The U.S. central bank raised its benchmark interest rate Wednesday amid concerns about sluggish growth, a slowdown in consumer spending and low inflation. But the head of the U.S. Federal Reserve says the one-quarter of 1 percent increase in the federal funds rate demonstrates the committee’s confidence in the overall health of the U.S. economy. Mil Arcega has more.
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The real estate firm owned by the family of Jared Kushner has withdrawn a request for a big tax break for one its buildings in Jersey City, New Jersey, the latest setback for the company in the area.

The Kushner Cos. sent a letter withdrawing its application for a 30-year break from city taxes for a planned two-tower project in the struggling Journal Square section of the city, Jersey City spokeswoman Jennifer Morrill said Wednesday. Opponents of the tax breaks marched downtown earlier this year and the city’s mayor recently came out against the Kushner request.

Jared Kushner was CEO of the family company before stepping down to become a senior adviser to his father-in-law, President Donald Trump.

Committed to area

Kushner Cos. spokesman James Yolles said the company is committed to the “much-needed investment” in that area of the city.

The loss of the tax break is the latest blow for the company in a city where it is major real estate developer.

The 79-story building, One Journal Square, gained attention last month after Jared Kushner’s sister, Nicole Kushner Meyer, mentioned her brother in a presentation in Beijing where she had hoped to attract Chinese investors in the building. Marketing material noted the “celebrity status” of her family.

Government ethics experts blasted the family for what they said was an attempt to profit off Jared Kushner’s position in Washington, and the Kushner Cos. canceled upcoming investor presentations in the country.

The company said Meyer wasn’t trying to use her White House ties to attract investors.

EB-5 visa program

The Kushner family is seeking 300 wealthy Chinese to invest a total of $150 million in One Journal Square. The family was trying to raise money through the EB-5 visa program that grants temporary U.S. residency to wealthy foreigners in exchange for investments of at least $500,000 in certain U.S. projects

The company also is in danger of losing another tax break for the building. The shared office space firm WeWork recently pulled out as anchor tenant. That has put in doubt a state tax break tied to WeWork.

Another project is off, too. The Kushner Cos. once considered bidding to develop a 95-acre industrial site along the Hackensack River in the city for housing, called Bayfront. Last month, it was revealed the family had withdrawn from those plans last year.

The Kusnher Cos. has said politics had nothing to do with its decision to withdraw from Bayfront, and that “economics of the deal” drove the move.

As for One Journal Square, company spokesman Yolles said the project will provide 4,000 construction jobs and $180 million in tax revenue for the city over 30 years.

Tax breaks an issue

Jersey City Mayor Steven Fulop, a Democrat, is running for re-election this fall, and tax breaks to developers have become a major issue.

Unlike neighboring Hoboken, Jersey City has granted dozens of tax breaks in recent years. Fulop had campaigned to reform the practice, but critics say he has done little.

Another Kushner property in the city overlooking the Hudson River got a five-year tax break soon after Fulop was elected mayor. That 50-story building has licensed the Trump name and is called Trump Bay Street. The building was also partly financed with EB-5 visa money from abroad.

The Kushner family owns or manages 20,000 apartments, 13 million square feet of office space and industrial properties in several states, including New York, New Jersey, Maryland and Illinois. 
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Fierce competition among car manufacturers requires constant search for ways to cut expenses without compromising safety and other standards. One of the areas with room for improvement is in manufacturing of car bodies, which could be made lighter but still strong enough to protect passengers. VOA’s George Putic visited the National Institute for Science and Technology, NIST, outside Washington, where everything starts with new ways of testing sheet metal.
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China’s three big Internet-driven companies, Alibaba, Tencent, and Baidu, are set to influence a vast section of the country’s business because they control data concerning the consumer and social behavior of millions of people. The awesome power comes from the government’s drive to develop a “big data” industry, which is thriving in China.

Several other players, including utilities like phone companies and retail chains, are also trying to dip into the newly discovered pot of money from buyers who need information to understand buying preferences of potential customers, and design their products and strategies in line with the data flows.

“It [big data] is an improvement to do [a] better job, but unfortunately your [consumer’s] lifeline is more and more dependent on these big three guys,” said Chiang Jeongwen, a professor of marketing at the China Europe International Business School.

Recent studies have shown that nearly 90 percent of China’s 731 million online users have made at least one online purchase, often involving the use of Baidu’s search facilities, e-commerce sites and third-party transactions using mobile phone apps.

Predicting trends

“People are buying things and using their third party payment systems. [That] information [is] also being captured by Tencent and Alibaba. That is huge because now they know both offline and online information of consumers,” said Chiang.

These companies own a wide range of businesses that makes it possible for them to gather both online and offline data that is generated when a customer uses a phone app to make payments at a physical shop.

Alibaba owns Alipay while Tencent runs the highly popular WeChat service which offers mobile payment options. Baidu is China’s biggest internet search engine and holds the kind of influence that Google does in other countries.

“They have diversified the services [that] they offer. Alibaba, they are big in e-commerce. The kind of data they generate comes from anything ranging from what you buy online to your bill payments, travel bookings you do with, for example, the Alipay app,” said Shazeda Ahmed, visiting academic in the technology and economics division of Mercator Institute of Chinese Studies.

“People use the same platforms to make purchases, so there is a sense of extreme power in this situation because you can do all of these on one platform,” she explained.

These companies have a very strong predictive power that comes from a vast store of historical data and real-time data that they are collecting from users of different services. “They kind of able to anticipate the next thing a user might want before the user himself is aware of it,” she said.

Trading in data

The expansion of big data has given rise to serious concerns about the privacy of millions of people, who reveal both their transaction information and facets of social behavior through social media.

China has seen the rise of a black market for data. Data sellers offer a wide range of data on a targeted person, business or community by cracking into official databases and privately run sites.

But Chinese officials insist the government has put in place strong safeguards.

“There is a very strong firewall built before the big data center was established,” Zhang Bin, a senior official of the main big data center established by the Chinese government in Guiyang city. “We also made strict policy to control the data leaks from the government, so these are the two ways to protect information not to be leaked to the private companies for illegal use.”

The government has established a big data exchange center in Guiyang to encourage private and state-run companies to trade in data in a transparent manner, and help the industry find out the real price of the information. The center has come in for some praise by foreign companies who visited it but some questions remain unanswered.

“Having a legitimate place to trade data is an idea, but how does an exchange ensure that the data controllers has to requisite rights to sell data and it’s not breach of privacy?” Gagan Sabharwal, director of the National Association of Software and Service Companies in India, said after a recent visit.
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Panama’s business community on Tuesday cheered the Central American country’s decision to establish full diplomatic ties with China and ditch Taiwan, hoping to deepen links with a key customer of the nation’s shipping canal.

Although there was regret at the cost to Taiwan, an ally of various Central American nations, there was broad support for President Juan Carlos Varela’s decision to throw his lot in with China, whose growing global ambitions contrast with U.S. President Donald Trump’s isolationist rhetoric.

“I’m sure it wasn’t an easy decision, given the long-term links we’ve had with Taiwan, but nonetheless, [China] is a global superpower, the world’s No. 2 economy, the second biggest user of the canal – and so we think this is a positive development that will result in more business and investment in Panama,” said Inocencio Galindo, president of Panama’s Trade, Industry and Agriculture chamber.

The diplomatic U-turn comes as China attempts to position itself as a defender of free trade in the face of the “America First” policy of Trump, who was elected in November 2016.

Chinese officials also celebrated the news.

Wang Weihua, the permanent representative in the Office of China-Panama Trade Development and Beijing’s top representative in the country, said various attempts had been made over the years without success to establish formal ties.

Late last year, more advanced talks began with Varela’s team that concluded only this week, said Wang, who added he was involved in the discussions.

China is interested in Panama for its strategic location, and as a trade and logistics hub, he added.

“China has made a big bet on Latin America, where it has strategic investments, and Panama, which didn’t have diplomatic relations, was losing out on those advantages,” he said in an interview. “Now Panama will be able to enjoy what our country can offer it in various sectors.”

Almost a fifth of the cargo crossing the isthmus last year went to or from China, which has been taking an increasing interest in the Panama Canal.

In March, the canal’s administrator, Jorge Quijano, said Chinese state firms were considering developing land around the waterway, which was recently expanded.

A spokesman for the canal said Quijano would address the implications of the diplomatic change for commerce on Thursday.

Bright Future

Taiwanese economic aid has helped support Central America, a region in the United States’ backyard that relies heavily on agriculture and struggles with law and order.

Its remaining allies were guarded about what the future held for their ties with Taiwan, which China considers a renegade province.

Panama’s foreign minister, Isabel de Saint Malo, said Varela had expressed an interest a decade ago in establishing ties with China. She hoped the move would lead to trade, investment and tourism opportunities, especially for “exporting more goods from Panama to China.”

According to Panamanian statistics, total trade between Panama and China was worth $1.1 billion in 2016 – roughly 12 times the value of the nation’s commerce with Taiwan. Chinese exports accounted for the vast majority of it.

Alvin Weeden, a former comptroller of Panama, said the decision to break ties with Taipei in favor of Beijing would boost business and should have been taken years ago, given Panama’s reliance on global trade and Chinese shipping.

“Every day, Taiwan is more isolated,” he said, adding he did not expect the move to hurt Panama’s ties with the United States, the top canal customer. “This is a reality that’s happening, a geopolitical reality.”

Octavio Vallarino, a partner of Desarrollos Bahia, a local real estate firm, said he hoped direct flights would soon be established between the two countries, and that the commercial real estate market would be bolstered by arriving Chinese firms.

Sara Pardo, president of Panama’s hotel association, said the accord could help make travel between the two countries easier.

“This is definitely going to strengthen the economy,” she said.
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Mexico’s ancient civilizations cultivated crops such as maize, tomatoes and chilies for thousands of years before the Spanish conquerors arrived — and now those native plants could hold the key to sustainable food production as climate change bites, said a leading ecologist.

José Sarukhán Kermez, who helped set up Mexico’s pioneering National Commission for the Knowledge and Use of Biodiversity (CONABIO), said that analyzing the genetic variability of traditional crops, and supporting the family farmers who grow most of the world’s food offered an alternative to industrial agriculture.

“We don’t need to manipulate hugely the genetic characteristics of these [crops] … because that biodiversity is there — you have to just select and use it with the knowledge of the people who have been doing that for thousands of years,” said Sarukhán, CONABIO’s national coordinator, in a telephone interview.

The emeritus professor and former rector of the National University of Mexico (UNAM) recently won the Tyler Prize for Environmental Achievement, often referred to as a “Nobel for the Environment.”

Making use of the knowledge held by indigenous groups is “absolutely essential,” Sarukhán told the Thomson Reuters Foundation.

That requires working with a wide range of people, from local cooks to small-scale farmers, especially in states like Oaxaca and Chiapas in the south of Mexico where indigenous farmers have a strong traditional culture, he said.

“They haven’t gone to university, and they don’t have a degree — but they damn well know how to do these things,” he said.

For example, they discover and incorporate new knowledge as they exchange seeds with peers from different areas.

Key is funding

CONABIO is hoping to win some $5 million in funding from the Global Environment Facility for a five-year project worth more than $30 million to speed up research into indigenous crops.

The aim is to enrich the commission’s vast online database of biodiversity, with a view to influencing national agricultural policy, said Sarukhán.

CONABIO’s information on the genetic adaptability of native plants will enable scientists to develop new lines that can tolerate wetter or more arid conditions as the climate changes, he said.

Highlighting the potential of climate-adapted native crops, Sarukhán said around 60 types of maize are grown across Mexico, from the coast to 3,000 meters (9,843 feet) above sea-level, while only a handful of species are sold commercially.

Forest protection

With Mexico’s hugely varied ecosystems and biodiversity under threat, the ecologist urged a greater focus on schemes to boost local incomes rather than giving grants to encourage people to maintain vast swaths of the country’s forest.

Projects like growing organic coffee in Oaxaca’s forests or ecotourism in Chiapas are helping provide communities with a decent income and an incentive to protect the environment, he said.

Rural and indigenous communities own 60 to 70 percent of all Mexico’s forests and natural ecosystems, he noted.

“That is the patrimony they have — they don’t have anything else to live on,” Sarukhán explained. “There are ways in which you can combine the sustainable management of the forest with more attractive incomes for the owners of the forest.”
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The World Bank on Tuesday approved financing worth more than $500 million for Afghanistan to support a string of projects to boost the economy, help improve service delivery in five cities and support Afghan refugees sent back from Pakistan.

The bank said the six grants, including donor money, worth some $520 million would help the Afghan government “at a time of uncertainty when risks to the economy are significant.”

The international troop withdrawal, which began in 2011, and political uncertainties have impacted Afghanistan’s economy, while a worsening security situation has added to budget pressures, the World Bank said.

“The package will help Afghanistan with refugees, expand private-sector opportunities for the poor, boost the development of five cities, expand electrification, improve food security and build rural roads,” the World Bank said in a statement.

In May, a World Bank report said economic growth in the country was likely to pick up this year but not enough to provide jobs needed by its growing population.

The largest chunk of the package, some $205.4 million, will go toward supporting communities affected by refugees returning from Pakistan, the World Bank said. Some 800,000 Afghans have been sent back from Pakistan and Iran, many of them left to rely on subsistence income in rural areas or low-paid work in towns.

In addition, $100 million will support reforms and business development for the poor; $20 million will go to improving services in five provincial capital cities; $29.4 million will help establish wheat reserves and improve grain storage; and $60 million will boost electricity in the western Herat province.
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The World Bank on Tuesday approved a $500 million loan to support Tunisia’s budget, a government official for the North African country said on Tuesday.

The funding followed the release by the International Monetary Fund of a delayed $320-million tranche of Tunisia’s IMF loan, after the government agreed to speed up economic reforms.

Praised as a model of democratic transition following its 2011 uprising to oust autocrat leader Zine El-Abidine Ben Ali, Tunisia has so far mostly failed to deliver on planned economic reforms to help create jobs and cut public deficits.

In a statement, the World Bank said the funding would support economic reforms to improve the business environment and boost investor confidence, as well as help expand access to finance.

“Along with supporting the implementation of the new competition and investment laws, this development policy loan will help the government’s efforts to improve the efficiency of public investments and promote greater participation of the private sector through public-private partnerships,” said Abdoulaye Sy, the bank’s senior economist for Tunisia.
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The United States is weighing imposing sanctions on countries that do business with North Korea and looking for ways to revive strained relations with Russia, U.S. Secretary of State Rex Tillerson said on Tuesday.

At a committee hearing, he also defended President Donald Trump’s plans for steep reductions in U.S. spending on diplomacy and foreign aid. Senators from both major parties charged that such cuts would ultimately hurt America.

At the start Tillerson told lawmakers that North Korea had released Otto Warmbier, a U.S. university student held captive for 17 months, and the United States was seeking the release of three other detained Americans.

Washington has sought to increase economic and political pressure on Pyongyang because of its nuclear and ballistic missile programs. The North has conducted five nuclear tests and is believed to be making progress toward an intercontinental ballistic missile that could hit the United States.

Tillerson said Washington is discussing North Korea with all of its allies, and seeing some response from China, its biggest trading partner. He said North Korea would top the agenda at next week’s high-level talks between U.S. and Chinese officials.

Tillerson said the United States would have to work with other countries to deny North Korea access to basics such as oil and will have to consider whether to impose sanctions on those doing business with North Korea.

“We are in a stage where we are moving into this next effort of, ‘Are we going to have to, in effect, start taking secondary sanctions because countries we have provided information to have not, or are unwilling, or don’t have the ability to do that?'” Tillerson told the Senate Foreign Relations Committee.

Because the United States has no trade with the North, its strongest way to impose economic pressure is through “secondary sanctions” that threaten companies from third countries with losing access to the U.S. market if they deal with Pyongyang.

Ties With Russia at a Low

Asked whether the United States wanted to see an Iran-style global embargo to deny exports of petroleum and other products to North Korea, Tillerson said that this would only work if Russia and China, the North’s main suppliers, cooperated.

Tillerson repeated his view that U.S. relations with Russia were at an all time-low and still deteriorating. Ties have been strained by differences over Syria, Ukraine and allegations, denied by Moscow, of Russian efforts to influence the 2016 U.S. presidential election.

He said the administration was trying to find a way to re-establish a working relationship, notably on Syria.

It took years of diplomacy with Russia and China to achieve consensus among major powers to impose the sanctions on Iran and a similar result with the North seems unlikely given Beijing’s reluctance to destabilize its neighbors.

Asked if China had lived up to its pledges to crack down on the North, Tillerson said its actions had been “uneven,” but added: “They have taken steps, visible steps that we can confirm. We are in discussions with them about entities inside of China.”

The purpose of Tillerson’s appearance, his first of four congressional hearings this week, was to discuss the budget. In all, the Trump proposal cuts about 32 percent from U.S. diplomacy and aid budgets, or nearly $19 billion.

Committee members, including some of Trump’s fellow Republicans, spoke sharply against the plan. Republicans control both houses of Congress, which sets the federal government budget.

Separately, 16 retired senior generals and other ex-military officers said they would submit joint testimony to the Senate on Wednesday about the importance of foreign aid to national security.
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The Trump administration is proposing to curb the authority of the consumer finance watchdog created following the economic crisis as it drives toward easing restrictions on banks and financial institutions.

The Treasury Department issued Monday the first part of a review that was ordered by President Donald Trump in one of his earliest acts as president.

The report reviewing the Dodd-Frank financial oversight law also urges changes to rules for banks that were put in place under the 2010 law. The law aimed to restrain banks – which received hundreds of millions in taxpayer bailouts – from the kind of misconduct that many blamed for the crisis.

The law was enacted by President Barack Obama and Democrats in Congress to tighten regulation after the 2008-09 financial crisis that sparked the Great Recession that cost millions of Americans their jobs and homes.

Trump, however, has called Dodd-Frank a “disaster” that has crimped lending, hiring and the overall economy. He promised to do “a big number” on it.

“Properly structuring regulation of the U.S. financial system is critical to achieve the administration’s goal of sustained economic growth, and to create opportunities for all Americans to benefit from a stronger economy,” Treasury Secretary Steven Mnuchin said in a statement Monday.

The report outlines what it calls core principles of financial regulation – including overhauling the Consumer Financial Protection Bureau and having more “efficient” bank rules.

The CFPB oversees the practices of companies that provide financial products and services, from credit cards and payday loans to mortgages and debt collection. It has been a prime target of Republican lawmakers, who accuse it of regulatory overreach.

The new report urges Congress to remove the agency’s authority to supervise banks and financial companies, returning that power to other federal and state regulators, respectively. And it proposes enabling the president to remove the CFPB director at will without citing a cause for firing. That’s the subject of a battle now in federal court.

The CFPB’s structure and broad regulatory powers have led to “abuses and excesses,” and hindered consumer choice and access to credit, the report says.

The Treasury report comes a few days after the Republican-led House approved sweeping legislation to undo much of Dodd-Frank, repealing about 40 of its provisions. That was passed on a largely party-line vote of 233-186, but is unlikely to clear the Senate in its current form.

The administration’s report is narrower in scope and ambition than the House-passed legislation. It could provide a blueprint for regulators to rewrite the Dodd-Frank rules, as Trump continues to fill out his team of top financial overseers.

Mnuchin said in separate congressional testimony Monday that he expects to be able to work with the regulators on 70 to 80 percent of the proposed changes. But Congress would need to pass legislation to actually revamp the law – for example, to change the CFPB’s authority.

Among the banking rules, the new report focuses closely on the so-called Volcker Rule, established by Dodd-Frank to generally bar banks from trading for their own profit instead of for customers. The idea behind the rule was to prevent high-risk trading bets that could imperil federally insured deposits.

The report proposes exempting from the rule banks with less than $10 billion in assets and those that have over $10 billion with few trading assets. The House legislation would repeal it altogether.

So-called living wills, the plans that big banks must submit to regulators detailing how they would reshape themselves in the event of failure, should be required every two years instead of the current annual mandate, the report says.

Aaron Klein, a Treasury Department official in the Obama administration, said the proposed changes were unlikely to achieve the economic growth Trump is seeking.

“The financial regulatory system isn’t what is stopping 3 percent economic growth,” said Klein, now a fellow at the Brookings Institution. “If you’re looking in the wrong place, you’re not likely to find the answer.” Better for the administration to find ways to promote investment in the U.S., he suggested.

Klein said the changes proposed for the CFPB would inject more politics into financial regulation. He did see some positive ideas, however, such as increased coordination among financial regulators.

Bank industry groups, which had consulted with Mnuchin and other Treasury officials as they prepared the report, expressed approval of it Monday.

Looking outside Dodd-Frank, the report calls for a task force to reconsider the Community Reinvestment Act, a 1977 law designed to monitor banks’ practices in low-income and minority communities, such as new branch openings. Regulators can fine or sanction banks under the law when they find patterns of discrimination.

The law is widely promoted by Democratic lawmakers and community and civil rights groups.
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