In an interview with The Economist, President Donald Trump whiffed on a batch of economic facts. He got the Canada-U.S. trade balance wrong, misplaced the U.S. in the world ranks of tax burdens and claimed to have coined an economic phrase that’s been familiar to economists for some 80 years.

A look at some of his assertions to the magazine:

U.S. Taxes

TRUMP: “We’re the highest-taxed nation in the world.”

THE FACTS: Trump has repeatedly made variations on this false claim. The overall U.S. tax burden is one of the lowest among the 32 developed and large emerging-market economies tracked by the Organization for Economic Cooperation and Development. Taxes made up 26.4 percent of the total U.S. economy in 2015, according to the OECD. That’s far below Denmark’s tax burden of 46.6 percent, Britain’s 32.5 percent or Germany’s 36.9 percent. Just four OECD countries had a lower tax bite than the U.S.: South Korea, Ireland, Chile and Mexico.

Trump qualified his claim later in the interview by saying the top marginal corporate tax rate, specifically, is higher than in similar industrialized countries. That’s more or less true, although the higher rate is moderated by tax breaks not available in some of those other countries.

Trade deficit with Canada

TRUMP: “Right now the United States has … about a $15 billion trade deficit with Canada.”

THE FACTS: His numbers are upside down. The United States actually ran an $8.1 billion trade surplus with Canada last year, according to the latest numbers available from the Census Bureau. A $24.6 billion U.S. surplus with Canada in the trade of services, including tourism and software, outweighed a $16.5 billion deficit in the trade of goods, including autos and oil.

Trump, who regularly decries the loss of American manufacturing jobs, tends to emphasize trade in goods and ignore trade in services. His comment about Canada came as his administration seeks a renegotiation of the North American Free Trade Agreement with Canada and Mexico.

The U.S. last year ran a deficit of $750 billion in goods with the rest of the world but recorded a $249 billion surplus in services.

‘Prime the pump’

TRUMP: “You understand the expression ‘prime the pump’? … I came up with it a couple of days ago and I thought it was good. It’s what you have to do. We have to prime the pump.”

THE FACTS: He didn’t coin that phrase. It’s a well-worn metaphor for generating faster growth, first made popular as an economic analogy more than 80 years ago during the Great Depression.

The Merriam-Webster dictionary people quickly tweeted that the phrase “priming the pump” has been around since the early 1800s. Literally, it’s about pouring water into a pump to allow it to create suction. The phrase was commonly used by mining publications during the 1920s, but it took on new significance after the economy cratered during the Depression.

By 1933, President Franklin D. Roosevelt had promoted the idea of flushing money into the economy to stimulate stronger growth with his New Deal policies. Such policies rankled Roosevelt’s predecessor, Herbert Hoover.

“One of the ideas in these spendings is to prime the economic pump,” Hoover said in a 1935 post-presidential speech. “We might abandon this idea also, for it dries up the well of enterprise.”

China and currency manipulating

TRUMP, on backing away from his campaign promise to label China a currency manipulator: “They’re actually not a currency (manipulator). You know, since I’ve been talking about currency manipulation with respect to them and other countries, they stopped.”

Treasury Secretary STEVE MNUCHIN, pitching in: “Right, as soon as the president got elected, they went the other way.”

THE FACTS: Trump persists in taking credit for something that happened before he even started running for president. China manipulated its currency, the yuan, lower for years before stopping in mid-2014; Trump’s presidential run began a year later.

A weak yuan helps Chinese exports because it makes them cheaper to buy. It disadvantages goods from the U.S. and other countries because they are more expensive to get in China.

Until 2005, China pegged the yuan to the dollar at a specific level. When it loosened the peg, the yuan began to rise steadily against the dollar. Worried that a strong currency would hurt their exporters, Chinese officials bought dollars to prevent the yuan from rising even faster.

The value of the yuan peaked in early 2014, as the Chinese economy slowed after years of torrid growth. The yuan then began to fall relative to the dollar, but not because Chinese officials were once again intervening to push it down. China was actually doing the opposite: selling dollars and buying yuan to prevent its currency from going into a free fall.
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A sweeping trade agreement, ranging from banking to beef, has been reached between Washington and Beijing, the U.S. Commerce Department announced on Thursday.

“It was pretty much a Herculean accomplishment to get this done,” said U.S. Commerce Secretary Wilbur Ross. “This is more than has been done in the whole history of U.S.-China relations on trade.”

The breakthrough results from an agreement U.S. President Donald Trump and Chinese President Xi Jinping made during their meeting at Trump’s Mar-a-Lago resort in Palm Beach, Florida, on April 6.

Trump “was briefed more or less every single day” as negotiations progressed since then, Ross said.

Beef imports

Following one more round of “technical consultations,” China has agreed to allow U.S. beef imports no later than July 16, consistent with international food and animal safety standards, Ross told reporters at the White House.

The United States Cattlemen’s Association applauded the agreement, saying market access to China is crucial for its members.

“Success in this arena will drive the U.S. cattle market and increase demand for U.S. beef” in China, association president Kenny Graner told VOA.

In exchange, Washington and Beijing are to resolve outstanding issues that would allow imports to the U.S. of cooked poultry from China “as soon as possible,” according to the Commerce Department.

Another significant breakthrough will see American liquefied natural gas (LNG) going to China. Under the agreement Chinese companies will be permitted “at any time to negotiate all types of contractual arrangement with U.S. LNG exporters, including long term contracts,” according to the Commerce Department.

This is “a very big change,” said Ross, noting China is trying to wean itself off coal at a time “it doesn’t produce enough natural gas to meet its needs.”

Financial, other business services

Among other action listed in the 100-Day Action Plan:

* China is to allow, by July 16, “wholly foreign-owned financial services firms” to provide credit ratings services and to begin licensing procedures for credit investigation.

* U.S.-owned suppliers of electronic payment services (EPS) will be able to apply for licensing in China under new guidelines.

* China is to issue bond underwriting and settlement licenses to two qualified U.S. financial institutions by July 16.

* China’s National Biosafety Committee is to meet by the end of this month to conduct science-based evaluations of all eight pending U.S. biotechnology product applications “to assess the safety of the products for their intended use.” Those that pass the tests are to get certificates within 20 working days.

The outcome of the joint dialogue will also see a United States delegation attending China’s Belt and Road Forum in Beijing next week.

A U.S.-China Comprehensive Economic Dialogue will be held this summer, according to the Commerce Department, to deepen engagement on these and other issues.

“There are probably 500 items you could potentially discuss” in the wider one-year plan for bilateral trade, Ross added.
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As farmers fret over President Donald Trump’s criticism of international trade agreements, Agriculture Secretary Sonny Perdue is trying to reassure them by creating a top post to oversee trade and foreign agricultural affairs.

The new undersecretary position is a sign of Perdue’s efforts to promote the U.S. agricultural industry as Trump has sought to undo trade pacts that benefit it. Perdue made the announcement Thursday in Cincinnati while standing near barges that carry grain on the Ohio River.

“This nation has a great story to tell and we’ve got producers here that produce more than we can consume,” the former Georgia governor said. He said the new position “fits right in line with my goal to be American agriculture’s unapologetic advocate and chief salesman around the world.”

On his second day in office last month, Perdue helped persuade Trump not to withdraw from the North American Free Trade Agreement with Mexico and Canada, arguing that doing so would hurt U.S. farmers. Trump has said he will work to renegotiate the pact instead.

The 2014 farm bill had directed USDA to make a plan for the new position, but the Obama administration never created the post. Perdue said the new undersecretary will work with incoming U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross to “ensure that American producers are well equipped to sell their products and feed the world.”

The Senate confirmed Lighthizer on Thursday. Though he had broad support from both parties, Republican senators John McCain and Ben Sasse said they wouldn’t vote for him because they doubted he would champion agriculture and negotiate trade deals to the benefit of American consumers and the economy.

The departmental reorganization announced by Perdue would also combine farm production and conservation agencies under one undersecretary and move rural development programs to report directly to the secretary. Perdue said that will put more focus on those programs and USDA efforts to revitalize small towns.

While the creation of the trade secretary won widespread praise in farm country, at least one Democrat is criticizing the rural development move. Democratic senator Sherrod Brown of Ohio called it a “downgrade” because there will no longer be an undersecretary for that area.

Brown says his state depends on the program for help with combating opioid abuse, building hospitals and securing loans for businesses.

“Ohio’s rural communities are too often overlooked by Washington as it is, and downgrading USDA Rural Development sends a message that rural Ohio is not a priority for this administration,” Brown said.
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U.S. Commerce Secretary Wilbur Ross sees the U.S. semiconductor industry as still dominant globally but said he is worried that it will be threatened by China’s planned investment binge to build up its own chipmaking industry.

Ross told Reuters in an interview this week that his agency is considering a national security review of semiconductors under a 1962 trade law because of their “huge defense implications” — including their use in military hardware and proliferation in devices throughout the economy. He has launched similar Section 232 reviews of the U.S. steel and aluminum sectors, where a flood of imports especially from China has depressed prices, threatening the industries’ long-term health.

The probes could lead to broad import restrictions on the metals, and the Trump administration could potentially take similar actions based on the findings of a semiconductor investigation.

“Semiconductors are one of our shining industries, but they have gone from substantial surplus to the beginnings of a deficit,” Ross told Reuters. “China has a $150 billion program to take that much further between now and 2025. That is scary.”

The 79-year-old billionaire investor was referring to China’s plans for massive state-directed investments in semiconductor manufacturing capacity under its Made in China 2025 program, which aims to replace mostly imported semiconductors with domestic products.

Ross’ predecessor at Commerce, Penny Pritzker, warned last November about looming market distortions if China builds too much semiconductor capacity.

Ross added that while he understands Beijing’s logic in developing its domestic chip industry, “that’s going to be a struggle” from a U.S. trade standpoint.

Industry view

U.S. semiconductor makers, meanwhile, have other ideas about how to secure their future. Their major trade group, the Semiconductor Industry Association (SIA), advocates open trade and increased access to international markets, which now buy 80 percent of U.S.-made semiconductors. U.S. chipmakers also depend on a complex global supply chain and have nearly half their production capacity located overseas.

“So while we fully support efforts to ensure trade in semiconductors is fair and market-based, we do not believe a Section 232 investigation is the right tool to be applied to our industry” SIA President John Neuffer told Reuters.

One area where there appear to be some differences is how to define the industry’s trade balance.

Commerce Department trade data showed that “semiconductors and related device manufacturing” had a trade deficit of $2.4 billion in 2016, with exports of $43.1 billion and imports of $45.6 billion.

But that category includes rapidly growing imports of non-semiconductor devices including solar cells and light-emitting diodes (LEDs), as well as some raw materials.

In a new submission late on Wednesday to Commerce for a study on trade deficits, SIA said that excluding the non-semiconductor products shows the sector had a $6.4 billion trade surplus last year, with exports of $41.3 billion and imports of $34.9 billion.

Neuffer said the industry was ready to work with the Trump administration to find ways to persuade China to allow its semiconductor industry to develop in a market-driven way and not discriminate against foreign firms.

He added the government could make the United States a more competitive environment for semiconductor output through tax reform that does not penalize overseas earnings, immigration reform that allows the industry to attract new talent, improvements to U.S. education and more spending on basic research.

“The Chinese are determined to build a semiconductor industry,” Neuffer said. “I think the strongest pillar of any strategy going forward has to be our government helping to create an environment where we can pedal faster and stay as far ahead as possible.”
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Uber is launching its private ride-hailing service in the Myanmar commercial capital of Yangon on Thursday, aiming to tap into one of the world’s youngest and fastest-growing online markets.

The launch follows Singapore-based GrabTaxi’s debut by about two months.

Uber is one of the world’s largest on-demand transportation platforms. It is seeking an alliance with the government to smooth acceptance of the use of private vehicles for commercial transport.

A taxi ride in Myanmar usually involves negotiating prices, no use of meters and a lack of air conditioning or seat belts. Using a ride-hailing app is still a relatively new concept, though the practice has been gaining in popularity.

Local travel services start-up Oway and Hello Cabs, a rival service run by a construction and auto dealership tycoon, also provide ride-hailing services. 

“I definitely want to try Uber,” said Nyan Zay Htet, 26, a company worker who was haggling with a driver over a fare on a downtown street in Yangon. “I welcome having international companies come in because it can be more convenient for us if we don’t have to bargain over prices and can just hop in and go.”

More than two-thirds of Southeast Asians are younger than 40 and the number going online to buy goods and services is soaring. A recent research report by Google and the Singaporean investment arm Temasek put the potential ride-sharing market in six larger regional markets at $13 billion by 2025, up from $2.5 billion in 2015.

With more than 50 million people, Myanmar is growing fast and its public transport networks are not keeping up. Taxis are plentiful in Yangon, with local media reporting authorities estimate there are more than 50,000 on the city’s jammed roads. The industry is something of a free-for-all, with non-licensed drivers turning their cars into taxis as they please. But the government has said it intends to crack down on that.

Incomes for most people are still low, so price competition may be key.

An online Uber fare estimator put the base fare in Yangon at 1,500 kyats (pronounced chuts) ($1.09) with a minimum charge of 1,800 kyats ($1.31).

Uber has faced trouble from regulators in various markets, including China, France, Spain and Mexico. But generally they target services transporting paying customers using private vehicles that are not registered for public transport, not ride-hailing that uses smartphone apps to call licensed taxis.
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Housing foreclosure activity in the United States dropped to the lowest level since 2005 last month, according to a business research group.

ATTOM Data Solutions tracks default notices, auctions and bank repossessions across the nation and says the number of actions dropped 23 percent from a year ago. That means more than 77,000 homeowners missed payments, and banks took some kind of action to encourage the repayment of their loans.

Severe problems in the U.S. housing market, and sales of securities backed by sometimes-faulty mortgages, played a key role in the financial crisis, which is one reason that investors and economists watch the housing market closely.

Seattle, a city in the Pacific Northwest state of Washington, did the best in this study, with the number of foreclosure notices dropping 38 percent from the same time a year ago. Atlantic City, New Jersey, had the worst foreclosure problem in this study, with one out of every 237 housing units getting a notice of some kind.
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China’s President Xi Jinping initiated the ambitious Belt and Road development plan but it has become a world plan not tied to his presidency, the Commerce Ministry said Wednesday, days before Xi hosts a global forum on the initiative.

The forum in Beijing next week will draw heads of state to discuss Xi’s plan to expand trade links between Asia, Africa and Europe through billions of dollars in infrastructure investment.

Representatives from more than 100 countries will attend China’s biggest diplomatic event of the year, though only one leader from the Group of Seven (G7) industrialized nations, Italian Prime Minister Paolo Gentiloni, is set to join.

China says that between 2014 and 2016, its businesses signed projects worth $304.9 billion along inland and maritime corridors of the plan, also known as the New Silk Road. But some of the projects could be in development for years.

Judging by recent precedent in China’s political system, Xi is slated to step down from the presidency in early 2023 at the end of his second five-year term.

Asked what guarantee the world had that the initiative would go on after Xi’s second term, Vice Minister of Commerce Qian Keming told a news briefing that its vitality lay in countries’ hopes for development and not in the idea of “who proposed it or what term in office there is later.”

“The Belt and Road initiative was proposed by President Xi in 2013, but this initiative is not an individual proposal, or merely left at a proposal level. Rather it is an initiative that has been widely received by the whole world. It is jointly owned by everyone,” Qian said.

China has repeatedly rebuffed concern that the plan is part of a grand strategy to expand its economic interests for selfish gain and to seek global dominance, saying that anyone can join the plan to boost common prosperity.

Xi has used the initiative to help portray China as an open economy, distinct from a rising wave of global protectionism.

However, the government has faced criticism from foreign business groups and governments alike, who say it has done little to remove discriminatory policies and market barriers that favor Chinese companies.

Foreign business groups have questioned whether multinational companies would be able to compete with Chinese firms through the plan in transparent bidding processes.

Zhang Xingfu, an official from the Commerce Ministry’s cooperation department, played down such concerns.

“Chinese enterprises conducting investment and cooperative business in countries along the Belt and Road initiative will … actively participate in project bidding, and cooperate and compete with international enterprises in the same industries on the same platform,” Zhang said.
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In August, 2014, planners in the northeastern Chinese city of Hunchun argued in state media that it should be included in the “One Belt, One Road” project, Beijing’s vision laid out the previous year of a new Silk Road across Asia to Europe.

In 2015, the official Xinhua news agency ran stories about how Hunchun was accelerating its “OBOR” plans, and early in 2016, China’s cabinet released a list of Chinese cities included in “OBOR:” Hunchun was on the map.

The fact that the list came about slowly, and that some cities felt moved to lobby to be included, underlines how the pet project of Chinese President Xi Jinping is as amorphous as it is ambitious.

The challenge of defining exactly what OBOR means will come to the fore later this month, when heads of state and senior officials from around the world gather in Beijing for the first major summit dedicated to the project.

“Frankly, I don’t really know what the belt and the road are. The reason being that I think Beijing doesn’t know either,” said Tom Miller of Gavekal Dragonomics, who recently wrote a book on the New Silk Road.

Reality is complicated

In theory, incentives for cities, companies and countries to be involved are strong: hundreds of billions of dollars are expected to be spent on roads, railways, pipelines, ports and industrial zones stretching from Sri Lanka to Djibouti.

But as Hunchun shows, the reality of OBOR can be complicated and requires buy-in from other countries.

The city’s position at the apex of Russia, North Korea and China is a blessing and a curse. While Russia is gradually opening up to more trade, North Korea has stalled.

Tantalizingly close to the sea but without a sea port after Russia’s annexation in 1860, local businesses said they wanted to ship more goods via Rason, a nearby North Korean port earmarked as an export hub to China, Japan, South Korea and beyond.

That would open a shipping route to southern China, but with sanctions in place against Pyongyang, global tensions rising over its arms programme and Rason developing slowly, expectations of progress are low.

“We currently transport goods by rail to southern China. We’d like to ship from Rason, but at present that’s not happening,” said Wang Hai, general manager of Guanghai Import and Export Trading Company in Hunchun, a small firm with 12 staff, both Chinese and Russian. “Hunchun is a hub for northeast Asia, so in theory it should play a big role in ‘One Belt, One Road,’ but for now it hasn’t been able to get its act together.”

Russia more promising?

North Korea remains largely shut to the outside world, and China, while remaining its main economic and diplomatic backer, has signed up for tough U.N. sanctions against it.

But China said on Tuesday that North Korea would be sending a delegation to the upcoming OBOR summit.

Russian President Vladimir Putin will also attend, reflecting his country’s importance in China’s OBOR strategy; in Hunchun, some enterprises are already seeing benefits from mutual trade.

Xingyang Seafood, for example, imports 90 percent of its seafood from Russia and 10 percent from North Korea, said chairman Zhao Yang.

“The main advantage of being in Hunchun is that we are close to Russia,” Yang told Reuters. The company is headquartered in northern China’s Shandong province, but in 2015 it opened a branch in Hunchun to exploit its proximity to Russia.

“How does North Korea help us? It doesn’t help us at all, they have hardly any seafood left there.”

Trade with Russia

Hunchun’s spokesman Hao Qiang declined to comment about the city’s relationship with North Korea, because of the “current political situation,” and would not say how many North Koreans were working in the city. “But we can talk about Hunchun’s trade with Russia, the city’s clean air and successful tree-planting initiatives,” he said.

In addition to oil and gas export opportunities between Russia and China, Putin has spoken of roads and bridges being built to strengthen links.

Russia has struggled, however, to lure enough people to sparsely populated regions bordering China’s northeast, and there are concerns among Russians of creeping colonization if too much land is leased to the Chinese.

“They [Chinese] will live there, their relatives will come, they will deepen their roots there, they will take Russian women as wives,” firebrand opposition politician Vladimir Zhirinovsky said in 2015, when proposals to lease Russian land to Chinese farmers were put forward. “We will only have problems. I see no advantages.”

For Hunchun, OBOR is the latest in a series of development programs aimed at revitalizing Jilin province and China’s northeast.

Benefits of investments are clear

In the 1990s, the United Nations backed the Tumen River Area Development Project, which became the Greater Tumen Initiative linking China, Mongolia, South Korea and Russia.

The benefits of large-scale state investment are clear. From 25th place among smaller cities in Jilin in terms of economic growth, Hunchun now stands third. Foreign trade has doubled since 2011, according to city statistics.

Whether OBOR can add value over the longer term is uncertain, Peter Cai wrote in a report for the Lowy Institute, an Australian think-tank.

“If the Chinese government fails to connect its domestic projects with overseas components, OBOR will be little different from other domestic infrastructure programs, greatly diminishing its economic and strategic value.”
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Mexico is embarking on a strategy to combat illegal pipeline thefts that includes going after those who purchase and deal in stolen fuel as well as the thieves, the country’s treasury secretary said Tuesday.

Jose Antonio Meade said it’s a problem that costs Mexico somewhere between 15 billion and 20 billion pesos a year, or $780 million to $1 billion, and one that requires a holistic approach to solve.

Mexico’s government wants to reduce the siphoning of gasoline and diesel from illegal pipeline taps by attacking “not only the supply but also the demand,” Meade said, according to a transcript of remarks during a Q&A session released by the Treasury Department.

Besides quick-response actions against thieves, authorities must work to make the illicit business less profitable and make those who buy it face consequences, he said.

Armed gangs add to problem

The topic is front-and-center in Mexico these days after gun battles between the army and suspected thieves killed four soldiers and six gunmen last week in the central state of Puebla. Armed gangs have gotten involved in the business of fuel thefts, and gunmen were said to have used civilians as human shields in one of the clashes.

Fuel thieves are also suspected of being behind a shocking crime in Puebla on May 2, when eight assailants raped a woman and her 14-year-old daughter, killed her toddler son, beat her husband, stole the family’s pickup truck and left on them on a highway at night. In March, three state detectives were abducted and killed by a fuel theft gang allegedly with the help of the local mayor and police officers.

Meade said those who “tear at the social fabric, who in a very cowardly fashion hide behind … women and children,” cause problems for communities and are “terribly dangerous.”

Corrupt workers a concern

Meade acknowledged it’s “very likely” that corrupt workers at state oil company Petroleos Mexicanos, or Pemex, are involved in facilitating pipeline thefts. He said officials are working with the company to identify them.

Officials are also looking at gas stations that may be selling stolen fuel, as well as the mass transportation sector. To that end, authorities raided 13 gas stations last month after detecting irregular fuel-buying patterns, Meade said.

“There was even a gas station that had been shut down (by authorities) for a year but was continuing to sell gasoline, which of course was stolen,” he said.

Looking for help from Senate

The secretary said authorities are looking into technology that would allow them to better track illegal pipeline taps and “mark” gasoline to help identify fuel that has been stolen.

Meade also noted legislation passed in the Chamber of Deputies and pending in the Senate would make it easier to prosecute fuel theft.

“The theft is illegal, but possession of stolen gasoline … since we don’t catch them physically and flagrantly stealing, we often find it impossible to take legal action,” he said.

Stolen fuel part of local economy

The Puebla state Public Security Department reported Tuesday that in a series of raids it seized over 21,000 liters (5,600 gallons) of fuel and 12 vehicles apparently involved in thefts.

Some communities in Puebla and elsewhere have come to base much of their economies on selling fuel stolen from the thousands of taps that are drilled into state-owned pipelines each year. It can also be dangerous — on Sunday one such illegal tap exploded into flames.

Meade said Puebla is the state with the highest incidence of fuel theft, followed by Guanajuato and Veracruz.
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