Business this week

Business this week

Fiat Chrysler Automobiles confirmed that it was seeking a merger with Renault, a combination that would create the world’s third-largest car company behind Volkswagen and Toyota. FCA and Renault hope the merger will save cash to bolster investments in electric vehicles and self-driving cars. But Renault is also in a close partnership with Japan’s Nissan and Mitsubishi. That alliance has been strained since the arrest of Carlos Ghosn, its former boss, on charges of financial misconduct at Nissan (which he denies) and its future is now in question. See article.

The Huawei effect

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Alibaba was reportedly considering a second listing of its shares, but in Hong Kong rather than New York, where its $25bn stockmarket debut in 2014 remains the world’s biggest IPO. This time it is seeking to raise $20bn. Its decision to list in Hong Kong comes amid uncertainties over the future treatment of Chinese companies by the American authorities. Alibaba is using its profits from e-commerce to invest in artificial intelligence, quantum computing and other sensitive tech areas where America and China are competing aggressively. See article.

The latest skirmish in the trade war saw China threaten to limit supplies to America of rare earths, a group of 17 metals vital to fast-growing businesses such as electric cars but also widely used in the defence industry. China accounts for the vast bulk of rare-earth production; for some of the metals it is the sole producer. In 2010 it cut exports to Japan during a maritime dispute.

Maersk, the world’s biggest shipping company, gave a downbeat assessment of the effect of global-trade tensions on its industry. It estimates that container trade grew by 1.7% in the first quarter compared with the same period a year earlier. That is less than half the average for 2018.

Boeing’s 737 MAX aircraft is unlikely to return to service until at least August, according to the International Air Transport Association. A recent meeting of global safety-regulators avoided putting a date on a return for the MAX, which has been grounded following two crashes. IATA stressed that it will be regulators who make the final decision. See article.

The Food and Drug Administration approved a gene therapy developed by Novartis for treating spinal muscular atrophy in children. Priced at $2.1m, Zolgensma is the world’s most expensive drug, though it costs half the current treatment for SMA over the first ten years of a child’s life.

The first trial got under way in Oklahoma of a drugmaker facing claims that its marketing of painkillers fuelled the opioid crisis. Johnson & Johnson argues that it followed the law and has decided to fight the case. Its two former co-defendants settled with the state: Purdue Pharma for $270m and Teva, this week, for $85m. See article.

Germany’s unemployment rate rose to 5% in May, the first increase in five years. Most of the rise is explained by a change to the way the government counts the unemployed, but the labour ministry said that Germany’s slowing economy was also a factor.

Global Payments, which focuses on processing transactions, agreed to buy Total System Services, which specialises in clearing them, for $21.5bn. It is the third big merger in the payments industry this year.

Sky broadband

After delays because of bad weather, SpaceX launched the first batch of satellites that will eventually form its Starlink broadband-internet network. Its boss, Elon Musk, lauded the achievement, SpaceX’s heaviest payload yet. Not everyone was happy. Around 12,000 satellites will be deployed by the mid- 2020s. They operate in low orbit and are brighter than expected, prompting concerns from astronomers about obstructed telescope observations. See article.

Arun Jaitley stepped down as India’s finance minister because of ill health. Mr Jaitley oversaw many of the financial reforms introduced under the government of Narendra Modi, including a consumption tax.

Indian authorities stopped the founder of Jet Airways, Naresh Goyal, from flying out of the country. The government has promised to make it harder for the bosses of bankrupt companies to leave India following the case of Vijay Mallya. The boss of Kingfisher Airlines fled to London in 2016 and is fighting extradition.

In the process of finalising her divorce from Jeff Bezos, MacKenzie Bezos promised to give half of the $36bn she is receiving as part of the settlement to charity. Ms Bezos made the commitment to the Giving Pledge, an initiative started by Warren Buffett and Bill and Melinda Gates through which the super-rich can donate some of their fortune to worthy causes. A contemplative Ms Bezos noted that “we each come by the gifts we have to offer by…lucky breaks we can never fully understand.”

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Trump says Huawei dispute could be resolved in trade deal with China

Trump says Huawei dispute could be resolved in trade deal with China

U.S. President Donald Trump speaks about a range of subjects including failed infrastructure talks with Democratic lawmakers, as Agriculture Secretary Sonny Perdue listens during an event to discuss administration efforts to “support America’s farmers and ranchers” in the Roosevelt Room of the White House in Washington, U.S., May 23, 2019. REUTERS/Carlos Barria

WASHINGTON (Reuters) – U.S. President Donald Trump characterized Chinese telecommunications giant Huawei Technologies Co Ltd as very dangerous on Thursday but said its dispute with the United States could be resolved in a trade deal with China.

Citing national security concerns, Washington last week effectively banned U.S. firms from doing business with Huawei, the world’s largest telecoms network gear maker. The move prompted many tech companies around the world to fall in line.

Reporting by Diane Bartz; Editing by Susan Thomas

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U.S. aid program to use $16 billion to boost farmers, expand markets: USDA’s Perdue

U.S. aid program to use $16 billion to boost farmers, expand markets: USDA’s Perdue

WASHINGTON (Reuters) – The Trump administration on Thursday unveiled a $16 billion farm aid package to offset losses from a 10-month trade war with China and said payment rates to farmers would be determined by where they farm rather than what crops they grow.

The package, the bulk of which will be spent on direct payments, surprised growers and traders who had expected to learn separate payment rates for soybeans, hogs, corn and other crops in the Department of Agriculture (USDA) briefing.

Many farm groups welcomed the move, but called for a trade deal with China as soon as possible. Some Democrats have slammed the plan, calling it a ‘band-aid’ and said the county-based payment system could leave some farmers with reduced aid.

Farmers, a key constituency that helped carry U.S. President Donald Trump to his 2016 electoral win, have been among the hardest hit from a trade dispute with China, once a destination for more than 60 percent of U.S. soybean exports.

“The farmers have been attacked by China,” Trump said in a press conference about the aid package. “But the $16 billion of funds will … make clear that no country has veto on America’s economic and national security,” he said.

The trade dispute, which escalated this month after Washington and Beijing hiked tariffs on imports of each other’s goods, has left U.S. farmers sitting on record volumes of soybeans with China halting purchases.

USDA officials said on Thursday they will roll out $14.5 billion in direct payments in three separate tranches with the first one planned for late July.

“The package we are announcing today ensures that farmers will not bear the brunt of those trade practices by China or any other nations,” Secretary of Agriculture Sonny Perdue said. “While farmers would tell you they’d rather have trade not aid, without the trade … they’re going to need some support.”

China, the world’s top soybean importer, curbed purchases of U.S. soy last year when Trump imposed tariffs on Chinese goods, prompting China to retaliate with tariffs on U.S. soy, pork, corn and other products.

An imminent trade deal between Washington and Beijing seems unlikely as the trade tensions between the world’s top two economies rose after U.S. placed China’s Huawei Technologies on a trade blacklist last week, triggering sharp protest from China.

Perdue also said the second and third tranches, with exact amounts yet to be decided, will be dependant on the progress in the trade talks and whether the U.S. will get a deal with China. The total package also includes $1.4 billion of support through food purchases and $100 million allocated to development of foreign markets.

PLANTING DECISIONS

Perdue said the USDA has redesigned last year’s aid program of up to $12 billion based on feedback. The new package therefore will have a single payment rate per county, calculated by the damages in that area, instead of a rate for every commodity across the nation.

“Those per acre payments are not dependent on which of those crops are planted in 2019, and therefore will not distort planting decisions,” USDA said in a statement.

Chicago Board of Trade corn futures turned lower and soybean futures extended earlier losses after the announcement.

The county-based mechanism for the aid payments have triggered a heated debate on whether it would impact planting decisions. Some analysts said the trade aid package could encourage farmers to try to seed their crops in order to qualify for the relief despite overly wet fields that have stalled planting this spring.

Jim Hefner, an Ohio farmer who has not been able to start planting due to heavy rain, said the plan could cause him to alter his initial acreage plans, however.

“I guess we would make more of an effort to get something planted,” Hefner said. “We may forgo corn and plant soybeans.”

FILE PHOTO: Justin Mensik, corn and soybean farmer, attends to his cattle at his farm in Morse Bluff, Nebraska, U.S. March 22, 2019. REUTERS/Humeyra Pamuk/File Photo

Some farmers remain skeptical.

Dan Henebry, a corn and soybean farmer in Buffalo, Illinois, said the payments are directed at rural areas that helped propel Trump into office. Henebry, who voted for a third-party candidate in 2016, said he wants the president to end the trade war with China.

“If we solve the issue, we wouldn’t need this,” he said about the aid package.

Additional reporting by Jeff Mason and Susan Heavey and Tom Polansek, Mark Weinraub, P.J. Huffstutter, Karl Plume in Chicago, Editing by Chizu Nomiyama, Jeffrey Benkoe and Susan Thomas

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U.S.-China trade dispute continues with no sign of resolution – The Globe and Mail

U.S.-China trade dispute continues with no sign of resolution – The Globe and Mail

The United States and China remain locked in one of the largest trade wars in history with no sign of resolution as talks in Washington failed to reach a deal.

U.S. President Donald Trump jacked up tariffs on Friday to 25 per cent from 10 per cent on US$200-billion worth of Chinese goods – on top of US$50-billion of products subject to the same levies since last year – in a key fight of his nationalistic economic agenda.

China vowed retaliation, even as Vice-Premier Liu He hunkered down with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin for a second straight day in a bid to break the impasse. But there were few concrete signs of progress.

“They were constructive discussions. That’s all I can say,” Mr. Mnuchin said as he left Mr. Lighthizer’s office near the White House.

In early evening, Mr. Lighthizer announced that he would start working on a plan to extend tariffs even further, to cover all US$539-billion worth of Chinese imports.

The gulf separating the two sides appears vast. The United States wants Beijing to change laws on intellectual property, stop obliging American companies to turn over trade secrets and get rid of subsidies to Chinese companies. The United States also wants the right to keep its tariffs in place until it is certain China is complying with the deal, but for China to give up the right to impose tariffs on the United States in retaliation.

China had previously made concessions on at least some of these measures, the White House has said, before changing its mind last week and reneging on its promises. This prompted Mr. Trump to order the tariff hike.

In a series of tweets on Friday, Mr. Trump made clear that he believes tariffs are good economic policy and not merely a useful negotiating tactic. He also falsely claimed that their cost is paid by China. In fact, U.S. tariffs on China are paid by American companies that import Chinese goods. Often, U.S. importers pass that cost on to American consumers in the form of higher prices. Instances in which Chinese companies compensate American businesses for the cost of the tariffs are believed to be rare.

“Talks with China continue in a very congenial manner − there is absolutely no need to rush − as Tariffs are NOW being paid to the United States by China of 25% on 250 Billion Dollars worth of goods & products,” Mr. Trump tweeted. “These massive payments go directly to the Treasury of the U.S.”

The President said he planned to use the money from tariffs to buy American agricultural products and give the food to low-income countries. The administration did not release any specific plan for making this happen.

The President also spoke Friday with Prime Minister Justin Trudeau about the trade negotiations and “relations with China,” according to a summary released by Mr. Trudeau’s office. Ottawa has been agitating for Washington to pressure China to release two Canadian citizens detained since December in apparent retaliation for police in Vancouver serving an American arrest warrant on Huawei CFO Meng Wanzhou.

The tariffs cover a vast swath of goods, ranging from auto parts to meat to CD players to sports equipment.

The average American family of four will pay US$767 more annually in increased costs because of the tariffs, and the economy will lose 934,000 jobs, according to one estimate by The Trade Partnership, a Washington consulting company. The same study found that covering all Chinese exports with tariffs would raise those numbers to US$2,300 and 2.1 million.

After the initial round of tariffs last year, China retaliated with levies on U.S. goods, particularly food. This ensured the fallout from the battle between the world’s two largest economies would be particularly acute across the Trump-voting American heartland.

Bret Davis, who farms soybeans in central Ohio, said the trade war has pushed prices down from US$10.38 a bushel last year to $8 now – a loss of $200,000 in revenue for his operation. He’s had to cope by deferring purchases of new equipment, growing still-profitable crops of wheat and corn and relying on savings built up over 40 years of farming.

“It’s getting kind of serious now,” Mr. Davis, secretary of the American Soybean Association, said in an interview. “You tighten your belt. It’s a trying time here on the farm.”

Tiffany Zarfas Williams, third-generation owner of the Luggage Shop of Lubbock in west Texas, said roughly 85 per cent of the bags and briefcases she sells are made in China. The 10-per-cent tariff increase last year meant a price hike to most goods in her store; sales are already down 8 per cent so far this year.

“We’re Americans first and we certainly want to respect our country and we want trade with China to be addressed, and want that to be fair and enforceable … it’s just difficult for a small store owner to have so much of that impact on what we sell and what we do,” she said in a conference call with reporters organized by the National Retail Federation.

Trade experts largely agree that China has behaved badly by unfairly competing through flooding global markets with heavily subsidized products and forcing foreign companies to turn over their trade secrets as a condition of doing business. But many argue there are other ways to deal with these problems.

Inu Manak, a trade scholar at the libertarian Cato Institute think tank, said one option would be for the United States to sue China at the World Trade Organization. Joining the Trans-Pacific Partnership, a free-trade deal covering 11 countries in east Asia and the Americas meant to counter Chinese influence, would be another idea.

Ms. Manak said she could not think of another trade war of this size.

“This is a shock-and-awe approach,” she said. “It’s unprecedented. It’s something that’s never been done to this scale.”

Jorge Guajardo, a former Mexican ambassador to China, said he agrees with using tariffs to push China into trade concessions. But he said Mr. Trump’s love of tariffs for their own sake, and the fact that he would like to keep them in place even if China makes a deal, gives Beijing little incentive to negotiate.

What’s more, Mr. Guajardo said, Mr. Trump had hurt his own case by simultaneously fighting trade wars with Canada, Mexico and the European Union, which remain subject to American steel and aluminium tariffs.

“China keeps promising reform, keeps promising it will play by the rules of the game, but it never does. I can’t think of any way to confront China other than this,” Mr. Guajardo said. “The U.S. could accomplish so much if it had brought other countries on board.”

A similar thought had occurred to Skip West, owner of Maxsa Innovations in Fairfax Station, Va.

Maxsa designs and distributes a suite of electronics manufactured in China, including laser guidance systems for parking cars and heated blankets that plug into car cigarette lighters. When selling goods through large retailers, Mr. West said, he is not allowed to raise prices to match the tariffs, meaning the costs come straight out of Maxsa’s bottom line.

Mr. West has long done business in Canada, as well, and said he couldn’t understand why Mr. Trump took aim at the country, along with other free-market democracies, instead of enlisting them as allies in his push against China.

“Why did we piss off our trading partners instead of having them as a united front?”

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The close: Global stocks bounce back as Trump downplays U.S.-China trade fight – The Globe and Mail

The close: Global stocks bounce back as Trump downplays U.S.-China trade fight – The Globe and Mail

North American and European stocks regained ground on Tuesday after President Donald Trump downplayed the U.S.-China trade war as “a little squabble” a day after a spike in tensions between the world’s two largest economies rattled financial markets.

Fears that the United States and China were spiraling into a fiercer, more protracted trade dispute that could derail the global economy have shaken investors in the past week. On Monday, MSCI’s gauge of stocks across the globe posted its biggest one-day decline in over five months and touched a two-month low. The MSCI index gained 0.49 per cent on Tuesday.

Trump insisted trade talks with China had not collapsed, while China’s Foreign Ministry spokesman said the two sides had agreed to continue pursuing relevant discussions. This followed Washington’s decision last week to hike its levies on $200 billion of Chinese imports to 25 per cent from 10 per cent.

On Wall Street, technology stocks led the rebound but major indexes finished below their session highs. The Dow Jones Industrial Average rose 207.06 points, or 0.82 per cent, to 25,532.05, the S&P 500 gained 22.54 points, or 0.80 per cent, to 2,834.41 and the Nasdaq Composite added 87.47 points, or 1.14 per cent, to 7,734.49.

“It’s a nice bounce-back certainly after yesterday for sure,” said Gary Bradshaw, portfolio manager of Hodges Capital Management in Dallas. “It seems like President Trump has been more jovial and more upbeat in making comments that hopefully will get this trade situation squared away. I think that’s got investors buying the dip.”

Canada’s main stock index rose on Tuesday, following a three-day slump, as upbeat comments from Washington and Beijing calmed nerves over a further escalation in their trade war, which has kept global financial markets on edge.

The Toronto Stock Exchange’s S&P/TSX Composite index was unofficially up 91.12 points, or 0.56 per cent, at 16,284.53.

Eight of the index’s 11 major sectors were higher, led by the energy and health care sectors, which climbed 2.1 per cent and 3.1 per cent, respectively.

The financials sector gained 0.5 per cent, while the industrials sector rose 0.9 per cent.

The Canadian dollar strengthened against its U.S. counterpart on Tuesday as oil prices rose and investors grew more optimistic on U.S.-China trade talks, but the currency stuck to a narrow range ahead of Canada’s inflation report on Wednesday.

Canada runs a current account deficit and exports many commodities, including oil, so its economy could be hurt by a slowdown in the global flow of capital or trade.

“I think the slight uplift in oil today has helped (the loonie),” said Amo Sahota, director at Klarity FX in San Francisco. “What I think is more significant when focusing just on the loonie is how will Canadian inflation come out tomorrow?”

Canada’s inflation report for April is due on Wednesday, which could help guide expectations for Bank of Canada interest rate policy. Money market see a nearly 40-per-cent chance of a rate cut by the end of the year.

Domestic data on Tuesday showed that home prices failed to rise for the eighth consecutive month in April.

The Canadian dollar was trading 0.1 per cent higher at 1.3466 to the greenback, or 74.26 U.S. cents. The currency, which has advanced 1.3 per cent since the start of the year, traded in a narrow range of 1.3457 to 1.3488.

The pan-European STOXX 600 index rose 1.01 per cent.

The U.S. benchmark S&P 500 recorded its biggest one-day loss since Jan 3 on Monday, after China struck back in the trade dispute by saying it would impose higher tariffs on a range of U.S. goods.

“It’s likely that it will take markets a day or two to adjust to this increased rhetoric around trade, because markets up until a week ago thought that trade had been put to bed,” said Carol Schleif, deputy chief investment officer with Abbot Downing in Minneapolis.

In another sign trade tensions are hurting the economic outlook, Germany’s ZEW institute said investors’ mood had deteriorated unexpectedly in May.

In currencies, the dollar index, which measures the greenback against a basket of currencies, rose 0.2 per cent, with the euro down 0.15 per cent to $1.1206.

The euro slid after Italy’s deputy prime minister said the country was ready to break European Union budget rules if necessary to spur employment. Italian government bond yields rose sharply.

Benchmark U.S. 10-year Treasury notes last fell 3/32 in price to yield 2.4139 per cent, from 2.405 per cent late on Monday.

Oil prices rose over 1 per cent on Tuesday after top exporter Saudi Arabia said explosive-laden drones launched by a Yemeni-armed movement aligned to Iran had attacked facilities belonging to state oil company Aramco.

That move higher comes as the market waits for a report from the American Petroleum Institute (API), an industry group, which is expected to show U.S. crude stockpiles fell by 800,000 barrels last week, their second decline in a row, according to analysts in a Reuters poll.

The poll was conducted ahead of weekly reports from API at 4:30 p.m. EDT on Tuesday and the U.S. Energy Information Administration (EIA) at 10:30 a.m. EDT on Wednesday.

Brent futures gained $1.01, or 1.4 per cent, to settle at $71.24 a barrel, while U.S. West Texas Intermediate crude gained 74 cents, or 1.2 per cent, to $61.78.

That was the highest settle for Brent since May 6 and WTI since May 8 and caused the closing premium of Brent over WTI to rise to a nine-week high.

Saudi Arabia said armed drones had struck two oil pumping stations in the kingdom on Tuesday in what it called a “cowardly” act of terrorism two days after Saudi oil tankers were sabotaged off the coast of the United Arab Emirates.

Reuters

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Swapping water for CO2 could make fracking greener and more effective – Phys.org

Swapping water for CO2 could make fracking greener and more effective – Phys.org

Swapping water for CO2 could make fracking greener and more effective
A shale sample ready for fracturing with CO2. Credit: Xuehang Song

Scientists at the Chinese Academy of Sciences and China University of Petroleum (Beijing) have demonstrated that CO2 may make a better hydraulic fracturing (fracking) fluid than water. Their research, published May 30 in the journal Joule, could help pave the way for a more eco-friendly form of fracking that would double as a mechanism for storing captured atmospheric CO2.

Fracking is a technique used to extract resources from unconventional reservoirs in which fluid (usually water mixed with sand, foaming agents, biocides, and other chemicals) is injected into the rock, fracturing it to release the resources within. Of the approximately 7-15 million liters of fluid injected, 30%-50% remains in the after extraction ends. Its high water consumption, , and frequent production issues have led to concerns about fracking among both industry experts and environmental advocates.

“Non-aqueous fracturing could be a potential solution to circumvent these issues,” says Nannan Sun, a researcher in the Shanghai Advanced Research Institute at the Chinese Academy of Sciences. “We chose CO2 fracturing from a range of options because the process includes multiple benefits. However, we were still lacking a fundamental understanding of the technology, which is greatly important for its further development and deployment.”

Benefits of CO2 fracturing include eliminating the need for a hefty water supply (which would make fracking viable in arid locations), reducing the risk of damage to reservoirs (as often happens when aqueous solutions create blockages in the rock formation), and providing an underground repository for captured CO2.

However, CO2 is not likely to become commonly used as a fracking fluid unless it is more effective than water at resource production. To investigate the differences between CO2 and water as fracturing fluids on a , Sun and his team collected shale outcrops from Chongqing, China and fractured them with both fluids. They found that CO2 outperformed water, creating complex networks of with significantly higher stimulated volumes.

“We demonstrated that CO2 has higher mobility than , and, therefore, the injection pressure can be better delivered into the natural porosity of the formation,” says Sun. “This changes the mechanism by which the fractures are created, generating more complex fracture networks that result in more efficient shale gas production.”

While the researchers believe this hydraulic fracturing technology will be scalable, its large-scale development is currently limited by CO2 availability. The cost of CO2 captured from emission sources is still prohibitively expensive to make CO2 an industry-wide fluid replacement.

The team also notes that once CO2 has been injected into the fracture, it acquires a low viscosity that inhibits it from effectively transporting sand to the fractures. Since the sand is intended to prop open the fractures while shale gas is harvested, it is critical that scientists learn to improve the fluid’s viscosity—but the team is not yet sure how to do so while keeping costs low and minimizing the environmental footprint.

As next steps, the researchers plan to study the limits of CO2 fracturing technology in order to better understand how it can be used. “Further investigations are needed to identify the effects of type of reservoirs, geomechanical properties and conditions, CO2 sensitivity of the formation, and so forth,” says Sun. “Additionally, cooperation with industries will be carried out to push forward the practical deployment of the technology.”



More information:
Joule, Song, Guo, and Zhang et al.: “Fracturing with Carbon Dioxide: From Microscopic Mechanism to Reservoir Application” https://www.cell.com/joule/fulltext/S2542-4351(19)30216-8 , DOI: 10.1016/j.joule.2019.05.004

Journal information:
Joule





Citation:
Swapping water for CO2 could make fracking greener and more effective (2019, May 30)
retrieved 31 May 2019
from https://phys.org/news/2019-05-swapping-co2-fracking-greener-effective.html

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As trade war heats up, China threatens clampdown on “rare earths” – CBS News

As trade war heats up, China threatens clampdown on “rare earths” – CBS News

“Rare earths” could help China in trade war

  • China state media reports suggest the country is considering limiting exports of “rare earths” as the trade war with the U.S. escalates.
  • Rare earths are a group of 17 elements used in everything from mobile phone cameras and automobile catalytic converters to wind turbines and MRI machines.
  • Rare earths aren’t rare per se, but their distribution in the planet’s crust makes processing them difficult.
  • China dominates the global supply of rare earths and accounted for almost 80% of exports to the U.S. last year.

As trade tensions between Washington and Beijing intensify, China’s state media on Wednesday suggested it may play a new card — restricting U.S. access to “rare earths,” the chemical elements that are widely used in everything from mobile phones and other consumer electronics to wind turbines, MRI machines and military hardware.

China dominates global exports of the 17 elements that constitute rare earths, accounting for almost 80 percent of America’s imports last year, according to the U.S. Geological Survey (USGS) and Bank of America Merrill Lynch analysts. Other countries that supply rare earths to the U.S. include Australia, Estonia, France and Japan.

Here’s a look at what rare earths are and why they could play an important role in the ongoing trade war between the U.S. and China.

Rare earths aren’t that rare

The 17 elements defined as rare earths aren’t as rare as their moniker suggests — gold, copper and platinum are more abundant and easier to mine, for instance. By contrast, rare earths are ubiquitous in modern life, and their use is likely to spread as technology advances. 

Cerium, used in compounds for catalytic converters in automobiles, is the most abundant and is more common in the earth’s crust than copper or lead, according to the USGS.

The glass industry is the largest consumer of rare earths, which are used for polishing, additives for color and other special optical properties. One rare earth element, lanthanum, makes up as much as 50 percent of digital camera lenses, including cell phone cameras.

rare-earths.jpg

Irina Ivanova/CBS MoneyWatch


So where does the name come from? 

Rare earths don’t get their name because of their scarcity; rather, they got that label in the 18th and 19th centuries because of their relative imperviousness to heat compared with other mined materials.

Rare earths are found in such low concentrations around the world that they are harder to extract and refine, and not always found in commercially mineable quantities. As a result, a handful of countries account for the bulk of extraction, including China, Australia, Japan and Malaysia.

China, which has roughly 40 percent of the global reserves of rare earths, accounted for almost 80 percent of U.S. imports of the elements last year, according to Bank of America Merrill Lynch. One reason China is the global leader — it’s been pulling rare earths out of the ground for a long time. The country spent a century perfecting the refining method for extracting and refining rare earths in large enough quantities to keep costs manageable. 

China’s not-so-veiled threat

Chinese president Xi Jinping last week visited the country’s biggest rare-earths producer in an appearance that was broadcast on Chinese national television. The visit followed a U.S. crackdown on technology giant Huawei by President Donald Trump’s administration earlier this month, and was interpreted by experts as a signal that the Chinese government is weighing restrictions on rare-earth exports.

Huawei steps up legal battle over U.S. ban in Texas court

China will try to meet global rare-earths demand as “long as they are used for legitimate purposes,” stated a commentary in the Xinhua news agency, a mouthpiece for Beijing. But later it added that “if necessary, China has plenty of cards to play.”  

Hu Xijin, editor in chief of China’s Global Times newspaper, was blunter, saying in a tweet on Tuesday that the country is “seriously considering restricting rare exports to the U.S.”

JJ Kinahan, chief marketing strategist at TD Ameritrade, said China’s threat to use rare earths as a weapon against the U.S. is worrisome. “What it shows to me is that there is a little bit of a worsening relationship here,” he said. “They went pretty deep in the bag to throw out something that would hurt.”    

A complete ban is impractical

Despite China’s dominance in producing rare earths, implementing a total ban on exports to the U.S. might not be in its favor. For one, cutting off supplies of a critical material used in products around the world could undermine Beijing’s efforts in recent years to portray itself as a responsible actor on the global stage — and make it harder to bash the Trump administration for its hardball stance on trade. 

Meanwhile, a Chinese ban risks inviting other countries to rev up rare-earths production. The last U.S. source for rare earths, the Mountain Pass Quarry in California, closed in 2015. The U.S. could shift demand for some metals to places like Malaysia or re-start domestic processing, although that could prove difficult because of regulations designed to prevent widespread environmental damage

China tariffs: Here’s how much more your shoes might cost

If China does clamp down, they are likely to be selective in which elements to target because the country wants to be seen as playing by World Trade Organization rules, said Arthur Kroeber, head of research at Gavekal Economics and editor-in-chief of China Economic Quarterly, on a call with clients this week. China’s goal is to paint the U.S. as a “lawless actor” that disrupts economic growth, he said.

“I really think that they have a problem [in] that none of the options are very good and all of them involve very significant costs to China,” Kroeber said. “So if they’re going to do any of them they have to do them extremely carefully, and I think quite selectively.”

The WTO would disapprove

Still, it wouldn’t be the first time China tried to use its dominance in rare earths as part of a trade conflict. China blocked some rare-earth exports to Japan after a maritime dispute in 2010. That led some countries to search for alternatives — and a protest by Japan with the WTO, which ruled in 2014 that the restrictions on rare-earth exports were illegal.

It also led some companies to cut their use of rare earths and to find alternatives for things like the element dysprosium, used in electric car magnets, the Bank of America analysts noted.

The Associated Press contributed to this report.

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How 5G is the key to protecting US interests – C4ISRNet

How 5G is the key to protecting US interests – C4ISRNet

One of the greatest assets to United States national security is our global dominance in the technology sector. For decades, the United States has led in the development of next-generation technology used by civilians and the military alike.

President Trump signed an executive order May 15 banning any company that poses “an unacceptable risk” to the security of our nation’s telecommunications networks from doing work in the United States. The Department of Commerce followed suit, preventing “American technology from being used by foreign-owned entities in ways that potentially undermine U.S. national security or foreign policy interests.” These moves, while political in nature, were critically important to preserving America’s dominance in the tech sector and providing secure communications networks here at home and abroad in allied nations.

Wireless communications have revolutionized the way we do businesses, share intelligence and conduct military operations. The introduction of 4G brought with it the fastest wireless speeds commercially available. Coming on the market in 2010, it ushered in a new wave of technological innovations for both civilians and military powers. On deck is 5G, a network anticipated to be 100 times faster than 4G that will completely revolutionize the way we communicate.

5G will impact everything light touches — manufacturing, traffic, trade and, of course, intelligence and national security. That is why the 5G network here in the United States and with our Five Eyes partners — Australia, Canada, New Zealand and the United Kingdom — must be safe, secure and built by trusted vendors. President Trump’s move to ban Chinese telecommunications equipment ensures 5G in the United States will be the gold standard for performance and security. Now we must work with our allies in the Five Eyes to eliminate the risk China poses abroad.

The rise of Huawei and other Chinese tech firms like ZTE in global recognition is a part of a “Long March,” a well-coordinated effort by the Chinese government to become the world’s dominant economic superpower. Like most companies in China, Huawei is state-owned, receiving state-sponsored research and development grants that have taken the company from a small telecommunications company in 2009 to a global supplier today. These grants allow Huawei to offer their services at below-market costs, often at rates no other company can match.

Our allies have a complicated relationship with Huawei that is impacting how 5G will roll out abroad. Across Europe and other nations, Huawei equipment was used to build 4G networks, which has created a “lock-in” for 5G since the way networks have previously been designed. Only a Huawei 4G network can communicate with a Huawei 5G network. This relationship needs to change to stop Huawei’s global expansion into 5G.

Huawei’s biggest competitors are Ericsson and Nokia — trusted partners leading the way in secure networking absent backdoors and a state-sponsored overlord tied to an oppressive Communist regime. Now that the president has moved to ban Huawei and others here in the United States, we must work with our allies to force interoperability in Huawei 4G networks so nations can begin talks with Ericsson and Nokia to complete their 5G build out.

To push U.S. network manufacturers like Qualcomm and Cisco to the top of the heap the United States should provide grants and scholarships to accelerate research and development and further promote the global expansion of U.S. technology. Global policymakers in the telecommunications vertical must adopt standards such as interoperability that ensure that multiple vendors can compete and can be used in networks.

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Today, international standards bodies like the Open Radio Access Network (O-RAN) and Open Network Automation Platform (ONAP) are working to ensure interoperability in 5G networks. The United States and our allies need to help foster continued conversations from these groups so that 5G is open to multiple vendors not just the Chinese.

While New Zealand and Australia have joined the United States in banning Huawei, nation’s such as the United Kingdom are still toying with the idea of letting them in. Prime Minister Teresa May has expressed interest in allowing Huawei in the “non-core” functions of the 5G network, permitting them at the Radio Access Level — antennas and transmitters. This would be a misstep, while the core is the central brain of the network, the Chinese would have a way into a network even if they are excluded from the core.

The Five Eyes have been a crucial part of stopping the global expansion of terrorism and cybercrime. The U.S. relationship with these countries is critical to protecting our citizens at home and our globally deployed service members. Our intelligence community will not be able to trust the information traveling on networks left open to Chinese state surveillance. No U.S. partner should be able to contract with a Chinese telecommunications company to build 5G. Among allies and partners, disagreement is healthy. We can not disagree here.

James “Spider” Marks is a retired U.S. Army major general and president of the Marks Collaborative corporate advisory firm.

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Fox host, Chinese state TV anchor face off over trade war

Fox host, Chinese state TV anchor face off over trade war

BEIJING (Reuters) – A Chinese state TV anchor and a host from Fox Business, whose sparring over the U.S.-China trade war has been avidly followed on Chinese social media, brought their duel to the American cable network for what turned out to be a respectful encounter.

FILE PHOTO: Flags of U.S. and China are displayed at American International Chamber of Commerce (AICC)’s booth during China International Fair for Trade in Services in Beijing, China, May 28, 2019. REUTERS/Jason Lee/File Photo

The showdown between Liu Xin of state-run English channel CGTN and Fox Business Network host Trish Regan was aired on Wednesday evening in the United States but was not shown live on TV in China, though it had been hyped by state and social media.

Many people in China followed the debate on state broadcaster CCTV’s blog and some watched via livestream, while others on social media were clamoring for the full video.

The rhetoric out of Beijing has become more strident since Washington moved this month to raise tariffs on Chinese imports and blacklist tech giant Huawei Technologies Co Ltd.

The 16-minute segment began with Liu correcting Regan to say that she was not a member of the Chinese Communist Party and was speaking for herself as a CGTN journalist. Otherwise, there was little in the way of fireworks.

Liu agreed that intellectual property theft was a problem, although not only in China, and that there was a “consensus” in China that “without the protection of IP rights, nobody, no country, no individual, can be strong and can develop itself.”

Regan asked Liu to define state capitalism, and Liu described China’s system of “socialism with Chinese characteristics, where market forces are expected to play the dominating or the deciding role in the allocation of resources.”

Liu said state-owned enterprises play “an important but increasingly smaller role, maybe, in the economy”, adding that the private sector accounted for 80% of Chinese employment.

Washington argues that Huawei, the world’s largest maker of telecoms network gear, is linked to the government and therefore poses a security risk, which Huawei disputes, arguing that it is owned by employees.

Key Chinese industries such as energy, telecoms and banking are dominated by state controlled firms, and foreign players are excluded from some sectors, or forced to form joint ventures.

INTERRUPTIONS

Liu had said on Twitter that because of broadcasting rights issues, CGTN would not be able to show the debate live, though it would “report on it closely”.

A Fox News spokesperson said a free live stream of the debate would be available on the Fox Business Network website and the entire segment would be available after the broadcast.

The internet in China is heavily censored and many major foreign media sites are blocked.

Liu was connected by video link to the Fox studio from Beijing and delays, which Regan had warned about, meant the two sometimes talked over each other.

Chinese internet users generally thought Liu performed well, but the top hashtag on the Twitter-like service Weibo, garnering more than 130 million views, was “CGTN host Liu Xin has been interrupted by Trish Regan three times.”

Some were annoyed they could not watch it live.

“Before the debate, everyone was noisily promoting it any which way. Yet, the livestream wasn’t a real livestream, it became a live blog,” said user Wangyuanwai, who had been unable to watch the debate live.

The feud between Liu and Regan had started on air and was amplified on Twitter and taken up by Chinese social media.

Liu had been critical of Regan’s China coverage, leading Regan to call on Liu to have an honest debate.

“She’s so sure of U.S. victimhood, so indignant that her eyes practically spit fire, yet in carefully analyzing her words, it’s all emotion and accusation, supported with little substance,” Liu said of Regan on CGTN.

Regan responded this week on air and on Twitter: “They’re launching a full-scale information war against the United States of America, and their latest target is me.”

CCTV and the People’s Daily newspaper had shared news of the debate on Weibo, while other Chinese media outlets had joined in, some even circulating footage of Liu in an English speech competition from 23 years ago.

Chinese state media has opened the floodgates to patriotic commentaries since the latest U.S. tariff hike and there has been a surge in internet chatter about the trade war during the past few weeks.

Reporting by Tony Munroe, Michael Martina and Huizhong Wu; Editing by Simon Cameron-Moore and Darren Schuettler

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Factbox: U.S. companies warn Trump’s tariffs could hit results

Factbox: U.S. companies warn Trump’s tariffs could hit results

(Reuters) – A host of U.S. consumer companies have warned that costs related to tariffs on goods imported from China would weigh on their results.

FILE PHOTO: U.S. and Chinese flags are seen in front of a U.S. dollar banknote featuring American founding father Benjamin Franklin and a China’s yuan banknote featuring late Chinese chairman Mao Zedong in this illustration picture taken May 20, 2019. REUTERS/Jason Lee/Illustration/File Photo

The United States increased tariffs on $200 billion in Chinese imports to 25% from 10% last week.

U.S. President Donald Trump has also threatened an additional round of tariffs on $300 billion that would cover nearly everything imported from China to the United States.

BEST BUY CO INC: “The impact of tariffs at 25% (proposed to be enacted) will result in price increases and will be felt by U.S. consumers,” CEO Hubert Joly said.

HOME DEPOT INC: If the latest round of tariffs hold, it would increase annual cost of goods sold by $1 billion, on top of a $1 billion hit that the home improvement chain has taken from tariffs imposed in 2018.

The impact from new tariffs would still be manageable as it would make up less than 1% of total sales, said Edward Decker, executive vice president of merchandising.

J.C. PENNEY CO INC: “We do anticipate a more meaningful impact on both our private and national brands if the potential fourth tranche of tariffs does go into effect,” CEO Jill Soltau said.

KOHL’S CORP: Tariffs will primarily hit China-sourced merchandise in home and accessories business but apparel and footwear are not impacted at this point.

The department store chain said about 20% of its merchandise is sourced from China.

WALMART INC: “Higher tariffs will lead to higher prices for customers,” CFO Brett Biggs told Reuters in an interview last week. He said the company, known for lower prices, will try to minimize the effect of the levies on the company and its customers.

MACY’S INC: “The increase of the third tranche from 10% to 25% on May 10 does have some impact, particularly on our furniture business. However, the team anticipates that this can be mitigated,” CEO Jeffrey Gennette told investors on a conference call on Wednesday.

“It’s too early to comment on what we think that’s going to mean in terms of potential price increases and what categories are going to be more affected than others,” he said.

RALPH LAUREN CORP: “The tariffs enacted to date have a limited impact on our business, but our teams are prepared for multiple scenarios and have accelerated the diversification of our supply chain to mitigate the long-term impact of any potential tariff outcomes,” CFO Jane Nielsen told investors on a conference call last week.

DEL MONTE FOODS INC: “It’s not just tariffs. Transportation costs are up, labor costs are up,” CEO Greg Longstreet told Reuters at a conference in New York last week. “It’s an inflationary environment. A lot of that’s going to have to be passed on. The consumer is going to have to pay more for a lot of critical goods.”

Del Monte has already raised prices on many products, including mandarin oranges that it imports from China, and will do so again with tariffs rising, he said.

Reporting by Nandita Bose, Siddarth Cavale, Rod Nickel, Aishwarya Venugopal and Uday Sampath Kumar; Editing by Anil D’Silva and Arun Koyyur

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