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Growth Slows in April in China’s Manufacturing Sector

Growth in China’s manufacturing sector slowed in April, official data showed Sunday, pointing to an unsteady recovery in the world’s second-largest economy. 

 

The monthly purchasing managers’ index by the Chinese Federation of Logistics and Purchasing fell to 51.2 in April, lower than the 51.8 recorded in March. 

 

The index is based on a 100-point scale on which numbers above 50 indicate expansion.

 

National Bureau of Statistics statistician Zhao Qinghe said in the release that April’s figure was affected by sluggish growth in market demand and supply, and slower expansion in imports and exports.

 

April’s index still represented a ninth consecutive month of expansion. 

 

China saw its slowest growth in nearly three decades in 2016. China’s huge manufacturing sector is seen as an important indicator for the wider Chinese economy. It has cooled gradually over the past six years as Beijing tries to pivot it away from heavy reliance on export-based manufacturing and investment toward consumer spending.

 

The official full-year economic growth target for 2017 is 6.5 percent. 

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IT Workers, Companies Cautious on H1B Visa Program Review

During a recent visit to Wisconsin, President Donald Trump announced he was signing an Executive Order reviewing the visa program that brings many technical workers to the United States, known as the H1B visa. About 85,000 workers come to the United States annually using an H1B visa. More from VOA’s Kane Farabaugh

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On 100th Day in Office, Trump to Focus on Trade

President Donald Trump will spend his 100th day in office talking tough on trade in one of the states that delivered his unlikely win.

 

The president is expected to sign an executive order Saturday that will direct his Commerce Department and the U.S. Trade Representative to perform a comprehensive study of the nation’s trade agreements to determine whether America is being treated fairly by its trading partners and the 164-nation World Trade Organization.

It’s one of two executive orders the president will sign at a shovel factory in Pennsylvania’s Cumberland County, the kind of place that propelled his surprise victory.

Rally in Pennsylvania 

The last week has been a frenzy of activity at the White House as Trump and his team have tried to rack up accomplishments and make good on campaign promises before reaching the symbolic 100-day mark. In addition to the visit to the Ames tool factory, which has been manufacturing shovels since 1774, the president will hold one of his signature campaign rallies in Harrisburg to cap the occasion.

 

It’s a return to fundamentals for a president who has, in recent days, sounded wistful reflecting on his term so far.

 

Earlier this week, Trump announced his intention to work to renegotiate the North American Free Trade Agreement. He also said he would begin renegotiating a free trade deal with South Korea, with which the U.S. has a significant trade deficit.

Trade discussed every day

 

“There isn’t a day that goes by that the president doesn’t discuss some aspect of trade,” Commerce Secretary Wilbur Ross said at the White House Friday.

 

The executive orders signed Saturday will mark Trump’s 31st and 32nd since taking office, the most of any president in his first 100 days since World War II. It’s a jarring disconnect from Trump’s rhetoric during the campaign, when he railed against his predecessor’s use of the tool, which has the benefit of not needing congressional sign-off.

The more significant of the two orders will give the Commerce Department and the U.S. Trade Representative 180 days to identify violations and abuses under the country’s trade agreements and recommend solutions.

World Trade Organization outdated 

Ross said the WTO, the Geneva-based arbiter of world trade rules, is bureaucratic and outdated and needs an overhaul. Ross downplayed the possibility that the United States would consider leaving the organization but didn’t rule it out. 

“As any multilateral organization, there’s always the potential for modifying the rules,” he said.

 

The administration argues that unfair competition with China and other trade partners has wiped out millions of U.S. factory jobs. Ross said dissatisfaction with trade policy is one reason voters turned to Trump.

 

“They’re fed up with having their jobs go offshore. They’re fed up with some of the destructive practices,” he said. “So in effect, the country said in this last election: It’s about time to fix these things. And the president heard that message.”

 

Trump, who campaigned on a vow to crack down on China and other trading partners, has announced several other moves on trade in recent weeks. He ordered the Commerce Department to study the causes of the United States’ massive trade deficit in goods, $734 billion last year, $347 billion with China alone. The administration is also imposing duties on Canadian softwood timber and is investigating whether steel and aluminum imports pose a threat to national security.

 

Ross said Friday that the WTO is too narrowly focused on limiting traditional tariffs — taxes on imports — and does little to counter less conventional barriers to trade or to police violations of intellectual property rights.

 

Trump has pushed a model of “reciprocal trade” agreements in which the U.S. would raise or lower tariffs on a country’s imports depending on how that country treats the U.S.

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Trump Signs Order Opening Arctic for Oil Drilling

President Donald Trump is re-opening for oil exploration areas that President Barack Obama had closed, a move that environmental groups have promised to fight.

In an executive order Friday, the president reversed the Obama administration’s decision to prohibit oil and gas drilling in the Arctic waters off Alaska.

The order also instructs the Interior Department to review current restrictions on energy development in the Atlantic Ocean and Gulf of Mexico. In addition, it bars the creation or expansion of marine sanctuaries and orders a review of all areas protected within the last 10 years.

Trump cites advantages

The White House says 90 billion barrels of oil and 327 trillion cubic feet of natural gas are buried off the U.S. coastline, but 94 percent of the area is off limits.

“Renewed offshore energy production will reduce the cost of energy, create countless new jobs and make America more secure and far more energy independent,” Trump said at a signing ceremony at the White House.

The action is the latest from the Trump administration aimed at boosting domestic energy production and loosening environmental regulations.

In his first 100 days, Trump has relaxed coal mine pollution rules and ordered a review of vehicle efficiency standards and power plant greenhouse gas rules. His administration has stopped defending Obama-era pollution regulations challenged in court.

The energy industry has cheered the moves. Environmental groups have promised strong opposition.

Fragile ecosystems

Conservationists have long opposed oil drilling in the Arctic. A spill would devastate the region’s fragile ecosystems, they say, while extreme conditions raise the risks of a spill and make cleanup harder.

Fishing and tourism on the Atlantic coast and Gulf of Mexico would suffer from an accident, too, environmentalists note.

“By his actions today, President Trump has sent a clear message that he prioritizes the oil and gas industry over the needs of working Americans in our coastal communities who depend on healthy fishing and tourism economies for their livelihoods,” Environmental Defense Fund Vice President Elizabeth Thompson said in a statement.

Reviewing and rewriting the current offshore drilling plans are expected to take several years. Environmental groups plan legal challenges to the changes.

 

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US Economy Grows at Disappointing 0.7% in First Quarter

The latest economic data indicate the U.S. economy is growing at the slowest rate in three years. The GDP or gross domestic product, the broadest measure of all goods and services produced in the country, increased at a disappointing 0.7 percent annual rate, according to new government estimates released Friday.  That’s the weakest performance since 2014, as consumer spending stayed flat and business inventories remained small.  

Analysts say that’s bound to be a disappointment to U.S. President Donald Trump who predicted strong economic growth on day one, once he took over the White House. 

“Remember candidate Trump talked about GDP of about 5 percent and paraphrasing, perhaps something much, much stronger,” said Bankrate.com senior analyst Mark Hamrick. 

“Most economists believe the track for the U.S. economy for the intermediate future is going to be very familiar to what has been seen over the last number of years, and that’s somewhere between one and probably 2.5 percent on an annual basis.”

The U.S. economy grew at a 2.1 percent pace in the fourth quarter of 2016.  But economists say first quarter estimates tend to be notoriously low for a number of reasons.  

“In some years it’s been because of bad weather that kept people in their homes, keeping them from purchasing things but it’s also believed to be somewhat flawed statistically — meaning that what’s actually happening in the economy isn’t being perfectly captured by government statistics,” Hamrick tells VOA.  “It ends up being an estimate and most of them are not perfect”.

Most economists say the first quarter estimate should not be seen as a true measure of U.S. economic health. 

Other indicators suggest a more positive outlook. The U.S. unemployment rate is near a 10-year low at 4.5 percent, consumer and business sentiment are rising and major U.S. stock indexes are near record highs.

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Apple Cuts Off Payments, Qualcomm Slashes Expectations

Qualcomm slashed its profit expectations Friday by as much as a third after saying that Apple is refusing to pay royalties on technology used in the iPhone.

Its shares hit a low for 2017.

Apple Inc. sued Qualcomm earlier this year, saying that the San Diego chipmaker has abused its control over essential technology and charged excessive licensing fees. Qualcomm said Friday that Apple now says it won’t pay any fees until the dispute is resolved. Apple confirmed Friday that it has suspended payments until the court can determine what is owed.

“We’ve been trying to reach a licensing agreement with Qualcomm for more than five years but they have refused to negotiate fair terms,” Apple said. “As we’ve said before, Qualcomm’s demands are unreasonable and they have been charging higher rates based on our innovation, not their own.”

Qualcomm said it will continue to vigorously defend itself in order to “receive fair value for our technological contributions to the industry.”

But the effect on Qualcomm, whose shares have already slid 15 percent since the lawsuit was filed by Apple in January, was immediate.

Qualcomm now expects earnings per share between 75 and 85 cents for the April to June quarter. Its previous forecast was for earnings per share between 90 cents and $1.15.

Revenue is now expected to be between $4.8 billion and $5.6 billion, down from its previous forecast between $5.3 billion and $6.1 billion.

Shares of Qualcomm Inc. tumbled almost 4 percent at the opening bell to $51.22.

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Federal Court: Women Can Be Paid Less Based on Past Salary

Employers can legally pay women less than men for the same work based on differences in the workers’ previous salaries, a federal appeals court ruled Thursday.

The decision by the 9th U.S. Circuit Court of Appeals overturned a lower-court ruling that said pay differences based exclusively on prior salaries were discriminatory under the federal Equal Pay Act.

That’s because women’s earlier salaries are likely to be lower than men’s because of gender bias, U.S. Magistrate Judge Michael Seng said in a 2015 decision.

1982 law cited

A three-judge panel of the 9th Circuit cited a 1982 ruling by the court that said employers could use previous salary information as long as they applied it reasonably and had a business policy that justified it.

“This decision is a step in the wrong direction if we’re trying to really ensure that women have work opportunities of equal pay,” said Deborah Rhode, who teaches gender equity law at Stanford Law School. “You can’t allow prior discriminatory salary setting to justify future ones or you perpetuate the discrimination.”

Activists held rallies around the country earlier this month on Equal Pay Day to highlight the wage gap between men and women. Women made about 80 cents for every dollar men earned in 2015, according to U.S. government data.

The 9th Circuit ruling came in a lawsuit by a California school employee, Aileen Rizo, who learned in 2012 while having lunch with her colleagues that her male counterparts were making more than she was.

Attorney: Logic hard to accept

Her lawyer, Dan Siegel, said he had not yet decided the next step, but he could see the case going to the U.S. Supreme Court because other appeals courts have decided differently.

“The logic of the decision is hard to accept,” he said. “You’re OK’ing a system that perpetuates the inequity in compensation for women.”

Fresno County public schools hired Rizo as a math consultant in 2009 for $63,000 a year. The county had a standard policy that added 5 percent to her previous pay as a middle school math teacher in Arizona. But that was not enough to meet the minimum salary for her position, so the county bumped her up.

Equal Pay Act of 1963

The Equal Pay Act, signed into law by President John F. Kennedy in 1963, forbids employers from paying women less than men based on sex for equal work performed under similar working conditions. But it creates exemptions when pay is based on seniority, merit, quantity or quality of work or “any other factor other than sex.”

The county argued that basing starting salaries primarily on previous pay prevents subjective determinations of a new employee’s value. The 5 percent bump encourages candidates to leave their positions to work for the county, it said.

The 9th Circuit sent the case back to Seng to consider that and other justifications the county provided for using previous salaries.

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United Airlines Settles with Doctor Dragged Off Plane

United Airlines reached an out-of-court settlement Thursday with a doctor who was dragged off one of its flights after he refused to give up his seat.

The airline and Dr. David Dao’s lawyers agreed not to disclose the amount of money he will receive.

United put out a brief statement saying it reached an “amicable resolution of the unfortunate incident.”

United changes policy

The airline said earlier Thursday that from now on, no passenger would be forced to give up his seat except in cases of safety and security.

Those who volunteer to surrender their seats when a flight is overbooked would get up to $10,000 in compensation.

“Every customer deserves to be treated with the highest levels of service and the deepest sense of dignity and respect,” United chief Oscar Munoz said. “Two weeks ago, we failed to meet that standard and we profoundly apologize.”

Chicago aviation police dragged Dao up the aisle of the packed plane when United needed to make room for airline employees.

Three other passengers volunteered to give up their seats, but Dao was picked out at random and refused to leave, saying he had to get home to treat patients.

Congress gets involved

His nose was broken, some teeth were knocked out, and he suffered a concussion. Cellphone video captured the scene. Dao, with blood streaming down his face, could be heard screaming with other shocked passengers.

The incident prompted calls in Congress  to bring back government airline regulation.

Some lawmakers demanded outlawing the practice of overbooking flights, in which airlines sell more seats than are available to ensure a full plane.

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Investors Have High Hopes for Ghana, Says Finance Minister

Ghana’s finance minister says investors were optimistic in meetings with senior government officials who accompanied Vice President Mahamudu Bawumia to the World Bank spring meetings in Washington.

In an interview with VOA, Ken Ofori-Atta said investors detected a new energy, and a sense of hope in a team that is focused on getting Ghana out of its current predicament. He also said that with a new government in place, the world is ready to see Ghana shine again in a much more stable West Africa.

“We came in on a platform of change and real hope that we will revitalize the economy and create jobs and there would be growth,” Ofori-Atta said. “But we met some pretty difficult challenges with regards to fiscal deficit close to 9 percent, lots of unemployment, growth of 3.4 percent, which was very low, and the discovery of some 7 billion Cedis [$1.3 billion] arrears that we all did not know about. Foreign exchange was low, and you also had the exchange rate in a pretty difficult situation. So we had to contend with all of that since we came [to power].”

But opposition groups say the new administration should get to work rather than complain about the state of affairs. They contend that Ghanaians displayed confidence in them by rejecting the previous government for failing to improve the lives of its citizens.

Ofori-Atta said that in just over 100 days, the government outlined its plans to jump-start the economy in a budget, which was presented to parliament. The aim, he said, is to create millions of jobs as the ruling party, led by President Nana Addo Dankwa Akufo-Addo, promised ahead of the December elections.

“We decided to create a budget that is both leading to a fiscal consolidation in a real way and also not compromising growth,” Ofori-Atta said. “So we brought down the deficit as a target from 8.7 percent to 6.5. We squeaked out a primary balance surplus. We’re reducing our debt-to-GDP ratio from 72.5 to 70.9 percent, and then increase revenue by 34 percent. So, quite dramatic contraction in a sense. However, we also were clear that we needed to spur growth.”

One means to achieve their goals: abolishing some taxes.

“One of the most dramatic things was to abolish about 14 taxes, which the senior minister [Yaw Osafo Marfo] termed to be nuisance taxes,” Ofori-Atta said. “Taxes that were kind of suppressive and created a sense of cohesion by the state. As a center-right party, we have to revitalize the economy, we have to give stimulus, we have to encourage people to use their creative energies.”

Ofori-Atta also said abolishing the taxes will free Ghanaian businesses, and entrepreneurs will help to “bring Ghana back” into a working mode.

Another measure the administration plans to implement is the revitalization of the rural economy. This, he said, includes establishing a factory in each of the country’s districts, as well as sending $1 million to each constituency as a resource to support the policy of one district, one factory, which was promised by the president in the run-up to the polls.

Critics, however, say the one district, one factory promise was overly ambitious. They contend that with the dramatic reduction of taxes, government revenue would be sharply reduced, thereby handicapping the ability of the administration to raise the necessary funds it needs to keep the promises to Ghanaians. They also say the reduction of taxes was just a ploy to score political points.

But supporters of the ruling party reject the criticisms as unfounded.

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Narrow Turkish Referendum Victory Reveals Economic Concerns

Turkish President Recep Tayyip Erdogan’s referendum victory to extend his powers was bittersweet.  

For the first time he lost in Turkey’s main cities, including Istanbul, which has been his electoral power base since 1994.  In the aftermath of his narrow win he has ordered a party investigation into the vote.  The drop in support coincides with an economic slowdown, an ominous sign given the president is facing crucial polls in two years.

Erdogan’s unprecedented electoral successes were largely achieved in a period of economic boom, but those halcyon days appear to be waning.  

“Currently, inflation rate is at 11.3 percent and is expected to increase further to around 12 percent in the coming months,” observes Inan Demir, an economist for Nomura Bank, “It would constitute the highest inflation rate since before the global financial crisis in 2009.  Also, unemployment is at multi-year highs.  So we are talking about a significant jump in the inflation and unemployment rate.”

The impact of the economic slowdown has been felt the most in western Turkey, where more than 70 percent of the country’s economic production is located, and most closely linked to European markets.  The same region saw some of the biggest drops in support for the president in the referendum vote.  While the Turkish economy is predicted to grow faster than that of Europe, it is still below the rate needed to absorb new entrants into the labor market.

Disaffected youth

A striking development of the referendum was the youth vote, overwhelmingly voting no, bucking its traditionally stalwart support for Erdogan.  

“Youth unemployment is affecting the first-time vote.  The youth unemployment ratio was 25 percent, according to the last data, notes Atilla Yesilada, a political consultant with Global Source Partners, “Fifty-eight percent of first-time voters voted “No.” (citing IPSOS research).  According to OECD research, Turkish students are the unhappiest in the world with 72 percent saying they are very unhappy with conditions.  So given Turkey’s very high rate of young population, up to six percent of the voters in the next election cycle, which starts in March 2019, will be first-time voters, which in my view is slipping from their [Erdogan government’s] grasp”.

 2019 is scheduled for an unprecedented three polls – of local, general and presidential elections.

Erdogan’s success in the referendum was due in part to the overwhelmingly support he received in the rural heartland of the country, known as Anatolia, a region that has particularly benefited from the expansion of social security benefits under Erdogan’s AK Party rule.

“I detect that certain voters are becoming clients of AKP, these people can’t survive in the globalized economy of Turkey,” claims consultant Yesilada, “they are largely existing on account of the welfare state and also  AKP has been very successful in imposing the view entitlements are coming form the party, rather than the state.  So a dependency has been created between the poor in Anatolia and AKP, and these are people are so afraid if AKP ever loses they will lose their entitlements.”

In the run-up to the referendum, the government again turned to state intervention, launching major programs of cheap loans for businesses, job creation schemes, and massive public works projects.

Early elections?

Economists predict that with individuals and private companies racked with debt, more state intervention is likely, ”Turkey will find it difficult to sustain that debt-fueled growth, that’s why the public sector will play an increasing role in supporting economic activity going forward.  Personally, I expect elections to be held earlier than the current schedule.  I would not be surprised to see elections by this time next year.  So I think it can be sustained until that time.”

The pressure to call early elections will deepen worries about how the government will fund it’s growing economic and financial programs.  “So [numbers] are simple,” warns Yesilada, “we cant borrow abroad, because it very costly or foreign lenders are no longer willing, and Turkish deposits have been completely converted into loans.  I don’t know how this can go forwards.”  

Given that the bedrock of Erdogan’s electoral success has been built on economic prosperity, the continuation and trajectory of those programs ultimately could determine his fate.