The United States has formally lifted a crippling ban on exports to the Chinese telecommunications giant ZTE. 

The Commerce Department said Friday that it had removed the ban after ZTE deposited $400 million in a U.S. bank escrow account as part of a settlement reached last month.

ZTE has already paid a $1 billion fine that is also part of its settlement with the U.S. government. 

“While we lifted the ban on ZTE, the department will remain vigilant as we closely monitor ZTE’s actions to ensure compliance with all U.S. laws and regulations,” Commerce Secretary Wilbur Ross said in a statement. He described the terms of the deal as the strictest ever imposed in such a case.

The Chinese company is accused of selling sensitive technologies to Iran and North Korea, despite a U.S. trade embargo. 

In April, the Commerce Department barred ZTE from importing American components for its telecommunications products for the next seven years, practically putting the company out of business. However, Trump later announced a deal with ZTE in which the Chinese company would pay a $1 billion fine for its trade violations, as well as replace its entire management and board by the middle of July.

Lawmakers from both parties have criticized Trump’s efforts and have taken steps to block the White House’s efforts to revive ZTE. The Senate passed legislation last month included in a military spending bill that would block ZTE from buying component parts from the United States. That legislation now moves to a joint committee of House and Senate members who will decide the fate of the ZTE measure in a compromise defense bill. 

Most of the world first heard of the dispute over ZTE in May after one of Trump’s tweets. “President Xi of China and I are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump said.
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The United States has formally lifted a crippling ban on exports to the Chinese telecommunications giant ZTE. 

The Commerce Department said Friday that it had removed the ban after ZTE deposited $400 million in a U.S. bank escrow account as part of a settlement reached last month.

ZTE has already paid a $1 billion fine that is also part of its settlement with the U.S. government. 

“While we lifted the ban on ZTE, the department will remain vigilant as we closely monitor ZTE’s actions to ensure compliance with all U.S. laws and regulations,” Commerce Secretary Wilbur Ross said in a statement. He described the terms of the deal as the strictest ever imposed in such a case.

The Chinese company is accused of selling sensitive technologies to Iran and North Korea, despite a U.S. trade embargo. 

In April, the Commerce Department barred ZTE from importing American components for its telecommunications products for the next seven years, practically putting the company out of business. However, Trump later announced a deal with ZTE in which the Chinese company would pay a $1 billion fine for its trade violations, as well as replace its entire management and board by the middle of July.

Lawmakers from both parties have criticized Trump’s efforts and have taken steps to block the White House’s efforts to revive ZTE. The Senate passed legislation last month included in a military spending bill that would block ZTE from buying component parts from the United States. That legislation now moves to a joint committee of House and Senate members who will decide the fate of the ZTE measure in a compromise defense bill. 

Most of the world first heard of the dispute over ZTE in May after one of Trump’s tweets. “President Xi of China and I are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump said.
…

The White House released a report Thursday contending that the United States’ war on poverty — a drive that started over 50 years ago to improve the social safety net for the poorest citizens of the world’s largest economy — is “largely over and a success,” contrasting with other reports on the nation’s poor.

The report, authored by President Donald Trump’s Council of Economic Advisers, called for federal aid recipients to be pushed toward work requirements.

The report says poverty, when measured by consumption, has fallen by 90 percent since 1961. It also says that only 3 percent of Americans currently live under the poverty line.

“The timing is ideal for expanding work requirements among non-disabled working-age adults in social welfare programs,” according to the report. “Ultimately, expanded work requirements can improve the lives of current welfare recipients and at the same time respect the importance and dignity of work.”

U.N. report

The council’s report contrasts with a U.N. report on poverty in the U.S. that was released last month. That report said about 12 percent of the U.S. population lives in poverty, and that the U.S. “leads the developed world in income and wealth inequality.”

Phillip Alston, a U.N. adviser on extreme poverty and the author of the report, wrote in December 2017 that he believed Trump and his administration, along with U.S. House Speaker Paul Ryan, a Wisconsin Republican, “will essentially shred crucial dimensions of a safety net that is already full of holes.”

In April, Trump signed an executive order outlining work mandates for low-income citizens on federal aid programs. These programs included Medicaid, which provides federal health insurance for low-income individuals, and the Supplemental Nutrition Assistance Program, which provides these low-income individuals with assistance in food purchasing.

Both programs were among those introduced in the 1960s, during the administration of then-President Lyndon Johnson, a Democrat who coined the term “war on poverty” during his first State of the Union address.

Four state mandates

The Trump administration has already permitted four states — Kentucky, Indiana, Arkansas, and New Hampshire — to implement work requirement programs for Medicaid recipients, the first such restrictions enforced on the program. In June, however, a federal judge struck down Kentucky’s mandate, writing that the administration’s waiver “never adequately considered whether [the program] would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid.”

Anne Marie Regan, a senior staff attorney for the Kentucky Equal Justice Center, one of the organizations that successfully challenged the Kentucky waiver, told VOA that while she didn’t know the specifics of other states’ Medicare waivers, she thought similar challenges could be successful because of the administration’s insistence on work requirements.

Regan said her state’s proposal would have removed 95,000 people from health care coverage.

“The war on poverty is certainly not over,” Regan said. “There’s certainly still a great need for a safety net.”

In June, the U.S. House of Representatives narrowly passed a farm bill that includes work requirements for some adults who receive food assistance benefits. Every Democrat, along with 20 Republicans, voted against the bill, which is not expected to pass the Senate.
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The White House released a report Thursday contending that the United States’ war on poverty — a drive that started over 50 years ago to improve the social safety net for the poorest citizens of the world’s largest economy — is “largely over and a success,” contrasting with other reports on the nation’s poor.

The report, authored by President Donald Trump’s Council of Economic Advisers, called for federal aid recipients to be pushed toward work requirements.

The report says poverty, when measured by consumption, has fallen by 90 percent since 1961. It also says that only 3 percent of Americans currently live under the poverty line.

“The timing is ideal for expanding work requirements among non-disabled working-age adults in social welfare programs,” according to the report. “Ultimately, expanded work requirements can improve the lives of current welfare recipients and at the same time respect the importance and dignity of work.”

U.N. report

The council’s report contrasts with a U.N. report on poverty in the U.S. that was released last month. That report said about 12 percent of the U.S. population lives in poverty, and that the U.S. “leads the developed world in income and wealth inequality.”

Phillip Alston, a U.N. adviser on extreme poverty and the author of the report, wrote in December 2017 that he believed Trump and his administration, along with U.S. House Speaker Paul Ryan, a Wisconsin Republican, “will essentially shred crucial dimensions of a safety net that is already full of holes.”

In April, Trump signed an executive order outlining work mandates for low-income citizens on federal aid programs. These programs included Medicaid, which provides federal health insurance for low-income individuals, and the Supplemental Nutrition Assistance Program, which provides these low-income individuals with assistance in food purchasing.

Both programs were among those introduced in the 1960s, during the administration of then-President Lyndon Johnson, a Democrat who coined the term “war on poverty” during his first State of the Union address.

Four state mandates

The Trump administration has already permitted four states — Kentucky, Indiana, Arkansas, and New Hampshire — to implement work requirement programs for Medicaid recipients, the first such restrictions enforced on the program. In June, however, a federal judge struck down Kentucky’s mandate, writing that the administration’s waiver “never adequately considered whether [the program] would in fact help the state furnish medical assistance to its citizens, a central objective of Medicaid.”

Anne Marie Regan, a senior staff attorney for the Kentucky Equal Justice Center, one of the organizations that successfully challenged the Kentucky waiver, told VOA that while she didn’t know the specifics of other states’ Medicare waivers, she thought similar challenges could be successful because of the administration’s insistence on work requirements.

Regan said her state’s proposal would have removed 95,000 people from health care coverage.

“The war on poverty is certainly not over,” Regan said. “There’s certainly still a great need for a safety net.”

In June, the U.S. House of Representatives narrowly passed a farm bill that includes work requirements for some adults who receive food assistance benefits. Every Democrat, along with 20 Republicans, voted against the bill, which is not expected to pass the Senate.
…

The Turkish lira recovered some losses Thursday hours after it hit record lows. New Treasury and  Finance Minister Berat Albayrak, President Recep Tayyip Erdogan’s son-in-law, sought to reassure nervous markets that the central bank’s independence was not in question.

The wild currency gyrations following Albayrak’s appointment underscore concerns over what economic policy Erdogan will adhere to now that he has consolidated power following his June re-election.

The lira approached five to the dollar late Wednesday in a nearly 30 percent depreciation since the beginning of the year.

The heavy decline is a result of worries over Erdogan’s economic expansion policy.

Although growth has soared more than 7 percent, inflation has surpassed 15 percent — a 15-year high — while the current deficit has widened to more than 6 percent of national income.

Analysts say after the June election, key ministers led investors to believe Erdogan would adopt austerity measures to rein in inflation. They are concerned the president, with the appointment of his son-in-law, may be seeking more control over monetary issues while excluding two prominent government figures from any say on policy.

“The two faces of market-friendly policies, Deputy Prime Minister Mehmet Simsek and Finance Minister Naci Agbal, are being excluded from policymaking roles,” economist Inan Demir of Nomura International Securities said.

“Before the elections,” he continued, “Agbal and Simsek had been talking to investors before the election, promising a return to orthodoxy that would generate a cooldown in the economy. The appointment of his son-in-law [Berat Albayrak] as the economy czar, would lead many investors to believe Erdogan will take tighter control of the economy, which would essentially annul promises of Agbal and Simsek.”

Agbal and Simsek are credited with persuading Erdogan to agree to an emergency hike in interest rates in May to protect the lira after steep falls. The Turkish president subscribes to the unorthodox view that low interest rates curb inflation, describing high interest rates as “the mother and father of all evils.”

Erdogan unnerved markets Tuesday by declaring his belief that “we will see interest rates fall in the period ahead.” Investors say any interest rate reduction would result in the total collapse of the currency, and that further increases are needed to secure the lira.

In a move to calm investors, Albayrak Thursday pledged to cut inflation, saying structural reform and fiscal discipline would be enforced, and he guaranteed the central bank’s independence. His statement saw the lira bounce back slightly.

Words, though, might not be enough. “It depends on how Albayrak will act really,” economist Demir said. “It’s possible if he manages to reassure the markets by actions, then the sell-off can subside. Otherwise, we will see an ongoing fall in lira assets going forward.”

Analysts warn there is skepticism about whether Albayrak will follow through on his commitment to fiscal discipline. Erdogan’s re-election campaign centered on the promise to continue with massive public construction projects and opposition to interest rate increases.

Political considerations

Political analyst Atilla Yesilada of Global Source partners suggests that political considerations could outweigh economic concerns.

“Something needs to be done. And the traditional recipe is belt-tightening and structural reforms in the traditional sense, to curtail domestic demand,” he said. “The challenge there is not that Erdogan is incapable of signing off for such a recipe. He is facing local elections in March 2019, which are extremely important, and the voters need to be fed, and that is the opposite of what the traditional recipe requires.”

A critical test of the direction Erdogan might choose will come at a July 24 meeting of the central bank. “If the central bank cannot find an opportunity to hike, the markets will take it very badly,” Demir said.

The failure of the central bank to act likely would increase worries about the introduction of capital controls to restrict money from leaving Turkey in a bid to protect the lira.

Demir said such a move would be counterproductive as it would end much of the international investment. Turkey needs to borrow about $5 billion monthly to cover the difference between its imports and exports.

As speculation rises over the threat of capital controls, Demir acknowledged investors now are asking about the risk of such a move. Pressure for decisive action by the central bank at its meeting July 24 is seen as critical to stemming the risk of an investor stampede out of the Turkish market.
…

The Turkish lira recovered some losses Thursday hours after it hit record lows. New Treasury and  Finance Minister Berat Albayrak, President Recep Tayyip Erdogan’s son-in-law, sought to reassure nervous markets that the central bank’s independence was not in question.

The wild currency gyrations following Albayrak’s appointment underscore concerns over what economic policy Erdogan will adhere to now that he has consolidated power following his June re-election.

The lira approached five to the dollar late Wednesday in a nearly 30 percent depreciation since the beginning of the year.

The heavy decline is a result of worries over Erdogan’s economic expansion policy.

Although growth has soared more than 7 percent, inflation has surpassed 15 percent — a 15-year high — while the current deficit has widened to more than 6 percent of national income.

Analysts say after the June election, key ministers led investors to believe Erdogan would adopt austerity measures to rein in inflation. They are concerned the president, with the appointment of his son-in-law, may be seeking more control over monetary issues while excluding two prominent government figures from any say on policy.

“The two faces of market-friendly policies, Deputy Prime Minister Mehmet Simsek and Finance Minister Naci Agbal, are being excluded from policymaking roles,” economist Inan Demir of Nomura International Securities said.

“Before the elections,” he continued, “Agbal and Simsek had been talking to investors before the election, promising a return to orthodoxy that would generate a cooldown in the economy. The appointment of his son-in-law [Berat Albayrak] as the economy czar, would lead many investors to believe Erdogan will take tighter control of the economy, which would essentially annul promises of Agbal and Simsek.”

Agbal and Simsek are credited with persuading Erdogan to agree to an emergency hike in interest rates in May to protect the lira after steep falls. The Turkish president subscribes to the unorthodox view that low interest rates curb inflation, describing high interest rates as “the mother and father of all evils.”

Erdogan unnerved markets Tuesday by declaring his belief that “we will see interest rates fall in the period ahead.” Investors say any interest rate reduction would result in the total collapse of the currency, and that further increases are needed to secure the lira.

In a move to calm investors, Albayrak Thursday pledged to cut inflation, saying structural reform and fiscal discipline would be enforced, and he guaranteed the central bank’s independence. His statement saw the lira bounce back slightly.

Words, though, might not be enough. “It depends on how Albayrak will act really,” economist Demir said. “It’s possible if he manages to reassure the markets by actions, then the sell-off can subside. Otherwise, we will see an ongoing fall in lira assets going forward.”

Analysts warn there is skepticism about whether Albayrak will follow through on his commitment to fiscal discipline. Erdogan’s re-election campaign centered on the promise to continue with massive public construction projects and opposition to interest rate increases.

Political considerations

Political analyst Atilla Yesilada of Global Source partners suggests that political considerations could outweigh economic concerns.

“Something needs to be done. And the traditional recipe is belt-tightening and structural reforms in the traditional sense, to curtail domestic demand,” he said. “The challenge there is not that Erdogan is incapable of signing off for such a recipe. He is facing local elections in March 2019, which are extremely important, and the voters need to be fed, and that is the opposite of what the traditional recipe requires.”

A critical test of the direction Erdogan might choose will come at a July 24 meeting of the central bank. “If the central bank cannot find an opportunity to hike, the markets will take it very badly,” Demir said.

The failure of the central bank to act likely would increase worries about the introduction of capital controls to restrict money from leaving Turkey in a bid to protect the lira.

Demir said such a move would be counterproductive as it would end much of the international investment. Turkey needs to borrow about $5 billion monthly to cover the difference between its imports and exports.

As speculation rises over the threat of capital controls, Demir acknowledged investors now are asking about the risk of such a move. Pressure for decisive action by the central bank at its meeting July 24 is seen as critical to stemming the risk of an investor stampede out of the Turkish market.
…

U.S. consumer prices barely rose in June, but the underlying trend continued to point to a steady buildup of inflation pressures that could keep the Federal Reserve on a path of gradual interest rate increases.

Other data on Thursday showed first-time applications for unemployment benefits dropped to a two-month low last week as the labor market continues to tighten. The Fed raised interest rates in June for a second time this year and has forecast two more rate hikes before the end of 2018.

“U.S. inflation continues to drift gradually higher in response to a nearly fully employed economy, with some nudging from tariffs,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “The Fed has every reason to pull  the rate trigger again in October.”

The Labor Department said its Consumer Price Index edged up 0.1 percent as gasoline price increases moderated and the cost of apparel fell. The CPI rose 0.2 percent in May. In the 12 months through June, the CPI increased 2.9 percent, the biggest gain since February 2012, after advancing 2.8 percent in May.

Excluding the volatile food and energy components, the CPI rose 0.2 percent, matching May’s gain. That lifted the annual increase in the so-called core CPI to 2.3 percent, the largest rise since January 2017, from 2.2 percent in May.

Economists polled by Reuters had forecast both the CPI and core CPI rising 0.2 percent in June.

The Fed tracks a different inflation measure, which hit the U.S. central bank’s 2 percent target in May for the first time in six years. Economists expect the personal consumption expenditures (PCE) price index excluding food and energy will overshoot its target.

U.S. financial markets were little moved by the data.

In another report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 18,000 to a seasonally adjusted 214,000 for the week ended July 7, the lowest level since early May.

That suggests robust labor market conditions prevailed in early July. The economy created 213,000 jobs in June.

A tightening labor market and rising raw material costs are expected to push up inflation through next year. Manufacturers are facing rising input costs, in part because of tariffs imposed by the Trump administration on lumber, aluminum and steel imports.

So far, they have not passed on those higher costs to consumers. Fed officials have indicated they would not be too concerned with inflation overshooting its target.

Last month, gasoline prices rose 0.5 percent after increasing 1.7 percent in May. Food prices gained 0.2 percent, with food consumed at home rebounding 0.2 percent after falling 0.2 percent in May. Food prices were unchanged in May.

Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.3 percent last month after increasing by the same margin in May. But the cost of hotel accommodation fell 3.7 percent after rising 2.9 percent in May.

Healthcare costs advanced 0.4 percent, with the price of hospital services surging 0.8 percent. Healthcare prices gained 0.2 percent in May. Consumers also paid more for prescription medication last month.

Prices for new motor vehicles rose for a second straight month. There were also increases in the cost of communication, motor vehicle insurance, education and alcoholic beverages.

But apparel prices fell 0.9 percent after being unchanged in May. The cost of airline tickets declined for a third straight month. Prices of household furnishings and tobacco also fell last month.
…

U.S. consumer prices barely rose in June, but the underlying trend continued to point to a steady buildup of inflation pressures that could keep the Federal Reserve on a path of gradual interest rate increases.

Other data on Thursday showed first-time applications for unemployment benefits dropped to a two-month low last week as the labor market continues to tighten. The Fed raised interest rates in June for a second time this year and has forecast two more rate hikes before the end of 2018.

“U.S. inflation continues to drift gradually higher in response to a nearly fully employed economy, with some nudging from tariffs,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “The Fed has every reason to pull  the rate trigger again in October.”

The Labor Department said its Consumer Price Index edged up 0.1 percent as gasoline price increases moderated and the cost of apparel fell. The CPI rose 0.2 percent in May. In the 12 months through June, the CPI increased 2.9 percent, the biggest gain since February 2012, after advancing 2.8 percent in May.

Excluding the volatile food and energy components, the CPI rose 0.2 percent, matching May’s gain. That lifted the annual increase in the so-called core CPI to 2.3 percent, the largest rise since January 2017, from 2.2 percent in May.

Economists polled by Reuters had forecast both the CPI and core CPI rising 0.2 percent in June.

The Fed tracks a different inflation measure, which hit the U.S. central bank’s 2 percent target in May for the first time in six years. Economists expect the personal consumption expenditures (PCE) price index excluding food and energy will overshoot its target.

U.S. financial markets were little moved by the data.

In another report on Thursday, the Labor Department said initial claims for state unemployment benefits dropped 18,000 to a seasonally adjusted 214,000 for the week ended July 7, the lowest level since early May.

That suggests robust labor market conditions prevailed in early July. The economy created 213,000 jobs in June.

A tightening labor market and rising raw material costs are expected to push up inflation through next year. Manufacturers are facing rising input costs, in part because of tariffs imposed by the Trump administration on lumber, aluminum and steel imports.

So far, they have not passed on those higher costs to consumers. Fed officials have indicated they would not be too concerned with inflation overshooting its target.

Last month, gasoline prices rose 0.5 percent after increasing 1.7 percent in May. Food prices gained 0.2 percent, with food consumed at home rebounding 0.2 percent after falling 0.2 percent in May. Food prices were unchanged in May.

Owners’ equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.3 percent last month after increasing by the same margin in May. But the cost of hotel accommodation fell 3.7 percent after rising 2.9 percent in May.

Healthcare costs advanced 0.4 percent, with the price of hospital services surging 0.8 percent. Healthcare prices gained 0.2 percent in May. Consumers also paid more for prescription medication last month.

Prices for new motor vehicles rose for a second straight month. There were also increases in the cost of communication, motor vehicle insurance, education and alcoholic beverages.

But apparel prices fell 0.9 percent after being unchanged in May. The cost of airline tickets declined for a third straight month. Prices of household furnishings and tobacco also fell last month.
…