Satellites Shed Light on Dictators’ Lies About Economic Growth

Several dictators are significantly overstating economic growth, according to research which looks at satellite images of countries at night. As Henry Ridgwell reports, economists have long questioned the reliability of data from autocratic regimes – including China.


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Clashes as Thousands Protest French Agro-industry Water ‘Grab’

Thousands of demonstrators defied an official ban to march Saturday against the deployment of new water storage infrastructure for agricultural irrigation in western France, some clashing with police.

Clashes between paramilitary gendarmes and demonstrators erupted with Interior Minister Gerald Darmanin reporting that 61 officers had been hurt, 22 seriously.

“Bassines Non Merci,” which organized the protest, said around 30 demonstrators had been injured. Of them, 10 had to seek medical treatment and three were hospitalized.

The group brings together environmental associations, trade unions and anti-capitalist groups against what it claims is a “water grab” by the “agro-industry” in western France.

Local officials said six people were arrested during the protest and that 4,000 people had turned up for the banned demonstration. Organizers put the turnout at 7,000.

The deployment of giant water “basins” is underway in the village of Sainte-Soline, in the Deux-Sevres department, to irrigate crops, which opponents claim distorts access to water amid drought conditions.

Around 1,500 police were deployed, according to the prefect of the Deux-Sevres department Emmanuelle Dubee.

Dubee said Friday she had wanted to limit possible “acts of violence,” referring to the clashes between demonstrators and security forces that marred a previous rally in March. 

The Sainte-Soline water reserve is the second of 16 such installations, part of a project developed by a group of 400 farmers organized in a water cooperative to significantly reduce water usage in the summer.

The open-air craters, covered with a plastic tarpaulin, are filled by pumping water from surface groundwater in winter and can store up to 650,000 square meters of water. 

This water is used for irrigation in summer, when rainfall is scarcer. 

Opponents claim the “mega-basins” are wrongly reserved for large export-oriented grain farms and deprive the community of access to essential resources.


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Study: Heat Waves Cost Poor Countries the Most, Exacerbating Inequality

Heat waves, intensified by climate change, have cost the global economy trillions of dollars in the past 30 years, a study published Friday found, with poor countries paying the steepest price.

And those lopsided economic effects contribute to widening inequalities around the world, according to the research. 

“The cost of extreme heat from climate change so far has been disproportionately borne by the countries and regions least culpable for global warming,” Dartmouth College professor Justin Mankin, one of the authors of the study published in the journal Science Advances, told AFP. “And that’s an insane tragedy.”

“Climate change is playing out on a landscape of economic inequality, and it is acting to amplify that inequality,” he said.

Periods of extreme heat cost the global economy about $16 trillion between 1992 and 2013, the study calculated. 

But while the richest countries have lost about 1.5% of their annual per capita GDPs dealing with heat waves, poorer countries have lost about 6.7% of their annual per capita GDPs. 

The reason for that disparity is simple: poor countries are often situated closer to the tropics, where temperatures are warmer anyway. During heat waves, they become even hotter.

The study comes just days ahead of the start of the COP27 climate summit in Egypt, where the question of compensation for countries that are disproportionately vulnerable to but least responsible for climate change is expected to be one of the key topics. 

The costs of heat waves come from several factors: effects on agriculture, strains on health systems, less productive workforces and physical damage to infrastructure, such as melting roads. 

Study researchers examined five days of weather considered extreme for a specific region each year. 

“The general idea is to use variation in extreme heat, which is effectively randomly assigned to all these economic regions and see the extent to which that accounts for variation in economic growth” in a given region, Mankin explained. 

“Then the second part is to say, ‘OK, how has human-caused warming influenced extreme heat?'” he added.

Despite these calculations, the study results almost certainly underestimate the true cost of extreme heat, according to the paper — only studying five days per year does not reflect the increased frequency of such heat events, and not all potential costs were included. 

Previous studies on the subject had focused on the costs of heat to specific sectors, though scientists say it is important to look at the price tag of climate change wholistically. 

“You want to know what those costs are, so that you have a frame of reference against which to compare the cost of action,” Mankin said, such as establishing cooling centers or installing air conditioners, versus “the cost of inaction.”

“The dividends economically of responding to the five hottest days of the year could be quite great,” he said.

But according to Mankin, the most important response is to reduce carbon emissions to slow global warming at the source. 

“We need to adapt to the climate we have now, and we also need to deeply invest in mitigation,” he said.


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Biden Pushes Strong Jobs Market as US Midterm Elections Near

U.S. President Joe Biden has pushed his economic agenda while campaigning for his Democratic Party before the November 8 elections, but high inflation, energy prices and economic anxiety caused by the pandemic and the war in Ukraine make the economy a tough sell. VOA’s Anita Powell reports.


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Timeline of Billionaire Elon Musk’s Bid to Control Twitter

On Oct. 4, Elon Musk reversed himself and offered to honor his original proposal to buy Twitter for $44 billion — a deal he had spent the previous several months trying to wriggle out of. He posted a video of himself arriving at Twitter headquarters Wednesday, and Thursday evening new outlets announced the deal had been completed and Musk had fired at least two top Twitter executives.

If the case has your head spinning, here’s a quick guide to the major events in the saga featuring the billionaire Tesla CEO and the social platform.

January 31: Musk starts buying shares of Twitter in near-daily installments, amassing a 5% stake in the company by mid-March.

March 26: Musk, who has tens of millions of Twitter followers and is active on the site, says he is giving “serious thought” to building an alternative to Twitter, questioning the platform’s commitment to “free speech” and whether Twitter is undermining democracy. He also privately reaches out to Twitter board members including his friend and Twitter co-founder Jack Dorsey.

March 27: After privately informing Twitter of his growing stake in the company, Musk starts conversations with its CEO and board members about potentially joining the board. Musk also mentions taking Twitter private or starting a competitor, according to later regulatory filings.

April 4: A regulatory filing reveals that Musk has rapidly become the largest shareholder of Twitter after acquiring a 9% stake, or 73.5 million shares, worth about $3 billion.

April 5: Musk is offered a seat on Twitter’s board on the condition he amass no more than 14.9% of the company’s stock. CEO Parag Agrawal said in a tweet that “it became clear to us that he would bring great value to our Board.”

April 9: After exchanging pleasantries and bonding by text message over their love of engineering, a short-lived relationship between Agrawal and Musk sours after Musk publicly tweets “Is Twitter dying?” and gets a message from Agrawal calling the criticism unhelpful. Musk tersely responds: “This is a waste of time. Will make an offer to take Twitter private.”

April 11: Twitter CEO Parag Agrawal announces Musk will not be joining the board after all.

April 14: Twitter reveals in a securities filing that Musk has offered to buy the company outright for about $44 billion.

April 15: Twitter’s board unanimously adopts a “poison pill” defense in response to Musk’s proposed offer, attempting to thwart a hostile takeover.

April 21: Musk lines up $46.5 billion in financing to buy Twitter. Twitter board is under pressure to negotiate.

April 25: Musk reaches a deal to buy Twitter for $44 billion and take the company private. The outspoken billionaire has said he wanted to own and privatize Twitter because he thinks it’s not living up to its potential as a platform for free speech.

April 29: Musk sells roughly $8.5 billion worth of shares in Tesla to help fund the purchase of Twitter, according to regulatory filings.

May 5: Musk strengthens his offer to buy Twitter with commitments of more than $7 billion from a diverse group of investors including Silicon Valley heavy hitters like Oracle co-founder Larry Ellison.

May 10: In a hint at how he would change Twitter, Musk says he’d reverse Twitter’s ban of former President Donald Trump following the Jan. 6, 2021 insurrection at the U.S. Capitol, calling the ban a “morally bad decision” and “foolish in the extreme.”

May 13: Musk declares his plan to buy Twitter “temporarily on hold.” Musk says he needs to pinpoint the number of spam and fake accounts on the social media platform. Shares of Twitter tumble, while those of Tesla rebound sharply.

June 6: Musk threatens to end his $44 billion agreement to buy Twitter, accusing the company of refusing to give him information he requested about its spam bot accounts.

July 8: Musk says he will abandon his offer to buy Twitter after the company failed to provide enough information about the number of fake accounts.

July 12: Twitter sues Musk to force him to complete the deal. Musk soon countersues.

July 19: A Delaware judge says the Musk-Twitter legal dispute will go to trial in October.

August 23: A former head of security at Twitter alleges the company misled regulators about its poor cybersecurity defenses and its negligence in attempting to root out fake accounts that spread misinformation. Musk eventually cites the whistleblower as a new reason to scuttle his Twitter deal.

October 5: Musk offers to go through with his original proposal to buy Twitter for $44 billion. Twitter says it intends to close the transaction after receiving Musk’s offer.

October 6: Delaware judge delays Oct. 17 trial until November and gives both sides until Oct. 28 to reach agreement to close the deal.

October 20: The Washington Post reports that Musk told prospective Twitter investors that he plans to lay off 75% of the company’s 7,500 employees.

October 26: Musk posts a video of himself entering Twitter headquarters carrying a kitchen sink, indicating that the deal is set to go through.

October 27: In a message to advertisers, Musk says Twitter won’t become a “free-for-all hellscape.”  News organizations report the deal to buy Twitter has been completed.


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Elon Musk Completes $44 Billion Acquisition of Twitter

Elon Musk became Twitter Inc’s new owner on Thursday, firing top executives he had accused of misleading him and providing little clarity over how he will achieve the lofty ambitions he has outlined for the influential social media platform.

The CEO of electric car maker Tesla Inc TSLA.O has said he wants to “defeat” spam bots on Twitter, make the algorithms that determine how content is presented to its users publicly available, and prevent the platform from becoming an echo chamber for hate and division, even as he limits censorship.

Yet Musk has not offered details on how he will achieve all this and who will run the company. He has said he plans to cut jobs, leaving Twitter’s approximately 7,500 employees fretting about their future. He also said on Thursday he did not buy Twitter to make more money but “to try to help humanity, whom I love.”

Musk terminated Twitter Chief Executive Parag Agrawal, Chief Financial Officer Ned Segal and legal affairs and policy chief Vijaya Gadde, according to people familiar with the matter. He had accused them of misleading him and Twitter investors over the number of fake accounts on the social media platform.

Agrawal and Segal were in Twitter’s San Francisco headquarters when the deal closed and were escorted out, the sources added.

Twitter, Musk and the executives did not immediately respond to requests for comment.

The $44-billion acquisition is the culmination of a remarkable saga, full of twists and turns, that sowed doubt over whether Musk would complete the deal. It began on April 4, when Musk disclosed a 9.2% stake in the San Francisco company, making him its largest shareholder.

The world’s richest person then agreed to join Twitter’s board, only to balk at the last minute and offer to buy the company instead for $54.20 per share, an offer that Twitter was unsure whether to interpret as another of Musk’s cannabis jokes.

Musk’s offer was real, and over the course of just one weekend later in April, the two sides reached a deal at the price he suggested. This happened without Musk carrying out any due diligence on the company’s confidential information, as is customary in an acquisition.

In the weeks that followed, Musk had second thoughts. He complained publicly that he believed Twitter’s spam accounts were significantly higher than Twitter’s estimate, published in regulatory filings, of less than 5% of its monetizable daily active users. His lawyers then accused Twitter of not complying with his requests for information on the subject.

The acrimony resulted in Musk giving notice to Twitter on July 8 that he was terminating their deal on the grounds that Twitter misled him on the bots and did not cooperate with him. Four days later, Twitter sued Musk in Delaware, where the company is incorporated, to force him to complete the deal.

By then, shares of social media companies and the broader stock market had plunged on concerns that the Federal Reserve’s interest rate hikes, as it seeks to fight inflation, will push the U.S. economy into recession. Twitter accused Musk of buyer’s remorse, arguing he wanted to get out of the deal because he thought he overpaid.

Most legal analysts said Twitter had the strongest arguments and would likely prevail in court. Their view did not change even after Twitter’s former security chief Peiter Zatko stepped forward as a whistleblower in August to allege that the company failed to disclose weaknesses in its security and data privacy.

On Oct. 4, just as Musk was set to be deposed by Twitter’s lawyers ahead of the start of their trial later in the month, he performed another u-turn and offered to complete the deal as promised. The Delaware judge gave him an Oct. 28 deadline to close the transaction and avoid the trial.

‘Chief Twit’

Since then, Musk has indulged the deal hype. He walked into Twitter’s headquarters on Wednesday with a big grin and carrying a porcelain sink, subsequently tweeting “let that sink in.” He changed his description in his Twitter profile to “Chief Twit.”

He also tried to calm fears among employees that major layoffs are coming and assured advertisers that his past criticism of Twitter’s content moderation rules would not harm its appeal.

“Twitter obviously cannot become a free-for-all hellscape, where anything can be said with no consequences!” Musk said in an open letter to advertisers on Thursday.

Musk has indicated he sees Twitter as a foundation for creating a “super app” that offers everything from money transfers to shopping and ride hailing.

“The long-term potential for Twitter in my view is an order of magnitude greater than its current value,” Musk said on Tesla’s call with analysts on Oct 19.

But Twitter is struggling to engage its most active users who are vital to the business. These “heavy tweeters” account for less than 10% of monthly overall users but generate 90% of all tweets and half of global revenue.

Musk said in May he would reverse the ban on Donald Trump, who was removed after the attack on the U.S. Capitol, although the former U.S. President Donald Trump has said he won’t return on the platform. He has instead launched his own social media app, Truth Social.


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US Rolls Out Voluntary Cybersecurity Goals

The United States is trying to make it easier for companies and organizations to bolster their cybersecurity in the face of growing attacks aimed at crippling their operations, stealing their data or demanding ransom payments.

Officials with the Department of Homeland Security and the Cybersecurity and Infrastructure Security Agency (CISA) rolled out their new Cybersecurity Performance Goals on Thursday, describing them as a critical but voluntary resource that will help companies and organizations make better decisions.

“Really what these cybersecurity performance goals present is a menu of options to advance one’s cybersecurity,” Homeland Security Secretary Alejandro Mayorkas told reporters, describing the rollout as a “watershed moment” for cybersecurity.

“They are accessible, they are easy to understand, and they are identified according to the cost that each would entail, the complexity to implement the goal, as well as the magnitude of the impact that the goal’s implementation would have,” he added.

For months, U.S. officials have been warning of an ever more complex and dangerous threat environment in cyberspace, pushing the government’s “Shields Up” awareness campaign, driven in part by Russia’s invasion of Ukraine earlier this year.

They have also called attention to cyberattacks by Iran and North Korea, while warning that both nation states and non-state actors have increasingly been scanning and targeting U.S. critical infrastructure, from water and electric companies to airports, which were struck by a series of denial-of-service attacks earlier in October.

Private cybersecurity companies have likewise warned of a growing number of attacks against health care companies and education and research organizations.

While some bigger U.S. companies and organizations have been able to devote time, money and other resources to confront the growing dangers, U.S. officials are concerned that others have not.

In particular, CISA has worried about small to mid-sized businesses, along with hospitals and school systems, often described by officials as target rich but resource poor because they do not have the money or resources to defend systems and data from hackers.

Officials said the new guidelines, which focus on key areas like account security, training, incident reporting, and response and recovery, and come with checklists, are designed to ease the burden. The officials also said they anticipate the goals will change and evolve along with the threat.

The newly unveiled goals “were developed to really represent a minimum baseline of cyber security measures that if implemented, will reduce not only risk to critical infrastructure but also to national security, economic security and public health and safety,” said CISA Director Jen Easterly, calling them a “quick start guide.”

“[It’s] really a place to start to drive prioritized investment toward the most critical practices,” she said.

According to CISA, many of the new goals are already resonating, including with state and local officials running U.S. elections.

“We’ve been working with them to implement several of these best practices, as well as ensuring that they have the tools and resources and the capabilities to ensure the security and resilience of election infrastructure,” Easterly told reporters Thursday. “I’ve met with election officials even just over the past few days … and they all expressed confidence in particular in the cybersecurity across all of their systems.”

CISA also said Thursday that U.S. states and territories needing more help can take advantage of $1 billion in grants that are being made available over the next four years.

The grants, designed specifically to help protect U.S. critical infrastructure, were first announced last month.


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Musk Says He Doesn’t Seek ‘Free-for-All Hellscape’ for Twitter

Elon Musk is telling Twitter advertisers he is buying the platform to “help humanity” and doesn’t want it to become a “free-for-all hellscape” where anything can be said with no consequences.

The message to advertisers posted Thursday on Twitter came a day before Musk’s deadline for closing his $44 billion deal to buy the social-media company and take it private.

“The reason I acquired Twitter is because it is important to the future of civilization to have a common digital town square, where a wide range of beliefs can be debated in a healthy manner, without resorting to violence,” Musk wrote, in an unusually-long message for the billionaire Tesla CEO who typically projects his thoughts in one-line tweets

He continued: “There is currently great danger that social media will splinter into far right wing and far left wing echo chambers that generate more hate and divide our society.”

The message reflects concerns among advertisers — Twitter’s chief source of revenue  that Musk’s plans to promote free speech by cutting back on moderating content will open the floodgates to more online toxicity and drive away users.

Friday’s deadline to close the deal was ordered by the Delaware Chancery Court in early October. It is the latest step in an epic battle during which Musk signed an April deal to acquire Twitter, then tried to back out of it, leading Twitter to sue the Tesla CEO to force him to conclude the deal. If the two sides don’t meet the Friday deadline, the next step could be a November trial that would likely lead to a judge forcing Musk to complete the deal.

But Musk has been signaling that the deal is going through by Friday, paying a visit to Twitter’s San Francisco headquarters Wednesday and changing his Twitter profile to “Chief Twit.”


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European Central Bank Makes Another Large Interest Rate Hike

The European Central Bank piled on another outsized interest rate hike aimed at squelching out-of-control inflation, increasing rates Thursday at the fastest pace in the euro currency’s history and raising questions about how far the bank intends to go with the threat of recession looming over the economy.

The 25-member governing council raised its interest rate benchmarks by three-quarters of a percentage point at a meeting in Frankfurt, matching its record increase from last month and joining the U.S. Federal Reserve in making a series of rapid hikes to tackle soaring consumer prices.

“Inflation remains far too high and will stay above our target for an extended period,” ECB President Christine Lagarde told reporters after the meeting. Bank policymakers “expect to raise interest rates further to ensure the timely return of inflation” to the 2% target.

She pointed to continued rate hikes despite the bank expecting “further weakening in the remainder of this year and the beginning of next year.”

The ECB has now raised rates for the 19-country euro area by a full 2 percentage points in just three months, distance that took 18 months to cover during its last extended hiking phase in 2005-2007 and 17 months in 1999-2000.

Central banks around the world are rapidly raising interest rates that steer the cost of credit for businesses and consumers. Their goal is to halt galloping inflation fueled by high energy prices tied to Russia’s war in Ukraine, post-pandemic supply bottlenecks, and reviving demand for goods and services after COVID-19 restrictions eased. The Fed raised rates by three-quarters of a point for the third straight time last month.

Quarter-point increases have usually been the norm for central banks. But that was before inflation spiked to 9.9% in the eurozone, fueled by higher prices for natural gas and electricity after Russia cut off most of its gas supplies during the war in Ukraine.

Inflation in the U.S. is near 40-year highs of 8.2%, fueled in part by stronger growth and more pandemic support spending than in Europe.

Inflation robs consumers of purchasing power, leading many economists to pencil in a recession for the end of this year and the beginning of next year in both the U.S. and the 19 countries that use the euro as their currency.

Some analysts foresee a half-point increase at the last rate-setting meeting of the year in December and think the bank may pause after that.

The ECB predicts inflation falling to 2.3% by the end of 2024.

Higher rates can control inflation by making it more expensive to borrow, spend and invest, lowering demand for goods. But the concerted effort to raise rates has also raised concerns about their impact on economic growth and on markets for stocks and bonds. Years of low rates on conservative investments have pushed investors toward riskier holdings such as stocks, a process that is now going into reverse, while rising rates can lower the value of existing bond holdings.

The head of the International Monetary Fund, Kristalina Georgieva, has warned that tightening monetary policy “too much and too fast” raises the risk of prolonged recessions in many economies. The IMF forecasts that global economic growth will slow from 3.2% this year to 2.7% next year.

The ECB also must keep an eye on the euro’s sagging value against the U.S. dollar, although the ECB says it does not target any particular exchange rate. A weaker euro worsens inflation by raising the price of imported goods. The euro rose above parity with the dollar on Wednesday but remains near its lowest levels in 20 years.

Reasons for the dropping exchange rate include higher U.S. interest rates that attract money into investments priced in dollars and, more broadly, the dwindling prospects for Europe’s economy. Europe is facing headwinds from the loss of cheap Russian natural gas and an economic slowdown in key trade partner China.

ECB rate hikes, other things being equal, could support the euro by lessening the interest rate gap with the U.S.

The ECB’s benchmark for short-term lending to banks now stands at 2%, a level last seen in March 2009.


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US Economy Returned to Growth Last Quarter, Expanding 2.6% 

The U.S. economy grew at a 2.6% annual rate from July through September, snapping two straight quarters of economic contraction and overcoming punishingly high inflation and interest rates.

Thursday’s estimate from the Commerce Department showed that the nation’s gross domestic product — the broadest gauge of economic output — grew in the third quarter after having shrunk in the first half of 2022. Stronger exports and steady consumer spending, backed by a healthy job market, helped restore growth to the world’s biggest economy.

Still, the outlook for the economy has darkened. The Federal Reserve has aggressively raised interest rates five times this year to fight chronic inflation and is set to do so again next week and in December. Chair Jerome Powell has warned that the Fed’s hikes will bring “pain” in the form of higher unemployment and possibly a recession.

The government’s latest GDP report comes as Americans, worried about inflation and the risk of recession, have begun to vote in midterm elections that will determine whether President Joe Biden’s Democratic Party retains control of Congress. Inflation has become a signature issue for Republican attacks on the Democrats’ stewardship of the economy.

With inflation still near a 40-year high, steady price spikes have been pressuring households across the country. At the same time, rising interest rates have derailed the housing market and are likely to inflict broader damage over time. The outlook for the world economy, too, grows bleaker the longer that Russia’s war against Ukraine drags on.

Last quarter’s U.S. economic growth reversed annual declines of 1.6% from January through March and 0.6% from April through June. Consecutive quarters of declining economic output are one informal definition of a recession. But most economists have said they believe the economy skirted a recession, noting the still-resilient job market and steady spending by consumers. Most of them have expressed concern, though, that a recession is likely next year as the Fed steadily tightens credit.

Preston Caldwell, head of U.S. economics for the financial services firm Morningstar, noted that the economy’s contraction in the first half of the year was caused largely by factors that don’t reflect its underlying health and so “very likely did not constitute a genuine economic slowdown.” He pointed, for example, to a drop in business inventories, a cyclical event that tends to reverse itself over time.

Higher borrowing costs have weakened the home market, in particular. The average rate on a 30-year fixed-rate mortgage, just 3.09% a year ago, is approaching 7%. Sales of existing homes have fallen for eight straight months. Construction of new homes is down nearly 8% from a year ago. 

Still, the economy retains pockets of strength. One is the vitally important job market. Employers have added an average of 420,000 jobs a month this year, putting 2022 on track to be the second-best year for job creation (behind 2021) in Labor Department records going back to 1940. The unemployment rate was 3.5% last month, matching a half-century low.

Hiring has been decelerating, though. In September, the economy added 263,000 jobs — solid but the lowest total since April 2021.

International events are causing further concerns. Russia’s invasion of Ukraine has disrupted trade and raised prices of energy and food, creating a crisis for poor countries. The International Monetary Fund, citing the war, this month downgraded its outlook for the world economy in 2023. 


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IMF Chief Wants Central Banks to Keep Raising Rates to Hit ‘Neutral’ Level

International Monetary Fund chief Kristalina Georgieva said on Wednesday that central banks should keep raising interest rates further to fight inflation until they hit a “neutral” level, though in most cases they have not reached this point.

Speaking to Reuters in Berlin a day before the European Central Bank is widely expected to raise rates by 75 basis points, the fund’s managing director said it would take until 2024 for the positive effect of central banks raising rates globally to be felt.

The ECB had for months said that its first step will be to raise rates to a neutral setting, where it was neither driving nor restricting growth, but some policymakers are now advocating more aggressive action, saying the ECB should go further to tame inflationary pressures.

“At this point we look for getting to a neutral mode, and in most places we are not quite yet there,” Georgieva said in an interview.

Central banks have to bring rates up because “when inflation runs high, that undermines growth, it hits the poorest parts of the population the hardest.”

Recent rate hikes by the ECB have come against the backdrop of a deteriorating economic outlook and inflation that hit 9.9% in the euro zone in September, driven by soaring food and energy prices after Russia’s invasion of Ukraine.

Asked how long she expected central banks to keep raising rates, Georgieva said the IMF projected that “by 2024 to get to a point when central banks are seeing the impact of their actions.”

“The benefits would come but they are not instantaneous, this requires some patience in society,” she added.


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LogOn: US Navy Turns to Driverless Ships for Indo-Pacific Strategy

As the U.S. military considers China’s military strength in the Indo-Pacific region, the U.S. Navy is turning to driverless ships to multiply its forces. VOA’s Jessica Stone takes us along for a closer look at this military innovation. Camera: Keith Lane


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US Technology Helps Improve Crop Yields in Drought-stricken Africa 

More frequent and severe droughts in Africa are hampering food production, especially in arid parts of the continent where farmers struggle to eke out a living. A water retention system developed in the U.S. is helping African farmers fight the trend and improve crop yields in drought-affected areas. Juma Majanga reports from Kibwezi, Kenya.  


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China’s Leader Faces Challenge: Fixing Economy While Pursuing Growth

China’s President Xi Jinping has faced and survived many challenges in life. He spent years as a teenager toiling in the countryside after his father was persecuted. He worked his way up to the top echelons of power and carried out a massive anti-corruption campaign that earned him many enemies.

But as he’s about to get an unprecedented third term, Xi faces what may perhaps be his toughest challenge – fixing the serious problems that have metastasized in China following four decades of rapid, unbridled and wasteful economic growth, and putting the world’s second biggest and soon-to-be-biggest economy in order.

Experts say it won’t be easy, and Xi himself may be his biggest obstacle.

“China has essentially reached the peak of its growth period, much of it fueled by debt. The result is they’ll have difficulty unless he wants to reform the economy and he has no plans to do that,” said Andrew Collier, a Hong Kong-based expert in China’s macroeconomy.

Under the past four decades of China’s opening, its economy has grown 18 times bigger – from a GDP of $149.5 billion in 1978 to $17.7 trillion last year, making up about 18.5% of the world’s economy. Since Xi came into power in 2012, it has doubled in size, surpassing the European Union last year.

But a lot of that growth has been unhealthy, especially in the manufacturing and construction sectors, where excessive growth has turned out “ghost cities” and unnecessary infrastructure. Not only has this damaged the environment, but it also has created a lot of internal debt.

Property developers

A symptom of the problem exploded recently when overambitious property developers, funded by state banks, defaulted, leaving apartment buildings unfinished and angry homebuyers boycotting their mortgages and amassing in rare protests.

Xi seems unable to rein in these excesses. While he has famously said that “houses are for living in, not for speculation,” the property bubble has continued to balloon over the past decade that he’s been in power.

“It was a bubble before, but it has gotten much bigger, so obviously the talk has not been followed by action,” said Shanghai-based independent economist Andy Xie.

He estimated Chinese property developers owe at least $10 trillion in debt and says that’s a “very conservative estimate.”

While some companies may be bailed out, China simply cannot continue growing like this and Xi knows it.

In his speech at the opening of the 20th Party Congress on Sunday, he said, “Development was imbalanced, uncoordinated, and unsustainable, and the traditional development model could no longer keep us moving forward.”

He said the next five years will be “crucial” for building a “modern socialist country” by engaging in “high-quality” development.

State-owned emphasis

Analysts say that instead of continuing to put emphasis on state-owned enterprises, which are less efficient and less profitable, Xi should support the private sector. But they say he’s doing the opposite.

“He’s essentially doubled down on his existing policies to promote the state-owned system and … the crackdown on the tech sector that occurred in the past couple of years is very much part of his world view,” said Collier, managing director of Orient Capital Research.

Collier suggests allocating more bank loans to the private sector, shifting focus to boosting domestic consumption, and allowing more free market decision making.

But Collier notes, “That’s not part of his DNA.”

In a recent report, the World Bank also advised China to remove remaining barriers to market competition, spur innovation and productivity, and focus on the service and consumption sector by boosting spending on health and education, so that Chinese people wouldn’t feel the need to save so much.

But Xie asserts that Xi wants to control the market economy.

“The Chinese Communist Party is about keeping the party in charge, but the market is not about that, it’s about power decentralization; the market makes decisions on its own,” Xie said. “Coexistence has been uneasy. Now the market has been brought under control.”

Examples: One tech company’s planned IPO (initial public offering) was stopped in its tracks. Big tech firms have been pressured to make large donations to charities, and government intervention has caused the stock prices of some companies, like Alibaba, to plunge. Even the video game and private tutoring industries have been ordered to stop putting profits above children’s welfare.

Observers believe it would be better if China reformed and updated its tax system to adequately tax the country’s growing number of ultra-rich people, including property speculators, and narrow the wealth gap.

But contrary to Xi’s image as a strongman, he may not have that much control over economic matters.

While political power is centralized in the party, economically, China is very decentralized, Collier said.

“He can control state-owned firms, but at the end of the day, it’s up to provinces to try to generate growth,” said Collier.

With the property sector, for example, land sales and taxes from transactions contribute to 10% of the nation’s annual GDP and to more than half of many local governments’ revenue, so Xi’s hands may be tied.

Multiple challenges

So far, Xi seems to prefer a soft landing – slowing growth to avoid China’s economic bubble completely bursting, avoiding massive discontent and social unrest, which could threaten his party’s survival.

In his speech, Xi vowed to deepen reforms of state-owned enterprises and help them grow larger and more competitive, while also promising to encourage entrepreneurship and help private Chinese companies “become world-class outfits.”

He also pledged to accelerate China’s transition toward green, low-carbon development – meaning the world’s factory ostensibly will manufacture higher-end goods and in less polluting ways.

At the same time, he vowed to improve the income tax system, increase earnings for low-wage workers and expand the middle class.

With millions still living in poverty and youth unemployment very high, that’s a major challenge, especially as economic growth is forecast to fall from 8.1% last year to just 3.2% this year, the second lowest rate in nearly five decades.

If Xi fails to carry out necessary reforms in his third term, China’s economy — while still predicted to surpass that of the U.S. by 2030 because of its much bigger population and manufacturing sector — could reach a crisis point. Additionally, since China is the biggest market, trade partner, and also increasingly the key investor for many countries, that could have huge implications for the rest of the world.

“The world spins around China,” economist Xie said.


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Companies Weigh Fallout From US Ban on Sending Chip Tech to China

The Biden administration’s announcement earlier this month that it would ban the transfer of advanced U.S. semiconductor technology to China continues to reverberate through global markets. The ruling by the Department of Commerce affects not only U.S. firms that sell to China but any company whose products contain American semiconductor technology.

In mainland China, according to Bloomberg News, officials from the Ministry of Industry and Information Technology have been summoning executives from domestic semiconductor manufacturers to assess how being deprived of high-tech manufacturing tools from overseas would impact their businesses. And companies that rely on imports of high-end semiconductors are assessing the viability of their businesses going forward.

In the U.S., semiconductor companies and other tech firms that count China among their largest single markets are facing potentially severe damage to their revenues. Other companies that manufacture tech products in China are having to recall U.S. employees because the ban also bars “U.S. persons” from supporting technology covered by the ban.

Internationally, large chipmakers, such as Taiwan Semiconductor Manufacturing Company and South Korea’s Samsung, as well as Netherlands-based ASML, which makes chip manufacturing equipment, are reassessing their business with China as they explore how deeply the new rules will cut into their sales.

“It really is reshaping the market,” said James Lewis, senior vice president and director of the Strategic Technologies Program at the Center for Strategic and International Studies. “The Koreans, the Taiwanese and some American companies are really nervous about it. I mean, everyone’s asking, ‘What can I still sell to China?’ And in some cases, the answer is ‘nothing,'” he told VOA.

Targeting China’s military

The Biden administration has characterized the ban as a national security measure, saying that withholding highly sophisticated semiconductors from China will hamper the development of Chinese weapons and surveillance technology.

The trouble is that the same technology that goes into Chinese weapons systems is also necessary for other goods, including electric vehicles, an area in which China is significantly further advanced than the U.S.

It remains unclear precisely how U.S. authorities will enforce the ban. It primarily targets the most advanced chip technology available, meaning that “mature” chip technology — older and less sophisticated chips — will not be affected.

Where the U.S. draws that line, however, could determine whether Chinese businesses such as smartphone manufacturers and commercial aerospace companies are left alone or devastated.

‘Cold war’ tactic

Experts and pundits saw the imposition of the tough new ban as a dramatic escalation of the Biden administration’s efforts to keep China from being able to advance toward technological parity with the U.S.

Writing for the American news publication Foreign Policy, Edward Alden, a senior fellow at the Council on Foreign Relations, said the move “looks increasingly drawn from the Cold War playbook.” He also noted that “the new restrictions, which will be fully implemented as soon as Oct. 21, go well beyond any previous measures by seeking to freeze China at a backward state of semiconductor development and cut Chinese companies off from U.S. industry expertise.”

In the Financial Times, U.S. national editor and columnist Edward Luce wrote that “Joe Biden this month launched a full-blown economic war on China.”

“His escalation … marks a final break with decades of U.S. foreign policy that assumed China’s global integration would tame its rise as a great power,” he added.

China reacts

Speaking at the start of the Chinese Communist Party’s five-year congress Sunday, during which he is expected to be named to an extraordinary third term as party leader, Xi Jinping did not address the ban directly. However, he did promise to step up investment in areas that would help his country achieve “technology self-reliance.”

“China will move faster to launch a number of major national projects that are of strategic, big-picture and long-term importance,” Xi said.

In a statement provided to VOA by the Chinese embassy in the U.S., spokesperson Liu Pengyu said that he was not aware of any specific meetings being held in China.

“I would like to note that what the U.S. is doing is purely ‘sci-tech hegemony.’ It seeks to use its technological prowess as an advantage to hobble and suppress the development of emerging markets and developing countries,” Liu said. “The U.S. probably hopes that China and the rest of the developing world will forever stay at the lower end of the industrial chain. This will disrupt the global supply chain and industrial chain, and the final result will hurt itself and others alike.”

Industry concerned

Semiconductor companies have reacted carefully to the Biden administration’s decision. Although they are acknowledging the government’s concerns, they are signaling frustration that they were neither given clear guidance about how the ban will be applied nor given an opportunity to consult with the Commerce Department before it was put into place.

In a statement provided to VOA, SEMI, a trade group representing the semiconductor industry, said that its members understand the United States’ national security concerns. In addition, it said, “We are currently evaluating the potential effects of the Commerce Department’s unilateral controls on the semiconductor industry in the U.S. and abroad. We plan to provide feedback to the government on these rules, as they were not previously published for public comment.”

“We believe it is vitally important that the U.S. government implements these rules in close collaboration with and input from our key international partners in order to limit unintended adverse consequences that could reverberate through the domestic supply chain of this critical industry.”


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Ukraine War Creates Risks, Benefits for US Farmers  

The good news for Benjamin Rice is that the price for the corn and soybeans he grows on his Philo, Illinois, farm are up this year – a bright spot at a time of uncertainty and upheaval made worse for agricultural producers around the world by the war in Ukraine. 

 

“This year compared to two years [ago], we’re up in that 50 percent range [of higher prices],” he told VOA during a break in his work in the fields during the harvest.  

 

But market forces working in Rice’s favor will only benefit him if he can sell the yield from his crops in time. “We’re seeing swings every single day of easily 10, maybe 15 cents of corn and 30 to 70 cents in beans. So, if you can sell one day for 70 cents higher for what tomorrow is going to be, they aren’t small swings anymore,” he said. 

 

Contributing to price fluctuations are some factors farmers can’t control, like the weather and drought conditions lowering water levels on the Mississippi River, which prevents crop-carrying barges from easily navigating the important waterway leading to international shipping ports.    

 

While high crop prices are good news for farmers, this year they come with a downside.  The cost of doing business is also up.  

 

The price of diesel fuel that powers farm equipment is near an all-time high. So is the cost of nitrogen-rich anhydrous ammonia fertilizers, made using natural gas, which farmers rely on to boost crop yields.  

 

“It’s 40% above the cost last year,” Rice said. “And it’s over 100% the cost it was two years ago for the exact same product.”  

 

The U.S. Department of Agriculture reports that fertilizer prices account for a hefty segment of farm cash costs – nearly one-fifth. The proportion is even larger for producing wheat and corn.  

 

While his farm is far away from battle lines in eastern Europe, the effects of the war in Ukraine – and the resulting disruption to natural gas and other supplies – are rippling through Rice’s fields in the midwestern United States.   

 

“Ukraine and Russia combined export – I believe it’s somewhere in the 30%-to-40% range of the world’s use of anhydrous ammonia, and I know that they are also a big player in that natural gas market,” Rice said. “And as soon as that [war] started, the numbers just exploded on what our input costs were.”  

 

Those costs haven’t come down since.  

 

“They’re already taking a look at next year’s prices, where they are seeing triple predictions,” said DeAnne Bloomberg of the Illinois Farm Bureau (IFB), speaking with VOA from the group’s headquarters in Bloomington.

Even higher prices 

 

Bloomberg emphasized there’s no easy way to lower fertilizer costs.  “You can’t just rachet up fertilizer production,” she said. “It takes years for that.”  

 

So high input prices could go even higher – concerns the IFB is relaying to federal and state lawmakers, urging action where possible.  

 

“Gasoline prices, and being able to have the supply chain opened up and available, is one piece that we can look at because it is extremely regulated,” said Bloomberg. “So, any of those pieces that regulate those inputs is where government can come into play.”

What farmers aren’t asking for – yet, Bloomberg added – is a return to direct government payments to offset increased costs.

“They also want to work on free markets, and let the markets move through it,” she told VOA. “I don’t see that that’s been on their radar.”  

 

As the war in Ukraine drags on, food prices continue to rise and inflation weighs on economies across the globe.    

 

The economic headwinds come at a time when farmer Benjamin Rice is making tough decisions about fertilizer applications ahead of next year’s planting season.   

 

“I want to cut back and be responsible about it, but not too much to end up hurting next year’s crop,” he said. Acknowledging a delicate balancing act he may have to contend with for years to come, Rice added, “It’s been a roller coaster for sure.”


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