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    Flush With Investment, New U.S. Factories Face a Familiar Challenge

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    Worries are growing in Washington that a flood of Chinese products could put new American investments in clean energy and high-tech factories at risk.The Biden administration has begun pumping more than $2 trillion into U.S. factories and infrastructure, investing huge sums to try to strengthen American industry and fight climate change.But the effort is facing a familiar threat: a surge of low-priced products from China. That is drawing the attention of President Biden and his aides, who are considering new protectionist measures to make sure American industry can compete against Beijing.As U.S. factories spin up to produce electric vehicles, semiconductors and solar panels, China is flooding the market with similar goods, often at significantly lower prices than American competitors. A similar influx is also hitting the European market.American executives and officials argue that China’s actions violate global trade rules. The concerns are spurring new calls in America and Europe for higher tariffs on Chinese imports, potentially escalating what is already a contentious economic relationship between China and the West.The Chinese imports mirror a surge that undercut the Obama administration’s efforts to seed domestic solar manufacturing after the 2008 financial crisis and drove some American start-ups out of business. The administration retaliated with tariffs on solar equipment from China, sparking a dispute at the World Trade Organization.Some Biden officials are concerned that Chinese products could once again threaten the survival of U.S. factories at a moment when the government is spending huge sums to jump-start domestic manufacturing. Administration officials appear likely to raise tariffs on electric vehicles and other strategic goods from China, as part of a review of the levies former President Donald J. Trump imposed on China four years ago, according to people familiar with the matter. That review, which has been underway since Mr. Biden took office, could finally conclude in the next few months.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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    World Bank Warns of Energy Price Surge if Mideast War Spreads

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    A new economic report predicted a year of weak growth and said the world faced a decade of “wasted opportunity.”The global economy is at risk of a “wasted” decade and the weakest stretch of growth in 30 years, the World Bank warned on Tuesday, saying a sluggish recovery from the pandemic and crippling wars in Ukraine and the Middle East are expected to weigh heavily on output.In its semiannual Global Economic Prospects report, the World Bank projected that the growth in world output will slow further in 2024, declining to 2.4 percent from 2.6 percent. Although the global economy has been surprisingly resilient, the report warned that its forecasts were subject to heightened uncertainty because of the two wars, a diminished Chinese economy and the increasing risks of natural disasters caused by global warming.The converging crises in recent years have put the world economy on track for the weakest half-decade in 30 years.“Without a major course correction, the 2020s will go down as a decade of wasted opportunity,” said Indermit Gill, the World Bank Group’s chief economist.Global growth is projected to slow for the third straight year in 2024. Developing countries are bearing the brunt of the slowdown, with high borrowing costs and anemic trade volumes weighing on their economies.Although policymakers have made progress in bringing inflation down from its 2022 high, the war in Gaza between Israel and Hamas is threatening to become a broader conflict that could spur a new bout of price increases by causing the cost of oil and food to spike.“The recent conflict in the Middle East, coming on top of the Russian Federation’s invasion of Ukraine, has heightened geopolitical risks,” the report said. “Conflict escalation could lead to surging energy prices, with broader implications for global activity and inflation.”The recent drone and missile attacks in the Red Sea by the Iranian-backed Houthi militia have already affected international commerce by pushing up oil prices and freight and insurance rates while diverting maritime traffic to a much longer and costlier route around Africa.Economists at Capital Economics wrote in a report this month that the redirecting of trade ships away from the Red Sea is unlikely to lead to a resurgence of global inflation, but they suggested that if the war became a broader regional conflict it could pose inflationary risks.The disruptions to shipping routes follow a year in which, other than during worldwide recessions, global trade growth was the slowest in the past 50 years, according to the World Bank.If the conflict in the Middle East does not widen, the World Bank expects that global oil prices will edge lower this year as growth weakens and production of oil increases.Beyond the ongoing wars, signs of fragility in the Chinese economy also remain a worry. World Bank economists pointed to lingering weakness in China’s property sector and lackluster consumer spending as evidence that the world’s second-largest economy will continue to underperform this year. They suggested that could pose headwinds for some of China’s trading partners in Asia.Chinese growth is expected to slow to 4.5 percent this year from 5.2 percent in 2023. Outside the pandemic-induced downturn, that would be China’s slowest expansion in 30 years.Europe and the United States are also poised for another year of weak output in 2024.The World Bank projects that economic growth in the euro area will rise to 0.7 percent in 2024 from 0.4 percent in 2023. Despite easing inflation and rising wages, tight credit conditions are expected to constrain economic activity.Growth in the United States is expected to slow to 1.6 percent this year from 2.5 percent in 2023. The World Bank attributes the slowdown to elevated interest rates — which are at their highest level in 22 years — and a pullback in government spending. Businesses are expected to be cautious about investing because of economic and political uncertainty, including around the 2024 election.Despite such slow growth, Biden administration officials say they deserve credit for corralling inflation while keeping the economy afloat.“I think we’ve made tremendous progress,” Treasury Secretary Janet L. Yellen told reporters on Monday. “It’s very unusual to have a period in which inflation declines as much it has while the labor market remains strong.”She added: “But that’s what we’re seeing, and that’s why I say we’re enjoying a soft landing.” More

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    The Debt Problem Is Enormous, and the System for Fixing It Is Broken

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    Economists offer alternatives to financial safeguards created when the U.S. was the pre-eminent superpower and climate change wasn’t on the agenda.Martin Guzman was a college freshman at La Universidad Nacional de La Plata, Argentina, in 2001 when a debt crisis prompted default, riots and a devastating depression. A dazed middle class suffered ruin, as the International Monetary Fund insisted that the government make misery-inducing budget cuts in exchange for a bailout.Watching Argentina unravel inspired Mr. Guzman to switch majors and study economics. Nearly two decades later, when the government was again bankrupt, it was Mr. Guzman as finance minister who negotiated with I.M.F. officials to restructure a $44 billion debt, the result of an earlier ill-conceived bailout.Today he is one of a number of prominent economists and world leaders who argue that the ambitious framework created at the end of World War II to safeguard economic growth and stability, with the I.M.F. and World Bank as its pillars, is failing in its mission.Martin Guzman, a former finance minister in Argentina, is among the economists and world leaders who argue that the framework created at the end of World War II to safeguard economic growth and stability is not working.Nathalia Angarita for The New York TimesJavier Milei, the newly elected president of Argentina, at an election event in Salta, Argentina, in October. He has described himself as an “anarcho-capitalist.”Sarah Pabst for The New York TimesThe current system “contributes to a more inequitable and unstable global economy,” said Mr. Guzman, who resigned last year after a rift within the government.The repayment that Mr. Guzman negotiated was the 22nd arrangement between Argentina and the I.M.F. Even so, the country’s economic tailspin has only increased with an annual inflation rate of more than 140 percent, growing lines at soup kitchens and a new, self-proclaimed “anarcho-capitalist” president, Javier Milei, who this week devalued the currency by 50 percent.The I.M.F. and World Bank have aroused complaints from the left and right ever since they were created. But the latest critiques pose a more profound question: Does the economic framework devised eight decades ago fit the economy that exists today, when new geopolitical conflicts collide with established economic relationships and climate change poses an imminent threat?Volunteers serving free meals in Buenos Aires. Argentina’s economy is in a tailspin, with growing lines at soup kitchens.Rodrigo Abd/Associated PressProtests in Buenos Aires in 2001. A debt crisis in Argentina led to default, riots and a devastating depression.Fabian Gredillas/Agence France-Presse — Getty ImagesThis 21st-century clash of ideas about how to fix a system created for a 20th-century world is one of the most consequential facing the global economy.The I.M.F. was set up in 1944 at a conference in Bretton Woods, N.H., to help rescue countries in financial distress, while the World Bank’s focus was reducing poverty and investing in social development. The United States was the pre-eminent economic superpower, and scores of developing nations in Africa and Asia had not yet gained independence. The foundational ideology — later known as the “Washington Consensus” — held that prosperity depended on unhindered trade, deregulation and the primacy of private investment.“Nearly 80 years later, the global financial architecture is outdated, dysfunctional and unjust,” António Guterres, secretary general of the United Nations, said this summer at a summit in Paris. “Even the most fundamental goals on hunger and poverty have gone into reverse after decades of progress.”The world today is geopolitically fragmented. More than three-quarters of the current I.M.F. and World Bank countries were not at Bretton Woods. China’s economy, in ruins at the end of World War II, is now the world’s second-largest, an engine of global growth and a crucial hub in the world’s industrial machine and supply chain. India, then still a British colony, is one of the top five economies in the world.A session of the United Nations Monetary Conference in Bretton Woods, N.H., on July 4, 1944. Delegates from 44 countries are seated at the long tables.Abe Fox/Associated Press, via Associated PressAntónio Guterres, secretary general of the United Nations, said this summer that “the global financial architecture is outdated, dysfunctional, and unjust.”Martin Divisek/EPA, via ShutterstockThe once vaunted “Washington Consensus” has fallen into disrepute, with a greater recognition of how inequality and bias against women hamper growth, as well as the need for collective action on the climate.The mismatch between institution and mission has sharpened in recent years. Pounded by the Covid-19 pandemic, spiking food and energy prices related to the war in Ukraine, and higher interest rates, low- and middle-income countries are swimming in debt and facing slow growth. The size of the global economy as well as the scope of the problems have grown immensely, but funding of the I.M.F. and World Bank has not kept pace.Resolving debt crises is also vastly more complicated now that China and legions of private creditors are involved, instead of just a handful of Western banks.The World’s Bank’s own analyses outline the extent of the economic problems. “For the poorest countries, debt has become a nearly paralyzing burden,” a report released Wednesday concluded. Countries are forced to spend money on interest payments instead of investing in public health, education and the environment.An assembly line at the electric vehicle manufacturer Nio in Hefei, China. China’s economy was in ruins at the end of World War II but is now the world’s second largest and an engine of global growth.Qilai Shen for The New York TimesGita Gopinath, first deputy managing director of the International Monetary Fund, said of the current financial system, “We have countries strategically competing with amorphous rules and without an effective referee.”Jalal Morchidi/EPA, via ShutterstockAnd that debt doesn’t account for the trillions of dollars that developing countries will need to mitigate the ravages of climate change.Then there are the tensions between the United States and China, and Russia and Europe and its allies. It is harder to resolve debt crises or finance major infrastructure without bumping up against security concerns — like when the World Bank awarded the Chinese telecommunications giant Huawei a contract that turned out to violate U.S. sanctions policy, or when China has resisted debt restructuring agreements.“The global rules-based system was not built to resolve national security-based trade conflicts,” Gita Gopinath, first deputy managing director of the I.M.F., said Monday in a speech to the International Economic Association in Colombia. “We have countries strategically competing with amorphous rules and without an effective referee.”The World Bank and I.M.F. have made changes. The fund has moderated its approach to bailouts, replacing austerity with the idea of sustainable debt. The bank this year significantly increased the share of money going to climate-related projects. But critics maintain that the fixes so far are insufficient.“The way in which they have evolved and adapted is much slower than the way the global economy evolved and adapted,” Mr. Guzman said.Argentina’s new president devalued the currency by 50 percent this week.Sarah Pabst for The New York TimesA vegetables shop in Almagro in Buenos Aires. Argentina’s economy is South America’s second largest.Anita Pouchard Serra for The New York Times‘Time to Revisit Bretton Woods’Argentina, South America’s second-largest economy, may be the global economic system’s most notorious repeat failure, but it was Barbados, a tiny island nation in the Caribbean, that can be credited with turbocharging momentum for change.Mia Mottley, the prime minister, spoke out two years ago at the climate change summit in Glasgow and then followed up with the Bridgetown Initiative, a proposal to overhaul the way rich countries help poor countries adapt to climate change and avoid crippling debt.“Yes, it is time for us to revisit Bretton Woods,” she said in a speech at last year’s climate summit in Egypt. Ms. Mottley argues that there has been a “fundamental breakdown” in a longstanding covenant between poor countries and rich ones, many of which built their wealth by exploiting former colonies. The most advanced industrialized countries also produce most of the emissions that are heating the planet and causing extreme floods, wildfires and droughts in poor countries.Mavis Owusu-Gyamfi, the executive vice president of the African Center for Economic Transformation, in Ghana, said that even recent agreements to deal with debt like the 2020 Common Framework were created without input from developing nations.“We are calling for a voice and seat at the table,” Ms. Owusu-Gyamfi said, from her office in Accra, as she discussed a $3 billion I.M.F. bailout of Ghana.Yet if the fund and bank are focused on economic issues, they are essentially political creations that reflect the power of the countries that established, finance and manage them.And those countries are reluctant to cede that power. The United States, the only member with veto power, has the largest share of votes in part because of the size of its economy and financial contributions. It does not want to see its influence shrink and others’ — particularly China’s — grow.The impasse over reapportioning votes has hampered efforts to increase funding levels, which countries across the board agree need to be increased.A vegetable market in Accra, Ghana. “We are calling for a voice and seat at the table,” said Mavis Owusu-Gyamfi, the executive vice president of the African Center for Economic Transformation in Ghana.Natalija Gormalova for The New York TimesCustomers at lunch in Buenos Aires. Mr. Guzman and others pushing for change argue that indebted countries need more grants and low-interest loans with long repayment timelines.Sarah Pabst for The New York Times‘Big Hole’ in How to Deal With DebtStill, as Mr. Guzman said, “even if there are no changes in governance, there could be changes in policies.”Emerging nations need enormous amounts of money to invest in public health, education, transport and climate resilience. But they are saddled with high borrowing costs because of the market’s often exaggerated perception of the risk they pose as borrowers.And because they are usually compelled to borrow in dollars or euros, their payments soar if the Federal Reserve and other central banks raise interest rates to combat inflation as they did in the 1980s and after the Covid pandemic.The proliferation of private lenders and variety of loan agreements have made debt negotiations impossibly complex, yet no international legal arbiter exists.Zambia defaulted on its external debt three years ago, and there is still no agreement because the I.M.F., China and bondholders are at odds.There’s a “big hole” in international governance when it comes to sovereign debt, said Paola Subacchi, an economist at the Global Policy Institute at Queen Mary University in London, because the rules don’t apply to private loans, whether from a hedge fund or China’s central bank. Often these creditors have an interest in drawing out the process to hold out for a better deal.Mr. Guzman and other economists have called for an international legal arbiter to adjudicate disputes related to sovereign debt.“Every country has adopted a bankruptcy law,” said Joseph Stiglitz, a former chief economist at the World Bank, “but internationally we don’t have one.”The United States, though, has repeatedly opposed the idea, saying it is unnecessary.Rescues, too, have proved to be problematic. Last-resort loans from the I.M.F. can end up adding to a country’s budgetary woes and undermining the economic recovery because interest rates are so high now, and borrowers must also pay hefty fees.Those like Mr. Guzman and Ms. Mottley pushing for change argue that indebted countries need significantly more grants and low-interest loans with long repayment timelines, along with a slate of other reforms.“The challenges are different today,” said Mr. Guzman. “Policies need to be better aligned with the mission.”Mia Mottley, the prime minister of Barbados, offered a proposal this year to overhaul the way rich countries help poor countries adapt to climate change and avoid crippling debt.Sean Gallup/Getty ImagesFlash flooding in Bangladesh last year. The global economic framework was devised long before climate change posed an imminent threat to poor nations.Mushfiqul Alam/NurPhoto More

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    World Bank Warns Record Debt Burdens Haunt Developing Economies

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    Surging interest rates and waning financing options threaten a “lost decade” for poor countries.Surging interest rates are saddling the world’s poorest countries with record levels of debt and complicating investments in public health, education and infrastructure initiatives that are key to helping their populations emerge from poverty, the World Bank warned on Wednesday.In its latest report on international debt, the World Bank said that low- and middle-income countries had paid $443.5 billion toward principal and interest in 2022. That is the highest level in history and a 5 percent increase from 2021. The organization projected that total would rise by nearly 40 percent in 2023 and 2024. The bank estimated that more than half of the world’s low-income countries were facing debt distress and called for their obligations to be restructured to avoid a “lost decade.”“Record debt levels and high interest rates have set many countries on a path to crisis,” said Indermit Gill, the World Bank Group’s chief economist.The World Bank pointed to the variable interest rates on the debt that many developing countries owe and are struggling to repay as a looming threat to their solvency. The bank also noted that the stronger U.S. dollar, which has made those countries’ currencies worth less on global markets, has been making repayment more costly.Governments have defaulted on their debts 18 times in the last three years, including in places like Zambia, Sri Lanka and Lebanon. That surpasses the total number of defaults that were recorded in the previous two decades, underscoring how unsustainable debt burdens have become.The predicament has also made it more difficult for developing countries to attract new investment and financing. According to the World Bank, new loan commitments to developing countries declined by 23 percent last year to $371 billion. It was the first time since 2015 that private creditors had received more money than they invested in developing countries.The mounting debt burdens have put additional pressure on multilateral development institutions such as the World Bank to provide low-cost loans to poor countries. International coalitions such as the Group of 20 have also been pushing to accelerate debt relief, but those efforts have been moving slowly.China, the world’s largest creditor, has faced criticism for being an obstacle to debt restructuring agreements because of its reluctance to assume losses on its loans. Earlier this year, China reached an agreement in principle with Zambia to restructure $4 billion in debt, but the deal has not been finalized amid lingering objections about concessions from some of its creditors.Sri Lanka, which declared bankruptcy last year, is also working on a restructuring package with creditors including China, Japan and India.With rich countries facing their own high debt burdens and global economic growth remaining sluggish, relief for developing economies could continue to be elusive.Treasury Secretary Janet L. Yellen said at a Wall Street Journal CEO Council event on Wednesday that debt relief was one of the most important issues that the U.S. and China needed to work together to address, and that it was a regular subject of discussion with her Chinese counterparts.“A lot of countries around the world are really suffering, especially with high interest rates from unsustainable debt burdens,” Ms. Yellen said. “They need to restructure their debt and we need to cooperate to do it.” More

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    Lawmakers Call for Raising Tariffs and Severing Economic Ties With China

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    A bipartisan report recommended stripping China of the low tariffs the United States granted it two decades ago, among other actions.Bipartisan lawmakers on Tuesday called for severing more of America’s economic and financial ties with China, including revoking the low tariff rates that the United States granted Beijing after it joined the World Trade Organization more than two decades ago.The House Select Committee on the Chinese Communist Party released a wide-ranging set of recommendations for resetting America’s economic relationship with China. The report, which was signed by both House Democrats and Republicans, argued that China had carried out a “multidecade campaign of economic aggression” that had undercut American firms, dominated crucial global industries and left the United States highly vulnerable in the event of a broader military conflict.The 53-page report included nearly 150 recommendations that Congress and the administration could take to offset those vulnerabilities. They ranged from imposing new tariffs on older types of Chinese chips to further cutting off the flow of capital and technology between the world’s largest economies.Among the report’s other recommendations were requiring that publicly traded American companies disclose ties to China and investing further in U.S. research and manufacturing capacity to counter China’s dominance of sectors like pharmaceuticals and critical minerals. It also suggested developing plans to coordinate economically with allies if the Chinese government invades Taiwan.Many of the recommendations may never be adopted by a fractious Congress. But the report could provide a path toward some bipartisan legislation on China in the months to come.Representative Mike Gallagher, Republican of Wisconsin and the committee’s chairman, said in an interview that he would like to see Congress come together on a major China bill next year ahead of the presidential election. He said that while some American firms opposed restrictions on doing business with China — a large and growing market — legislation clarifying what was allowed would be beneficial for many companies.“If Congress doesn’t step up and do something legislatively,” Mr. Gallagher said, “we’re just going to bounce back and forth between different executive orders that have wildly different rules that create chaos for Wall Street and the market.”The report is a tangible sign of how much the bipartisan consensus toward China has shifted in recent years.The most prevalent argument a decade ago was that economic interdependence between the United States and China would be a force for peace and stability. Some — including Biden administration officials — still say that business ties can help stabilize the relationship and promote peace.But that theory has increasingly given way to fears that ties to China could be weaponized in the event of a conflict. It could be catastrophic for the U.S. economy or the military, for example, if the Chinese government cut off its shipments to the United States of pharmaceuticals, minerals or components for weapons systems.Beijing’s subsidization of Chinese firms and incidents of intellectual property theft have also become an increasing source of friction. In some cases, China has allowed foreign firms to operate in the country only if they form partnerships that transfer valuable technology to local companies.The report said that the United States had never before faced a geopolitical adversary with which it was so economically interconnected, and that the full extent of the risk of relying on a strategic competitor remained unknown. The country lacks a contingency plan in the case of further conflict, it said.“Addressing this novel contest will require a fundamental re-evaluation of U.S. policy towards economic engagement with the P.R.C. as well as new tools to address the P.R.C.’s campaign of economic aggression,” the report said, using the abbreviation for the People’s Republic of China.This year, the committee hosted a tabletop exercise to simulate how the United States would respond if the Chinese government invaded Taiwan. It found that U.S. efforts to deter China through sanctions and financial punishment “could carry tremendous costs to the United States,” the report said.The lawmakers said that they did not advocate a full “decoupling” of the U.S. and Chinese economies, but that the country needed to find a way to reduce Beijing’s leverage and to make the United States more economically independent.The report includes a variety of other recommendations, including increasing the authority of a committee that reviews foreign investments for national security threats and devising new high-standard trade agreements, especially with Taiwan, Japan and Britain.But the report’s first recommendation, and perhaps its most significant, is phasing in a new set of tariffs for China over a short period of time.When China joined the World Trade Organization in 2001, the United States and other members began offering China lower tariffs to encourage trade. In return, China started undertaking a series of reforms to bring its economy in line with the organization’s rules.But the report argued that China had consistently failed to make good on those promised reforms, and that the “permanent normal trade relations” the United States had granted to China after its W.T.O. succession did not lead to the benefits or economic reforms Congress had expected. The report said Congress should now apply a different, higher set of tariffs to China.Such a move has been debated by lawmakers, and has been backed by former President Donald J. Trump and other Republican candidates. Last year, Congress voted to revoke permanent normal trade relations with Russia after its invasion of Ukraine.But increasing tariffs on China, one of the United States’ largest trading partners, would provoke more opposition from businesses, since it would raise costs for products imported from China and most likely slow economic growth.The United States already has significant tariffs on many Chinese products, which were imposed during the Trump administration’s trade war and President Biden is still reviewing. The further changes suggested by Congress would increase levies on other items, like toys and smartphones, that have not born additional taxes.A study published by Oxford Economics in November and commissioned by the U.S. China Business Council estimated that such tariffs alone would lead to a $1.6 trillion loss for the U.S. economy over a five-year horizon. It would also be likely to cause further friction at the World Trade Organization, where the group’s most steadfast supporters have already accused the United States of undermining its rules.Liu Pengyu, a spokesman for the Chinese Embassy, said that the U.S.-China economic relationship was “mutually beneficial” and that the proposals would “serve no one’s interests.”The report runs counter to “the principles of market economy and fair competition, and will undermine the international economic and trading order and destabilize global industrial and supply chains,” he said.The Retail Industry Leaders Association, a trade group that includes Target, Home Depot and Dollar General, said in a statement on Tuesday that it was concerned about the recommendations. Raising tariffs on Chinese products would “only harm U.S. businesses and invite retaliation from China,” it said.The lawmakers’ report acknowledged that such a change would be an economic burden, and suggested that Congress consider additional appropriations for farmers and other support for workers.Mr. Gallagher said that extricating the United States from its “thorough economic entanglement” with China would not be easy, and that Washington should work to develop alternative markets and prepare for potential retaliation from Beijing.Reaching consensus on the report required months of negotiations between Democrats and Republicans, which its authors said should send a message to China. Only one member of the 24-person committee voted against the report: Representative Jake Auchincloss, a Massachusetts Democrat who had concerns about protectionism.“One of the theories that the C.C.P. has about the United States is that we are divided, that we are tribal, that we are incapable of coming together to deal with challenges,” said Representative Raja Krishnamoorthi of Illinois, the committee’s top Democrat, referring to the Chinese Communist Party. “On this particular issue of competition between the United States and the C.C.P., we are of one mind.” More

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    U.S. Debates How Much to Sever Electric Car Industry’s Ties to China

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    Some firms argue that a law aimed at popularizing electric vehicles risks turning the United States into an assembly shop for Chinese-made technology.The Biden administration has been trying to jump-start the domestic supply chain for electric vehicles so cleaner cars can be made in the United States. But the experience of one Texas company, whose plans to help make an all-American electric vehicle were upended by China, highlights the stakes involved as the administration finalizes rules governing the industry.Huntsman Corporation started construction two years ago on a $50 million plant in Texas to make ethylene carbonate, a chemical that is used in electric vehicle batteries. It would have been the only site in North America making the product, with the goal of feeding battery factories that would crop up to serve the electric vehicle market.But as new facilities in China came online and flooded the market, the price of the chemical plummeted to $700 a ton from $4,000. After pumping $30 million into the project, the company halted work on it this year. “If we were to start the project up today, we would be hemorrhaging cash,” said Peter R. Huntsman, the company’s chief executive. “I’d essentially be paying people to take the product.”The Biden administration is now finalizing rules that will help determine whether companies like Huntsman will find it profitable enough to participate in America’s electric vehicle industry. The rules, which are expected to be proposed this week, will dictate the extent to which foreign companies, particularly in China, can supply parts and products for American-made vehicles that are set to receive billions of dollars in subsidies.The administration is offering up to $7,500 in tax credits to Americans who buy electric vehicles, in an effort to supercharge the industry and reduce the country’s carbon emissions. The rules will determine whether electric vehicle makers seeking to benefit from that program will have the flexibility to get cheap components from China, or whether they will be required instead to buy more expensive products from U.S.-based firms like Huntsman.After pumping $30 million into the project, Huntsman halted work on it. “If we were to start the project up today, we would be hemorrhaging cash,” said Peter R. Huntsman, the company’s chief executive.Callaghan O’Hare for The New York TimesCan the World Make an Electric Car Battery Without China?From mines to refineries and factories, China began investing decades ago. Today, most of your electric car batteries are made in China and that’s unlikely to change soon.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.We are confirming your access to this article, this will take just a moment. However, if you are using Reader mode please log in, subscribe, or exit Reader mode since we are unable to verify access in that state.Confirming article access.If you are a subscriber, please  More

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    Cómo sale el dinero de China

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    Las personas chinas acaudaladas han sacado cientos de miles de millones de dólares del país este año, aprovechando el fin de las precauciones por covid que habían sellado casi por completo las fronteras de China durante casi tres años.Están utilizando sus ahorros para comprar apartamentos en el extranjero, acciones y pólizas de seguros. Ahora que pueden volar de nuevo a Tokio, Londres y Nueva York, los viajeros chinos han comprado apartamentos en Japón y han invertido dinero en cuentas en Estados Unidos o Europa que pagan intereses más altos que en China, donde las tasas son bajas y sigue cayendo.La salida de dinero indica, en parte, el malestar existente en China por su vacilante recuperación tras la pandemia, así como por problemas más profundos, como la alarmante desaceleración del sector inmobiliario, principal depósito de riqueza de las familias. Para algunas personas, también es una reacción a los temores sobre la dirección de la economía bajo el liderazgo de Xi Jinping, que ha tomado medidas enérgicas contra las empresas y ha reforzado la influencia del gobierno en muchos aspectos de la sociedad.En algunos casos, los residentes chinos están improvisando maneras de eludir los estrictos controles gubernamentales de su país sobre las transferencias de dinero al extranjero. Han comprado lingotes de oro lo suficientemente pequeños como para esparcirlos discretamente por el equipaje de mano, así como grandes cantidades de divisas extranjeras.Los bienes inmuebles también son una opción. Los chinos se han convertido en los principales compradores de apartamentos en Tokio que cuestan 3 millones de dólares o más, y a menudo pagan con maletas llenas de dinero en efectivo, dijo Zhao Jie, director ejecutivo de Shenjumiaosuan, un servicio en línea de venta de inmuebles en Tokio. “Es un trabajo muy duro contar esta cantidad de dinero en efectivo”.Antes de la pandemia, dijo, los compradores chinos solían comprar estudios en Tokio por 330.000 dólares o menos para alquilarlos. Ahora compran unidades mucho más grandes y obtienen visas de inversión para trasladar a sus familias.El Park Tower Harumi, un complejo de apartamentos de lujo en Tokio que ha atraído a compradores de China continental.Hiroko Masuike/The New York TimesLos jardines del Branz Tower Toyosu, otro proyecto de apartamentos de lujo en Tokio que también ha atraído a compradores de China continental.Hiroko Masuike/The New York TimesEn total, se calcula que este año han salido de China unos 50.000 millones de dólares al mes, principalmente de hogares chinos y empresas del sector privado.Los expertos dijeron que el ritmo de salida de dinero de China probablemente no representaba un riesgo inminente para la economía del país, de 17 billones de dólares, en gran parte porque las exportaciones de muchos de los principales productos manufacturados del país son fuertes, lo que devuelve un flujo constante de efectivo.Una amplia operación para enviar los ahorros familiares a otra parte podría ser motivo de alarma. Las salidas de dinero a gran escala han desencadenado crisis financieras en las últimas décadas en América Latina, el sudeste asiático e incluso la propia China, a finales de 2015 y principios de 2016.Hasta ahora, todo indica que el gobierno chino cree tener la situación bajo control. La salida de dinero de China ha debilitado la moneda, el renminbi, frente al dólar y otras divisas. Y esa debilidad del renminbi ha ayudado a mantener las exportaciones del país, que sostienen decenas de millones de empleos chinos.El flujo de dinero que sale de China “es muy manejable”, dijo Wang Dan, economista jefe para China en la oficina de Shanghái del Hang Seng Bank.Personas comprando joyas en LukFook.Billy H.C. Kwok para The New York TimesLos legisladores chinos siguen recurriendo a algunos de los límites a la salida de dinero del país que impusieron para frenar la crisis monetaria hace ocho años. Otras restricciones que se hicieron entonces, como el escrutinio de las exportaciones e importaciones para detectar estrategias encubiertas de transferencias internacionales de dinero, se dejaron sin efecto y no se han vuelto a imponer este año, a pesar de que se han reanudado las salidas de dinero.La salida de dinero de China ha igualado aproximadamente la entrada de dinero por los grandes superávits comerciales del país. Para consternación de muchos países, sobre todo europeos, China está exportando cada vez más paneles solares, autos eléctricos y otros productos avanzados, incluso cuando ha reemplazado más importaciones por producción nacional.El valor del renminbi cayó a principios de año a su nivel más bajo en 16 años. Durante gran parte de los dos últimos meses, se mantuvo en torno a los 7,3 por dólar, antes de subir un poco en la última semana.En 2015, los inversores que operan a tiempo real observaron fuertes ventas masivas de acciones chinas, cuando la salida de dinero del país provocó turbulencias en los mercados de todo el mundo.Ng Han Guan/Associated PressLa oleada de dinero que salió de China hace ocho años fue provocada por una caída en la bolsa de valores y un intento fallido de devaluar la moneda de forma controlada. El banco central de China tuvo que gastar hasta 100.000 millones de dólares al mes de sus reservas de divisas extranjeras para apuntalar el renminbi.En cambio, China parece haber gastado unos 15.000 millones de dólares al mes desde mediados de verano para estabilizar su moneda, según datos del banco central. “No hay nada que sugiera que sea desordenada”, dijo Brad Setser, especialista en finanzas internacionales del Consejo de Relaciones Exteriores. “La escala de la presión sigue siendo mucho menor que en 2015 o 2016”.Las salidas de 2015 y 2016 reflejaron los esfuerzos de las grandes empresas estatales por trasladar fuertes sumas de dinero al extranjero. En la actualidad, el gobierno ejerce un control político más estricto sobre esas empresas, y no ha habido indicios de una urgencia por movilizar dinero de su parte.En cambio, las empresas privadas y los hogares chinos han estado trasladando dinero al extranjero. Pero gran parte de la riqueza de la gente está anclada a bienes inmuebles, que no pueden venderse fácilmente.Al mismo tiempo, las empresas ilegales de cambio de moneda de Shanghái, Shenzhen y otras ciudades que solían convertir el renminbi en dólares y otras divisas extranjeras fueron cerradas por redadas policiales hace ocho años.Turistas chinos frente al Casino Londoner de Macao en octubrePeter Parks/Agence France-Presse — Getty ImagesTuristas chinos en un ferry durante una excursión a Hong KongBilly H.C. Kwok para The New York TimesY los reguladores han cerrado casi todos los viajes de apuestas a Macao, una región china de administración especial. Estos viajes permitían a los chinos adinerados comprar fichas de casino con renminbi, apostar una parte en el bacará o la ruleta y convertir el resto en dólares.Pekín también ha prohibido la mayoría de las inversiones extranjeras en hoteles, torres de oficinas y otros activos de escaso valor geopolítico. El arquitecto de las restricciones a la inversión extranjera en China, Pan Gongsheng, fue ascendido en julio a gobernador del banco central, el Banco Popular de China.Pero los hogares y las empresas siguen arreglándoselas para enviar dinero al extranjero.Una tarde reciente, las sucursales del Banco de China y del China Merchants Bank en China continental vendían lingotes de oro un 7 por ciento más caros que sus bancos afiliados en la adyacente Hong Kong. Esa diferencia de precios indica que, dentro de China, existe una gran demanda de oro, que puede trasladarse fácilmente fuera del país.Otro truco que están utilizando los residentes de China continental para sacar su dinero es abrir cuentas bancarias en Hong Kong y luego transferir dinero para comprar productos de seguros que se asemejan a certificados de depósito bancario. Según la Autoridad de Seguros de Hong Kong, las primas de las nuevas pólizas de seguro vendidas a los habitantes de China continental que visitan Hong Kong fueron un 21,3 por ciento más altas en el primer semestre de este año que en el primer semestre de 2019, tras casi desaparecer durante la pandemia.Una larga fila frente al Banco de China en Hong Kong el lunesBilly H.C. Kwok para The New York TimesEn una sucursal del Banco de China en la península de Kowloon, en Hong Kong, los habitantes de China continental esperaban a las 7:30 de una mañana reciente para abrir cuentas, 90 minutos antes de la apertura del banco. La fila era tan larga a las 8 a. m. que quien llegaba más tarde tenía suerte de llegar al principio de la fila antes de que terminara la jornada laboral, dijo Valerius Luo, agente de seguros de Hong Kong.Las familias suelen invertir entre 30.000 y 50.000 dólares estadounidenses en productos de seguros, varias veces más que antes, mientras buscan lugares seguros donde colocar sus ahorros, dijo Luo. “Sigue habiendo personas con un capital poderoso”, dijo, “y quieren un paquete de inversión que conserve el valor”.Li You More

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    U.S. to Press China to Stop Flow of Fentanyl

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    President Biden pressed the Chinese leader Xi Jinping on Wednesday to crack down on the Chinese firms that are helping to produce fentanyl, a potent drug that has killed hundreds of thousands of Americans.A plan to curb China’s illicit exports of fentanyl and, particularly, the chemicals that can be combined to make the drug was hoped to be one of the more significant achievements for the United States out of Mr. Biden and Mr. Xi’s meeting, which took place as leaders from Pacific nations gathered for an international conference in San Francisco.A summary of the meeting published by China’s CCTV News said that Mr. Biden and Mr. Xi had agreed to establish an anti-drug working group.China is home to a thriving chemical industry that pumps out compounds that are made into pharmaceuticals, fragrances, textile dyes and fertilizers. Some of those same compounds can also be combined to create fentanyl, an opioid that can be 100 times as potent as morphine.U.S. officials argue that this vast chemical industry is playing a key role in the American fentanyl crisis by supplying the bulk of materials used in illegal drug labs, including in Mexico, which is now the largest exporter of fentanyl to the United States.The Chinese government denies that its country plays such a pivotal role and instead blames the United States for harboring a culture of drug use.“All-out marketing by pharmaceutical companies, over-prescription by doctors, ineffective government crackdowns and the negative implications of marijuana legalization are among the combination of factors behind an ever-growing market for narcotics,” China’s foreign ministry said in a statement last year.U.S. officials say they have stopped more fentanyl from coming into the United States in the past two years than in the previous five years combined. According to the Centers for Disease Control and Prevention, fentanyl and other synthetic opioids may have resulted in more than 77,000 overdose deaths in the United States between May 2022 and April 2023. The problem with fentanyl overdoses is particularly acute in San Francisco, where Mr. Biden and Mr. Xi are meeting.Ian Johnson, a senior fellow for China studies at the Council on Foreign Relations, said that getting China to agree to do something about fentanyl would resonate more with average Americans than the typical “deliverables” from international meetings.“For Biden, that would be nice to have to show to the heartland of the United States that relations with China are more than just some esoteric matter, but can actually bring something to ordinary people,” Mr. Johnson said in a briefing held by the council last week. Republicans have made fentanyl-related deaths a central piece of their campaign against Mr. Biden and Democrats in the 2024 elections.Red stained pollen grain sample at the U.S. Customs and Border Protection in Chicago, last year.Lyndon French for The New York TimesCollecting pollen samples at a Customs and Border Protection facility. The extent to which an agreement with China would curb the flow of fentanyl into the United States is unclear.Lyndon French for The New York TimesStill, given the difficulties with policing an illicit industry, the extent to which an agreement would curb the flow of fentanyl into the United States is unclear.Roselyn Hsueh, an associate professor of political science at Temple University, said that an agreement between Mr. Biden and Mr. Xi could lead the Chinese central government to provide more oversight and invest more resources into inspection and monitoring. But she said Beijing had run into difficulty in the past clamping down on fentanyl and precursor chemicals.Before 2019, China was the primary source of fentanyl coming into the United States, typically through the mail and other commercial couriers. As a part of trade talks with President Donald J. Trump, the Chinese government in 2019 agreed to prohibit the production, sale and export of all fentanyl-related drugs except through special licenses.But that resulted in Chinese companies rerouting to Mexico and India’s emergence as a new production site, Ms. Hsueh said. The main source of U.S. fentanyl became Mexican criminal organizations, which used Chinese-made components and Chinese money-laundering services.Today, online sales that mask the identities of sellers and buyers further complicate enforcement. The regulation and enforcement of fentanyl and precursor chemicals remain “fragmented and decentralized” among Chinese local governments, industry associations and firms with vested interests in the chemical trade, Ms. Hsueh said.U.S. officials have said that problem is compounded because many of the ingredients used to make fentanyl are legal chemicals that can be used for legitimate purposes in other industries. The United States has issued sanctions against dozens of people in China and Hong Kong for their role in fentanyl trafficking. In September, Mr. Biden added China to the U.S. list of the world’s major drug-producing countries, a move that the Chinese government denounced as “a malicious smear.”Last month, the U.S. customs department released an updated strategy to combat fentanyl and synthetic drugs, including through the enhanced use of data and counterintelligence operations to track drug manufacturing and distribution networks, and target suspicious locations and recipients that demonstrate patterns of illicit activity. “In my 30 years as a customs official, the trafficking of synthetic illicit drugs like fentanyl is one of the toughest, most daunting challenges I have ever seen,” said Troy Miller, the acting commissioner for Customs and Border Protection.U.S. officials say they have stopped more fentanyl from coming into the United States in the past two years than in the previous five years combined.Mamta Popat/Arizona Daily Star, via Associated PressU.S. officials believe China’s dominance as a chemical producer makes Beijing’s cooperation key for enforcement. Administration officials, including Commerce Secretary Gina M. Raimondo, have raised the issue with top Chinese officials during recent trips to China.When six lawmakers, including Senator Chuck Schumer, the majority leader, had a chance to talk to Mr. Xi during a visit to China last month, the main issue they brought up was not trade or military coordination or climate change, but the harm that fentanyl had caused in their home states.“Everyone told stories, personal stories about how, you know, friends of ours, family, have died from fentanyl, and how this was a really important issue, and I think that you could tell that made an impression on him, how deeply we felt about it,” said Mr. Schumer, a New York Democrat.Fentanyl precursors from China have become a bipartisan issue in Congress, and the six senators who spoke with Mr. Xi were three Democrats and three Republicans.“China needs to enforce laws that prevent the export of fentanyl precursors to international drug markets,” said Senator Bill Cassidy, Republican of Louisiana.Despite the scale of the problem, there is hope that greater coordination between the United States and China could improve the situation. Cooperation between the countries on preventing shipments of the precursor chemicals stalled several years ago after the United States placed sanctions on a Chinese government entity for its alleged involvement in human rights abuses in China’s westernmost region, Xinjiang.That entity was located at the same address in Beijing as the National Narcotics Laboratory of China, which plays a key role in China’s law enforcement effort on drug-related chemicals.Chinese officials deeply resent American sanctions on their institutions, and U.S. officials have taken the position that because of the risk of confusion among the two institutes at the same address, neither institute can work with the United States.China then broadened its position in August 2022 when it halted any counternarcotics coordination with the United States as one of a series of measures taken in response to a visit to Taiwan by Representative Nancy Pelosi, then the speaker of the House. Beijing claims Taiwan, a self-ruled island democracy, as part of its territory.Eileen Sullivan More