International Monetary Fund chief Kristalina Georgieva on Thursday disputed an independent investigation that found that in her previous job at the World Bank, she pressed staff to alter a report to avoid angering China. 

Based on the findings, the World Bank announced it was immediately discontinuing its “Doing Business” report, after the investigation found irregularities in the 2018 and 2020 editions. 

Georgieva, a Bulgarian national who took the helm of the IMF in October 2019, rejected its conclusions regarding her role.

“I disagree fundamentally with the findings and interpretations of the Investigation of Data Irregularities as it relates to my role in the World Bank’s ‘Doing Business’ report of 2018,” she said in a statement. 

The allegations could damage her reputation and provide grist for longtime U.S. critics of the multilateral organizations and their treatment of China. 

‘Serious findings’

“These are serious findings,” the U.S. Treasury said in a statement, noting that it was “analyzing the report.”

“Our primary responsibility is to uphold the integrity of international financial institutions,” the statement said. 

Georgieva said she briefed the IMF board on the situation. The board was expected to meet to discuss the issue, but it was unclear when. 

Justin Sandefur of the Center for Global Development, who has written extensively about the problems with the report’s methodology, said, “We need to hear her side of the story, but it doesn’t look great right now.” 

“The IMF is in charge of monitoring the integrity of macroeconomic and financial data internationally, and for the head of the IMF to have been involved in data manipulation is a pretty damning allegation,” he told Agence France-Presse. “That does seem like a real hit on their credibility.” 

Report ranks countries

The flagship report ranks countries based on their business regulations and economic reforms and has caused governments to jockey for a higher spot to attract investors. 

According to the investigation, Beijing complained about its ranking of 78th on the list in 2017, and the next year’s report would have shown Beijing dropping even further.

The Washington-based development lender’s staff was preparing the 2018 edition while leadership engaged in sensitive negotiations to increase its lending capital, which hinged on an agreement with China and the United States. 

In the final weeks before the report was released at the end of October 2017, the World Bank’s then-president, Jim Kim, and Georgieva, at the time the bank’s CEO, asked staff to look into updating the methodology in regard to China, according to the investigation by law firm WilmerHale. 

Chinese officials dismayed

Kim discussed the rankings with senior Chinese officials, who were dismayed by the country’s ranking, and his aides raised the issue of how to improve it, according to the summary of the probe, released by the World Bank. 

It is considered one of Kim’s signature achievements that he shepherded a deal for a $13 billion increase in World Bank resources.

The bargain required support from former U.S. President Donald Trump, who opposed concessional lending to China, and from Beijing, which agreed to pay more for loans. 

Amid the pressure from upper management, staff changed some of the input data, which boosted China’s ranking in 2018 by seven places to 78 — the same as it was the previous year, according to the investigation that analyzed 80,000 documents and interviewed more than three dozen current and former employees of the lender. 

Georgieva chastised a World Bank senior official for “mishandling the bank’s relationship with China and failing to appreciate the importance of the ‘Doing Business’ report to the country,” the report said.

After the changes were made, she thanked him for “doing his part for multilateralism.” 

Nobel Prize winner concerned

Georgieva later visited the home of the manager in charge of the report to retrieve a copy, whom she thanked for helping to “resolve the problem.” 

Paul Romer, a Nobel Prize winner who served as the World Bank’s chief economist at the time, resigned in January 2018 after telling a reporter that the methodology for the ranking had been changed in a way that could give the impression political considerations affected the results. 

At the time, the World Bank strenuously denied any political influence over the rankings. 

The investigation also found “improper changes” in the 2020 report affecting the rankings of Saudi Arabia, the United Arab Emirates and Azerbaijan. 

Nadia Daar, head of Oxfam International’s Washington, D.C., office, applauded the decision to scrap the report, saying the index “encouraged governments to adopt destructive policies that worsen inequality.” 
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Scientists from multiple organizations that monitor and assess the state of the Earth’s climate system warn the world is not on track to meet the target of the Paris Agreement to limit global warming to 1.5 degrees Celsius by 2050.

The United in Science 2021 report warns greenhouse gas concentrations in the atmosphere are continuing at record levels, committing the planet to dangerous future warming. It notes the last five-year period has been the warmest since record-keeping began in 1850. 

Scientists say rising temperatures due to human activity are causing higher than average temperatures in the Arctic, Europe and Asia. That is increasing the frequency and intensity of floods, droughts, wildfires, storms, and other extreme weather events throughout the world. 

Secretary-General of the World Meteorological Organization Petteri Taalas says weather events that used to happen every 100 years now are happening every 20 years because of climate change. He warns they will occur with even greater frequency in the future if the world does not limit warming to well below two degrees Celsius by mid-century. 

“Now we are heading towards three degrees warming instead of 1.5 to two degrees,” he said.”And it has been shown clearly that it would be beneficial for the welfare of us human beings and the welfare of the biosphere and the planet to reach the lower limit of the Paris Agreement of 1.5 degrees.”

The report notes that COVID-19 has had no impact on climate change. It says pandemic lockdowns and economic slowdowns reduced air pollution for a time, but was only temporary. Now that societies are opening again, it says carbon dioxide emissions into the atmosphere are growing.

Taalas says mitigation measures can reduce the release of greenhouse gas emissions into the atmosphere and reduce climate change, but for this to happen, people must change their daily behavior. 

“If we fail with climate mitigation, we would have a permanent problem for at least hundreds or even thousands of years and both economic and human wellbeing events would be much more dramatic than this COVID pandemic, which has been hitting us all in a dramatic way,” he said.

In a forward to the United in Science report, U.N. Secretary-General Antonio Guterres warns time is running out. He says all countries must commit to net-zero emissions by 2050, backed up by concrete long-term strategies to prevent further irreversible damage.

He says these pledges must be made now for November’s U.N. Climate Change Conference in Glasgow to be a turning point in the fight for the survival of the planet. 

 
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First-time claims for U.S. unemployment compensation increased last week but remained near the low point during the 18-month coronavirus pandemic, the Labor Department reported Thursday. 

A total of 332,000 jobless workers filed for assistance — up 20,000 from the revised figure of the week before. In part, benefit claims increased because Hurricane Ida’s drenching rains played havoc with the economy in the southern state of Louisiana. 

Still, the claims figures for the last month have been on the whole the lowest since the pandemic swept through the U.S. beginning in March 2020, although they remain above the 218,000 average of 2019. 

The jobless claims total has fallen steadily but unevenly since topping 900,000 in early January. Filings for unemployment compensation often have been seen as a current reading of the country’s economic health, but other statistics are also relevant barometers. 

Even as the U.S. government said last month that its world-leading economy grew by an annualized rate of 6.6% in the April-to-June period, in August it added only a disappointing 235,000 more jobs. Economists said that figure was partly reflective of the surging delta variant of the coronavirus inhibiting job growth. 

The number of new jobs was down sharply from the more than 2 million combined figure added in June and July. The unemployment rate dipped to 5.2%, which is still nearly two percentage points higher than before the pandemic started in March 2020. 

About 8.7 million workers remain unemployed in the U.S. There are nearly 11 million available jobs in the country, but the skills of the available workers often do not match what employers want, or the job openings are not where the unemployed live. 

The size of the U.S. economy – nearly $23 trillion – now exceeds its pre-pandemic level as it recovers faster than many economists had predicted during the worst of the business closings more than a year ago. 

How fast the growth continues remains an open question. 

For months, the national government had sent an extra $300 a week in unemployment compensation, on top of often less generous state aid, to jobless workers. But that extra assistance has now ended throughout the country. About 7.5 million jobless workers were affected by the cutoff in extra funding. 

In addition, the delta variant of the coronavirus poses a new threat to the economy.

Political disputes have erupted in numerous states between conservative Republican governors who have resisted imposing mandatory face mask and vaccination rules in their states at schools and businesses, although some education and municipal leaders are advocating for tougher rules to try to prevent the spread of the delta variant. 

U.S. President Joe Biden has ordered workers at companies with 100 or more employees to get vaccinated or be tested weekly for the coronavirus. In addition, he is requiring 2.5 million national government workers and contractors who work for the government to get vaccinated if they haven’t already been inoculated. 

In recent weeks, about 150,000 new cases have been identified each day in the U.S., and more than 1,500 people are dying from COVID-19 daily.

More than 65% of U.S. adults now have been fully vaccinated against the coronavirus, and overall, 54.1% of the U.S. population of 332 million. 
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Canada Goose, the Canadian maker of parkas it claims are designed to keep wearers toasty warm in the “the coldest places on Earth,” is the latest foreign brand targeted by Chinese regulators.

China’s state-controlled CCTV revealed that authorities fined the company’s affiliated operation in Shanghai about $70,000 (450,000 RMB) for “falsely advertising goods or services, deceiving and misleading consumers.”

The Shanghai Huangpu District Market Supervision and Administration Department acted against the local outlet of Canada Goose Holdings Inc. of Toronto in June, a move CCTV made public on Sept. 2.

The National Enterprise Credit Information Publicity System (Shanghai) announced that Shanghai district regulators found that Canada Goose, which was marketing its products as filled with goose down, was using mostly duck to stuff its garments.

The regulators said the company advertised that it uses “Hutterite down,” claiming it is the warmest down available. The Hutterites, a religious group in Canada similar to the Amish and Mennonites in the United States, enjoy a reputation for raising high-quality geese and ducks.

And while the Canada Goose marketing stresses the warming quality of the down it uses, Shanghai regulators said the place of origin has nothing to do with down’s warmth.

On Sept. 8, other state-affiliated media outlets in China began criticizing the expensive parkas that as The New Yorker suggested, broadcast, “I earned the money, and then I spent the money. And now, here I am, warmer than you are.”

The Economic Daily published a commentary titled Catching the Lying Canada Goose on Sept. 8, suggesting that Canada Goose had violated China’s law regarding advertising standards. It continued to accuse the company of failing to credit Chinese buyers as savvy consumers who are capable of market research.

Calling on Chinese consumers to purchase goods from Chinese brands, the Economic Daily urged Chinese companies to seize the opportunity to expand market share.

The newspaper also said Xiji (Shanghai) Trading Co., operator of the Canada Goose Official Flagship Store on China’s online retailer Tmall, had sales of $25.9 million (167 million yuan) in 2020. On the company’s U.S. website, the most expensive Canada Goose parka, the Polar Bear International, costs $1,545. The same coat on the company’s Chinese website costs $1,616 (10,400 yuan).

Canada Goose told Canada’s CBC News on Sept. 8 that a technical error on a partner website caused confusion about the down.

“Earlier this year, a misalignment of text was found on a partner site, Tmall, in our (Asia-Pacific) region. The error was corrected immediately,” the email to CBC said.

The company told CBC that it uses both goose and duck down, depending on the garment. Although Canada Goose is best known for its parkas, it makes other down and non-down products.

VOA Mandarin contacted Canada Goose but did not receive a response.

Consumer nationalism

Canada Goose is not the only company targeted by China’s regulators. Earlier this month, Chinese regulators fined H&M, the Swedish multinational retailer, $51,000, claiming the company misrepresented that some of its products were sold exclusively in China.

This came after Chinese netizens attacked H&M in April for a statement expressing concern about allegations of Uyghur forced labor in cotton production in Xinjiang, a stronghold of the Muslim minority.

Major e-commerce websites removed H&M products, and dozens of Chinese celebrities ended their endorsement contracts with the company. Brands such as Nike and Adidas, which had expressed similar concerns about the situation in Xinjiang, saw China sales plummet.

Experts say that the surge in China’s nationalist sentiment since the advent of the COVID-19 pandemic, coupled with Beijing’s official policy of supporting domestic brands, could lead to consumer nationalism.

According to its official website, Canada Goose currently has 21 stores in China, making it one of the fastest expanding brands in the Chinese market. The company has nine stores in Canada.

“The campaign fits in with ‘equality’ themes recently emphasized by President Xi. Foreign brands are something like private schools — patronized by higher income Chinese households,” Gary Hufbauer, an economist at Peterson Institute for International Economics, told VOA in an email. ”Domestic brands are seen as the preference of ordinary people.”

Analysts believe that as tensions increase between China and the West, Chinese nationalists are equating the purchase of Western brands to approval of Western values. To reject foreign brands is to resist foreign influence, according to the nationalists.

Amid the nationalists’ push, Beijing is actively promoting domestic brands and promoting patriotism in the shopping decisions among Chinese consumers.

In July, Chinese sports brand Erke became famous overnight after donating about $7.6 million (50 million RMB) to the flood-stricken central Henan province. Chinese netizens heralded the move, and Erke experienced its biggest single-day sales jump.

“Foreign companies are facing a less receptive environment in China,” Hufbauer added. ”Official statements are often hostile to the United States, with the result that buying foreign brands, especially U.S. brands, seems unpatriotic to ordinary Chinese.”

Caught in the middle

Canada Goose entered the Chinese market in 2018 when the relationship between Ottawa and Beijing began to fray. Canada detained Huawei Chief Financial Officer Meng Wanzhou on a U.S. extradition request for fraud in December 2018, and China subsequently took custody of two Canadians — Michael Kovrig and Michael Spavor — over espionage charges. Spavor was sentenced to 11 years in prison last month.

The Chinese Consulate General in Montreal said Sept. 11 that the current Canada Goose action is related only to market regulations and disputed any “political interpretation of the case.”

Wang Qing, a professor of marketing and innovation at Warwick Business School in London, told VOA via email that the Chinese government has emphasized the importance of building strong Chinese brands for several years. “We have seen real improvement of domestic brands in terms of quality and brand image,” she said.

Yet she argued that currently, the competitive edge between Chinese and Western brands are different.

“In the short term, there is no real threat to high-end foreign brands, as most Chinese brands are value for money. They do not compete directly with foreign brands,” she added.

Reuters contributed additional reporting. 
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House Democrats this week have proposed a bill that would sharply raise taxes on wealthy Americans and corporations while slashing taxes paid by lower-income citizens. On balance, the proposal would raise an estimated $900 billion in additional revenue over 10 years to fund some of the Biden administration’s expansive social spending plans. 

The proposal, released by House Ways and Means Committee Chairman Rep. Richard E. Neal, a Democrat from Massachusetts, would move policy in the same general direction as a plan released by the Biden administration earlier in the year. This constitutes the opening salvo in what is certain to be a hard-fought battle over future tax policy. But the plan does not go as far as Biden favors in raising taxes on businesses, capital gains from the sale of investments, and the treatment of inherited wealth. 

“I think the way to summarize it is, it’s enormous,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center in Washington. “It raises taxes by about $2.1 trillion, it cuts other taxes by about $1.2 trillion — that’s moving around almost three-and-a-half trillion dollars in taxes over 10 years. That’s huge.” 

“It’s a very big mix of raising taxes on high-income people and corporations, and cutting taxes on low and middle income households,” he added in an interview with VOA. 

House Ways and Means Committee Chairman Richard Neal, D-Mass., and his panel work on the “Build Back Better” package, cornerstone of President Joe Biden’s domestic agenda, at the Capitol in Washington, Sept. 15, 2021.

According to an analysis by the Congress’s Joint Committee on Taxation, the bill would raise the average tax rate on people earning $1 million or more a year to 37.3% from 30.2%. At the other end of the financial spectrum, it would assure that people earning less than $20,000 per year would have a negative tax liability — meaning that they would receive tax refund checks from the government, even if they had paid nothing in federal taxes in a given year. 

A more complex tax code 

The Democrats’ proposal continues the trend in U.S. policy of using the tax code as a substitute for direct legislation. The proposal contains tax credits for housing construction, union dues, green energy, local journalism, and more. 

“It seems like every aspect of the [Democrats’] agenda seems to need to have a tax credit component,” said Alex Muresianu, a federal policy analyst at the Tax Foundation in Washington. 

“And it doesn’t necessarily make sense to try to run your policymaking entirely through the tax code.” 

Child tax credit 

As a response to the coronavirus pandemic, earlier this year Congress authorized a tax credit for families with children under 18 years of age, and structured it in a way that delivered monthly payments of several hundred dollars per child directly to parents. The infusion of cash led to a sharp decline in childhood poverty rates in the United States, and the tax proposal would make that credit permanent. 

However, to avoid running afoul of budget rules, the Democrats have proposed having a number of related measures expire in 2025. At the same time, they strive to make sure that the proposal jibes with Biden’s promise not to raise taxes on Americans earning less than $400,000 per year. 

Personal income tax changes 

The House proposal would raise the top marginal income tax rate, which applies only to earnings above $400,000 per year for individuals or $450,000 for married couples, to 39.6%. A bill passed by Republicans and signed into law by former President Donald Trump had reduced the top rate to 37% for all income over $500,000. 

The House proposal includes an additional surtax of 3% on income over $5 million, creating what amounts to another tax bracket for exceptionally high-earning Americans. 

Many businesses in the U.S. are structured as pass-through entities, which means their profits are taxed as personal income to their owners. Current law allows a 20% pre-tax deduction of qualifying income. The bill would cap that deduction at $400,000 for an individual and $500,000 for a married couple. 

Capital gains tax changes 

The proposal’s change in the treatment of capital gains — the earnings an investor sees when selling an asset that has gone up in value — is far less dramatic than the Biden administration had requested. Instead of heeding the president’s request to raise the 20% top rate on capital gains to 39.6%, bringing it in line with normal income, the plan would raise the rate to 25%. 

Under current law, when someone dies with unrealized capital gains, those gains are wiped away when the assets are passed on to heirs. In some cases that allows the very wealthy to pass on large fortunes to their heirs tax-free. 

The Biden administration had wanted the U.S. to begin taxing unrealized capital gains at death, but the Democrats’ proposal does not contain a provision to do that. 

Business taxes 

The Republican-led tax changes in 2017 included a drastic reduction in the corporate income tax, from 35% to 21%. The Democrats’ proposal would raise the corporate rate to 26.5%. That’s not as much of an increase as the 28% the Biden administration had proposed, and is still far below the rate in force in 2017. 

The business tax increases, critics say, will make the United States a less appealing place to do business. 

“It’s lower than previous proposals, but still, when you factor in state level corporate taxes, that  would probably put us about third [highest] in the Organization for Economic Cooperation and Development countries. So that is a major downside of the plan,” said Muresianu of the Tax Foundation. 

International business taxes 

At a time when the Biden administration is working with partners on the international stage to reform the way multinational businesses are taxed on their income, the House bill proposes a minimum tax on the foreign earnings of U.S. companies that is lower than the administration has requested. 

The Biden administration has advocated for a 21% tax on the overseas earnings of U.S. businesses, but the House plan sets the levy at 16.6%. 

In talks with other developed countries, the Biden administration has been pushing for the worldwide adoption of a 15% minimum tax on the domestic earnings of corporations. The idea is to make it less attractive for companies to transfer their operations to low- or no-tax jurisdictions. 

Experts said it was difficult to tell what impact the House proposal might have on the Biden administration’s efforts, in large part because the talks with foreign governments are considering an entirely different system that would tax companies based on where their goods and services are sold rather than where they are headquartered. 

 
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2020 році стрес-тестування не проводилося через пандемію COVID-19
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Торги на міжбанківському ринку завершилися на рівні 26 гривень 63,5–65,5 копійки
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