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US Warns China Against Imposing ‘Political Correctness’ on US Firms

U.S. officials and politicians say they are increasingly frustrated and looking for ways to fight back against what they see as China’s use of its market power to impose “politically correct” behavior on American companies. Airlines, retailers and hoteliers all have been pressured to alter products and promotions that offended Beijing.

“These actions are outrageous and disturbing,” Deputy Assistant Secretary of State for East Asian and Pacific affairs Alex Wong told American lawmakers Tuesday.

“China is very much well aware that it’s wading through treacherous waters here. And they understand that if they continue along this path, continue to employ these tactics, that will negatively affect the U.S.-China relationship and that there will be consequences,” said Wong during a hearing at Senate Foreign Relations subcommittee on East Asia, The Pacific, and International Cybersecurity Policy.

“The consequences are under review,” Wong added.

His remarks come after American clothing retailer Gap apologized and recalled the sale in the Chinese market of its T-shirts showing a map that’s seen by Beijing as politically incorrect. The T-shirts were also destroyed. 

A Chinese student earlier this week posted pictures of the T-shirt, which did not include Taiwan, parts of Tibet and islands in the South China Sea that Beijing claims are Chinese territories. Gap quickly apologized, citing “unintentional error.” Photos circulated on Chinese social media network Weibo were said to be have been taken at an outlet store in Canada. 

A Chinese government spokesperson took note of Gap’s apology and the American company’s pledge to respect “China’s sovereignty and territorial integrity and is conducting an internal inspection.”

“We have taken note of this statement. We will continue to listen to its [Gap’s] words, and watch the actions,” said Chinese Ministry of Foreign Affairs Spokesperson Lu Kang on Tuesday.

But U.S. officials and lawmakers are hitting back.

“American companies are being bullied,” said Florida Republican Senator Marco Rubio during Tuesday’s Senate Foreign Relations Subcommittee hearing.

Rubio said U.S. airlines “are being threatened by China, that if their website doesn’t say Taiwan [is part of] China, they’re going to lose their routes and have fines and penalties.”

On April 25, the Chinese Civil Aviation Administration sent a letter to 36 foreign air carriers, including a number of American carriers, demanding the carriers remove references on their websites or in other material that suggests Taiwan, Hong Kong and Macau are independent territories from China.

And in January, Beijing requested U.S. hotel giant Marriott International change the way it referred to Tibet, Taiwan, Hong Kong and Macau to be in line with Beijing’s views.

The request came after a Marriott employee “liked” a tweet by Friends of Tibet that praised Marriott for “listing #Tibet as a country along with #HongKong and #Taiwan” in an online customer questionnaire.

The employee was fired and Marriott apologized to Beijing.

Observers said market access to the growing population of affluent Chinese consumers leads to American companies’ compliance.

“It’s totally based on market strategy or, more precisely, fear of being shut out of the China market,” Brooking Institution’s Senior Fellow Richard Bush told VOA on Thursday. 

U.S. officials said they have raised this issue privately with their Chinese counterparts, while also condemning Beijing’s actions in public. U.S. officials have also talked with companies who have been involved in the incidents.

China claims democratically ruled Taiwan is part of its territory, and it has never renounced the use of military force to bring the island under Beijing’s control. The U.S. broke diplomatic ties with Taiwan in 1979 and has “acknowledged” Beijing’s position, while insisting on a “peaceful resolution of cross-Strait differences.”

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Trump Meets Chinese Vice Premier Amid Tough Trade Talks 

President Donald Trump stepped into a round of tough trade talks with China on Thursday after the White House confirmed a meeting between the U.S. president and Chinese Vice Premier Liu He.

The two world powers are taking part in a second series of trade negotiations that started Thursday. The initial talks were held in Beijing two weeks ago.

Speaking to reporters before his meeting with Liu, Trump repeated his strong dislike for previous deals between Washington and Beijing.

“The United States has been ripped off for many, many years by its bad trade deals. I don’t blame China; I blame the leadership of this country from the past,” Trump told reporters before a meeting with NATO Secretary-General Jens Stoltenberg.

“China has taken out hundreds of billions of dollars a year from the United States, and I explained to President Xi [Jinping] we can’t do that anymore,” Trump added.

The talks are aimed at “rebalancing the United States-China bilateral economic relationship,” according to the White House. They are also aimed at avoiding a full-blown trade war after the two countries exchanged tariff threats in March.

Despite the tough talks, Trump tweeted over the weekend that he was working with Xi to give Chinese phone company ZTE a way to get back into business.

The U.S. slapped sanctions against the Chinese telecommunications company last month for breaking U.S. trade control laws by selling components to Iran and North Korea. The move prompted ZTE to shut down its U.S. operations.

U.S. law enforcement and intelligence communities have long had national security and espionage concerns about ZTE.

“ZTE was a company I spoke to with President Xi. He asked me if I could take a look at that, because it was very harmful to them in terms of their jobs and probably other things, and I certainly said I would — he asked me to do it, and I would do that. I like him, he likes me, we have a great relationship,” Trump said in explaining his tweet to reporters. 

Trump noted it was his administration that had first put strong clamps on ZTE.

“Anything we do with ZTE is just a small component of the overall deal. I can only tell you this: We are going to come out fine with China,” Trump said. “When you’re losing $500 billion a year on trade, you can’t lose the trade war, you’ve already lost it.”

Liu, who is Xi’s top economic adviser, is taking part in two days of talks with a U.S. trade delegation led by Treasury Secretary Steve Mnuchin.

Trump’s top economic adviser, Larry Kudlow, told reporters Wednesday that the administration was conducting “very serious” talks with China, and that Trump was “very hands-on” and “involved in every decision.”

“We have requested that China change their trading practices, which are unfair and in many ways illegal,” Kudlow said.

“This is with respect to the issue of theft of technology, forced transfers of technology, high tariffs and non-tariff barriers” that are preventing the United States from making a competitive effort to export goods and services to China, he said.

The economic adviser said the administration had given China a “lengthy, detailed list” of what the U.S. wanted, including narrowing the U.S.-China trade deficit, lowering non-tariff barriers and permitting American ownership of its own companies in China. 

“Right now, the limit is 49 percent and that’s one of the causes of the theft and transfer of viable technology,” Kudlow said. “When we do these joint ventures, we should have to own 51 percent on to 100 percent. That’s a key part of these talks.”

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Bulgarian Truckers Protest Proposed EU Rules During Summit

Hundreds of truck drivers blocked roads across Bulgaria on Thursday as European Union leaders met in Sofia, protesting proposed EU rules they say would cost their jobs and put their firms out of business.

Transport company owners described the initiative, known as the Mobility Package, as a protectionist measure designed to help rival firms in western Europe. The Bulgarian transport association said around 120,000 drivers from the country would lose their jobs under the proposed rule changes.

Trucks from Bulgaria and other low-wage eastern European countries are a common sight on the roads of western Europe, competing with local firms whose drivers are much higher paid.

Under the package, backed by France, Germany and other higher-wage states, truck drivers from eastern Europe would receive the same payment for work abroad as those employed by western European transport companies.

The package has long been the subject of negotiations between EU member states and has yet to be laid before the European Parliament.

The Bulgarian government backed the local truck companies.

“We declare our strong support for Bulgarian carriers,” Transport Minister Ivaylo Moskovski said.

Prime Minister Boyko Borissov, who is hosting the EU summit, said the proposed changes would “kill the Bulgarian sector.”

French President Emmanuel Macron said he hoped a compromise could be found in the coming months. “We will find a balanced deal together that will ensure the proper working of the single market, good social protection and fair competition in the transport sector. September has to be our objective,” he told a news conference at the Sofia summit.

Drivers from Bulgaria, where average monthly wages of little more than 500 euros ($600) are among the lowest in the EU, often spend weeks moving loads between countries including Germany, France and Britain before returning to their home base.

Under the package, drivers would have to rest for at least 45 hours in a hotel rather than their cab and return home every three weeks.

Bulgarian transport firms said this would nullify eastern European companies’ competitive advantage.

“These restrictions are absolutely unnecessary,” said Vladislav Kalchev, owner of a transport company. “They are trying to help, in some way, the market in the big countries.”

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Trump: US Has Not ‘Folded’ in Trade Dealing with China

President Donald Trump says the United States has not “folded” in trade negotiations with China as both countries get set for another round of meetings.

“We have not seen China’s demands yet,” Trump tweeted Wednesday. “The U.S. has very little to give because it has given so much over the years. China has much to give.”

U.S. Treasury Secretary Steve Mnuchin opens two days of talks in Washington with Chinese officials Thursday.

“These meetings are a continuation of the talks held in Beijing two weeks ago and will focus on rebalancing the United States-China bilateral economic relationship,” the White House says.

They are also aimed at avoiding a full-blown trade war after the U.S. and China exchanged tariffs in March.

Trump reminded the country Wednesday that the U.S. has been losing hundreds of billions of dollars a year and countless U.S. manufacturing jobs because of its trade deficit with China.

But despite his tough talks on China, Trump wants to rescue China’s giant technology company ZTE, puzzling many lawmakers.

ZTE was forced to close one of its plants and cease major operations after the U.S. Commerce Department barred it from buying American-made components for its consumer products. ZTE had been using those components in goods sold to Iran and North Korea, a violation of U.S. trade embargoes.

The president said earlier this week that “too many jobs” were being lost in China because of ZTE’s problems, and he ordered the Commerce Department to help it “get back into business, fast.”

Republican Senator Marco Rubio told VOA that the Commerce Department’s sanctions on ZTE are “a law enforcement function that really shouldn’t have anything to do with trade. … Chinese telecom companies are agents of the Chinese government. They don’t just steal national security secrets, they steal commercial secrets.”

House Democratic Leader Nancy Pelosi also talked to VOA, saying Trump does not know how to fight when it comes to balancing trade issues.

“The president talked big about wanting to have a fair trade relationship with China and folded immediately on the ZTE issue.”

Pelosi said Trump’s motives over ZTE are hard to understand, but said he will face serious opposition in Congress if he tries to use ZTE as a bargaining chip.

Michael Bowman and VOA Mandarin contributed to this report.

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Argentina’s Currency Crisis Over, Macri says

President Mauricio Macri said Wednesday that Argentina’s currency crisis is over, speaking as the country’s currency rebounded somewhat and prices for its stocks and bonds rose.

 

Macri announced last week that Argentina was seeking a financing deal with the International Monetary Fund following a sharp drop in the peso. The decision brought back haunting memories for Argentines who blame the IMF for introducing policies that led to the country’s 2001 economic implosion.

 

Argentina was forced to impose interest rate hikes and to tighten the fiscal deficit target to try to halt the devaluation of its currency, which has lost about 25 percent of its value in recent weeks.

 

The peso hit a new all-time low of 25.30 to the U.S. dollar Monday. But it rose at 24.8 per dollar Wednesday and Argentine stocks and bonds rose.

 

Macri said his government thinks it has “overcome” the turbulence over the currency. He also said he will demand “an intelligent” deal with the IMF.

 

“It’s important to recognize the moment of nervousness and anguish lived by a sector of the population,” Macri told reporters at the presidential palace.

 

“There was fear and anguish. Today, we have a different climate, but we must take a balance of what happened.”

 

The economic turbulence highlighted the frailty of Argentina’s economy despite austerity measures imposed by Macri, a conservative who has vowed to boost growth and curb Argentina’s high inflation.

 

Macri’s government has requested a “high-access stand-by arrangement” from the IMF to meet its debt obligations without risking a disruption of economic growth.

 

“With this deal, we will potentialize the future of Argentines,” Macri said.

 

The crisis 17 years ago resulted in one of every five Argentines being unemployed and millions sliding into poverty. The peso, which had been tied to the dollar, lost nearly 70 percent of its value.

 

Many Argentines have blamed the IMF since then for its role in Argentina’s record debt default of more than $100 billion.

 

A survey by Argentine pollsters D’Alessio Irol/Berensztein said 75 percent of Argentines feel that seeking assistance from the IMF is a bad move. The survey of 1,077 people in early May had a margin of error of three percentage points.

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Amsterdam Determined to Tame Tourism

Amsterdam unveiled far-reaching plans Wednesday to rein in tourism, reflecting the dissatisfaction of many residents who feel the city’s historic center has been overrun.

The leading Green-Left and other parties negotiating a new municipal government after March elections vowed to return “Balance to the City,” in a document of that name seen by Reuters.

“The positive sides of tourism such as employment and city revenues are being more and more overshadowed by the negative consequences,” including trash and noise pollution, the document said.

Changes the document outlines include curtailing “amusement transportation” such as multiperson “beer bikes”; cracking down on alcohol use in boats on the canals; further restricting Airbnb and other home rentals; and a large tax hike.

The plans announced Wednesday also include creating an inventory of all commercial beds in the city to try to cap various sectors, such as those on cruise ships and in hotels.

“I’m very happy that the city is now finally taking action, because residents have been asking for it for a very long time,” said Bert Nap of neighborhood organization d’Oude Binnenstad, in the historic center.

“What I’m worried about is that this package of measures is so drastic that there will be a lot of lawsuits and political resistance, which will cost a lot of time.”

He said the city was suffering from too many visitors in general, which had the effect of changing the character of the center into one big tourist attraction. He also said some unruly, drunken tourists were making the city center an unattractive place for local residents.

Edgy lure

With a population of around 800,000, the city expects 18 million tourists in 2018, an increase of 20 percent from 2016 levels, many drawn by an edgy atmosphere generated by readily available soft drugs and the “red light” sex zone.

Anti-tourist and anti-expatriate sentiment have been steadily on the rise in Amsterdam, as both are blamed in part for helping drive housing prices increasingly out of the reach of ordinary Dutch people.

The average apartment in Amsterdam cost 407,000 euros ($475,000) in 2017, an increase of around 12 percent from 2016 levels, according to national real estate association NVM.

The change of emphasis has already started from national government over the past years, to try to dissuade visitors from the more earthy pastimes the city is famous for.

Advertising campaigns have focused on the city’s canals, the Anne Frank House and the museums packed with the greatest works of Van Gogh and Rembrandt.

Legislators have helped the rebranding, shutting a third of the city’s brothels in 2008 and starting a program in 2011 to close marijuana cafes located near schools.

“Amsterdam is a city to live and work in — it’s only a tourist destination in the second place,” the municipal document said.

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Malaysia’s New Leaders Lay Out Economic Reforms, Rattle Nerves

Malaysia’s new government to scrutinize past economic policies under the now ousted Najib Razak administration is prompting analysts to warn of a slide in investment and growth in one of Southeast Asia’s top economies.

The new leadership has appointed a group of prominent citizens, an eminent persons group, to come up with a new policy agenda within the next 100 days that will, among other things, review mega investment projects that have been key drivers of economic growth.

The new government has also established a special task force as corruption allegations over the abuse of funds in a sovereign wealth fund set up by Najib, and ordered a review of political representation on Malaysia’s largest government investment firms, including the main sovereign and pension funds.

Leading the eminent persons group is a former finance minister, Daim Zainuddin, and it includes a former central bank governor, Zeti Akhtar Aziz, a former president the Malaysian energy giant, Petronas, an economist and a leading businessman.

 

Gareth Leather, senior Asia economist for Capital Economics, an economic research group in London, says a key issue is whether Malaysia’s new government will remain united in the face of moves toward economic reforms.

“[The coalition] when it was formed was very much a coalition against Najib rather than anything pro-reform. So the first real test they have got is to see if there is enough cohesion within that coalition to push through [economic] reforms,” Leather told VOA.

A key campaign promise by new Prime Minister Mahathir Mohamad’s Pakatan Harapan — or Alliance of Hope — was to abolish a value added, goods and services tax.

While the tax, known as GST, was unpopular among voters, analysts say the revenue enabled the government to diversify its tax base from an over-reliance on corporate tax and the oil industry.

Immediately after the vote, financial markets reacted nervously to the scrapping of the tax and questions of the impact the measure would have on the government’s budget. Contributions from the GST have reached $10.6 billion.

Malaysian Finance Ministry officials have not said when the tax would be abolished, and analysts predicted a tough road ahead for the plan.

“To raise as much money as the GST while getting rid of the GST is going to be quite difficult. I don’t think that they can really go ahead and form a U-turn a d decide to keep it — so it’s going to be quite tricky managing it for them,” Leather said.

Analysts say financial markets are also closely watching steps in the new investigations centered on former leader Najib, accused of siphoning off billions of dollars from the 1MDB wealth fund. He firmly denies the charges. The U.S. Department of Justice alleges some $4.5 billion was misappropriated from the 1MDB, originally set up by Najib.

At least six countries, including the U.S., Singapore and Switzerland, are investigating the allegations of corruption. The new government has vowed to undertake fresh investigations into the case. Last weekend Malaysian immigration authorities refused Najib and his family the right to leave the country pending the investigations.

 

Unlike abolishing the sales tax, Leather predicts the corruption investigations will have a positive effect on the economy.

“Hopefully what it will do is it will bring to light a lot of the problems, institutional problems that have been holding Malaysia’s economy back over the past few years. It would have been shocking had Najib been able to steal this election,” he said.

But observers say a review of the multi-billion dollar mega projects, especially those undertaken by China, may have a major impact. The Chinese have invested more than $3.38 billion in Malaysia — and China is the leading foreign investor ahead of the U.S., Japan and Singapore. Chinese investments include manufacturing, real estate and sovereign wealth fund bonds.

China has also supported rail infrastructure in Malaysia that is linked to the One Belt One Road, a Beijing initiative that envisions building a network extending throughout Asia.

Analysts say there is a risk that investment — a key driver of growth — may fall sharply over the next two years.

Economic growth, with quarterly figures due this week, has been expanding at between 5.5 percent and 6 percent over the past year, aided by exports and foreign investment.

During the election campaign, Mahathir rallied against Chinese investment and promised a detailed review of projects involving foreign countries.

Pavida Pananond, a professor of international business at Bangkok’s Thammasat University, also predicts that Malaysia faces key economic challenges, especially after more than 60 years of government led by the monolithic United Malay National Organization coalition.

Pavida, in emailed comments to VOA, said it “remains to be seen how much political power can be remained from [the] economic sphere” after such a length of time.

“While the intention to scrutinize major projects and to investigate corruption should be well received, major changes will not come easily as the Malaysian economy and business have long been dominated by government linked or government supported corporations and entities,” she said.

On a positive note, she added, “the euphoric excitement toward changes, equality and transparency, should be welcome, as they bode well for what is needed in the new era of efficiency — and innovation-driven economy that Malaysia aspired to achieve.”

 

 

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Study: US Insurers Unprepared for Climate Change Disasters 

Most U.S. insurance companies have not adapted their strategies to address the dangers of climate change, making them likely to raise rates or deny coverage in high-risk areas, said a study released Tuesday.

With predictions of an above-average Atlantic hurricane season approaching, thousands of people could be unable to afford insurance protection or lose it altogether, said the Canadian research study published in the British Journal of Management.

Scientific consensus holds that climate change increases the intensity and frequency of extreme weather, from hurricanes to flooding. Last year, three record hurricanes struck the Gulf of Mexico and the Caribbean, causing billions of dollars’ worth of damage.

Yet insurance and reinsurance companies overwhelmingly continue to treat storms as “anomalous rather than correlated to climate change,” the study said.

“Insurers that ignore climate change will not put away enough money to cover their claims. To recoup those losses, they’ll have to raise rates or pull coverage from high-risk areas,” said lead author Jason Thistlethwaite, an assistant professor of environment and business at the University of Waterloo.

They will face whopping payouts associated with disasters, he said.

So long, coverage

“When this shift happens, thousands of people will lose coverage or it will be unaffordable,” he said.

Insured losses hit an all-time high between 2004 and 2014, according to a 2015 analysis by reinsurer Swiss Re.

Insurance companies use reinsurance to minimize their risk. 

But in 2015, only 3 percent out of a sample of 178 U.S. property insurers and reinsurers were taking into account climate change in corporate governance, underwriting and investment, the study found.

However, the number of companies factoring in climate change in at least one area of operation doubled to about three dozen from 2012 to 2015, it said.

With storm-related payouts soaring, insurance companies may go out of business or lose investors, Thistlethwaite said.

A shrinking insurance market will drive up costs to consumers, he said.

The researchers analyzed insurers in California, Connecticut, Minnesota, New York, Washington and New Mexico.

Less than a month away, the Atlantic hurricane season has been predicted to be “above average” by Colorado State University meteorologists. The season runs from June 1 to November 30.

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