Business
Amid tensions with China, some US states are purging Chinese companies from their investments
Amid tensions with China, some US states are purging Chinese companies from their investments
As state treasurer, Vivek Malek pushed Missouri’s main retirement system to pull its investments from Chinese companies, making Missouri among the first nationally to do so. Now Malek is touting the Chinese divestment as he seeks reelection in an Aug. 6 Republican primary against challengers who also are denouncing financial connections to China.
The Missouri treasurer’s race highlights a new facet of opposition to China, which has been cast as a top threat to the U.S. by many candidates seeking election this year. Indiana and Florida also have restricted their public pension funds from investing in certain Chinese companies. Similar legislation targeting public investments in foreign adversaries was vetoed in Arizona and proposed in Illinois and Oklahoma.
China ranks as the world’s second-largest economy behind the U.S.
Between 2018 and 2022, U.S. public pension and university endowments invested about $146 billion in China, according to an analysis by Future Union, a nonprofit pro-democracy group led by venture capitalist Andrew King. The report said more than four-fifths of U.S. states have at least one public pension fund investing in China and Hong Kong,
Ukraine’s foreign minister seeking ‘common ground’ with China in talks on ending war with Russia
“Frankly, there should be shame — more shame than there is — for continuing to have those investments at this point in time,” said King, who asserts that China has used intellectual property from U.S. companies to make similar products that undercut market prices.
”You’re talking a considerable amount of money that frankly is competing against the U.S. technology and innovation ecosystem,” King said.
But some investment officials and economists have raised concerns that the emerging patchwork of state divestment policies could weaken investment returns for retirees.
“Most of these policies are unwise and would make U.S. citizens poorer,” said Ben Powell, an economics professor who is executive director of the Free Market Institute at Texas Tech University.
The National Association of State Retirement Administrators opposes state-mandated divestments, saying such orders should come only from the federal government against specific companies based on U.S. security or humanitarian interests.
The U.S. Treasury Department recently proposed a rule prohibiting American investors from funding artificial intelligence systems in China that could have military uses, such as weapons targeting. In May, President Joe Biden blocked a Chinese-backed cryptocurrency mining firm from owning land near a Wyoming nuclear missile base, calling it a “national security risk.”
Yet this isn’t the first time that states have blacklisted particular investments. Numerous states, cities and universities divested from South Africa because of apartheid before the U.S. Congress eventually took action. Some states also have divested from tobacco companies because of health concerns.
Most recently, some states announced a divestment from Russia because of its war against Ukraine. But that has been difficult to carry out for some public pension fund administrators.
The quest to halt investments in Chinese companies comes as a growing number of states also have targeted Chinese ownership of U.S. land. Two dozen states now have laws restricting foreign ownership of agricultural land, according to the National Agricultural Law Center at the University of Arkansas. Some laws apply more broadly, such as one facing a legal challenge in Florida that bars Chinese citizens from buying property within 10 miles (16 kilometers) of military installations and critical infrastructure.
State pension divestment policies are “part of a broader march toward more confrontation between China and the United States,” said Clark Packard, a research fellow for trade policy studies at the libertarian Cato Institute. But “it makes it more challenging for the federal government to manage the overall relationship if we’ve got to deal with a scattershot policy at the state level.”
Indiana last year became the first to enact a law requiring the state’s public pension system to gradually divest from certain Chinese companies. As of March 31, 2023, the system had about $1.2 billion invested in Chinese entities with $486 million subject to the divestment requirement. A year later, its investment exposure in China had fallen to $314 million with just $700,000 still subject to divestment, the Indiana Public Retirement System said.
Missouri State Treasurer Malek tried last November to get fellow trustees of the Missouri State Employees’ Retirement System to divest from Chinese companies. After defeat, he tried again in December and won approval for a plan requiring divestment over a 12-month period. Officials at the retirement system did not respond to repeated questions from The Associated Press about the status of that divestment.
In recent weeks, Malek has highlighted the Chinese divestment in campaign ads, asserting that fentanyl from China “is drugging our kids” and vowing: “As long as I’m treasurer, they won’t get money from us. Not one penny.”
Two of Malek’s main challengers in the Republican primary — state Rep. Cody Smith and state Sen. Andrew Koenig — also support divestment from China.
Koenig said China is becoming less stable and “a more risky place to have money invested.”
“In China, the line between public and private is much more blurry than it is in America,” Smith said. “So I don’t think we can fully know that if we are investing in Chinese companies that we are not also aiding an enemy of the United States.”
A law signed earlier this year by Florida Gov. Ron DeSantis requires a state board overseeing the retirement system to develop a plan by Sept. 1 to divest from companies owned by China. The oversight board had announced in March 2022 that it would stop making new Chinese investments. As of May, it still had about $277 million invested in Chinese-owned entities, including banks, energy firms and alcohol companies, according to an analysis by Florida legislative staff.
Florida law already prohibits investment in certain companies tied to Cuba, Iran, Sudan, Venezuela, or those engaged in an economic boycott against Israel.
In April, Arizona Gov. Katie Hobbs vetoed a bill that would have required divestment from companies in countries determined by the federal government to be foreign adversaries. That list includes China, Cuba, Iran, North Korea, Russia and Venezuela.
Hobbs said in a letter to lawmakers that the measure “would be detrimental to the economic growth Arizona is experiencing as well as the State’s investment portfolio.”
Business
Americans are sour on tariffs if they spark inflation
Americans don’t think import tariffs are a good idea if they lead to higher prices and are skeptical they would help US workers, a Reuters/Ipsos poll found, underscoring the political risks to President-elect Donald Trump’s plan to impose heavy fees on goods from China, Mexico, and other nations.
Only 29% of respondents in the six-day poll, which closed on Tuesday, agreed with a statement that “it’s a good idea for the U.S. to charge higher tariffs on imported goods even if prices increase,” while 42% disagreed. Another 26% said they didn’t know and the rest didn’t answer the question.
Just 17% of respondents agreed with a statement that “when the U.S. charges tariffs on imported goods, it is good for me personally.”
Americans’ views on tariffs pose a potential problem for Trump when the Republican returns to the White House on Jan 20. Economists say his tariff plan, which is more aggressive than the one he employed during his 2017-21 presidency, would spark higher inflation of the sort that weakened Democratic President Joe Biden and helped pave Trump’s path back to the White House.
“I think that some of the public opinion might act as a bit of a brake on Trump’s more extreme tariff plans because clearly, they will show up in prices,” said Mary Lovely, a trade economist and senior fellow at the Peterson Institute for International Economics, a pro-trade think tank.
Trump has pledged to boost American industry by imposing a 10% universal import tariff and a 60% tariff on Chinese imports. He has also threatened 25% duties on goods from Mexico and Canada as well as an additional 10% tariff on Chinese goods, as a way to push them to clamp down on the flow of the deadly opioid fentanyl, and illegal immigration to the U.S. The three countries are America’s top trading partners.
In terms of an American citizen who was found just today. I can’t give you any details on exactly what’s going to happen except to say that we’re to bring him home, to bring him out of Syria and to bring him home.
About 10% of U.S. consumer spending goes toward imports, the Federal Reserve Bank of San Francisco has estimated, so major tariffs could significantly impact household finances.
In an interview with NBC’s Meet the Press that aired on Sunday, Trump said he did not believe that consumers ultimately pay the price of tariffs, adding “I think they’re beautiful.”
“Tariffs are going to make our country rich,” he said.
The poll, which was conducted online, surveyed 4,183 U.S. adults nationwide and had a margin of error of about two percentage points in either direction.
‘TARIFF MAN’
Trump’s talk of tariffs has raised the prospect of trade wars – that is, tit-for-tat measures between nations aimed at undermining one another’s economies.
The president-elect called himself a “tariff man” during his first term when he levied tariffs between 7.5% and 25% on some $370 billion worth of Chinese goods. But those policies exempted many top categories of Chinese imports – including smartphones, laptops and video game consoles – and overall U.S. inflation remained low.
Facing much higher levies on potentially every U.S.-bound export, China’s top leaders and policymakers are considering allowing the yuan currency to weaken in 2025, a move that would counter the effect of tariffs by making Chinese goods cheaper in dollar terms, Reuters reported this week.
Mexican President Claudia Sheinbaum has hinted at possible retaliation to Trump’s tariffs, saying in a letter to him that “one tariff will follow another in response.” Some Canadian regional leaders have urged a strong response to Trump’s tariffs, including potentially halting Canadian energy exports, while others have highlighted U.S. reliance on critical minerals mined in Canada.
The long-term decline in U.S. factory employment was seen as a factor in Trump’s victory in the 2016 presidential election when he carried Wisconsin, Michigan and Pennsylvania. He won those Rust Belt states again in November.
But Americans currently appear less hostile to international trade than they had during the first Trump administration. Some 48% of respondents in the new poll agreed with a statement that “international trade hurts average Americans because it causes us to lose jobs here in America,” down from 64% in Reuters/Ipsos polling conducted in 2018.
Business
Gold prices decrease by Rs5,000 per tola
he price of 24 karat per tola gold decreased by Rs5,000 and was sold at Rs277,800 on Friday against its sale at Rs282,800 on previous trading day, All Sindh Sarafa Jewellers Association reported.
The price of 10 grams of 24 karat gold also decreased by Rs4,286 to Rs238,169 from Rs242,455 whereas that of 10 gram 22 karat also went down to Rs218,321from Rs222,250.
The prices of Per tola silver decreased by Rs50 to Rs3,400 whereas that of ten ten gram silver went down by Rs42.86 to Rs Rs.2,914.86 respectively.
The price of gold in the international market decreased by $50 to $2,666 from $2,716, the Association reported.
Meanwhile, Pakistani rupee appreciated by 12 paisa against the US dollar in the interbank trading and closed at Rs278.11 against the previous day’s closing of Rs278.23.
However, according to the Forex Association of Pakistan (FAP), the buying and selling rates of the dollar in the open market stood at Rs277.60 and Rs279.15 respectively.
The price of Euro decreased by Rs 1.54 to close at Rs 291.06 against the last day’s closing of Rs 292.60, according to the State Bank of Pakistan (SBP).
The Japanese yen remained came down by one paisa and closed at Rs1.81, whereas a decrease of Rs3.87 was witnessed in the exchange rate of the British Pound, which traded at Rs351.24 as compared to the last day’s closing of Rs355.11.
The exchange rates of the Emirates Dirham and the Saudi Riyal decreased by four and three paisa to close at Rs75.71 and Rs74.01, respectively.
Business
Trump’s deportations could shake up the restaurant industry
Sweeping deportations pledged by President-elect Donald Trump could pose an economic shock for the restaurant industry in ways that echo the pandemic: pricier menus, rising wages, and shuttered storefronts, economists and some restaurateurs worry.
But Wall Street is wagering that Trump’s tough talk is a bluff ahead of a more limited crackdown that won’t uproot the restaurant industry’s immigrant-heavy workforce.
The industry is one of the most reliant on workers in the country illegally, making it a test case for whether Trump will fulfill completely his campaign promises.
“I see little risk of them deporting people that are working at jobs in restaurants or anywhere else in the food industry,” says Dan Ahrens, chief operating officer and portfolio manager of AdvisorShares. Ahrens said he believes Trump’s administration will focus on immigrant criminals, with talk of broader deportations amounting to political rhetoric.
Thomson Reuters’ index of restaurant and bar stocks has steadily risen more than 5% since the election, outpacing the S&P 500. In the last year, while lagging the S&P, restaurant stocks have risen nearly 10%, buoyed by rising prices sector-wide even as consumers are eating out less.
Gary Bradshaw, portfolio manager at Hodges Capital Management, said he remains bullish on restaurants with growing sales revenue and store numbers, like Chipotle, McDonald’s and Texas Roadhouse. On the prospect of deportations, he said, “My guess is the bark is a lot louder than the bite, but hey, nobody knows. So I don’t spend a whole lot of time thinking about it.”
Jake Dollarhide, chief executive of Longbow Asset Management, said he doesn’t make investment decisions on hypothetical policy. “We didn’t sell our energy stocks the day Joe Biden took office,” he said. He said he believed stock market highs and the “propensity of Americans to spend” would continue to drive restaurant stocks up. “The perception of grocery inflation — whether real or not real — benefits restaurants,” he added.
Trump has said that the initial focus of deportations will be on criminals in the U.S. illegally, but that the net will eventually widen to all immigrants in the country illegally.
“I think you have to do it,” he told NBC last weekend. Around 1-in-12 of the country’s 10 million restaurant workers were living in the United States illegally in 2022, according to Pew Research Center estimates from this summer which have not previously been published.
“Restaurants will be a hard-hit sector,” if Trump lives up to his promises on deportations, said Marcus Noland, an economist with the Peterson Institute for International Economics. Not only will they have to contend with their own higher labor costs, Noland said, but they’ll also have to pay more for food because of disruptions upstream in agriculture.
“You saw this during the pandemic when many restaurants had restricted hours, smaller menus and worse service,” he said.
PIIE estimated prices in the service sector would rise by 1.7% if the Trump administration deported 1.3 million workers, or rise by 11% if the administration fulfilled its commitment to deporting all working immigrants in the country illegally, which the Pew Center estimates at 8.3 million.
“We’re already dealing with a huge labor shortage of food workers,” said Jacob Monty, an immigration and employment lawyer who advises chain restaurants. “If you add more enforcement, it’s going to only get harder to find workers to staff restaurants.”
Diners are already reeling from sticker shock, and Kelsey Erickson Streufert, the Texas Restaurant Association’s chief policy liaison, said restaurateurs in the state are concerned that a “tipping point” has been reached for raising prices. “Customers are only going to pay so much for a hamburger,” she said.
-
Entertainment2 months ago
Movie Review: Helen Mirren tells a story of evil and hope during WWII in ‘White Bird’
-
Business2 months ago
Ray-Ban maker EssilorLuxottica slams ‘grab bag’ lawsuits claiming eyewear monopoly
-
Entertainment2 months ago
Dozens of health workers killed in Lebanon over past day, WHO says
-
Entertainment3 months ago
Hilfiger goes full nautical for Fashion Week, with runway show on former Staten Island Ferry boat
-
Entertainment3 months ago
Shagufta Ejaz’s husband passes away after protracted illness
-
pakistan2 months ago
Punjab govt imposes Section 144 in five districts
-
Business3 months ago
Gold scales fresh record high in Pakistan
-
pakistan3 months ago
Women steal the SBP currency note design competition show