China’s export growth accelerated in January amid mounting trade tension with Washington while imports surged as factories stocked up ahead of the Lunar New Year holiday.

Exports rose 11.1 percent compared with a year earlier to $200.5 billion, up from December’s 10.9 percent growth, trade data showed Thursday. Imports surged 36.9 percent to $180.1 billion, up from the previous month’s 4.5 percent.

China’s politically sensitive trade surplus with the United States widened by 2.3 percent from a year ago to $21.9 billion, while its global trade gap narrowed by 60 percent to $20.3 billion.

“Export growth remained robust in January, indicating steady global demand momentum,” said Louis Kuijs of Oxford Economics in a report.

“While we expect the favorable external setting to continue to support China’s exports, rising U.S.-China trade friction remains a key risk,” Kuijs said. “We expect the U.S. administration to scale up on measures impeding imports from China.”

US import duties

Beijing’s steady accumulation of multibillion-dollar trade surpluses with the United States has prompted demands for import controls.

President Donald Trump’s administration has increased duties on Chinese-made washing machines, solar modules and other goods it says are being sold at improperly low prices. It is set to announce results of a probe into whether Beijing improperly pressures foreign companies to hand over technology, which could lead to further penalties.

Exports to the United States rose 12.1 percent in January from the same time last year to $37.6 billion while imports of U.S. goods rose 26.5 percent to $15.7 billion, according to the General Administration of Customs of China.

Exports to the European Union, China’s biggest trading partner, rose 11.6 percent to $33.7 billion while purchases of European goods rose 44.4 percent to $23.8 billion. China reported a $9.9 billion trade surplus with the EU but that was down 29.8 percent from a year earlier.

Trade war accusations

Chinese authorities have accused Trump of threatening the global trade regulation system by taking action under U.S. law instead of through the World Trade Organization. Beijing has filed a challenge in the WTO against Washington’s latest trade measures.

Beijing announced an anti-dumping investigation last weekend of U.S. sorghum exports. In response to suggestions the move was retaliation for Trump’s increase tariffs, Chinese government spokespeople say it is a normal regulatory step.

January’s import growth was driven in part by demand from factories that are restocking before shutting down for the two-week holiday. Each year, the holiday falls at different times in January or February, distorting trade data.

Forecasters expect Chinese demand to weaken this year as Beijing tightens controls on lending to slow a rise in debt. That is a blow to its Asian neighbors, for which China is the biggest export market, and for suppliers of iron ore and other commodities such as Brazil and Australia.
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Dutch lender Rabobank’s California unit agreed Wednesday to pay $369 million to settle allegations that it lied to regulators investigating allegations of laundering money from Mexican drug sales and organized crime through branches in small towns on the Mexico border.

The subsidiary, Rabobank National Association, said it doesn’t dispute that it accepted at least $369 million in illegal proceeds from drug trafficking and other activity from 2009 to 2012. It pleaded guilty to one count of conspiracy to defraud the United States for participating in a cover-up when regulators began asking questions in 2013.

The penalty is one of the largest U.S. settlements involving the laundering of Mexican drug money, though it’s still only a fraction of the $1.9 billion that Britain’s HSBC agreed to pay in 2012. It surpasses the $160 million that Wachovia Bank agreed to pay in 2010.

Three execs behind cover-up

Under the agreement, the company will cooperate with investigators. The federal government agreed not to seek additional criminal charges against the company or recommend special oversight.

The settlement describes how three unnamed executives ignored a whistleblower’s warnings and orchestrated the cover-up. Two of the executives were fired in 2015 and one retired that year.

“Settling these matters is important for the bank’s mission here in California,” said Mark Borrecco, the subsidiary’s chief executive.

In 2010, Mexico proposed new limits on cash deposits at the country’s banks, resulting in more tainted deposits at Rabobank branches in Calexico and Tecate, according to the plea agreement. Accounts in the two border towns soared more than 20 percent after Mexico’s crackdown, and bank officials knew the money was likely tied to drug trafficking and organized crime.

Risky customers escaped scrutiny, including one in Calexico who funneled more than $100 million in suspicious transactions. Customers in Tecate withdrew more than $1 million in cash a year from 2009 to 2012, often in amounts just under federal reporting requirements.

“The cartels probably thought these were sleepy towns, no one’s going to notice,” said Dave Shaw, head of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations in San Diego. “When you bring in $400 million, someone is going to notice. The bank should have known and they just chose not to report any suspicious activity.”

Punishment for cover-up, not crime

Heather Lowe, legal counsel and government affairs director at research and advocacy group Global Financial Integrity, said the illegal activity bore similarities to what happened with HSBC and Wachovia.

But those banks were charged with laundering Mexican drug proceeds, while Rabobank only acknowledged covering it up.

“It seems in this case we have the bank taking the hit for lying but not for the violations themselves,” said Lowe, who expects the three unnamed executives will be prosecuted.

A whistleblower alerted two of the three executives to suspicious activity in 2012 and shared her concerns with the bank’s “executive management group,” according to the plea agreement. She also spoke with regulators amid concerns in the company that the government scrutiny could endanger a pending merger. She was fired in July 2013.

The government has a cooperating witness in former compliance officer George M. Martin, who agreed in December to cooperate with authorities in a deal that delayed prosecution for two years.

Martin, a vice president and anti-money laundering investigations manager, acknowledged he oversaw policies and practices that blocked or stymied probes into suspicious transactions and said he acted at the direction of supervisors, or at least with their knowledge.

Martin told investigators that he and others allowed millions of dollars to pass through the bank.

Rabobank, based in Utrecht, Netherlands, said last month that it set aside about 310 million euros ($384 million) to settled allegations against its subsidiary. Sentencing is scheduled May 18.
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The rollercoaster ride continued in financial markets Tuesday, with sharp swings rocking major indexes from Asia, Europe and North America. The volatility intensified just a day after the steepest drop on Wall Street on Monday, after the Dow Jones Industrial index plunged nearly 1,200 points. But if the sharp sell-off came as a shock to some, analysts who spoke with VOA say it’s a shock many had been anticipating for some time. Mil Arcega explains.
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In the heartland of the tequila industry, in Mexico’s western state of Jalisco, a worsening shortage of agave caused by mounting demand for the liquor from New York to Tokyo has many producers worried.

The price of Agave tequilana, the blue-tinged, spiky-leaved succulent used to make the alcoholic drink, has risen six-fold in the past two years, squeezing smaller distillers’ margins and leading to concerns that shortages could hit even the larger players.

In front of a huge metal oven that cooks agave for tequila, one farmer near the town of Amatitan said he had been forced to use young plants to compensate for the shortage of fully grown agave, which take seven to eight years to reach maturity.

He asked not to be identified because he did not want his clients to know he was using immature plants.

The younger plants produce less tequila, meaning more plants have to be pulled up early from a limited supply – creating a downward spiral.

“They are using four-year-old plants because there aren’t any others. I can guarantee it because I have sold them,” said Marco Polo Magdaleno, a worried grower in Guanajuato, one of the states allowed to produce tequila according to strict denomination of origin rules.

More than a dozen tequila industry experts interviewed by Reuters said that the early harvesting will mean the shortage is even worse in 2018.

Already, the 17.7 million blue agaves planted in 2011 in Mexico for use this year fall far short of the 42 million the industry needs to supply 140 registered companies, according to figures from the Tequila Regulatory Council (CRT) and the National Tequila Industry Chamber (CNIT).

The shortages are likely to continue until 2021, as improved planting strategies take years to bear fruit, according to producers.

The result is agave prices at 22 pesos ($1.18) per kilo – up from 3.85 pesos in 2016.

Those higher prices mean that low-cost tequila producers, which make a cheaper, less pure drink that once dominated the market, find it harder to compete with premium players.

“It doesn’t make sense for tequila to be a cheap drink because agave requires a big investment,” said Luis Velasco, CNIT’s president.

Small-scale distillers of quality tequilas are also feeling the pinch and some warn that drinkers are seeking alternative tipples.

“At more than 20 pesos per kilo, it’s impossible to compete with other spirits like vodka and whisky,” said Salvador Rosales, manager of smaller producer Tequila Cascahuin, in El Arenal, a rural town in Jalisco.

“If we continue like this a lot of companies will disappear,” he said.

Exports to the United States of pure tequila jumped by 198 percent over the past decade, while cheaper blended tequila exports rose by just 11 percent, CNIT data shows.

Over the same time, Mexican production declined 4 percent, with blended tequila leading the fall.

Global Demand

As it sheds its image as a fiery booze drunk by desperados and fratboys, while moving into the ranks of top-shelf liquors, the tequila industry has seen a flurry of deals in recent years.

In January, Bacardi Ltd. said it would buy fine tequila maker Patron Spirits International for $5.1 billion.

In 2017, after years of speculation, Mexico’s Beckmann family launched an initial public offering of Jose Cuervo, raising more than $900 million.

And Britain’s Diageo Plc swapped its Bushmills Irish whiskey label for full ownership of the high-end Don Julio tequila in 2014.

The question posed by many distillers is how to keep pace with tequila’s success.

“The growth has overtaken us. It’s a crisis of success of the industry,” said Francisco Soltero, director of strategic planning at Patron, which buys agave under various contracts.

“We thought that we were going to grow a certain amount, and we’re growing double,” he said.

Large sellers such as Patron and Tequila Sauza say they have not experienced problems paying for agave, and forecast that their inventories will keep growing.

“If you sell value, the costs don’t worry you,” Soltero said.

Tequila Sauza, which mostly grows its own agave, does not foresee supply problems, chief executive Servando Calderon said.

But some think it is simply a matter of time before the higher production costs and scarcity pressures bigger players.

“We are sure this will have a strong impact on the big firms such as Cuervo or Sauza,” said Raul Garcia, President of the National Committee for Agave Production in Tequila, a group that includes most agave producers in the country.

“We don’t see that the problem will be resolved soon, and that’s what worries us.”

Demand is also being driven by other, fashionable agave-derived products, including agave syrup and health supplement inulin, which use the equivalent of 20 percent of the plants needed in 2018, the CRT said.

And rising prices are leading to growing theft, driving out smaller producers, said Jose de Jesus, a producer of blue agave in Tepatitlan. Criminals come to the area with large trucks in the middle of the night to steal agave, he said.

According to the CRT last year 15,000 plants were reported stolen, more than triple the number in 2016.

($1 = 18.7096 Mexican pesos)
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Peru’s trade minister defended China as a good trade partner on Tuesday, after U.S. Secretary of State Rex Tillerson warned Latin American countries against excessive reliance on economic ties with the Asian powerhouse.

Eduardo Ferreyros said Peru’s 2010 trade liberalization deal with China had allowed the Andean nation of about 30 million people to post a $2.74 billion trade surplus with Beijing last year.

“China is a good trade partner,” Ferreyros told foreign media, as Tillerson met with President Pedro Pablo Kuczynski in Lima, a stop on Tillerson’s five-nation Latin American tour.

“We’re happy with the results of the trade agreement.”

The remarks were the Peruvian government’s first signal since Tillerson’s warning that it does not share Washington’s concerns about growing Chinese influence in the region.

Before kicking off his trip to Latin America on Friday, Tillerson suggested that China could become a new imperial power in the region, and accused it of deploying unfair trade practices.

“I appreciate advice, no matter where it comes from. But we’re careful with all of our trade relations,” Ferreyros said, when asked about Tillerson’s remarks.

Ferreyros also praised Peru’s trade relationship with Washington, despite a trade deficit with the United States. “I’m not afraid of trade deficits,” Ferreyros said.

Since China first overtook the United States as Peru’s biggest trade partner in 2011, thanks mostly to its appetite for Peru’s metals exports, bilateral trade has surged and diplomatic ties have tightened.

Kuczynski, a former Wall Street banker, made a point of visiting China before any other nation on his first official trip abroad as president in 2016.

Under former president Barack Obama, the United States had hoped to counter China’s rise in the fast-growing Asia-Pacific region, which includes large parts of Latin America, with the sweeping Trans-Pacific trade deal known as the TPP.

While President Donald Trump withdrew the United States from the TPP upon taking office, the 11 remaining signatories, including Peru and Japan, have struck a similar deal that they plan to sign without the United States in March.

Tillerson, who left Peru for Colombia on Tuesday, said on Monday that Trump was open to evaluating the benefits of the United States joining the so-called TPP-11 pact in the future, which Ferreyros called “a good sign.”

All countries in the Asia-Pacific region, including China, were welcome to join TPP-11, Ferreyros said. “But the deal has closed and countries that want to join obviously can’t renegotiate the whole agreement,” he added.
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U.S. stock prices fluctuated wildly Tuesday after regaining ground following a sharply lower open on the heels of selloffs earlier in the day in Asia and Europe.

The volatility continued unabated one day after The Dow Jones Industrial Average shed the most points in one day in its more than 120-year history.

The Dow fell 530 points at the market open and the more broad-based Standard & Poors 500 Index (S&P 500) tumbled 1.3 percent. The technology heavy Nasdaq Composite Index dropped 1.1 percent.

Earlier Tuesday, Asia’s benchmark stock indexes collapsed, as Monday’s massive selloffs on Wall Street rolled across the globe.

Japan’s Nikkei 225 index lost as much seven percent of its value at one point during the trading session, before closing at 21,610 points, a loss of nearly five percent.  Hong Kong’s Hang Seng index followed suit, dropping just over five percent in its worst trading day since August 2015.

The benchmark indexes Australia and South Korea also suffered serious losses.

In early Europe trading London’s FTSE 100 was down 3.5 percent at 7,081 points.

Asian markets were caught in the ripple effect of Monday’s 1,175-point loss on the Dow, marking the biggest point decline in history.  The S&P 500 also had a bad day, losing just over four percent to finish at 2,648 points.  

The stock market has now lost about a trillion dollars in value since Friday, when the Dow lost 666 points.  That drop followed a solid jobs report that showed the U.S. economy adding 200 thousand jobs and wages rising at the fastest pace in a decade. The tighter labor market and rising wages prompted investor fears of higher inflation and the possibility that the U.S. Federal Reserve would raise interest rates faster and higher than they have in recent years.

Analysts who spoke with VOA had been expecting a stock market “correction,” a decline of at least 10-percent from the most recent record highs, as a result of the record run-up in stock prices this year.  

 
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China’s decision last month to ban the import of certain types of waste and crack down on “foreign garbage” has had a ripple effect worldwide, forcing countries to quickly rethink their waste strategies.

That includes China, where its own fight against recycled waste has only just begun, analysts say.

Prior to the ban, China was the final resting place for about half of the globe’s metal, plastic and paper recyclables.

But in an effort to protect the environment and public health, Chinese authorities have banned the import of 24 categories of solid waste, sending shock waves through the international waste processing industry.

In the wake of the ban, most developed countries including Britain, the United States and Australia are grappling with a growing mountain of unprocessed rubbish and trying to find alternative destinations in Asia to fill China’s enormous shoes.

But Greenpeace East Asia plastic campaigner Eric Liu warned of the danger in their efforts to shift their trash headache to yet another developing country.

“This isn’t really a feasible solution, very few places are equipped to handle the sheer volume of waste that was being processed in China. Ultimately, the foreign trash ban should act as a wake up call to the world. We seriously need to cut down on our production and consumption of plastic,” Liu wrote in an emailed reply.

Environmentalists like Liu are hoping the development will motivate countries to eliminate unnecessary waste such as single-use plastic products.

Waste was one key topic Theresa May discussed when she met with Chinese leader Xi Jinping last week.

Last month, the British prime minister pledged to eradicate all avoidable plastic waste in Britain by 2042 as part of a 25-year green strategy.

Positive for China

Observers also note the ban is a positive step for China, although it has resulted in a shortage of some raw materials for the country’s manufacturing sector.

Local environmentalists hope the ban will spur the country’s waste processing industry to modernize and become more efficient.

“The domestically-produced, consumed and disposed waste should be recycled locally,” said Mao Da, researcher of solid waste treatment at Beijing Normal University.

“Prior to the ban, part of those foreign recyclable rubbish was of better quality and in greater quantity. That led to the country’s earlier dependence on foreign recyclable waste,” he said, adding, “The potential of locally-disposed recyclables has long been overlooked.”

Making China environmentally-friendlier

The researcher urges the environmental regulator to quickly enforce policies that will make households’ recycling and sorting of solid waste mandatory.

But Jason Wang, general secretary of the China Scrap Plastics Association said the country’s waste has already been fully recycled. He said that the import ban is a natural move following China’s rising awareness toward the environment and stricter standards for waste processing.

“With or without the ban and before 2017, any waste in China that was recyclable and of economic values had been fully recycled,” Wang said.

“China has an enormous army of scavengers with much of its population still living around the poverty line. As a result of their contribution, the country’s waste has long been fully recycled. So, the import ban is irrelevant to the country’s recycling [efficiency] of local waste,” he added.

Feng Juan, research director of Incom Recycle Co., a Beijing-based recycler of used plastic bottles, disagreed.

The company’s earlier experience showed that many of the used plastic bottles in Beijing might have been left unrecycled as its affiliated factory used to have a hard time sourcing enough used bottles to fill its annual processing capacity of 50,000 tons. According to estimates, Beijing generates 150,000 tons in used plastic bottle waste each year, Feng said.

Feng said the way local collectors had processed used bottles without a proper wastewater management in place further prompted the company in 2012 to facilitate a smarter way to source used bottles by bypassing those middlemen.

The company has since installed 5,000 vending machines in Beijing that collected 55 million used bottles directly from consumers last year.

“Through our platform, we can trace every single bottle we have collected and guarantee its safe [processing] flow,” Feng said. “While in the past, no one could tell the exact flow of used bottles or where they’ve ended up,” she added.

To-be-tightened use of plastics

China is also taking aggressive steps to tackle its plastic waste problem.

According to Greenpeace’s Liu, an estimated 1.3- 3.35 million tons of the plastic waste that’s polluted the world’s oceans come from Chinese cities.

China’s National Development and Reform commission is reported to have been mulling a new policy, specifically targeting plastic waste generated by the country’s e-commerce, courier and food delivery sectors. Liu said that if that policy is enacted it would be another positive step for China to bring the country’s rampant use of plastics under control.

China has imposed decade-long restrictions on the use of plastics, but lack of teeth in its enforcement has meant little success for the country’s past fight against plastic waste.
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The U.S. trade deficit hit the highest level in nine years in 2017, defying President Donald Trump’s efforts to bring more balance to America’s trade relationships.

The Commerce Department said Tuesday that the trade gap in goods and services rose to $566 billion last year, the highest level since $708.7 billion in 2008. Imports set a record $2.9 trillion, swamping exports of $2.3 trillion.

The U.S. ran an $810 billion deficit in the trade of goods and a $244 billion surplus in services such as banking and education.

The goods deficit with China hit a record $375.2 billion in 2017, and the goods gap with Mexico rose to $71.1 billion. Trump has sought to reduce the deficits with China and Mexico. His administration is weighing whether to impose trade sanctions on China for the theft of U.S. intellectual property. It is also renegotiating the North American Free Trade Agreement with Mexico and Canada.

The overall December trade deficit in goods and services rose to $53.1 billion, up from $50.4 billion in November and highest since October 2008.

Countries run trade deficits when they buy more from other countries than they sell.

Trump sees trade deficits as a sign of economic weakness and largely as the result of unfair competition by America’s trading partners. Most economists see them largely as the result of bigger economic forces: Americans spend more than they produce, and imports fill the gap.

 
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Nigeria’s President Muhammadu Buhari on Monday signed an executive order aimed at boosting the local production of goods and create jobs in the west African country.

Buhari, a 75-year-old former military ruler, has frequently spoken about ending the OPEC member’s dependence on oil exports while also creating jobs by boosting local food production.

And in 2015, months after Buhari came to power in May of that year, the central bank restricted access to foreign currency to import certain goods in a bid to stimulate local manufacturing.

The president “ordered that all ‘procuring authorities shall give preference to Nigerian companies and firms in the award of contracts, in line with the Public Procurement Act 2007,'” said the presidency in a statement circulated on Monday.

“The executive order also prohibits the ministry of interior from giving visas to foreign workers whose skills are readily available in Nigeria,” added the statement.

Around four out of every 10 people in the country’s workforce were unemployed or underemployed by the end of September, according to data released by the statistics office in December.

The order states that consideration will only be given to a foreign professional, “where it is certified by the appropriate authority that such expertise is not available in Nigeria.”

The country, which has Africa’s largest population and biggest economy, in 2016 fell into its a recession largely caused by low oil prices and militant attacks on energy facilities in the Niger Delta region.

It emerged from recession in the second quarter of 2017, largely on higher on oil prices.
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