicly traded bitcoin fund.
“We were simply asking the SEC to hold this product to a higher standard, to give it greater investor protection and give greater risk disclosure for investors,” Grayscale CEO Michael Sonnenshein told CNBC’s “ETF Edge” on Wednesday of this week. “Converting would unlock billions of dollars of unrealized shareholder value.”
He identified potentially capricious treatment by the SEC, which allows bitcoin futures products to trade under specific rules and regulations but denies spot products an equal opportunity. 
“The inconsistent treatment here by the SEC — allowing the futures products to trade but denying the spot products to trade — is not looking at what is essentially the same exact market through a like lens here,” Sonnenshein said. “In fact, the treatment is quite disparate.”
Todd Rosenbluth of VettaFi, a financial services company, joined the conversation to share his thoughts on what could change the SEC perspective. The commission made a distinction between futures- and spot-based products, citing the regulations tied to bitcoin futures-based ETFs.

“I wish Michael [Sonnenshein] best of luck in the lawsuit, but it’s hard to convince the SEC that there isn’t going to be fraud and manipulation when that’s what they’re clearly asking the asset managers to disprove time and time again,” VettaFi’s head of research said.
Markets in Canada, Brazil and parts of Europe show promise for spot bitcoin ETFs, according to Sonnenshein. Rather than bring the prospective ETF to international markets right away, the Grayscale CEO hopes to repair cryptocurrency regulation domestically.
“What we’re going to see, and what we intend to see, is working proactively with the SEC and other regulators here in the U.S. to really answer that White House executive order from earlier this year to engage on crypto issues and ultimately develop regulatory frameworks that create consistent treatment and develop frameworks that can actually allow businesses to grow and not squander innovation here in the U.S. as it relates to crypto,” Sonnenshein said. 
Grayscale Bitcoin Trust was trading higher Thursday. However, it’s down more than 50% over the past 52 weeks.
The SEC declined to provide comment beyond its order denying Grayscale’s application. More

Check out the companies making headlines before the bell:
GameStop (GME) – GameStop rallied 7.8% in the premarket after the videogame retailer declared a 4-for-1 stock split. Trading on a split-adjusted basis will begin on July 22.

Seagen (SGEN) – Seagen gained 4.5% in premarket trading after the Wall Street Journal reported that Merck (MRK) is in advanced talks to acquire the biotech company for more than $200 per share, or about $40 billion.
Virgin Galactic (SPCE) – The space tourism company’s stock rallied 3.7% in premarket action, after announcing a partnership with a Boeing (BA) subsidiary to build motherships that carry Virgin rocket ships aloft.
Meridian Bioscience (VIVO) – The maker of diagnostic test kits agreed to be acquired by a consortium consisting of Korean diagnostics company SD Biosensor and Korean private equity firm SJL Partners for $34 per share in cash, or about $1.5 billion.
Bed Bath & Beyond (BBBY) – Bed Bath & Beyond jumped 6% in the premarket following the disclosure of several insider purchases. Interim CEO Sue Gove bought 50,000 shares of the housewares retailer’s stock, while board members Harriet Edelman and Jeff Kirwan each bought 10,000 shares.
Boston Beer (SAM) – Boston Beer was downgraded to “sector perform” from “outperform” at RBC Capital Markets, which expects the brewer of Sam Adams beer and Truly hard seltzer to cut its volume guidance once again.

Helen of Troy (HELE) – The health care and beauty products company reported an adjusted quarterly profit of $2.41 per share, beating the $2.16 consensus estimate, with revenue also topping analyst forecasts. However, the company noted a slowdown in demand in some of its categories, as consumers shift spending patterns to deal with inflation, and cut its full-year outlook. The stock slid 6.7% in the premarket.
China EV Makers – Shares of China-based electric vehicle makers rose after government officials said they would consider extending a tax break for EV buyers. Li Auto (LI) rose 1% in the premarket, with Nio (NIO) up by 1.5% and Xpeng (XPEV) jumping 3.3%.

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Insiders have been waiting for half a decade for official word on the whereabouts of Xiao Jianhua, an erstwhile billionaire financier. So far they have heard nothing, not even as his trial kicked off in a Shanghai courtroom on July 4th. All details of the charges he faces have been kept secret. The only official recognition of the trial itself has been from Canada’s foreign ministry (Mr Xiao is a Canadian citizen), which says its diplomats have been denied entry to the proceedings.For leaders in Beijing, the secrecy is necessary because the case presents an uncomfortable picture of the Chinese political and financial system. Not long ago Mr Xiao counted some of China’s most powerful families as clients. His dealings have been linked to many elite families including, according to the New York Times, that of Xi Jinping, the president. This alone makes his trial extremely sensitive.Mr Xiao was abducted by Chinese agents from his suite in the Four Seasons hotel in Hong Kong in early 2017, in violation of local law. He has been held for five years at an undisclosed location in Shanghai as he helps financial authorities untangle his business empire. Mere recognition that he is in China is a prickly fact officials would prefer to sidestep. Many of the details of Mr Xiao’s case may never be revealed to the public. But his tribulations have already laid bare some of the hidden risks lurking within China’s financial system. His conglomerate, Tomorrow Group, once controlled a vast array of assets from mining and property to banking and insurance. Over the years his network built up huge debts, which quickly turned into financial losses after he was abducted. The Chinese state was forced to take over his bank, Baoshang Bank, in 2019 in order to prevent spillovers to the wider system. Several other institutions were also eventually bailed out or seized in what posed one of the biggest threats to China’s financial system in years. Once-hidden risks such as these are now popping up in other corners. Poor oversight of smaller lenders has led to an accumulation of bad debt. In many cases tycoons such as Mr Xiao have been allowed to control banks and use them to lend to their own ventures, or to friends.Central auditors recently discovered that a handful of small banks had understated their bad debts by a total of more than 170bn yuan ($25bn). The central bank has said there are more than 300 high-risk institutions in the country. All this is starting to test public trust in the thousands of small lenders. Bank runs are occurring more frequently. In May depositors at several rural banks in Henan province discovered they could no longer withdraw billions of dollars in funds, leading to protests in the provincial capital of Zhengzhou. The banks are linked to a property tycoon. Covid-19 is making the problems worse. Lockdowns are expected to create a new wave of troubled loans worth 1.1trn yuan this year alone. Adam Liu of the National University of Singapore recently noted that a “systematic central bail-out is increasingly foreseeable”. Political intrigue can be contained in a closed court. But the financial spillovers are harder to keep secret. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

In america and Europe, central banks turned only recently from encouraging economic recovery to battling stubborn inflation. In some emerging markets this shift began much earlier. Brazil’s central bank raised interest rates by three-quarters of a percentage point back in March 2021, 15 months before the Federal Reserve did the same. It foresaw that fiscal stimulus in the rich world raised the risk of inflation, which would upset financial markets and complicate life for emerging economies. The governor of Russia’s central bank, Elvira Nabiullina, warned over a year ago that the prospect of sustained inflation was likelier “than perceived at first glance”. The pandemic had changed spending patterns, she pointed out. No one knew if the shift would last. But that very uncertainty was discouraging firms from investing to meet demand.These kinds of comments look prudent and prescient in hindsight. Indeed, with some notable exceptions, central banks in emerging markets have won increased respect in recent years. Their monetary-policy frameworks have improved, according to a new index (based on 225 criteria) developed by the imf. Their frameworks are more coherent (their targets serve sensible objectives), transparent (they say what they are doing) and consistent (they do what they say). According to calculations by the World Bank, expectations of inflation in emerging markets in 2005-18 were about as well-anchored as they had been in rich countries in 1990-2004. Inflation also became less sensitive to falls in the exchange rate. Your columnist remembers a sign outside a café in the Malaysian state of Penang in 2015. “Don’t worry!” it said. “As our ringgit falls, coffee price remains the same.”More people expected emerging markets to succeed in their fight against inflation, which in turn made success more likely. This enhanced credibility raised enticing possibilities. Perhaps their central banks, like those in the rich world, would not need to worry about each depreciation and every inflation spike. If so, perhaps they could pay less slavish attention to two forces that had bedevilled them in the past: namely, the global price of capital, which is dictated by the Fed, and that of commodities.When the Fed tightens monetary policy, trouble has often followed for emerging markets. In 2013, for example, Ben Bernanke’s talk about reducing (or tapering) the pace of the Fed’s bond-buying sparked the “taper tantrum”, a big sell-off in Brazil, India, Indonesia, South Africa and Turkey. Things are different in the rich world. When the Fed tightens, central banks in Britain, the euro area and Japan do not feel obliged to raise interest rates. Their currencies may fall. But unless these depreciations look likely to raise inflation persistently above their targets, they are ignored. Likewise, when the price of oil goes up, so does the cost of living. Yet consumer prices need not go on rising, unless people demand higher wages in response, putting further upward pressure on prices in a self-reinforcing spiral. In both cases, central banks can ignore a one-time increase in prices. The more securely inflation expectations are anchored, the more leeway central banks enjoy. The past year has subjected emerging-market anchors to one severe test after another. Global interest rates have risen in anticipation of a faster pace of tightening in America, as the Fed wrestles with a credibility test of its own. And emerging markets have suffered remorseless increases in the prices of food and fuel, which make up more of their consumers’ shopping bills than they do in the rich world. According to the World Bank, food and energy account for over 60% of South Asia’s consumer-price index.Some central banks have been able to “look through” the rise in food and fuel prices. One example is Thailand’s central bank, which has done nothing even as inflation has surged. It insists that “medium-term inflation expectations remain anchored,” and it wants to make sure the economic recovery gains traction. But other emerging markets, including Mexico and Brazil, felt compelled to raise interest rates forcefully long before their economies fully recovered. They were quicker to respond than their counterparts in mature economies, point out Lucila Bonilla and Gabriel Sterne of Oxford Economics. But “that’s partly because they had to be.” Much of their tightening had to keep up with a worrying rise in inflation expectations. They have stayed ahead of the curve. But the curve has been brutally steep. The Fed has been a “somewhat less dominant” force in this emerging-market tightening cycle than in the past, note Andrew Tilton and his colleagues at Goldman Sachs. Fears of a second taper tantrum have not been realised. One reason may be that a lot of footloose foreign capital had already left during the pandemic. Moreover, some of the countries that might otherwise be vulnerable to Fed tightening, especially those in Latin America, are also big commodity exporters that have benefited from higher prices for their wares, point out Ms Bonilla and Mr Sterne. Following the leader The Fed, however, is far from finished. And inflation, already rising in emerging markets, may become more sensitive to any falls in domestic currencies. “It’s like adding combustible material to a fire,” says David Lubin of Citigroup, a bank. A depreciation may not be enough to ignite inflation. But once it is already burning, a weaker exchange rate could make it hotter. A Malaysian café that is already revising its prices to keep up with costlier commodities may be more likely to factor in a weaker ringgit. Much therefore depends on how far the Fed has to go to restore its anti-inflation credentials and contain price pressures in America. The harder the Fed must work to meet the test of its own credibility, the more trouble emerging markets will face. Their hawkish pivot began much earlier than in America, but it probably cannot end much sooner. This year has reminded emerging markets that for all their progress, they are not yet blessed with fully credible central banks. It has taught America the same lesson. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

The war in Ukraine throttled a flow of raw materials that was already being restricted by logistical logjams, bad weather and other disruptions. The result was soaring prices. In March a barrel of Brent crude oil hit $128, and European gas prices were three times higher than they had been just two months earlier. Copper, a trendsetter for all industrial metals, hit a record price of $10,845 per tonne. Wheat, corn and soyabean prices rose by double-digit percentages. The surge turbocharged consumer-price inflation, which, by challenging central banks’ credibility, has given them another reason to raise interest rates. Yet in recent weeks the wind has changed. Oil is trading at around $100 a barrel. Copper has dropped below $8,000 a tonne for the first time in 18 months; metals in general have fallen by 10-40% since May. Agricultural-commodity prices are back at pre-war levels. (Europe’s gas prices, which have continued to rise as Russia has cut supply, are bucking the trend.) The slide may fuel hopes that inflation will soon be defeated. But the victory might prove hollow—if there is one at all. One explanation for tanking commodity prices is that worries about a recession are taking hold. In this view, rising interest rates are cooling the market for new homes, dampening demand for building materials such as copper and wood, and lowering spending on things like clothing, appliances and cars, which in turn hurts everything from aluminium to zinc. Moreover, some of the supply constraints that contributed to price rises earlier in the year have eased—the weather in grain-growing regions has improved, for instance. Meanwhile, the un is trying to end a blockade on Ukraine’s shipments of wheat. For central banks, this is mixed news. It suggests that inflation may be beaten even though they have only just begun tightening monetary policy. True, this might be accompanied by a recession, but, because inflation would be tamed without interest rates having to rise too much, the downturn would, perhaps, at least be shallow. Worries about the economy are not the only force pushing down prices. Much of the money that has fled commodities, say industry experts, belongs not to physical traders but to financial punters. In the week to July 1st about $16bn flowed out of commodity-futures markets, bringing the total for the year so far to a record $145bn, according to JPMorgan Chase, a bank. In part that reflects rising interest rates. In May America’s long-dated real rates turned positive for the first time since 2020. That made commodities, which do not offer a yield, less attractive to speculators. This suggests that commodity-price inflation may not have been slayed. Movements driven by real-rate swings are usually short-lived, says Tom Price of Liberum, an investment bank. The last time one happened, in 2013, prices stabilised within weeks. Prices are also still sensitive to further supply disruptions. Commodity stocks remain 19% below historical average at a time of tight production, meaning there is less of a buffer against shocks. Even as some supply problems have eased, triggers for others abound. Energy prices are still vulnerable to Vladimir Putin’s whims. Pricey energy, in turn, would cause metals producers to trim output further, making production tighter still. And the return of La Niña, a harsh climate pattern, for the third consecutive year could disrupt grain harvests worldwide. Prices, in other words, might stay high even if recession hits. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

A screen displays the logo and trading information for GameStop on the floor of the New York Stock Exchange (NYSE) March 29, 2022.
Brendan McDermid | Reuters

Shares of GameStop jumped more than 8% in extended trading Wednesday after the retailer said a 4-for-1 stock split was approved by its board.
Shareholders who own the stock at the close of the market on July 18 will get a dividend of three additional shares for each of the company’s Class A common stock, the retailer said. The dividend will be distributed after trading closes on July 21, and will start trading on a split-adjusted basis the following day.

A stock split is issued when companies want to boost the number of shares and make them more affordable for investors. On Wednesday, GameStop closed at $117.43 per share.
The so-called meme stock has posted volatile one-day moves since gaining attention last year as a group of retail investors coordinated a short squeeze on the stock, spurring its price higher. Shares have since retreated from their highs, down more than 20% year to date.

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Job openings and voluntary departures remain extremely high, while layoffs are near record lows — conditions that are favorable to workers.
The Great Resignation is still in full swing, according to economists, though there are some signs of a slight slowdown.
It’s unclear how long it will remain a job seeker’s market, given the Federal Reserve’s move to raise borrowing costs and fears of a looming U.S. recession.

Mixetto | E+ | Getty Images

Workers are still reaping the benefits of a hot labor market characterized by few layoffs, ample job openings and a high level of voluntary departures, according to U.S. Department of Labor data issued Wednesday.
The numbers reveal that the pandemic-era trend known as the Great Resignation is still in full swing despite fears of a U.S. recession, though it is showing some signs of leveling off, labor economists said.

“Overall, this doesn’t look like a job market about to tip into recession,” said Daniel Zhao, a senior economist at career site Glassdoor. “Labor demand is still extremely hot, and even if things are cooling from white-hot, they’re still red-hot.
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“I think the question on everyone’s mind, though, is if this will continue,” Zhao added.

Job openings and ‘quits’ near record highs

A “Help Wanted” sign in Patchogue, New York, on Aug. 24, 2021.
Steve Pfost/Newsday RM via Getty Images

There were nearly 11.3 million job openings on the last business day of May, the Labor Department reported Wednesday.
Job openings — a proxy for employers’ demand for labor — are down from about 11.7 million in April and a record 11.9 million in March. But they are still elevated in historical terms and hovering near their level of late 2021.

Additionally, workers have been quitting their jobs at a near record pace. About 4.3 million people voluntarily left their jobs in May, about the same as in the previous month and down only slightly from their peak of more than 4.4 million in March.

“The quits rate was doing 100 [miles per hour] on the freeway; it slowed down but it’s still doing 90,” said Nick Bunker, an economist at job site Indeed. “It’s still pretty quick, just not as fast as it was.”
This Great Resignation trend has been a centerpiece of the labor market since early 2021. It’s even entered the zeitgeist via so-called “QuitToks” on social media site TikTok and in a Beyonce song released last month.
For the most part, workers are shifting to better jobs, lured by factors like higher pay, according to economists. Wages in May jumped by 6.1% versus a year earlier, the biggest annual increase in more than 25 years, according to the Federal Reserve Bank of Atlanta.

Historically low layoff rates continue

Layoffs were also near record lows in May. The layoff rate — which measures layoffs during the month as a percent of total employment — was unchanged at 0.9% in May, the Labor Department said Wednesday.
Before the pandemic, 1.1% was the country’s lowest layoff rate. But May marked the 15th straight month in which layoffs were below that pre-pandemic record — an indication that employers are holding on to their existing workers, Bunker said.

It’s still a job seeker’s labor market. Workers still have lots of bargaining power.

Nick Bunker
economist at Indeed

Meanwhile, the unemployment rate of 3.6% is near the pre-pandemic level in early 2020, when it was 3.5%. That was the lowest jobless rate since 1969.
“It’s still a job seeker’s labor market,” Bunker said. “Workers still have lots of bargaining power.
“They maybe lost a little leverage from a couple months ago, but we haven’t seen a significant change there yet.”

Slowdown may be ahead

While the labor market has been a bright spot of the pandemic-era economic recovery, there are indications things may cool — though it’s unclear how much and how quickly, economists said.
The Federal Reserve is raising borrowing costs for consumers and businesses in a bid to slow the economy and tame stubbornly high inflation. What’s more, the latest inflation reading came in hotter than expected, and the latest retail sales data was weaker than anticipated, Glassdoor’s Zhao said.
“We know quite explicitly the Federal Reserve is trying to cool down the economy,” Zhao said. “One of the places that’s going to happen is in the labor market.
“Things might slow down as the labor market cools, but for right now we’re still very much in the Great Resignation,” he added.

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China is often said to be an area of rare consensus in American politics. Just about everyone agrees that something must be done to counter its rise. But this appearance of unity masks divisions and even confusion about what exactly needs to be done, most of all in the economic domain. Is the ultimate goal to open the Chinese market to American businesses, or to dissolve commercial bonds with China?For Joe Biden’s administration, these cross-currents have led to prolonged deliberations—so much so that some critics accuse it of paralysis. A seemingly endless debate about whether to remove tariffs on China is the latest example of indecision. Slowly, though, the shape of Mr Biden’s approach to the Chinese economy is emerging. The coming weeks may determine whether it amounts to a resolute, coherent strategy or a mess of contradictions.The narrative is clear enough. In a speech in May Antony Blinken, America’s secretary of state, boiled down Mr Biden’s China policy to three words: “invest, align, compete”. That is, America should invest in its own strength; align more closely with allies; and confront China where necessary. Putting the spin to one side, these are in fact good categories for understanding how the Biden administration is trying to deal with China’s economy.Start with competition. This took centre-stage under Donald Trump, who dragged America away from a lingering desire to “engage” China towards a sharper rivalry with it. By the time he left office, America’s average tariff on Chinese products had risen from roughly 3% to nearly 20%, according to calculations by Chad Bown of the Peterson Institute for International Economics (see chart 1). The immediate question for Mr Biden is what to do about this inheritance.With inflation running high, Mr Biden wants to lessen price pressures. Eliminating tariffs on China—which are, in effect, a tax on consumers—would in theory help. In practice it may make a very small contribution. One study from the Peterson Institute estimated that removing the tariffs would shave just 0.3 percentage points off the annual inflation rate, which is now running at more than 8%. On the one hand, every little counts. On the other, Mr Biden is loth do something that would be portrayed by Republicans, and perhaps China itself, as a capitulation.Even within his own administration, many view the tariffs as precious leverage. The most likely outcome will be minor tweaks. Mr Trump’s earlier tariffs went after products such as semiconductors. But later levies hit items like shoes, hurting consumers more directly. Removing tariffs on some consumer products would therefore seem like an easy decision. Beyond that, opposition to cuts grows steelier. “For tariffs on high-tech products or industrial inputs, the Biden administration may want to increase these substantially at the same time that it eliminates others. It needs to determine which are working and which are not,” says Clete Willems, a veteran of Mr Trump’s trade team. Hawks welcome the fact that America imports less from China than it did at the start of the trade war (see chart 2). The Biden administration has also debated whether to begin a new probe into China’s economic behaviour. Mr Trump’s big investigation, conducted under section 301 of American trade law (used to tackle problems not solvable within the wto), was focused on China’s “forced technology transfers”. Many in the Biden administration see that as a misdiagnosis. The real issue is China’s broader state capitalism. A new 301 investigation could put China’s industrial plans and subsidies at the forefront of America’s economic grievances with it. Intellectually, that would be appealing. “The bigger challenge will be, is the administration ready to do what a 301 says? Is it ready to impose significant new penalties on China?” says Scott Kennedy of the Centre for Strategic and International Studies, a think-tank in Washington. The White House’s delay in announcing a new 301 case, despite talk swirling around it for months, reveals its hesitancy.Another plank in America’s competition with China is the battery of economic sanctions rolled out against companies. Mr Trump’s administration blazed the trail, placing Chinese industrial champions from Huawei, a telecoms giant, to dji, a dronemaker, on the government’s “entity list”, thereby preventing American companies from selling them any items without permission. By the end of his term, though, his methods were increasingly chaotic, epitomised by his ill-fated demand that the Chinese owner of TikTok, a wildly popular app, spin off its American operations (see Briefing).Mr Biden’s team has worked to place sanctions on a sounder legal footing, while also making them more targeted. Most of Mr Trump’s corporate blacklistings are still in place. Mr Biden has added to them, including barring American investments in a range of Chinese surveillance-tech companies. It is also considering new rules to block foreign rivals’ access to Americans’ personal data, which may yet ensnare TikTok. Taken together, the Biden approach looks less like a retreat from Mr Trump’s brawl with China and more like a professionalisation of it.The second part of Mr Biden’s strategy—alignment with allies—sets him much further apart from his predecessor. Whereas Mr Trump revelled in scorning America’s staunchest friends, Mr Biden has steadfastly repaired relations. The cornerstone of his approach to Asia was unveiled in May with the launch of the Indo-Pacific Economic Framework (ipef), tying together countries that represent 40% of global gdp. India, Japan and Vietnam are part of it and, most crucially, China is not. Another fruit of Mr Biden’s efforts was a joint statement at the end of the g7 summit on June 28th pledging to “reduce strategic dependencies” on China (see China section).There are doubts that these fine words will add up to much concrete action. The messages shared by several Asian diplomats about the ipef are remarkably similar: it is good to have America back at the table, but the only dish on offer is thin gruel. The ipef will include discussions about everything from decarbonisation to data sharing, but there will be nothing on tariffs, a mainstay of traditional trade talks. The Biden administration disputes this characterisation. One senior official points to the ipef’s focus on supply chains, arguing that it will be meaty. With talks starting later this month, the official believes that a deal to accelerate port-clearance times could be reached within as little as a year.Even if that comes to fruition, there is frustration among many in America and abroad that Mr Biden will not do more on trade. A stubborn bipartisan group of politicians in Washington is still agitating for America to re-enter the Trans-Pacific Partnership, a regional trade deal from which Mr Trump withdrew. Allies such as Japan would love that. They believe forging new supply chains is essential to lessening reliance on China. For the Biden administration, though, the idea is a non-starter; it is fearful of alienating union supporters and angering a trade-wary public. The unsatisfactory conclusion is that Mr Biden’s desire to align with allies in its China strategy can only go so far. That speaks to the final element of Mr Biden’s approach: investing at home. This is the area where rhetoric and action are furthest apart. After all, Mr Biden’s signature spending plan, his “Build Back Better” social-and-climate package, has not yet made it through Congress. It is now crunch time for an initiative that was conceived as a response to China. The Senate and House have passed two alternative bills with the same centrepiece: a $52bn plan for bolstering America’s capacity to produce semiconductors. The Senate’s is more modest and has received bipartisan support. The House‘s, almost exclusively backed by Democrats, contains a hotch-potch of measures—including even funding to save coral reefs.People familiar with talks to bridge the differences say there has been recent progress, bringing the unified bill closer to the Senate’s version. One aspect of the House’s may, in reduced form, survive: the creation of a mechanism that, for the first time, would require American companies to notify the government of overseas spending, raising the possibility that the White House could block some investments in China. For the bill to pass before mid-term elections in November, agreement will probably have to be hammered out before Congress breaks for recess for August. Even without that bill, the Biden administration has tried to set the tone for an investment push at home. Mr Trump cajoled and threatened companies to set up factories in America, making limited headway. Mr Biden’s big initiative, grabbing fewer headlines, has been a sprawling review of supply chains. In February the government published six separate reports, covering semiconductors, batteries and more. This hardly equates to industrial policy on a Chinese scale. But the aim is to channel financing and incentives to strengthen America’s manufacturing base.The Biden plan may be pushing at an open door. Since the start of his administration companies have announced more than $75bn of investments in semiconductor production and research in America. That is in part a response to Mr Biden’s actions, but also a recognition of the fragility of global supply chains. Indeed, perhaps the most useful policy in weaning companies off the Chinese market is Xi Jinping’s foolhardy pursuit of “zero covid”, which has almost walled off the country. If Mr Biden does succeed in boosting domestic manufacturing, that victory could well come at the cost of higher prices for consumers, reduced efficiency and, ultimately, lower economic growth. True, he is rebuilding frayed relationships with allies. But in other respects, his economic strategy for dealing with China looks a lot like a refinement of the bare-knuckle competition started by Mr Trump. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More