During the three-day World Internet Conference held in Wuzhen, China, this week, the country’s biggest tech tycoons rushed to show their support for Beijing’s “common prosperity” initiative.

Their enthusiasm for the initiative comes amid a yearlong crackdown on the country’s tech industry, where several high-profile companies have faced investigations and fines. Formerly high-flying celebrity CEOs are now keeping a low profile.

Daniel Zhang, CEO at e-commerce giant Alibaba group, said his company’s donation of $15 billion to the initiative over the next five years represented its willingness to help China achieve its goal of prosperity for all.

Zhou Hongyi, billionaire entrepreneur and chairman and CEO of the country’s largest Internet security firm, Qihoo 360, said his company will donate an as yet undisclosed sum to the initiative and step up to help smaller firms thrive.

Stressing the need to develop these enterprises, Zhou said, “Our success depends on our country’s policies. … We must take the initiative to align our development with our national strategies and serve our country with science and technology.”

Lei Jun, CEO of consumer electronics manufacturer Xiaomi, said that technological development must be used to achieve social good and that tech companies should help build a good life for everyone.

Other tech giants, such as technology conglomerate Tencent, online agricultural marketplace Pinduoduo and food delivery platform Meituan, answered Beijing’s call before the Sept. 26-28 gathering, pledging financial support for social causes.

‘Common prosperity’ initiative

During his first eight years in office, Chinese President Xi Jinping occasionally mentioned the term “common prosperity.” Since February, when he declared China had eliminated poverty, “common prosperity” has become one of his favorite themes.

At a meeting of the Communist Party’s Central Committee for Financial and Economic Affairs on Aug. 17, Xi stressed that those who are already rich need to guide and help others achieve prosperity.

“Common prosperity means prosperity for all, not just a few people,” Xi said, according to a meeting note published by China’s state-run Xinhua News Agency. “We can allow some to get rich first, but we must then launch a scientific public policy to make sure every citizen can have their fair share.”

Central to achieving common prosperity is a concept known as the three distributions, first introduced by the Chinese economist Li Yining in the 1990s.

According to the explanation from China’s National Development and Reform Commission, the first distribution of wealth comes through market competition. The second is achieved through the state via taxes, subsidies and social welfare programs. The third distribution taps enterprises and individuals to redistribute their wealth through voluntary donations.

‘Third distribution’

“The target of this round of the common prosperity initiative is the wallet of wealthy domestic entrepreneurs,” said Lu Jun, founder of the influential nongovernmental organization Beijing Yirenping Center, in a phone interview with VOA Mandarin. His NGO focuses on eliminating discrimination and defending the rights of disadvantaged groups.

Wang Hsin-Hsien, a political science professor and chair of the East Asian Studies Institute at National Cheng-Chi University in Taiwan, told VOA Mandarin that businesses are essentially forced to make charity donations under the current system.

“China’s current common prosperity initiative is controlled by the party-state. That means large enterprises must make donations in order to show that they are choosing the right side. So I don’t think these donations will be voluntary,” he told VOA Mandarin via phone.

“This is not the charitable donation we see in Western countries, because eventually the money will be returned to the state for redistribution,” he added.

Meanwhile, analysts say this new wave of donation will not likely help boost China’s civil society.

NGOs under microscope

China has been tightening its grip on NGOs since 2016, demanding they provide specific funding sources and membership information or face being banned.

This year, China announced a new wave of crackdowns targeting NGOs. In May, the Ministry of Civil Affairs started to target “illegal NGOs with measures such as limiting their access to conference venues, publicity resources and manpower,” according to the state-owned news outlet China Daily.

“The moves were part of a sweeping campaign launched last month by the ministry and 21 other central agencies to clamp down on the unregistered NGOs, which have masqueraded as foundations, industrial associations and other nongovernmental groups to rake in money from the public,” China Daily said.

Lu told VOA Mandarin that the NGOs that can survive or get funding will be those that align their goals with the government’s agenda — unlike many NGOs outside China, whose views diverge from those of the government.

“I don’t think this is necessarily good news for NGOs, as I believe the money donated by private companies will go to the government-run or government-affiliated NGOs,” he said of the third distribution.

“Beijing won’t allow companies to donate to independent NGOs freely, let alone the ones they don’t like, such as NGOs working on human rights, labor rights and women’s rights.”  

 
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Fitch Ratings said Friday the United States’ AAA sovereign credit rating could be pressured if federal lawmakers fail to address the debt ceiling in a timely manner, noting that political brinkmanship and reduced financing flexibility could increase the risk of a default.

A two-year suspension of the debt ceiling expired in July, and Democrats and Republicans in Congress remain at odds. The credit rating agency said it believes action will be taken to raise or suspend the debt ceiling in time to avert a default. But it said the failure of the latest efforts to address the matter “indicates that the current stand-off could be among the most protracted since 2013.”

U.S. Treasury Secretary Janet Yellen has warned that the government could run out of cash by October 18 if the debt ceiling is not raised or suspended, leading to its first-ever default.

“We view reaching the Treasury’s X-date [October 18] without the debt limit having been raised as the principal tail risk to the U.S. sovereign’s willingness and capacity to pay,” Fitch said in a report. “If this appeared likely we would review the U.S. sovereign rating, with probable negative implications.”

As for a default, Fitch said it “would downgrade only the affected instruments to a default rating level, while non-defaulted instruments that continued to perform would retain their then-current ratings.”

It added that the United States would still have a limited capacity to make payments beyond October 18, but that would depend on “volatile revenue and expenditure flows” and that prioritization could reduce the immediate risk of a missed payment.

Fitch has had a negative outlook on the AAA rating since July 2020.
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U.S. consumer spending increased more than expected in August, but a downward revision to July data kept intact expectations that economic growth slowed in the third quarter as a resurgence in COVID-19 infections curbed demand for services.

The Commerce Department said Friday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, rebounded 0.8% in August, shrugging off declining motor vehicle sales caused by a global shortage of semiconductors, which is undercutting the production of automobiles.

Data for July was revised down to show spending dipping 0.1% instead of gaining 0.3% as previously reported. Economists polled by Reuters had forecast consumer spending increasing 0.6% in August. Spending was likely boosted by back-to-school shopping and child tax credit payments from the government.

Though spending is shifting back to services from goods, the flare-up in coronavirus cases in the summer, driven by the Delta variant, crimped demand for air travel and hotel accommodation as well as sales at restaurants and bars.

Services account for the bulk of consumer spending. Growth in consumer spending is expected to decelerate sharply in the third quarter and regain steam for the remainder of the year. Infections are trending down, which already is leading to a rise in demand for travel and other high-contact services.  

Consumer spending grew at a robust 12.0% annualized rate in the second quarter, accounting for much of the economy’s 6.7% growth pace, which raised the level of gross domestic product above its peak in the fourth quarter of 2019. Growth estimates for the third quarter are below a 5.0% rate.

“Consumer momentum should improve in the months ahead, driving the economy closer to a full post-pandemic recovery and keeping inflation hot,” said David Kelly, chief global strategist at JPMorgan Funds in New York.

Inflation maintained its upward trend in August. The personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, climbed 0.3% after increasing by the same margin in July.

In the 12 months through August, the so-called core PCE price index increased 3.6%, matching July’s gain.

The core PCE price index is the Federal Reserve’s preferred inflation measure for its flexible 2% target. The Fed last week upgraded its core PCE inflation projection for this year to 3.7% from 3.0% back in June.

The U.S. central bank said it would likely begin reducing its monthly bond purchases as soon as November and signaled interest rate increases may follow more quickly than expected. Fed Chair Jerome Powell told lawmakers Thursday that he anticipated some relief from high inflation in the months ahead.
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Торги на міжбанківському валютному ринку завершуються на рівні 26 гривень 61–63 копійки за долар
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About two centuries ago, American local, state and federal governments poured millions of dollars into building canals to move the nation’s people and goods. By 1840, there were 3,000 miles of canals in the United States. But, within 20 years, the rise of the railroads would make canals practically obsolete. In the 1840s, several U.S. states ended up defaulting on the loans they took to build canals and railroads.

The defaults are an example of what can happen when governments spend on infrastructure — because trying to guess the future can be like shooting at a moving target. 

“You try to foresee a future. You try to guess what you’re going to need 10, 20, 30 years down the line,” says Richard White, professor emeritus of American history at Stanford University in California. “It takes a long time to construct this kind of infrastructure. And secondly, you’re going to be paying for it in the future…so very often you can be paying for something you no longer need well into the future.” 

Yet, not spending on infrastructure can be costly. 

“If we continue to not invest, Americans — between now and 2039 —— will lose on average $3,300 per year in lost disposable income,” says Greg DiLoreto, past president of the American Society of Civil Engineers (ASCE). “That’s money they’ll lose because they’re spending it on fixing their cars because it ran into a pothole, for example. That’s wasted gas stuck in traffic. Or, this past year where I live, we have the big freeze. People were investing in generators so they would have power. Or that’s when a water line breaks and you go out and you buy bottled water.” 

Every four years, the ASCE grades America’s Infrastructure. The assessment looks at several categories including energy, waste water, drinking water, aviation, roads, bridges, dams and rail. The 2021 Report Card gives the nation’s infrastructure a low C grade — essentially the lowest passing grade possible. 

President Joe Biden has made infrastructure funding a signature piece of his agenda. In August, the U.S. Senate passed a $1 trillion bipartisan infrastructure plan that focuses on transportation, utilities, including high-speed internet for rural communities, and pollution cleanup. The proposal, which would be the largest federal investment in infrastructure in more than a decade, must still pass in the House of Representatives. 

DiLoreto says it’s hard to prioritize one infrastructure category area over the other because they all hinge together. 

“You’ve got to have strong electric to have strong water and wastewater and broadband,” DiLoreto says. “You’ve got to have a strong road system if you’re going to feed your ports. You’ve got to have strong ports if you’re going to ship your goods and get your goods into this country. And, without the roads to support that, what happens when [goods] wind up on the ports and can’t go anywhere [because] congestion is a problem?” 

While it’s challenging to predict the future, White sees several places where infrastructure money would be wasted. That includes places like coastal Louisiana, the San Francisco Bay and large parts of Florida and the Atlantic coastline, which could be impacted by climate change and rising sea levels.

“Do we really want to build infrastructure in places where we’re no longer going to be able to inhabit?” White says. “Are we really going to want to build a huge amount of infrastructure to protect coastlines that we really cannot protect? Are we going to want to set up sewage systems that, in fact, will be overwhelmed by ocean rise? We have a whole series of things which are going to be controversial because people live there now and they’re going to want that infrastructure to protect them.” 

Another potentially unpopular move would be to refrain from spending money on more fire-prone areas of the country, primarily in the West. From January 1, 2021, through September 29, 2021, more than 46,000 wildfires burned through almost 2.4 million hectares of land across the United States.

“We should not be building up infrastructure that encourages people to move into places where these kinds of fires are going to ravage them, force them out, [and] we’re going to have to spend huge public resources trying to protect them,” White says. “It seems to me the writing’s on the wall. It’s not that hard to figure out, but none of these things are necessarily going to be particularly popular.” 

Local governments own most of the nation’s infrastructure, but any ambitious infrastructure plans require at least some federal funding. 

“There’s no question that all the spending increases happen because of bold elected officials, and elected officials are only bold when the people they represent tell them to be. So we need bold leadership to make this happen,” DiLoreto says. “We also need to design these projects both sustainably and to be resilient.” 
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Угорщина підписала 27 вересня новий довгостроковий контракт про постачання газу із російським «Газпромом»
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