The Biden administration on Thursday pushed Congress to pass its proposed $260 billion Inflation Reduction Act, which the White House says will “lower costs, reduce inflation, and address a range of critical and long-standing economic challenges.”

“My message to Congress is this: Listen to the American people,” Biden said during a virtual roundtable of U.S. business leaders. “This is the strongest bill you can pass to lower inflation, continue to cut the deficit, reduce health care costs, tackle the climate crisis and promote America’s energy security, all while reducing the burdens facing working-class and middle-class families.”

Economists, politicians and ordinary consumers alike agree that rising prices are a problem — U.S. inflation hit 9.1% in June, according to the U.S. Bureau of Labor Statistics. Food price hikes are especially painful for many American families: In the past year those have risen, on average, by about 10%, the highest yearly increase in more than 40 years.

What few can agree on, however, is what needs to be done to bring it back down.

Biden’s supporters say the act will raise government revenues by $313 billion by imposing a 15 percent minimum corporate tax — a move that will affect some of the nation’s wealthiest companies, especially those that paid nothing in federal corporate income taxes on their profits in 2020.

It will also reform prescription drug pricing, which the administration estimates will save the federal government $288 billion a year. The act also invests more than $400 billion in energy security, climate change mitigation and health care.

The country’s largest union umbrella group, the American Federation of Labor and Congress of Industrial Organizations, supports the act, its president said Thursday during the roundtable with Biden.

“I’m bringing the voice of our 57 unions, 12.5 million members, who believe this bill is going to help us reshape the future and deliver real help to working families by reducing rising energy and health care costs,” said AFL-CIO President Liz Shuler. “This is going to deliver fundamental economic change across America.”

But some economists are not so sure.

A study from the Penn Wharton Budget Model predicts the act would have little impact on inflation, forecasting prices would slightly increase for another two years and then fall.

The Committee for a Responsible Federal Budget reached the opposite conclusion, saying that the act would “very modestly reduce inflationary pressures in the near term while lowering the risk of persistent inflation over time.”

Moody’s Analytics reached a similar conclusion, while the nonpartisan Congressional Budget Office estimated the bill would trim U.S. budget deficits by $102 billion over 10 years.

Economist Steve H. Hanke, a professor of applied economics at Johns Hopkins University and founder and co-director of the university’s Institute for Applied Economics, Global Health, and the Study of Business Enterprise, said Thursday that the act is “ill-conceived” and involves the one thing that people seem to dislike more than rising prices: taxes.

“The idea it’s going to do anything with inflation is ridiculous,” he said Thursday during a seminar with the Jewish Policy Center. “It will change the relative prices of different things — exactly how, I don’t know, because I haven’t gone through the 10,000-page thing. And it looks to me like it’s a tax increase bill.”

A Senate vote on the legislation in the next few days appeared more likely late Thursday. Democrats said they had reached an agreement on some changes to the bill, clearing a path for its consideration by the chamber.

Senator Kyrsten Sinema, an Arizona Democrat who was seen as the pivotal vote, said in a statement that she had agreed to changes in the measure’s tax and energy provisions. Senate Majority Leader Chuck Schumer, a New York Democrat, said he believed the compromise “will receive the support” of all Democrats in the chamber. The party needs unanimity to succeed in the 50-50 Senate, along with Vice President Kamala Harris’ tiebreaking vote.

Schumer has said he hopes the Senate can begin voting on the bill Saturday. Passage by the House, which Democrats control, could come next week.

Some information for this report came from The Associated Press.
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From Phoenix, Arizona, in the southwest United States, to Jackson, Mississippi, in the southeast U.S., people are waiting in long lines in their vehicles to receive food assistance from food banks and mobile pantries.

Soaring inflation in the U.S. is raising the price of everything from food to gas to rent. And that’s been making it hard for many people to buy the food they need.

“We’re seeing a lot more families who are struggling to make ends meet because the dollar isn’t going as far as it used to at the grocery store,” said Kellie O’Connell, CEO at Nourishing Hope, a food pantry in Chicago. “So now folks are needing to make difficult choices like paying for medicine or buying food.”

In Phoenix, “a lot of people on fixed incomes, especially in our senior community, go to the grocery store and see the skyrocketing prices, especially on necessities like milk, eggs and meat,” said Jerry Brown, director of media relations for St. Mary’s Food Bank. “And they may not be able to afford these items.”

In Virginia, Maria Aguilar, who immigrated from El Salvador, works two jobs to stay afloat and take care of her three children.

“Going to the grocery store is a challenge because food is so expensive,” she told VOA. “Knowing I can get additional food makes a big difference,” she said, as she brought bread, fruit and other provisions to her car at Food for Others, a food bank in Fairfax, Viriginia, near Washington.

More food needed

The demand for food is continuing to grow.

“Last week, the number jumped to about 68% at our main locations in Phoenix — that’s 800 to 1,200 families a month,” Brown said.

“We are seeing much longer lines at food pantries and soup kitchens in Mississippi,” said Kelly Durrett, director of external affairs for the Mississippi Food Network.

The network’s 430 partners provide food to those in need in the state, the poorest in the U.S. Starting in June, Durrett said, the number of people coming to the network’s partners had increased between 10% and 20%.

“Our clientele is the working poor who have minimum wage jobs that keep them at the poverty level,” Durrett told VOA.

“Some people are arriving early at mobile food pantries, waiting for them to open,” she said. “With so much demand, some pantries quickly run out of food.”

The largest food bank in the U.S., in the city of Houston, Texas, feeds some 1 million people every year through schools, churches and other partners.

Brian Greene, president and CEO of the Houston Food Bank, told VOA, “We’re not having to turn anyone away, but we can’t be as generous with food now as we would like. A family is probably not going to get as much food as they would have a year ago.”

Some are concerned that the food situation could become as serious as it was during the height of the coronavirus pandemic.

“We’re inching closer every month,” said Meredith Knopp, president and CEO of the St. Louis Area Foodbank. “It is troubling to see so many people in line and needing assistance, many for the first time. We also have people who are coming and saying, ‘I’m only able to feed my kids, and I haven’t eaten in two days.'”

Lack of donations

Annie Turner, executive director of Food for Others, said that while the need for food has gone up, food donations have gone down.

“The number of families who came to our warehouse to get food nearly doubled from June 2021 to June 2022,” she said. At the same time, “we’ve seen a 42% decrease in food donations since the high cost of food is also affecting our donors.”

“We used to purchase about 9% of the food we distributed,” she added, “but now that’s grown to 32% during this past year.”

The story is similar at other food banks across the U.S.

“Our donations from grocery stores have decreased by about 33%, and so we have to supplement that by buying food,” said O’Connell in Chicago.

In Phoenix, “we will probably have to purchase about 200% more food in the coming year since we know we’re not going to receive it in donations,” Brown said.

Seeking help

“I’m hopeful that communities will rally to provide food aid like they did during the coronavirus pandemic.” O’Connell said.

“We’re telling local farmers that we’ll arrange for volunteers to pick fruit and vegetables that can be distributed to people in need,” Knopp said.

At Food for Others, William Gonzales said he was grateful for the food he had been given. “My family has been struggling, and this is helping make our lives so much easier.”

The network’s 430 partners provide food to those in need in the state, the poorest in the U.S. Starting in June, Durrett said, the number of people coming to the network’s partners had increased between 10% and 20%.
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Порт Миколаєва є важливим транспортним хабом, до повномасштабної війни він забезпечував експорт близько 25% аграрної продукції
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За даними Мінекономіки, загалом українські підприємці подали 1769 заявок на переміщення виробничих потужностей
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President Joe Biden virtually joined Michigan Governor Gretchen Whitmer Tuesday to celebrate the CHIPS and Science Act, which aims to boost U.S. competitiveness against China by allocating billions of dollars toward domestic semiconductor manufacturing and scientific research.

“This bill makes it clear the world’s leading innovation will happen in America. We will both invent in America and make it in America,” Biden said. He was scheduled to join the event in person but had to remain in isolation after testing positive for COVID-19 again on Saturday in what his physician described as a “rebound” case.

In the coming days, Biden is expected to sign the legislation, which passed in a 243-187 vote in the House of Representatives and 64-33 vote in the Senate last week.

The $280 billion act includes $52 billion in incentives for domestic semiconductor production and research, as well as an investment tax credit for semiconductor manufacturing. Advocates say it will allow the U.S. to catch up in the global semiconductor manufacturing race currently dominated by China, Taiwan and South Korea.

Last year, a semiconductor shortage affected the supply of automobiles, electronic appliances and other goods, causing higher inflation globally and pummeling Biden’s public approval among American voters.

Michigan, a major hub for the American auto industry, has been one of the states hardest hit by the semiconductor shortage.

“This bill will mean humming factories and lower costs on electronics, medical devices, farm equipment and cars for working families,” Whitmer said.

The act includes $4.2 billion to fund defense initiatives and the U.S. mobile broadband market, particularly efforts to promote non-Chinese 5G equipment manufacturing.

Catching up with China

The U.S. share of global semiconductor manufacturing capacity has decreased from 37% in 1990 to 12% today, largely because other governments have offered manufacturing incentives and invested in research to strengthen domestic chipmaking capabilities, according to a state of the industry report by the Semiconductor Industry Association.

Now China accounts for 24% of the world’s semiconductor production, followed by Taiwan at 21%, South Korea at 19% and Japan at 13%, the report said.

With the CHIPS Act, the administration hopes to bring as much semiconductor manufacturing to the U.S. as practically possible, said Bonnie Glick, director of the Krach Institute for Tech Diplomacy at Purdue University.

“And what can’t be reasonably onshore, either because it’s cost prohibitive or other allied countries simply do it better, we can ally-shore manufacturing and support that,” she told VOA.

The two allies the administration has leveraged are South Korea and Japan, both of which Biden visited in May. In Seoul, he toured a Samsung computer chip factory that is the model for a $17 billion facility that the South Korean technology giant is setting up in the U.S. state of Texas.

Last week, the U.S. and Japan launched a new joint international semiconductor research hub under a “bilateral chip technology partnership” to bolster manufacturing for 2-nanometer chips as early as 2025.

Washington has also persuaded Taiwan Semiconductor Manufacturing Ltd. (TSMC) to open a U.S. foundry to produce advanced semiconductors. The $12 billion facility in the state of Arizona was completed last month and is scheduled to start production of 5 nm chips by 2024. TMSC also has plants in China.

“We’re back in the game,” Biden said Tuesday. “Remember, we invented these chips, we modernized these chips, we made them work, and there’s a lot more we can get done.”

The CHIPS Act has laid out a clear strategy for Washington, said Volker Sorger, director of the Devices & Intelligent Systems Laboratory at the George Washington University.

“Gain autonomy and eliminate political dependencies on these global supply chain values,” Sorger told VOA.

That strategy puts the U.S. on a collision course with China, which also aims to be the global leader in semiconductors. In 2015, Beijing launched the Made in China 2025 project, which aimed to increase chip production from less than 10% of global demand at the time to 40% in 2020 and 70% in 2025.

The Made in China 2025 program and the People’s Liberation Army’s goal of military-civil fusion make it “overtly clear that Beijing is seeking to dominate global technology and supply chains through anti-competitive trade practices and infiltration of dual-use technology research,” Glick said.

The U.S. government has been pushing for stricter export regulations to China by prohibiting export of equipment needed for manufacturing chips at 14 nm and below. “That would mark an escalation from the previous ban covering 10 nm and below,” Glick added.

Taiwan’s strategic importance

Taiwan — a self-governed island that Beijing claims to be its breakaway province — lies at the heart of the increasingly tense U.S.-China rivalry.

Taipei has dominated manufacture of the world’s most high-tech chips, accounting for 92% of the global production of 10 nm or smaller semiconductors, essentially creating what some observers have characterized as a “silicon shield” that ensures American support in the event of a Chinese attack, as well as a deterrence to such a move.

A military conflict over Taiwan could disrupt TMSC’s semiconductor production and have disastrous effects on global manufacturing.

U.S.-China tensions are already spooking technology investors. TSMC shares fell nearly 3% on Tuesday as U.S. House of Representatives Speaker Nancy Pelosi landed in Taipei in a visit she said demonstrated American solidarity with the Taiwanese people.

Beijing has condemned the visit, the first by a U.S. House speaker in 25 years, as a threat to peace and stability in the Taiwan Strait.

Rare earths

The CHIPS Act does not include provisions to secure supply chains of rare earths — and other critical minerals used in semiconductors and other high-tech elements — to reduce the nation’s dependence on China, a major producer of these elements.

“I don’t know that we have developed a coherent strategy on accessing both rare and nonrare elements,” Glick said.

Last June, following Biden’s executive order to improve supply chains, the administration released a report concluding that the U.S. was overly reliant on China for critical minerals. Currently, China controls 87% of the global permanent magnet market, 55% of rare earths mining capacity and 85% of rare earths refining.

Earlier this year, the administration announced actions it said would bolster the supply chain of these elements, including a contract for U.S. company MP Materials to process heavy rare earth elements at its California production site — the first processing and separation facility of its kind in the nation.  
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British bank and financial services giant HSBC, a longtime presence in East Asia, has become the first foreign lender to install a Chinese Communist Party committee in its investment banking subsidiary in China.  

HSBC’s China investment bank, HSBC Qianhai Securities, established a CCP committee after the lender increased its stake in the joint venture from 51% to 90% in April.  

Some experts are concerned that the move might expose HSBC to increased influence from Beijing. But other analysts told VOA Mandarin that the development isn’t a big deal, saying there is little evidence that these party committees exert substantial influence in privately owned companies. 

“The establishment of a party committee at HSBC may be super important, or it may be entirely irrelevant and not worth the attention it’s getting,” Scott Kennedy, a senior adviser at the Center for Strategic and International Studies in Washington, told VOA Mandarin in an interview.  

“The vast majority, as far as I can tell, really don’t do anything. They haven’t affected the normal procedures for corporate governance,” he said. “But in Xi Jinping’s China, nothing is impossible.”

Founded during a growth phase

Founded as the Hongkong and Shanghai Banking Corporation, Ltd., HSBC was established in Hong Kong in March 1865, and opened its doors in Shanghai one month later. It launched at a time of burgeoning trade among China, India and Europe.  

China’s legal requirement that all companies with more than three party members must establish a party committee dates back to the 1993 PRC Company Law, according to Gabriel Wildau, a managing director at the consulting company Teneo. But before Xi became the CCP’s general secretary in 2012, this requirement was lightly enforced, especially for private and foreign companies.   

“Under Xi Jinping, enforcement has intensified, and the share of private companies with party cells has increased,” Wildau wrote in an email to VOA Mandarin, referring to China’s president since 2013. Xi has expanded the party’s influence over the economy in many ways, apparently based on his sense that both state-owned and private companies were often operating business models that undermined the party’s political, economic and social objectives, Wildau said. 

Seven international banks control investment banking operations in mainland China, including HSBC, Goldman Sachs, JPMorgan, Credit Suisse, Morgan Stanley, UBS and Deutsche Bank, according to the Financial Times. So far, only HSBC has set up a CCP committee, according to the report.  

Dennis Kwok, a partner at Elliott, Kwok, Levine & Jaroslaw, a New York City law firm, thinks establishing a party committee risks exposing HSBC to increased party reach. 

“What China is doing is that it is opening its financial market to foreign firms, and you see a lot of investment banks and other financial institutions have shown great interest in going into the China market. But at the same time, China is also using these party cells to increase their control and influence of these financial institutions,” Kwok said in an interview with VOA Mandarin. 

After a lengthy period of political and economic isolation under Mao Zedong, Deng Xiaoping began opening China to foreign companies with the launch of his reform and opening policy in 1978. 

Following the establishment of this HSBC committee, foreign companies should reevaluate the risks associated with doing business in China, Kwok said. 

“This is the time to reassess your risk exposure. This is the time to do a stress test on your operations on the ground to see if you are managing the legal and political risk in the right way,” said Kwok. “And if things don’t go your way, can your international operation handle any political or legal crises that emerge from China?” 

The development also drew the attention of some high-level U.S. politicians.  

Florida Republican Senator Marco Rubio, long known for his anti-Beijing stance, criticized the move. “Communist party committees are not just for show. They exist to influence, monitor, and ultimately control the company,” he said on July 21. “Investors need to be aware.”  

But multiple China analysts with whom VOA Mandarin spoke were less concerned.  

One reason is because these committees are relatively common in China, and they don’t appear to do much in practice, according to Teneo’s Wildau, a former Shanghai bureau chief for the Financial Times.  

“My sense from Chinese corporate executives and investors is that party organizations rarely intervene in substantive decision making and are often quite irrelevant in practice. Often they do little more than organize occasional ideological study sessions,” Wildau wrote.  

Still, he recognizes that foreign business leaders and investors are concerned that party cells may grow more assertive and influential. “But I don’t think we’re at that point yet,” Wildau said. 

The Chinese embassy in Washington did not respond to VOA’s request for comment. 

In a statement, HSBC told the Financial Times that “[e]mployees of private firms in China are able to form a Party branch. These branches are common and can be set up by as few as three employees. It is important to note that management has no role in establishing such groups, they do not influence the direction of the business, and have no formal role in the day-to-day activities of the business.”   

What distinguishes this particular party committee from others is the fact that HSBC is such a significant stakeholder in HSBC Qianhai Securities, according to Wildau.  

Up until now, party committees have usually been in companies that are more equally Sino-foreign joint ventures, Wildau said. The fact that HSBC now owns a 90% stake in HSBC Qianhai Securities and still established a party committee makes it look “like a milestone,” he said. 

Hoping for ‘business as usual’

“Still, HSBC and foreign banks probably hope that establishing the committee will be a box-ticking exercise that doesn’t disrupt business as usual,” Wildau wrote. “That a party committee has been established tells us very little about what influence it will have, if any.” 

Victor Shih, a professor at the University of California, San Diego, agrees that some responses to the development have been “a bit of an over-reaction,” but says it’s still something people should be aware of. 

“Most of the time it is for show, but in an emergency situation, when the party would like to mobilize all resources, these committees potentially serve as the links between the party and resources in society,” Shih wrote in an email to VOA Mandarin. 

Political developments in Hong Kong, like the controversial 2020 National Security Law, also inform this move, Shih said, since HSBC makes almost all of its profit in that city.  

“The bank has had to walk a tight line in the run-up to the Hong Kong national security law and in the aftermath of its passage,” Shih wrote. “HSBC’s eagerness to announce the formation of a party committee might be related to its desire to score points with the Chinese government.” 
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America’s largest warehouse market is full as major U.S. retailers warn of slowing sales of the clothing, electronics, furniture and other goods that have packed the distribution centers east of Los Angeles.

The merchandise keeps flooding in from across the Pacific, and for one of the busiest U.S. warehouse complexes, things are about to get worse.

Experts have warned the U.S. supply chain would get hit by the “bullwhip effect” if companies panic-ordered goods to keep shelves full and got caught out by a downturn in demand while shipments were still arriving from Asia.

In the largest U.S. warehouse and distribution market — stretching east from Los Angeles to the area known as the “Inland Empire” — that moment appears to have arrived.

“We’re feeling the sting of the bullwhip,” said Alan Amling, a supply-chain professor at the University of Tennessee.

The sprawl of Inland Empire warehouses centered in Riverside and San Bernardino counties grew quickly in recent years to handle surging demand and goods imported from Asia.

That booming area, visible from space, anchors an industrial corridor encompassing 1.6 billion square feet of storage space that extends from the busiest U.S. seaport in Los Angeles to near the Arizona and Nevada borders. That much storage space is nearly 44 times larger than New York City’s Central Park and 160 times bigger than Tesla Inc’s TSLA.O new Gigafactory in Texas.

But a consumer spending pullback now threatens to swamp warehouses here and around the country with more goods than they can handle — worsening supply —  chain snarls that have stoked inflation. Retailers left holding unwanted goods are faced with the choice of paying more money to store them or denting profits by selling them at discount.

Inland Empire warehouse vacancies are among the lowest in the nation, running at a record 0.6% versus the national average of 3.1%, according to real estate services firm Cushman & Wakefield. 

The market is poised to get even tighter as shoppers at Walmart WMT.N, Best Buy BBY.N and other retailers retreat from early COVID-era spending binges.

Binge to backlog

While U.S. consumer spending remains above pre-pandemic levels, retailers and suppliers are raising alarms about backlogs in categories that have fallen out of fashion as consumers catch up on travel and struggle with the highest inflation in 40 years.

Last week, Walmart said surging food and fuel prices left its lower-income customers with less cash to spend on goods, and Best Buy said shoppers were curbing spending on discretionary products like computers and televisions. Those cautionary signals followed Target Corp’s TGT.N alert that it was saddled with too many TVs, kitchen appliances, furniture and clothes.

Suppliers —  ranging from barbecue grill maker Weber Inc WEBR.N to Helen of Troy Ltd HELE.O, a consumer brands conglomerate that includes OXO kitchen tools — also have warned of slowing demand and an urgent need to clear inventories.

While the U.S. economy was downshifting, goods kept pouring in at near-record levels.

Imports to U.S. container ports that process retail goods from China and other countries jumped more than 26% in the first half of 2022 from pre-pandemic levels, according to Descartes Datamyne. Christmas shipments and the reopening of major Chinese factory hubs could goose volumes further.

Meanwhile, cargo keeps flooding in to the busiest U.S. seaport complex at Los Angeles/Long Beach. During the first half of this year, dockworkers there handled about 550,000 more 40-foot containers than before the pandemic started, according to port data.

Christmas toys and winter holiday decor landed on those docks in July, along with some patio furniture for Walmart and stretch pants, jeans and shoes for Target, said Steve Ferreira, CEO of Ocean Audit, which scrutinizes marine shipping invoices.

Retailers ordered most of those goods months ago and many are destined for the Inland Empire’s already jam-packed warehouses.

“It’s a domino effect. Now the inventory is going to really build up,” said Scott Weiss, a vice president at Performance Team, a Maersk MAERSKb.CO company with 22 warehouses in greater Los Angeles.

Demand for space in the Inland Empire is so intense that when 100,000 to 200,000 square feet of space frees up, it “gets gobbled up in a second,” said Weiss.

Sears and parking lots

Investors have almost 40 million square feet under construction in the Inland Empire — including Amazon.com Inc’s AMZN.O biggest-ever warehouse — and at least 38% is spoken for, said Dain Fedora, vice president of research for Southern California at Newmark, a commercial real estate advisory firm.

While Amazon’s 4.1 million square-foot facility rises on former dairy land in the city of Ontario, the online retailer has been shelving construction plans in other parts of the country.

Amazon is the biggest warehouse tenant in the Inland Empire and the nation. Its decision to scale back on building, coupled with rising interest rates and the slowing economy, is sidelining other would-be Inland Empire warehouse builders, area real estate brokers and economists told Reuters.

Meanwhile, the scramble for space continues.

Trucking company yards and spare lots around the region have already been converted to makeshift container storage, so entrepreneurs are marketing vacant stores as last-resort warehouses in waiting.

Brad Wright is CEO of Chunker, which bills itself as an AirBNB for warehouses, and works with everyone from state officials to the owners of vacated big-box stores to find new places to stash goods.

During a recent tour at the former Sears anchor store in San Bernardino’s Inland Center mall, Wright and a potential tenant strolled past collapsed ceiling tiles, sagging wall panels and idled escalators while working out how forklifts would navigate the abandoned space. Wright sees the empty stores as one answer to easing the log jams.

“There’s a lot of them sitting around, and they’re in good locations,” he said.
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