Business

BEIJING — A key political meeting that is watched for signals on China's economic direction will be held in mid- July, state media said on Thursday, as policymakers seek to shore up a stuttering recovery. 

A full rebound in the world's number two economy has yet to kick in more than 18 months after crippling COVID-19 restrictions ended, sending ripples of unease through leaders and citizens. 

The Third Plenum, originally expected last autumn, is highly anticipated in the hope it will resolve uncertainty and reveal details of Beijing's future strategy. 

State news agency Xinhua said the meeting, to be held from July 15-18, would "primarily examine issues related to further comprehensively deepening reform and advancing Chinese modernisation". 

Authorities have been clear they want to re-orient the economy away from state-funded investment and instead base growth around high-tech innovation and domestic consumption. 

However, economic uncertainty is fuelling a vicious cycle that has kept consumption stubbornly low. 

President Xi Jinping's government has so far resisted any big stimulus and the head of China's central bank warned last week it was not on the cards. 

The economy still faced many challenges, the bank's chief said, but authorities would exercise moderation. 

Xinhua said the government meeting at which the Third Plenum's dates were set had emphasised the need to ensure that reform "relies on the people and the fruits of reform are shared by the people". 

Among the most urgent issues facing China's economy is a persistent crisis in the property sector, which long served as a key engine for national growth but is now mired in debt with several top firms facing liquidation. 

Authorities have moved in recent months to ease pressure on developers and restore confidence, such as by encouraging local governments to buy up unsold homes. 

The Third Plenum could see the introduction of policies such as "a more coordinated housing destocking programme to contain the negative property spillovers", according to UBS Global Wealth Management's Yifan Hu. 

Other moves may include "fiscal/tax reforms to contain local government debt risks, and further support for emerging industries", Hu wrote in a report. 

There have been some positive economic signs recently, with the International Monetary Fund revising upwards its 2024 economic growth forecast to 5 per cent last month in line with Beijing's official target. 

But significant hurdles remain and geopolitical tensions are also mounting. 

Beijing hit back Thursday after Canadian officials suggested they might become the latest Western country to impose additional tariffs on Chinese electric cars and batteries. 

"Canada should respect facts, abide by WTO rules, and create a fair, non-discriminatory and predictable market environment for the common development of the China-Canadian electric vehicle industry," said spokesperson He Yadong of the commerce ministry, according to a transcript on its website. 

The European Union is preparing to impose new tariffs of up to 38 per cent on Chinese EVs by July 4, which Beijing has condemned as "purely protectionist". 

The EU maintains that heavy state subsidies in China have led to unfair competition in local markets, a claim denied by Beijing. 

The United States hiked tariffs on $18 billion worth of imports from China last month, targeting strategic sectors such as electric vehicles, batteries, steel and critical minerals, a move Beijing warned would "severely affect" relations between the two superpowers. 

Chinese Premier Li Qiang called on countries to "oppose decoupling" at a World Economic Forum conference this week. 

NEW YORK — German auto giant Volkswagen (VW) will invest $5 billion in US electric vehicle (EV)  maker Rivian and create a joint venture expected to produce technology used by both auto makers, the companies announced recently.

The collaboration includes a direct $3 billion investment by the German company in Rivian as well as $2 billion to establish an equally controlled and owned joint venture "to create next-generation electrical architecture and best-in-class software technology", the companies said in a news release.

Shares of Rivian rose 8.6 per cent on Tuesday and nearly 50 per cent in after-hours trading following the deal's announcement just after the end of the trading session.

Although praised for its technology, Rivian has been reporting losses and bleeding cash.

Under the transaction, VW will make an initial $1 billion investment in the US company in 2024 that will convert to Rivian common stock, to be followed by subsequent rounds in 2025 and 2026 of $1 billion each. 

The additional $2 billion from VW is expected to be split between a payment at the start of the joint venture and a loan in 2026, the companies said. 

Besides boosting Rivian's balance sheet, the deal represents a vote of confidence by VW in the California company's platform that will improve the EV maker's ability to win concessions from key suppliers, company officials said on a conference call with analysts.

"The transaction as a whole provides a powerful platform for future growth for Rivian," said Chief Financial Officer Claire McDonough "and it's not just the $2 billion of JV-related capital. It's the full $5 billion of capital and the opportunity we have to accelerate our mission".

VW's investment will enable Rivian to fund investments to ramp up production at its Illinois factory and to advance a new plant in the state of Georgia, the company said.

Those two projects enable "a path to positive free cash flow and meaningful scale", Rivian said.

The venture will allow VW to employ Rivian's existing electrical architecture and software plan, accelerating the German company's efforts on software-defined vehicles.

"Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost," said VW Chief Executive Oliver Blume.

"We are strengthening our technology profile and our competitiveness," Blume said.

The two companies expect completion of the transaction in the fourth quarter of 2024 with anticipated regulatory approvals.

CFRA Research lifted its share price target on Rivian but maintained a "sell" recommendation on the company.

"While the announcement is a vote of confidence in Rivian, we think it does little to change the company's operating issues and troubling cash burn rates, which have been around one billion dollars per quarter," said CFRA's Garrett Nelson.

"The key question is why would VW make such an investment in a struggling EV manufacturer that could face going concern risk in the future, but clearly VW sees value in gaining access to RIVN's vehicle architecture and software," Nelson said.

TOKYO — Hundreds of multinational corporations on Tuesday urged Japan to triple its capacity to generate renewable power by 2035, as the heavily coal-dependent country updates its energy policy.

Dubbed RE100, the group of more than 400 large companies that have committed to work towards using all-renewable electricity includes 87 Japanese firms such as Sony and Panasonic.

"By increasing its domestic renewables capacity, Japan can significantly improve its energy security, safeguard its international competitiveness and increase private investment in more renewables projects," the group said.

It called for Japan to use its Strategic Energy Plan — set to be unveiled later this year — to triple installed renewables capacity from 121 gigawatts in 2022 to 363 gigawatts before 2035. 

At the COP28 climate talks in December, nearly 120 nations including Japan pledged to triple the world's renewable energy within seven years — a global effort in which each country's contribution may vary.

Japan, at 22.6 per cent, and the United States are the Group of Seven countries with the lowest share of renewables in their current power generation, according to International Energy Agency figures from 2022.

The Japanese government is targeting carbon neutrality by 2050 but was reluctant to set a date to phase out coal-fired power plants at this year's G7 climate meeting, where ministers agreed to a goal of the mid-2030s.

They also preserved a place for coal power if it is "abated", meaning its emissions are captured or limited by technology — something panned by many as unproven and a distraction from cutting fossil fuel use.

RE100 was founded 10 years ago by the international non-profit Climate Group in partnership with global NGO Carbon Disclosure Project (CDP), which tracks and rates companies' climate pledges.

Ahead of Japan's revised energy strategy, it has set out six policy recommendations to improve "the availability, accessibility and affordability of renewables in Japan".

The world's fourth-largest economy is heavily reliant on fossil fuels, partly because many nuclear reactors remain offline after the 2011 Fukushima meltdown.

NEW YORK — The US Department of Justice (DoJ)  is considering a deal with Boeing that would avoid criminal prosecution of the aerospace giant but may appoint a federal supervisor to oversee company progress on safety improvements, The New York Times reported recently.

People familiar with the discussions told the daily that the terms of the possible alternative settlement, known as a deferred prosecution agreement, or DPA, are still subject to change.

A DOJ official involved in the case, Glenn Leon, chief of the fraud section criminal division, said in an email to a civil party lawyer seen by AFP that the department "has not made a decision" on the path it will take with respect to Boeing.

The DOJ is determining its next steps after concluding in May that Boeing could be prosecuted for violating a criminal settlement following two fatal 737 MAX crashes in 2018 and 2019 which claimed 346 lives.

But the Times, citing sources familiar with the discussions, reported that after substantial internal debate, Justice officials "appear to have concluded that prosecuting Boeing would be too legally risky". 

Officials also reportedly believe that the appointment of a watchdog would be "a quicker, more efficient way" to ensure safety and quality control improvements are made, the newspaper said.

Last month, the DOJ told the judge in the case it would give its decision no later than July 7.

The DOJ's Leon emailed Paul Cassell, a lawyer for families in the criminal case against Boeing, saying the Times reporting "was simply not correct". 

Boeing did not respond to AFP requests for reaction.

No decision 

The troubled planemaker had contested the department's conclusions in mid-June, but has recognised the gravity of the safety crisis and CEO Dave Calhoun told Congress that Boeing is "taking action and making progress".

In January 2021, Justice announced an initial DPA in which Boeing agreed to pay $2.5 billion to settle fraud charges over certification of the 737 MAX. 

But since early 2023, the manufacturer has experienced multiple production and quality control problems on its commercial aircraft, as well as mid-flight incidents including in January when a door plug panel flew off an Alaska Airlines 737 Max 9.

The DOJ says Boeing's violation of several provisions of the initial agreement, including measures requiring it to bolster its internal controls to detect and deter fraud, opened the company to prosecution.

Victims' families have called for the criminal prosecution of Boeing and its executives, and are seeking a nearly $25 billion fine.

A new DPA would allow the US government to resolve Boeing's violations without a trial. 

That could serve as a victory of sorts for Boeing, a company seen as critical to the US aviation industry as well as national security.

Cassell, the families' lawyer, warned against sealing an agreement avoiding trial.

"We hope that the Department is not using its claim to have not yet made a 'final decision' as a ploy to gain additional time to hammer out a DPA deal with Boeing," Cassell said in a statement.

"The first DPA deal failed. There is no reason to think a second one would be any better," he said, adding it's time for "moving forward with a trial and obtaining a guilty verdict against Boeing".

Such lawsuits in the past have forced companies into filing for bankruptcy, the Times reported, and a conviction could potentially prevent Boeing from receiving government contracts.

Boeing's defence, space and security segment generated $25 billion in 2023, nearly a third of the company's sales.

BRUSSELS, Belgium — The growth of business activity in the eurozone slowed down in June after the manufacturing sector posted its biggest decline in six months, a key survey said recently.

The HCOB Flash Eurozone purchasing managers' index (PMI) published by S&P Global recorded a figure of 50.8, down from 52.2 in May and its lowest level in three months.

Any reading above 50 indicates growth, while a figure below 50 shows contraction.

Manufacturing activity slid to 46 in June from 49.3 a month earlier.

The data however "suggested that GDP will continue to expand in the second quarter", S&P Global said. But the lower PMI in June showed growth "may be slower than initially expected", said Bert Colijn, senior eurozone economist at ING Bank.

Economists agreed it was unlikely that the European Central Bank (ECB) would cut interest rates again in July, although there could be further cuts later in the year.

"The HCOB PMI do not provide ammunition for another rate cut in July by the ECB," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank (HCOB).

The situation in France, the EU's second biggest economy, is however weighing on the single currency area's economic performance, according to the economist.

"It is evident that France's poor economic performance has significantly contributed to the deteriorating economic conditions in the Eurozone," de la Rubia said.

The survey showed both services and manufacturing output falling.

De la Rubia said it could be tied to the far right's drubbing of the party of President Emmanuel Macron in EU elections this month and his call for a snap vote on June 30.

"This unexpected turn of events has likely stirred up a lot of uncertainty about future economic policies, causing many companies to hit the brakes on new investments and orders," he added.

Capital economics' Senior Europe Economist Franziska Palmas however warned not to "overemphasise" the point since "the French PMI started falling in May before the political turmoil started".

In contrast, Germany, the EU's biggest economy, recorded a third successive monthly increase in business activity, the survey showed.

BEIJING — China said on Thursday it "reserves the right" to file a suit with the World Trade Organisation over planned new EU (WTO) tariffs on imports of its electric vehicles. 

"China reserves the right to file a suit to the WTO and take all necessary measures to resolutely defend the rights and interests of Chinese companies," Beijing's Commerce Ministry spokesman He Yadong told a briefing. 

The European Union warned on Wednesday it would slap additional tariffs of up to 38 per cent on Chinese electric car imports from next month after an anti-subsidy probe, a move that risks provoking a bitter trade war. 

The European Commission has proposed a provisional hike of tariffs on Chinese manufacturers: 17.4 per cent for market major BYD, 20 per cent for Geely and 38.1 per cent for SAIC. 

The EU said the amount depended on the level of state subsidies received by the firms. 

Beijing condemned the move on Thursday as lacking a "factual and legal basis". 

"This action not only harms the legal rights and interests of the Chinese electric vehicle industry... but will also distort auto production and supply chains around the world, including in the European Union," He said. 

"The actions by the European side are suspected of violating WTO rules and are naked protectionist behaviour," he said. 

AMMAN — Deputising for HRH Crown Prince Hussein, Deputy Prime Minister for Economic Affairs and Minister of State for Public Sector Modernisation Nasser Shraideh on Tuesday inaugurated the first European Union-Jordan Business Forum.

The forum, organised by the European Union Delegation to the Kingdom in collaboration with the Ministry of Investment, aims to open and explore investment and trade opportunities as well as economic partnerships and cooperation between the Kingdom and EU.

The one-day forum, under the theme of "Digital and Green Jordan: Pioneering the Future of Business", saw significant participation from Jordanian and European businesspeople and entrepreneurs in the fields of green energy, the digital economy, and industry, was attended by Vice President of the European Investment Bank Gelsomina Vigliotti, and government officials, investors, representatives of public and private banks, and industry experts. 

Participants engaged in bilateral meetings to discuss key issues hindering bilateral trade and investment between the Kingdom and EU countries and explored tangible ways to overcome these challenges.

The forum also addressed investment opportunities for European companies in Jordanian and regional markets, highlighted success stories of European and Jordanian companies operating in the Kingdom, and went over sustainable initiatives and opportunities in green industries, the digital economy, and trade.

Minister of Investment Khuloud Saqqaf emphasised the importance of holding the forum, noting that it is a pivotal event reaffirming Jordan’s commitment to fostering a business-friendly environment and attracting foreign investment.

She added that despite external shocks and challenges faced by the Kingdom, and the geopolitical uncertainty in the region, the Jordanian economy has continued to demonstrate resilience against these challenges, achieving numerous positive economic indicators such as satisfactory economic growth rates and the lowest inflation rates compared to other countries in the region and the world, along with "comfortable" foreign currency reserves.

Saqqaf pointed out that while many countries in the region and the world have faced credit rating downgrades, Moody's Investor Service upgraded Jordan's sovereign credit rating for the first time in 21 years. 

This upgrade reflects the effective and prudent management of the Kingdom’s fiscal and monetary policies, the minister said, adding that the successful completion of the seventh review of the International Monetary Fund’s programme for 2023 reflects the government's commitment to adopting stable and secure economic, fiscal and monetary policies.

She noted that Jordan is heading towards diversifying energy resources through big investments in the renewable energy sector, pointing out that the Kingdom ranks first in the Middle East and North Africa in terms of the contribution of renewable energy to the overall energy supplies.

Ambassadors of the EU to Jordan Pierre-Christophe Chatzisavas said that the forum is a "testimony" of the "solid" relations between Jordan and the EU, which are based on a joint vision for economic prosperity and sustainable development.

Chatzisavas noted that the forum will open opportunities to Jordanian and EU companies to display their products and services, and provide a platform to develop dialogue among commercial facilities. 

On the sideline of the forum, thematic dialogue sessions were held to focus on three crucial sectors with outstanding growth potential which are green growth and renewable energy specifically Hydrogen and clean technologies, as well as digital and technology, as well as Exports and scaling up industrial operations in the fields of textile, pharmaceutical and agro-processing. 

AMMAN — The Association of Banks in Jordan (ABJ) on Tuesday hosted the second edition of the "Green Finance Forum (GREEFIN): A Strategic Necessity for the Banking Future", which focuses on taking a holistic approach to accelerating green finance practices.

The GREEFIN forum is an annual event aimed at promoting dialogue and cooperation within the banking sector and relevant stakeholders, to advance green finance initiatives, according to an ABJ statement sent to The Jordan Times.

In its second edition, GREEFIN saw several sessions which mainly discussed the importance of green finance, and the current market trends, thereby sharing regional and global experiences with the greening of the banking sector.

The forum was attended by banking sector representatives, CEOs and senior executives, sustainability officers, risk management specialists, environment economists, NGOs, regulators and government officials.

Governor of the Central Bank of Jordan (CBJ) Adel Sharkas said, “Green finance is a strategic imperative for the future of the banking sector.” 

According to Sharkas, climate change has become among the top issues at the world level, due to its social, environmental and economic implications and dangers.

The CBJ launched its (2023-2028) Green Finance Strategy in late 2023, which was prepared with the World Bank Group, in partnership with the ABJ and other relevant stakeholders. The strategy is considered the roadmap to enable the local banking sector to strengthen green finance and reduce the risks of climate change.

Director General of ABJ Maher Mahrouq said that the forum spotlights the reality and future of green finance in Jordan, and is part of ongoing efforts of ABJ to strengthen orientation towards green finance.