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Westlake Legal Group > International Trade and World Market

Trump’s Policies, Not His Heckling, May Force Fed to Cut Rates

Westlake Legal Group 16DC-FED-facebookJumbo Trump’s Policies, Not His Heckling, May Force Fed to Cut Rates United States Politics and Government United States Economy Trump, Donald J International Trade and World Market Interest Rates Inflation (Economics) Federal Reserve System Customs (Tariff) Banking and Financial Institutions

WASHINGTON — President Trump lacks official power to make the Federal Reserve cut interest rates, but he may have found a way to force its hand: stoking economic uncertainty.

The Fed’s chair, Jerome H. Powell, has signaled that he and his colleagues could cut interest rates at their upcoming meeting as inflation remains stubbornly low and risks, including Mr. Trump’s trade war with China, threaten economic growth. Mr. Powell, speaking in Paris on Tuesday, reiterated that the Fed would act as appropriate to sustain the economic expansion.

Mr. Trump continues to keep the Fed — and the world — on policy tenterhooks, saying at the White House on Tuesday that there was a long way to go to reach a trade deal with China and suggesting he could still impose tariffs on more Chinese goods. The president, speaking during a meeting of his cabinet, also took a swipe at the Fed, saying, “We would have done even better had we had a Federal Reserve that didn’t raise interest rates so quickly.”

Mr. Trump said China was under no such pressure from its central bank, noting that President Xi Jinping was “his own Fed.”

“They’re pumping money into their system, and they’re lowering rates very substantially,” he said.

The White House’s assault on the central bank, underway for about a year now, is unlikely to directly influence Fed policy. But by roiling trade tensions, Mr. Trump is continuing to throw uncertainty into a global economy that is already struggling with weakened demand from China and a slowdown in manufacturing.

That, rather than his badgering, could force the Fed’s hand, helping to lock in a rate cut at its meeting on July 30 and 31.

Uncertainties about the economic outlook “have increased, however, particularly regarding trade developments and global growth,” Mr. Powell said in prepared remarks delivered in France, also emphasizing risks including the debt ceiling.

“We are carefully monitoring these developments and assessing their implications for the U.S. economic outlook and inflation, and will act as appropriate to sustain the expansion,” he said.

An interest-rate cut now could seem unusual, because unemployment is at a nearly 50-year low, growth is holding up and the stock market has recently touched record highs. While Mr. Trump regularly celebrates that economic progress, his trade policies could crimp the expansion.

The Trump administration has already placed tariffs on $250 billion of Chinese goods, and is threatening to impose them on another $300 billion of goods — practically all remaining imports from China — if the country does not meet America’s demands. Mr. Trump has also threatened auto tariffs on Europe and Japan, a move that would hit German carmakers particularly hard.

Cutting rates could provide an economic backstop and signal that central bankers are ready and willing to act should geopolitical risks escalate or persist, causing economic data to further sour. Because policy works at a lag, moving early and pre-emptively could offer perks.

“Trade uncertainties have helped to contribute to global growth deceleration,” Robert S. Kaplan, the president of the Federal Reserve Bank of Dallas, said in Washington on Tuesday, noting that many large American companies do business overseas and will suffer as a result. “We are not immune to spillovers from decelerating global growth.”

Mr. Kaplan has not made up his mind over whether a rate cut is needed, though he is “open” to discussing one. He said that if the Fed made a move, it should be “tactical” and “limited.”

Charles L. Evans, the president of the Federal Reserve Bank of Chicago, said at a CNBC event on Tuesday that “on the basis of inflation alone, I could feel confident in arguing for a couple of rate cuts before the end of the year.”

The accumulating risks come as inflation is already well below the Fed’s 2 percent goal. The central bank aims for low but steady price gains, which guard against economy-harming deflation and give companies headroom to raise wages.

Fed officials have “raised concerns about a more prolonged shortfall in inflation below our 2 percent target,” Mr. Powell said on Tuesday.

Investors fully expect the Fed to cut rates at their July meeting, based on pricing in federal funds futures markets. The central bank’s pre-meeting quiet period starts Saturday, so their chances to change that perception are increasingly limited.

Mr. Powell also addressed the importance of shoring up trust in central banks at a time when “our audience has become more varied, more attuned to our actions and less trusting of public institutions.”

He said such trends meant that central bankers “must speak to Main Street, as well as Wall Street, in ways we have not in the past, and Main Street is listening and engaged.”

In Washington, his colleague Mr. Kaplan underlined the importance of central bank independence, saying that it allows monetary policymakers to ensure low unemployment and stable prices in the longer term — preventing short-term thinking that sacrifices comfort down the road for stronger growth today.

“A sign of a successful economy has been an independent central bank,” Mr. Kaplan said. “Independence has to be earned: It means you have to be susceptible to transparency, oversight.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Trump’s Policies, Not His Heckling, May Force Fed to Cut Rates

Westlake Legal Group 16DC-FED-facebookJumbo Trump’s Policies, Not His Heckling, May Force Fed to Cut Rates United States Politics and Government United States Economy Trump, Donald J International Trade and World Market Interest Rates Inflation (Economics) Federal Reserve System Customs (Tariff) Banking and Financial Institutions

WASHINGTON — President Trump lacks official power to make the Federal Reserve cut interest rates, but he may have found a way to force its hand: stoking economic uncertainty.

The Fed’s chair, Jerome H. Powell, has signaled that he and his colleagues could cut interest rates at their upcoming meeting as inflation remains stubbornly low and risks, including Mr. Trump’s trade war with China, threaten economic growth. Mr. Powell, speaking in Paris on Tuesday, reiterated that the Fed would act as appropriate to sustain the economic expansion.

Mr. Trump continues to keep the Fed — and the world — on policy tenterhooks, saying at the White House on Tuesday that there was a long way to go to reach a trade deal with China and suggesting he could still impose tariffs on more Chinese goods. The president, speaking during a meeting of his cabinet, also took a swipe at the Fed, saying, “We would have done even better had we had a Federal Reserve that didn’t raise interest rates so quickly.”

Mr. Trump said China was under no such pressure from its central bank, noting that President Xi Jinping was “his own Fed.”

“They’re pumping money into their system, and they’re lowering rates very substantially,” he said.

The White House’s assault on the central bank, underway for about a year now, is unlikely to directly influence Fed policy. But by roiling trade tensions, Mr. Trump is continuing to throw uncertainty into a global economy that is already struggling with weakened demand from China and a slowdown in manufacturing.

That, rather than his badgering, could force the Fed’s hand, helping to lock in a rate cut at its meeting on July 30 and 31.

Uncertainties about the economic outlook “have increased, however, particularly regarding trade developments and global growth,” Mr. Powell said in prepared remarks delivered in France, also emphasizing risks including the debt ceiling.

“We are carefully monitoring these developments and assessing their implications for the U.S. economic outlook and inflation, and will act as appropriate to sustain the expansion,” he said.

An interest-rate cut now could seem unusual, because unemployment is at a nearly 50-year low, growth is holding up and the stock market has recently touched record highs. While Mr. Trump regularly celebrates that economic progress, his trade policies could crimp the expansion.

The Trump administration has already placed tariffs on $250 billion of Chinese goods, and is threatening to impose them on another $300 billion of goods — practically all remaining imports from China — if the country does not meet America’s demands. Mr. Trump has also threatened auto tariffs on Europe and Japan, a move that would hit German carmakers particularly hard.

Cutting rates could provide an economic backstop and signal that central bankers are ready and willing to act should geopolitical risks escalate or persist, causing economic data to further sour. Because policy works at a lag, moving early and pre-emptively could offer perks.

“Trade uncertainties have helped to contribute to global growth deceleration,” Robert S. Kaplan, the president of the Federal Reserve Bank of Dallas, said in Washington on Tuesday, noting that many large American companies do business overseas and will suffer as a result. “We are not immune to spillovers from decelerating global growth.”

Mr. Kaplan has not made up his mind over whether a rate cut is needed, though he is “open” to discussing one. He said that if the Fed made a move, it should be “tactical” and “limited.”

Charles L. Evans, the president of the Federal Reserve Bank of Chicago, said at a CNBC event on Tuesday that “on the basis of inflation alone, I could feel confident in arguing for a couple of rate cuts before the end of the year.”

The accumulating risks come as inflation is already well below the Fed’s 2 percent goal. The central bank aims for low but steady price gains, which guard against economy-harming deflation and give companies headroom to raise wages.

Fed officials have “raised concerns about a more prolonged shortfall in inflation below our 2 percent target,” Mr. Powell said on Tuesday.

Investors fully expect the Fed to cut rates at their July meeting, based on pricing in federal funds futures markets. The central bank’s pre-meeting quiet period starts Saturday, so their chances to change that perception are increasingly limited.

Mr. Powell also addressed the importance of shoring up trust in central banks at a time when “our audience has become more varied, more attuned to our actions and less trusting of public institutions.”

He said such trends meant that central bankers “must speak to Main Street, as well as Wall Street, in ways we have not in the past, and Main Street is listening and engaged.”

In Washington, his colleague Mr. Kaplan underlined the importance of central bank independence, saying that it allows monetary policymakers to ensure low unemployment and stable prices in the longer term — preventing short-term thinking that sacrifices comfort down the road for stronger growth today.

“A sign of a successful economy has been an independent central bank,” Mr. Kaplan said. “Independence has to be earned: It means you have to be susceptible to transparency, oversight.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Tariffs on China Don’t Cover the Costs of Trump’s Trade War

Westlake Legal Group merlin_156648417_22d1cfc3-1331-4e84-b1a5-5523c82cc0e2-facebookJumbo Tariffs on China Don’t Cover the Costs of Trump’s Trade War Vietnam United States Economy United States Trump, Donald J Nucor Corporation International Trade and World Market Customs and Border Protection (US) China

WASHINGTON — President Trump on Monday portrayed America as being on the winning end of his trade war, saying tariffs are punishing China’s economy while generating billions of dollars for the United States, an economic victory that will allow him to continue his fight without domestic harm.

“We’ve taken in tens of billions of dollars in tariffs from China,” Mr. Trump told reporters during a “Made in America” product event at the White House. While China has taken $16 billion “off the table” by stopping its purchases of American agriculture, he said, the United States has “taken in much, much more — many times that in tariffs.”

But government figures show that the revenue the United States has collected from tariffs on $250 billion worth of Chinese goods is not enough to cover the cost of the president’s bailout for farmers, let alone compensate the many other industries hurt by trade tensions. The longer Mr. Trump’s dispute with China drags on, the more difficult it could be for him to ignore that gap.

Mr. Trump’s tariffs on Chinese imports raised $20.8 billion through Wednesday, according to data from United States Customs and Border Protection. Mr. Trump has already committed to paying American farmers hurt by the trade war $28 billion.

The president has rolled out two rounds of financial support for farmers: a $12 billion package that was announced last July, of which nearly $10 billion has been spent, and an additional $16 billion announced in May.

The government has provided no such benefit to the myriad other businesses, including plane makers, technology companies and medical device manufacturers, that have lost contracts and revenue as a result of Mr. Trump’s tariffs and China’s retaliation against American goods.

Trade talks with China have faltered in recent months, and Mr. Trump and his aides appear to be in no hurry to resolve the dispute, projecting confidence that China is suffering more of the harm, if not all of it.

Mr. Trump’s tariffs are undeniably hurting China, where exports power about 20 percent of the economy, compared with 12 percent in the United States. On Monday, the Chinese government said its economy had grown at a 6.2 percent annual rate in the second quarter, the lowest rate in 27 years.

“The United States Tariffs are having a major effect on companies wanting to leave China for non-tariffed countries,” Mr. Trump wrote on Twitter on Monday morning, commenting on the Chinese growth figures. “Thousands of companies are leaving. This is why China wants to make a deal with the U.S., and wishes it had not broken the original deal in the first place.”

There is little sign, though, that China’s loss is America’s gain. Much of the business activity is shifting to other low-cost countries, like Vietnam, with a transition cost attached for American companies that depend on them.

Numerous companies have announced changes in their supply chains or other effects from the tariffs, and more could be revealed as companies report second-quarter earnings in coming weeks. Nintendo has accelerated the shift of its Switch console to Vietnam from China, according to Panjiva, a supply chain research firm, while GoPro, Hasbro and other companies are reworking their supply chains to reduce their exposure to China.

The president and his advisers have argued that now is the time to try to force China to change trading practices that they say have hurt American companies and resulted in the loss of American jobs. The administration argues that the status quo was not without costs to the American economy. An investigation by the administration into Chinese intellectual property theft found that China’s policies had resulted in harm to the American economy of at least $50 billion per year.

Many trade experts and business leaders support confronting Beijing, and some have said the heavy cost of the trade war will be worth it if the United States can persuade China to open up its economy. But most disagree with the administration’s claim that the trade war is having no negative effect on American businesses.

“Certainly it is absolute folly to suggest that this is cost free for the U.S.,” said Rufus Yerxa, the president of the National Foreign Trade Council, which represents major American exporters.

Numerous studies have shown that American consumers are bearing much of the cost of the tariffs. Studies from the Tax Foundation in Washington and the Penn Wharton Budget Model at the University of Pennsylvania have shown that the tariffs amount to a significant tax increase on Americans, by raising the prices of goods. The damage is concentrated, as a percentage of income, among the lowest earners, who spend a larger share of their pay on imports than the upper middle class and the rich.

The administration has gradually increased the amount of Chinese goods subject to tariffs over the last year, from an initial $34 billion to a total of $250 billion, and ramped up the tariff rate on those goods.

But the monthly pace of revenue collection from tariffs has not increased this year. That’s because America is importing fewer Chinese goods than it did a year ago, which has canceled out the higher tariffs on a larger share of Chinese goods.

That decline appears to be the product of an overall slowdown in trade — which has contributed to weakened exports for American manufacturers — and the shift in supply chains to other countries. Imported goods from Vietnam have risen more than 30 percent this year from a year ago, Commerce Department data show.

Tariff revenue would likely surge if Mr. Trump followed through on his threat to impose tariffs on nearly all Chinese goods.

The administration has tried to put the levers of the government to work to shelter and support American businesses. On Monday, Mr. Trump signed an executive order requiring that 95 percent of the steel and iron that goes into projects funded by federal contracts eventually be American made, up from 50 percent.

The order is the latest in a series of proclamations that the president has made to encourage more purchases of American goods. An order in January encouraged companies to use American iron, steel, aluminum, cement and other products to the extent practical, but did not set any binding target.

John Ferriola, the chief executive of Nucor, a steel company in North Carolina, applauded the move. “We believe it’s good for our country, and it’s certainly good for the industry, I can’t deny that,” he said.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

China’s Economic Growth Hits 27-Year Low as Trade War Stings

BEIJING — China’s growth fell to its slowest pace in nearly three decades, officials said on Monday, as a resurgence of trade tensions with the United States and lingering financial problems take an increasing toll on one of the world’s most vital economic engines.

Chinese officials said the economy grew 6.2 percent between April and June compared with a year earlier. While such economic growth would be the envy of most of the world, it represented the slowest pace in China since the beginning of modern quarterly record-keeping in 1992. That marks a significant slowdown from earlier this year, when growth came in at 6.4 percent, matching a 27-year low reached during the global financial crisis a decade ago.

Premier Li Keqiang set a target in March for economic growth to be between 6 and 6.5 percent this year. The figures on Monday fell within that range.

But much of the growth in the quarter may have taken place in April and early May, when public confidence was higher because of a tax cut in March and heavy infrastructure spending as spring began. Trade talks broke down on May 10 and President Trump raised tariffs sharply on Chinese goods, a step that damaged consumer confidence within China. Growth early in the quarter also would have taken place before the contentious government takeover of a bank in late May hurt financial confidence.

Chinese officials on Monday acknowledged that conditions are becoming increasingly difficult.

“Economic conditions are still severe both at home and abroad, the global economic growth is slowing down, the external instabilities and uncertainties are increasing, the unbalanced and inadequate development at home is still acute, and the economy is under new downward pressure,” said Mao Shengyong, a spokesman for China’s National Bureau of Statistics, in a news conference.

Mr. Mao downplayed the effects of trade, saying China’s economy increasingly relies on consumption.

Monthly economic data, particularly for imports, suggests that the second quarter started strong but then slowed. “There was certainly a surge in activity through April,” said George Magnus, a longtime specialist in the Chinese economy who is now at Oxford University. “Something happened in May.”

The number may also understate the extent of the slowdown. Economists widely doubt the veracity of the overall Chinese growth figure, which shows far more stability than comparable numbers from the United States and elsewhere.

A few sectors of the Chinese economy are doing fairly well. The strongest sector appears to be the construction of infrastructure, much of it paid for with money borrowed by local, provincial and national government agencies. Retail sales ticked up as well.

ImageWestlake Legal Group merlin_155141007_0e4236fa-0d48-4e13-ac35-bef0484946be-articleLarge China’s Economic Growth Hits 27-Year Low as Trade War Stings Politics and Government International Trade and World Market Infrastructure (Public Works) Economic Conditions and Trends China Banking and Financial Institutions

A used car dealership in Beijing. Auto sales have slumped badly.CreditLam Yik Fei for The New York Times

The biggest drag on the Chinese economy lies in trade, which grew powerfully over the past three decades but has stopped rising in recent months. Exports dipped 1.3 percent in June from a year earlier, the government said on Friday, and imports fell 7.3 percent.

While the trade war has hurt American purchases from China, economic weakness in Europe and many Asian countries has caused overseas demand to weaken far more broadly than just in the United States. Last week, Singapore unexpectedly announced that its trade-dependent economy had shrunk at an annualized rate of 3.4 percent in the second quarter.

“The economy is definitely in a broad decelerating trend because the global economy is slowing down, so exports are slowing down,” said Larry Hu, the chief China economist at Macquarie Capital, the investment banking unit of a big Australian multinational.

China’s troubles have their roots not just in trade but also in a debt-laden financial system that has been shaken by a series of large shocks in the last few weeks.

On May 24, Chinese financial regulators took over Baoshang Bank in Inner Mongolia, a small institution that is part of a financial empire previously controlled by Xiao Jianhua, a financier who disappeared into the custody of government investigators two years ago. Regulators tried to force a few of its largest creditors to accept losses rather than bailing them out as a way to teach financiers to be more careful about where they put their institutions’ money.

Problems in some of the shadowy corners of China’s financial system have also frightened investors. China’s shadow banking system plays an important role in funding property projects and other private business ventures. But managers of some riskier investment products have had a hard time making high-interest payments to investors in recent weeks. In some cases they have also had trouble even repaying principal.

These incidents have set off a broader shift in recent weeks away from riskier investments. Institutions and households alike have been putting money into larger, more stable financial institutions run by the central government.

Big state-controlled banks have steered the bulk of their lending to state-owned enterprises. That long-running trend has hurt the real estate market and the broader private sector.

Regulators have repeatedly urged the big banks to lend more to small businesses and the private sector, and Mr. Li, the premier, did so again on July 2. But these exhortations have had limited effect so far. Bank lending officers worry that they might be blamed, or even investigated for corruption, if they extend large loans to struggling private businesses that then default as the economy weakens.

The Chinese economy has come to rely largely on government investment in infrastructure projects. CreditLam Yik Fei for The New York Times

Andrew Collier, the managing director and founder of Orient Capital Research, a Hong Kong investment and economic research firm, said that troubles at Baoshang and in the shadow banking system had rattled financial markets but seemed to have been contained, at least so far.

“The Chinese central bank is watching carefully, and for now will use quiet means to avoid any shaky financial shenanigans,” he said.

Economists are watching for other potential warning signs, like inflation. Price increases have been tame, according to official statistics. But many in China complain that the actual cost of living is rising fast, particularly for food but also for rent and other daily expenses.

Industrial production has weakened this year, as has private sector investment. Housing sales have slowed, as buyers look harder for bargains but sellers have been reluctant to cut prices. Car factories have sharply reduced output in response to weak sales, although there were signs last month that consumer interest in buying luxury automobiles may finally be stabilizing.

The long-running trade war has prompted many multinational companies to look at ways to shift supply chains elsewhere. But many continue to invest in China to supply China’s own market as well as others, especially in Asia.

“The Chinese government will continue to work hard to create a more stable, fair, transparent and predictable investment environment,” Gao Feng, spokesman for the Ministry of Commerce, said at a news briefing on Thursday.

He later added that “China has not experienced large-scale withdrawals of foreign capital.”

For now, though, the economy keeps running to a considerable extent because the Chinese government is pumping huge sums of money into infrastructure. It is building high-speed rail lines, immense highway bridges, ports and other facilities to connect ever smaller and less affluent cities and towns to the rest of the country.

That infrastructure is making it easier to do business and move around even in some of the poorest and most remote areas of China. But bankers and economists worry about whether some of these investments will ever earn enough of a return to cover their cost.

“There’s a very weak commercial basis,” Mr. Magnus said, “for this credit-fueled infrastructure spending.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

China’s Economic Growth Slows as Trade War With U.S. Deepens

BEIJING — China’s growth fell to its slowest pace in nearly three decades, officials said on Monday, as a resurgence of trade tensions with the United States and lingering financial problems take an increasing toll on one of the world’s most vital economic engines.

Chinese officials said the economy grew 6.2 percent between April and June compared with a year earlier. While such economic growth would be the envy of most of the world, it represented the slowest pace in China since the beginning of modern quarterly record-keeping in 1992. That marks a significant slowdown from earlier this year, when growth came in at 6.4 percent, matching a 27-year low reached during the global financial crisis a decade ago.

Premier Li Keqiang set a target in March for economic growth to be between 6 and 6.5 percent this year. The figures on Monday fell within that range.

But much of the growth in the quarter may have taken place in April and early May, when public confidence was higher because of a tax cut in March and heavy infrastructure spending as spring began. Trade talks broke down on May 10 and President Trump raised tariffs sharply on Chinese goods, a step that damaged consumer confidence within China. Growth early in the quarter also would have taken place before the contentious government takeover of a bank in late May hurt financial confidence.

Monthly economic data, particularly for imports, suggests that the second quarter started strong but then slowed. “There was certainly a surge in activity through April,” said George Magnus, a longtime specialist in the Chinese economy who is now at Oxford University. “Something happened in May.”

The number may also understate the extent of the slowdown. Economists widely doubt the veracity of the top Chinese growth figure, which shows far more stability than comparable numbers from the United States and elsewhere.

A few sectors of the Chinese economy are doing fairly well. The strongest sector appears to be the construction of infrastructure, much of it paid for with money borrowed by local, provincial and national government agencies.

ImageWestlake Legal Group merlin_155141007_0e4236fa-0d48-4e13-ac35-bef0484946be-articleLarge China’s Economic Growth Slows as Trade War With U.S. Deepens Politics and Government International Trade and World Market Infrastructure (Public Works) Economic Conditions and Trends China Banking and Financial Institutions

A used car dealership in Beijing. Auto sales have slumped badly.CreditLam Yik Fei for The New York Times

The biggest drag on the Chinese economy lies in trade, which grew powerfully over the past three decades but has stopped rising in recent months. Exports dipped 1.3 percent in June from a year earlier, the government said on Friday, and imports fell 7.3 percent.

While the trade war has hurt American purchases from China, economic weakness in Europe and many Asian countries has caused overseas demand to weaken far more broadly than just in the United States. Last week, Singapore unexpectedly announced that its trade-dependent economy had shrunk at an annualized rate of 3.4 percent in the second quarter.

“The economy is definitely in a broad decelerating trend because the global economy is slowing down, so exports are slowing down,” said Larry Hu, the chief China economist at Macquarie Capital, the investment banking unit of a big Australian multinational.

China’s troubles have their roots not just in trade but also in a debt-laden financial system that has been shaken by a series of large shocks in the last few weeks.

On May 24, Chinese financial regulators took over Baoshang Bank in Inner Mongolia, a small institution that is part of a financial empire previously controlled by Xiao Jianhua, a financier who disappeared into the custody of government investigators two years ago. Regulators tried to force a few of its largest creditors to accept losses rather than bailing them out as a way to teach financiers to be more careful about where they put their institutions’ money.

Problems in some of the shadowy corners of China’s financial system have also frightened investors. China’s shadow banking system plays an important role in funding property projects and other private business ventures. But managers of some riskier investment products have had a hard time making high-interest payments to investors in recent weeks. In some cases they have also had trouble even repaying principal.

These incidents have set off a broader shift in recent weeks away from riskier investments. Institutions and households alike have been putting money into larger, more stable financial institutions run by the central government.

Big state-controlled banks have steered the bulk of their lending to state-owned enterprises. That long-running trend has hurt the real estate market and the broader private sector.

Regulators have repeatedly urged the big banks to lend more to small businesses and the private sector, and Mr. Li, the premier, did so again on July 2. But these exhortations have had limited effect so far. Bank lending officers worry that they might be blamed, or even investigated for corruption, if they extend large loans to struggling private businesses that then default as the economy weakens.

The Chinese economy has come to rely largely on government investment in infrastructure projects. CreditLam Yik Fei for The New York Times

Andrew Collier, the managing director and founder of Orient Capital Research, a Hong Kong investment and economic research firm, said that troubles at Baoshang and in the shadow banking system had rattled financial markets but seemed to have been contained, at least so far.

“The Chinese central bank is watching carefully, and for now will use quiet means to avoid any shaky financial shenanigans,” he said.

Economists are watching for other potential warning signs, like inflation. Price increases have been tame, according to official statistics. But many in China complain that the actual cost of living is rising fast, particularly for food but also for rent and other daily expenses.

Industrial production has weakened this year, as has private sector investment. Housing sales have slowed, as buyers look harder for bargains but sellers have been reluctant to cut prices. Car factories have sharply reduced output in response to weak sales, although there were signs last month that consumer interest in buying luxury automobiles may finally be stabilizing.

The long-running trade war has prompted many multinational companies to look at ways to shift supply chains elsewhere. But many continue to invest in China to supply China’s own market as well as others, especially in Asia.

“The Chinese government will continue to work hard to create a more stable, fair, transparent and predictable investment environment,” Gao Feng, spokesman for the Ministry of Commerce, said at a news briefing on Thursday.

He later added that “China has not experienced large-scale withdrawals of foreign capital.”

For now, though, the economy keeps running to a considerable extent because the Chinese government is pumping huge sums of money into infrastructure. It is building high-speed rail lines, immense highway bridges, ports and other facilities to connect ever smaller and less affluent cities and towns to the rest of the country.

That infrastructure is making it easier to do business and move around even in some of the poorest and most remote areas of China. But bankers and economists worry about whether some of these investments will ever earn enough of a return to cover their cost.

“There’s a very weak commercial basis,” Mr. Magnus said, “for this credit-fueled infrastructure spending.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

China’s Economic Growth Slows as Trade War With U.S. Deepens

BEIJING — China’s growth fell to its slowest pace in nearly three decades, officials said on Monday, as a resurgence of trade tensions with the United States and lingering financial problems take an increasing toll on one of the world’s most vital economic engines.

Chinese officials said the economy grew 6.2 percent between April and June compared with a year earlier. While such economic growth would be the envy of most of the world, it represented the slowest pace in China since the beginning of modern quarterly record-keeping in 1992. That marks a significant slowdown from earlier this year, when growth came in at 6.4 percent, matching a 27-year low reached during the global financial crisis a decade ago.

Premier Li Keqiang set a target in March for economic growth to be between 6 and 6.5 percent this year. The figures on Monday fell within that range.

But much of the growth in the quarter may have taken place in April and early May, when public confidence was higher because of a tax cut in March and heavy infrastructure spending as spring began. Trade talks broke down on May 10 and President Trump raised tariffs sharply on Chinese goods, a step that damaged consumer confidence within China. Growth early in the quarter also would have taken place before the contentious government takeover of a bank in late May hurt financial confidence.

Monthly economic data, particularly for imports, suggests that the second quarter started strong but then slowed. “There was certainly a surge in activity through April,” said George Magnus, a longtime specialist in the Chinese economy who is now at Oxford University. “Something happened in May.”

The number may also understate the extent of the slowdown. Economists widely doubt the veracity of the top Chinese growth figure, which shows far more stability than comparable numbers from the United States and elsewhere.

A few sectors of the Chinese economy are doing fairly well. The strongest sector appears to be the construction of infrastructure, much of it paid for with money borrowed by local, provincial and national government agencies.

ImageWestlake Legal Group merlin_155141007_0e4236fa-0d48-4e13-ac35-bef0484946be-articleLarge China’s Economic Growth Slows as Trade War With U.S. Deepens Politics and Government International Trade and World Market Infrastructure (Public Works) Economic Conditions and Trends China Banking and Financial Institutions

A used car dealership in Beijing. Auto sales have slumped badly.CreditLam Yik Fei for The New York Times

The biggest drag on the Chinese economy lies in trade, which grew powerfully over the past three decades but has stopped rising in recent months. Exports dipped 1.3 percent in June from a year earlier, the government said on Friday, and imports fell 7.3 percent.

While the trade war has hurt American purchases from China, economic weakness in Europe and many Asian countries has caused overseas demand to weaken far more broadly than just in the United States. Last week, Singapore unexpectedly announced that its trade-dependent economy had shrunk at an annualized rate of 3.4 percent in the second quarter.

“The economy is definitely in a broad decelerating trend because the global economy is slowing down, so exports are slowing down,” said Larry Hu, the chief China economist at Macquarie Capital, the investment banking unit of a big Australian multinational.

China’s troubles have their roots not just in trade but also in a debt-laden financial system that has been shaken by a series of large shocks in the last few weeks.

On May 24, Chinese financial regulators took over Baoshang Bank in Inner Mongolia, a small institution that is part of a financial empire previously controlled by Xiao Jianhua, a financier who disappeared into the custody of government investigators two years ago. Regulators tried to force a few of its largest creditors to accept losses rather than bailing them out as a way to teach financiers to be more careful about where they put their institutions’ money.

Problems in some of the shadowy corners of China’s financial system have also frightened investors. China’s shadow banking system plays an important role in funding property projects and other private business ventures. But managers of some riskier investment products have had a hard time making high-interest payments to investors in recent weeks. In some cases they have also had trouble even repaying principal.

These incidents have set off a broader shift in recent weeks away from riskier investments. Institutions and households alike have been putting money into larger, more stable financial institutions run by the central government.

Big state-controlled banks have steered the bulk of their lending to state-owned enterprises. That long-running trend has hurt the real estate market and the broader private sector.

Regulators have repeatedly urged the big banks to lend more to small businesses and the private sector, and Mr. Li, the premier, did so again on July 2. But these exhortations have had limited effect so far. Bank lending officers worry that they might be blamed, or even investigated for corruption, if they extend large loans to struggling private businesses that then default as the economy weakens.

The Chinese economy has come to rely largely on government investment in infrastructure projects. CreditLam Yik Fei for The New York Times

Andrew Collier, the managing director and founder of Orient Capital Research, a Hong Kong investment and economic research firm, said that troubles at Baoshang and in the shadow banking system had rattled financial markets but seemed to have been contained, at least so far.

“The Chinese central bank is watching carefully, and for now will use quiet means to avoid any shaky financial shenanigans,” he said.

Economists are watching for other potential warning signs, like inflation. Price increases have been tame, according to official statistics. But many in China complain that the actual cost of living is rising fast, particularly for food but also for rent and other daily expenses.

Industrial production has weakened this year, as has private sector investment. Housing sales have slowed, as buyers look harder for bargains but sellers have been reluctant to cut prices. Car factories have sharply reduced output in response to weak sales, although there were signs last month that consumer interest in buying luxury automobiles may finally be stabilizing.

The long-running trade war has prompted many multinational companies to look at ways to shift supply chains elsewhere. But many continue to invest in China to supply China’s own market as well as others, especially in Asia.

“The Chinese government will continue to work hard to create a more stable, fair, transparent and predictable investment environment,” Gao Feng, spokesman for the Ministry of Commerce, said at a news briefing on Thursday.

He later added that “China has not experienced large-scale withdrawals of foreign capital.”

For now, though, the economy keeps running to a considerable extent because the Chinese government is pumping huge sums of money into infrastructure. It is building high-speed rail lines, immense highway bridges, ports and other facilities to connect ever smaller and less affluent cities and towns to the rest of the country.

That infrastructure is making it easier to do business and move around even in some of the poorest and most remote areas of China. But bankers and economists worry about whether some of these investments will ever earn enough of a return to cover their cost.

“There’s a very weak commercial basis,” Mr. Magnus said, “for this credit-fueled infrastructure spending.”

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Trump Backs Away From Barriers on Foreign Uranium

WASHINGTON — President Trump said he would not impose quotas on imports of uranium, backing away from one of many trade confrontations the administration has threatened as it tries to protect American industry.

Mr. Trump, in an announcement late Friday night, said that he did not agree with the commerce secretary’s findings that foreign uranium poses a threat to national security. It was a rare dissent for a president who has determined that foreign metals, autos and auto parts are a threat to America’s national security and should be restricted.

After several months of deliberation, the commerce secretary determined that the high volume of uranium imports do pose a threat to national security. Mr. Trump rejected that finding.

“Although I agree that the secretary’s findings raise significant concerns regarding the impact of uranium imports on the national security with respect to domestic mining, I find that a fuller analysis of national security considerations with respect to the entire nuclear fuel supply chain is necessary at this time,” the president said in a statement.

The potential for trade barriers on foreign uranium stemmed from an investigation into whether imported uranium ore and related products, which are essential components for the United States’ nuclear arsenal, submarines, aircraft carriers and power plants, were a security threat.

Mr. Trump’s decision means that the United States will not impose the quotas that the domestic uranium industry had requested, which would have limited imports to guarantee that American miners supply one-quarter of the uranium used domestically. Instead, the president said he would establish a working group to develop recommendations in the next 90 days for reviving and expanding domestic nuclear fuel production.

The announcement was a rare instance in which the Trump administration chose not to exercise the full extent of its powers to give American companies a trade advantage over foreign competitors.

The Trump administration has used similar national security-related investigations to levy tariffs on foreign steel and aluminum, and it has threatened to do the same with imported automobiles and auto parts. Foreign leaders from Canada, Mexico, Europe and elsewhere have bristled at being branded a national security threat and imposed retaliatory tariffs on American products in return.

Image<img alt="Mr. Trump took the rare step of disagreeing with his Commerce Department’s findings that imports of uranium pose a threat to national security.

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Mr. Trump took the rare step of disagreeing with his Commerce Department’s findings that imports of uranium pose a threat to national security.CreditErin Schaff/The New York Times

Unlike the investigations in foreign metals and cars, which the Trump administration initiated on its own, two American uranium mining companies, Ur-Energy and Energy Fuels, had requested the inquiry into uranium. Both businesses claimed that subsidized foreign products had flooded the American market, putting them at a competitive disadvantage, forcing them to cut jobs and putting the domestic supply of uranium at risk.

But in seeking protection, Ur-Energy and Energy Fuels found themselves at odds with American nuclear power plants and the utilities that depend on that power, which would face higher material prices and operating costs if quotas were put into place. Nuclear plants generate about one-fifth of the country’s electricity, but they are rapidly losing market share to cheaper electricity from shale gas and wind turbines.

The United States is the world’s largest consumer of uranium. But it imported 93 percent of the uranium it used in 2017, with the vast majority coming from Australia, Canada, Kazakhstan and Russia. In its report, the Commerce Department said that imports had risen from satisfying 85.8 percent of the domestic market in 2009 as a result of increased production by foreign state-owned enterprises that distorted global prices and made it difficult for American miners to compete.

“We are down to where we are effectively producing nothing when it comes to newly mined uranium,” said Mark Chalmers, the president of Energy Fuels. “That should shock people.”

“We’re basically chucking our car keys at the Chinese and the Russians and saying go ahead and produce our uranium for us,” he said.

Energy Fuels and Ur-Energy say they have had to cut their work force because of falling global prices. They claim that Russia and Kazakhstan have heavily subsidized their production, and China has been buying up uranium mines around the world, threatening the supply of uranium from the United States and close allies like Canada and Australia.

But those who criticized the petition — including foreign uranium miners and domestic utilities — viewed the request as a transparent grab for protection of a struggling domestic industry. They say mining uranium has not been economical in the United States for a decade, and note that the country maintains a strategic reserve of uranium that can supply the military for many years.

The Ad Hoc Utilities Group, which runs a majority of the nuclear generators in the United States, said in comments submitted to the Trump administration last September that restricting imports would endanger the viability of nuclear plants and the entire industry. The quota that the petitioners had requested would effectively tax nuclear generators by $500 million to $800 million a year, the utilities group said, risking thousands of jobs in the industry.

“Maintaining nuclear plants is a cornerstone of the present administration’s policy,” the utilities company said. “However, this investigation’s potential impact on restricting nuclear fuel imports would do just the opposite.”

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As Nations Look to Tax Tech Firms, U.S. Scrambles to Broker a Deal

Westlake Legal Group merlin_148265940_3d34f4ca-6938-496a-86fd-8da1c7681316-facebookJumbo As Nations Look to Tax Tech Firms, U.S. Scrambles to Broker a Deal United States Politics and Government United States International Relations United States Economy Trump, Donald J Treaties tax evasion Mnuchin, Steven T International Trade and World Market Income Tax Great Britain Google Inc France Federal Taxes (US) Facebook Inc Customs (Tariff) Corporations Corporate Taxes Amazon.com Inc

WASHINGTON — For most of the 21st century, wealthy nations have engaged in a race to the bottom on corporate taxes, cutting rates in an effort to poach business activity across borders. Very quickly, that script has flipped.

Developed countries are now moving to impose new taxes on technology companies, like Facebook and Google, that have large presences in their citizens’ daily lives but pay those countries little tax on the profits they earn there.

France moved on Thursday to become the first country to impose a so-called digital tax of 3 percent on the revenue companies earn from providing digital services to French users. It would apply to large companies, numbering more than two dozen, with robust annual sales in France, including United States-based Facebook, Google and Amazon. British leaders also detailed plans on Thursday to impose a similar tax, of 2 percent, on tech giants. And the European Union has also been mulling a digital tax.

The digital revenue grab is pitting traditional allies against one another, threatening to set off a cascade of tax increases and tariffs unless political and economic leaders work out a multinational agreement to avert them. Late Wednesday, the Trump administration said it would pursue an investigation into whether France’s tech tax amounted to an unfair trade practice that could be punishable with retaliatory tariffs. Administration officials, including Treasury Secretary Steven Mnuchin, have also raised concerns about Britain’s move.

The French tax, which would exact a bigger toll on foreign companies than French ones, has been denounced by the American tech industry, along with Democratic and Republican leaders, who are looking for ways to avoid such one-off decisions by more closely coordinating international digital tax arrangements.

Administration officials have tried to shape an effort being led by the Organization for Economic Cooperation and Development to broker an international system for taxing digital profits. A lobbying flurry has broken out in Washington to influence the negotiations.

And in its attempts to show international leadership — and not go it alone, as Mr. Trump has in his trade wars with China and other partners — the administration is pushing the Senate to vote next week on a package of long-foundering updates to international tax treaties, which could demonstrate to allies that it is serious about leading the effort to broker a digital armistice.

Countries have competed to reduce corporate tax rates, and attract business activity both physically and on paper, for two decades. The average rate tracked by the Organization for Economic Cooperation and Development has fallen seven percentage points since 2000, to just over 21 percent today. France and the United States both cut rates substantially for 2018, with Mr. Trump’s signature tax cuts bringing the American rate of 21 percent right to the international average.

Technology companies’ revenue has surged worldwide, but not their tax payments, prompting many wealthy governments to complain that digital businesses are not paying their fair share. The European Union calculates that digital company revenue is growing more than four times as fast as revenue for other multinational companies, partly from ad sales to European consumers.

Because the firms have relatively light physical presences in Europe, they benefit from the current system, which taxes companies based on where their operations and assets are — and not where their sales are generated. The European Union has said this has allowed tech companies to pay less than half the effective tax rate of other multinationals, and European leaders want to tax them in a way that takes into account where their users are.

Mr. Mnuchin has spent much of his time discussing the issue at international forums with finance ministers from around the world.

During meetings of the International Monetary Fund and the World Bank in April, Mr. Mnuchin said it was a “priority” to find an international solution, and he pressed France and Britain to abandon their own tax plans once a compromise is reached.

At the Group of 20 finance ministers meeting in Japan in June, Mr. Mnuchin underscored his concerns, and the finance ministers agreed in their communiqué to work toward finding a common set of rules to close loopholes that global technology companies have been using to reduce their tax bills.

“I’m not in favor of the current digital tax that has been proposed by France and the U.K.,” Mr. Mnuchin said, warning a system of unilateral digital taxes would not work. “We have significant concerns with both of those.”

The United States has called for a tax that is based on companies’ income, not sales, and said specific industries should not be singled out with a different standard. The Treasury secretary has dispatched his deputy, Justin Muzinich, to help broker an agreement. The Organization for Economic Cooperation and Development released a “road map” in May, agreed to by nearly 130 countries, toward finding agreement on a global digital tax plan.

France has said that it will repeal its tax once a group agreement is reached. The subject will come up again when finance minsters gather in Chantilly, France, for the summit of the Group of 7 industrialized nations next week. Bruno Le Maire, the French finance minister, has suggested that France’s tax will help accelerate an international pact.

“We are willing, especially with Steven Mnuchin, to give new impetus during the G7 in Chantilly on the very specific topic of minimum taxation,” Mr. Le Maire said in an interview last month.

The Treasury Department said in a letter to the Senate Finance Committee on Thursday that it is considering a range of responses to the French tax.

“We have and will continue to urge France to forbear from such unilateral actions and join with us in an intensive effort to reach a comprehensive, multilateral solution,” wrote Kimberly J. Pinter, deputy assistant secretary in Treasury’s office of legislative affairs.

As negotiations persist, administration officials and Republican Senate leaders have worked together to break a decade-long logjam on updating international tax treaties, some of which were negotiated in the early years of the Obama administration.

Senator Mitch McConnell of Kentucky, the majority leader, moved on Thursday to set up a vote on the quartet of treaties next week, in what would be a bipartisan victory for multinational companies. The package is expected to succeed in garnering the support of two-thirds of senators voting on the issue.

The so-called tax protocols would update existing tax treaties with Spain, Japan, Luxembourg and Switzerland. They would allow companies with operations in those countries to avoid some previous tax penalties for transferring money to their operations abroad, in a provision proponents say would encourage multinationals to invest more in the United States. They would also update the existing treaties to allow for more detailed sharing of information among countries on individual and corporate taxpayers.

The treaties were held up for years by Senator Rand Paul, Republican of Kentucky, who objected to that information sharing. But the Senate Foreign Relations Committee overrode his complaints and voted to advance the treaties last month.

A host of large and powerful trade groups, including the Semiconductor Industry Association and the Business Roundtable, has been urging Senate leaders to approve the measures. “Tax treaties help the U.S. economy by allowing U.S. companies to more efficiently conduct their businesses abroad and by making the U.S. more hospitable to foreign investment,” the groups wrote this spring in a letter to Senator Jim Risch, the Idaho Republican who leads the Foreign Relations Committee.

One of the companies that stands to benefit is a Spanish-owned steel maker with a large plant in Kentucky, North American Stainless, which has been pushing Mr. McConnell and other senators to schedule a vote.

North American Stainless is the subsidiary of Acerinox, and employs more than 1,300 workers in Kentucky. A company executive told a Senate panel in 2014 that ratifying the tax protocol with Spain could boost Acerinox’s investments in Kentucky, by ending a 10 percent tax on dividend payments from the American subsidiary to the parent company.

In pushing for the tax treaties, Treasury officials have argued that they would promote fair and efficient taxation by the United States and treaty partners, reduce the risk of double taxation and help combat tax evasion by improving the flow of information among tax authorities.

A Treasury spokeswoman said the tax treaties were a priority for Mr. Mnuchin and Mr. McConnell and that the Senate’s bipartisan work on the issue would fuel economic growth.

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A Koch Executive’s Harassment in China Adds to Fears Among Visitors

A Koch Industries executive was told he could not leave China. An ex-diplomat who helped organize a technology forum in Beijing was hassled by authorities who wanted to question him. An industry group developed contingency plans, in case its offices were raided and computer servers were seized.

Business executives, Washington officials and other frequent visitors to China who were interviewed by The New York Times expressed increasing alarm about the Chinese authorities’ harassment of Americans by holding them for questioning and preventing them from leaving the country.

They worry that trade tensions between Washington and Beijing could turn businesspeople and former officials into potential targets. Some companies are reviewing or beefing up their plans in case one of their employees faces problems, three people said. Many of the more than a dozen people interviewed by The Times asked for anonymity because they feared reprisals from the Chinese authorities.

“In a very not-so-subtle manner, the Chinese government has upped the ante by detaining Americans at the borders and at their hotels, and with the obvious intent to send a message to the Trump administration that they can engage in hostage diplomacy if push comes to shove,” said James Zimmerman, a partner in the Beijing office of the law firm Perkins Coie, which works with American companies in China.

“If they go in that direction, this would not be received well by the American business community, which puts at risk billions of dollars of investment in China,” he said.

The problems escalated after Canadian officials arrested an executive of Huawei, the Chinese technology giant, at the behest of American officials. China then detained a Canadian businessman and a former diplomat.

The fear spreading through the American business community highlights how fraught ties between the world’s two largest economies have become. Though President Trump and China’s president, Xi Jinping, have agreed to restart trade talks, which broke off in May, the two sides remain far apart on the most contentious issues.

ImageWestlake Legal Group merlin_157181262_86a6b94b-7e19-45ba-9b2f-b1bb9e3d60df-articleLarge A Koch Executive’s Harassment in China Adds to Fears Among Visitors United States Political Prisoners Koch Industries Inc International Trade and World Market China

President Trump and his Chinese counterpart, Xi Jinping, right, have agreed to restart trade talks, yet the two sides remain far apart on the most contentious issues.CreditErin Schaff/The New York Times

The extent of the harassment is unknown, but several recent episodes are likely to add to the concerns. Companies that publicly discuss such problems in China could face punishment from the politicized court system, calls for boycotts in the state-run news media or other punishments meted out behind closed doors. Officials at China’s Foreign Ministry and the Ministry of Public Security, its main police agency, did not respond to requests for comment.

Many American business figures still come and go without major incident. Elon Musk, the chief executive of the electric-car maker Tesla, was offered permanent residency by Li Keqiang, China’s premier, after he visited China in January to open a factory.

Still, a number of recent run-ins with the authorities have prompted broader worries. In late June, one American industry group sent an email to its members detailing how it was trying to mitigate its own risks.

“Foreign staff in particular have reported a high level of anxiety about the current environment,” it said in the message, which was reviewed by The Times. It said it was “in the process of finalizing a detailed crisis plan to be used in the event that one of our offices is raided and/or one of our staff is detained.”

Those plans included a procedure if its servers were seized. It also said it had reviewed insurance policies to ensure that staff evacuations were covered, and it recommended that workers not travel to sensitive parts of China.

Washington officials continue to warn travelers that the Chinese authorities have blocked a number of Americans from leaving China, a practice known as exit bans. Many of those targeted are businesspeople. Often they are naturalized American citizens who were born in China.

In some cases, the Chinese authorities use such bans to exert pressure on Americans who are members of the families of local officials, like the wife and children of Liu Changming, a former executive at state-owned bank accused of fraud. Huang Wan, the American daughter-in-law of Zhou Yongkang, a fallen former senior leader, has also publicly said she has been forbidden to leave.

In early June, a Chinese-American executive at Koch Industries, the conglomerate owned by the conservative billionaire brothers David and Charles Koch, was told he could not leave the immediate vicinity of his hotel in southern China, according to three people with knowledge of the matter. He was then interrogated for multiple days, with the discussion hitting on the trade war and souring relations between the United States and China.

Chinese leaders see American restrictions on companies like Huawei, the telecommunications giant, as an effort to hold back their country’s progress.CreditLam Yik Fei for The New York Times

While the authorities told the man that he would not be allowed to leave China, they did not take his passport. After the State Department intervened, tensions subsided and he was able to fly out of the country, the people added.

Given some of the discussion, two of the people with knowledge of the episode involving the Koch Industries executive said they believed it was an attempt to send a message to Mr. Trump.

The Kochs have traditionally been major financial backers of Republicans, including Mike Pompeo, the secretary of state and a former Republican congressman from Kansas. Koch Industries also has big investments in China, where it employs more than 23,000 people. Last year, a Koch subsidiary said it would put more than $1 billion into a chemical plant in Shanghai.

But the Kochs, whose views are more libertarian than populist, have also criticized Mr. Trump’s trade and immigration policies, prompting the president on Twitter to call them “a total joke in real Republican circles.”

In late June, the authorities tried to interrogate a former Beijing-based American diplomat, according to three people with knowledge of the incident. The former diplomat had been attending an artificial intelligence forum in Beijing, which he helped organize, when a hotel employee called his room on the night of June 25, saying that government security officers in the lobby wanted to speak with him. Alarmed, the former diplomat emailed the other American conference attendees, then went down.

Two plainclothes officers asked him to go with them to answer questions. They asked him about his diplomatic status and whether he had diplomatic immunity, the people said. They demanded to see his passport, which he refused to show.

The former diplomat called American Embassy officials. After a few senior diplomats arrived, the Chinese officers left, the people said.

Other run-ins create an atmosphere of intimidation. Early this year, a technology industry executive who has traveled to and worked in China for more than a decade without major incident encountered authorities in a smaller city in eastern China, according to an account from the person, who asked not to be identified publicly for fear of retaliation.

While the executive was traveling between meetings, a black car appeared to be following, often taking no precautions to disguise its presence. When the executive arrived at the airport to leave, a group of about six men with earpieces and bulletproof vests emerged from the car. One carried a visible sidearm, and another filmed the executive. Two of the men then followed the executive through security to the airport gate before the executive flew out.

As the trade war has intensified, China has tried to use American businesses to send a message to the Trump administration. It summoned American executives in June to warn them that they would suffer if they followed the administration’s proposed ban on sales of American technology. Businesspeople have taken new steps to reduce their profiles when traveling in China, including using burner phones and wiping laptops that may contain sensitive information, according to three people with knowledge of the matter.

Over all, that has led to growing nervousness among businesspeople.

“A lot of Western businesses are not willing to speak up loudly because they think things could get worse,” said Peter Humphrey, a British private investigator who was imprisoned in China in 2013 while working for GlaxoSmithKline. Now living in Britain, he advises companies on security and business issues in China and says his clients face growing retaliation.

“I believe we are seeing the worst environment since the Cultural Revolution,” he added, “in terms of the extent to which people are under surveillance and control, and the extent to which people are punished.”

Nicholas Confessore contributed reporting from New York.

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France Moves to Tax Tech Giants, Stoking Fight With White House

Westlake Legal Group frenchtechtax-facebookJumbo France Moves to Tax Tech Giants, Stoking Fight With White House Mnuchin, Steven T Macron, Emmanuel (1977- ) Law and Legislation International Trade and World Market Google Inc France Facebook Inc Corporate Taxes

PARIS — President Emmanuel Macron’s government waded into a potentially messy fight with the White House on Thursday as French lawmakers voted to impose a tax on Facebook, Google and other American technology giants despite a blunt warning from the Trump administration.

The measure, which the White House said could amount to an unfair trade practice, is likely to be signed into law by Mr. Macron within two weeks, placing France squarely in the cross hairs of President Trump’s escalating trade wars.

The finance minister, Bruno Le Maire, told the French Senate before the vote that Steven Mnuchin, the United States Treasury secretary, and Robert Lighthizer, the White House’s top trade negotiator, phoned him on Wednesday to say the United States is opening an investigation into the French tax using a mechanism Mr. Trump had already employed to impose sweeping tariffs on China.

It was the first time in the history of French-American relations that the United States had taken such a step, Mr. Le Maire said. “I believe that between allies we can and must sort out differences in other ways than by using threats,” he said.

“France is a sovereign nation that decides its own tax rules. And this will continue to be the case,” he added.

France has moved independently from the European Union to seek a tax on technology companies after little progress was made in creating Europe-wide rules to tax the largest tech platforms. Mr. Macron accelerated the French tax plan this year after waves of so-called Yellow Vest protesters forced his government to make billions of euros in spending concessions that widened the country’s budget shortfall.

Mr. Le Maire described Thursday’s vote as a pivotal moment in which governments needed to stand up to digital behemoths that he said were becoming the equivalent of sovereign states acting with virtual impunity as they maneuvered to keep their tax bills low across the world.

“We’re being confronted with the emergence of economic giants that are monopolistic and that not only want to control the maximum amount of data, but also escape fair taxes,” he said. “It’s a question of justice.”

France is seeking a 3 percent tax on the revenues that companies earn from providing digital services to French users. It would apply to digital businesses with annual global revenue of more than 750 million euros, or about $845 million, and sales of €25 million in France. That would cover more than two dozen companies, many of them American, including Facebook, Google and Amazon.

The government expects to collect around €500 million, or about $563 million. France’s General Assembly passed the bill last week.

In a statement on Wednesday, Mr. Lighthizer said the United States was “very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies.”

“The president has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce,” Mr. Lighthizer said.

The European Commission last year proposed modernizing tax policies across the bloc as a way to keep pace with the digital economy, but countries have been unable to reach an agreement.

The Organization for Economic Cooperation and Development is also trying to hammer out a deal for taxing digital companies across countries, but the slow pace of the talks has frustrated European nations.

Mr. Le Maire said that if anything, the disarray underscored the need for the United States to help formulate an accord on the international taxation of digital services. He urged Mr. Mnuchin to participate in accelerated talks at a meeting of finance ministers of the Group of 7 richest nations in Chantilly, France, next week.

Governments across Europe fear their tax base will fall as more commerce moves online because digital businesses are able to make use of subsidiaries in low-tax countries to avoid paying taxes elsewhere in Europe. The European Commission estimates digital companies pay an average effective tax rate of 9.5 percent, compared with 23 percent for more traditional businesses.

“It’s totally unjust and ineffective,” Mr. Le Maire said. “How will we finance our environmental needs, our schools, day care centers, hospitals and colleges if we don’t tax them at the same level” as other goods or services? he added.

France’s digital tax adds to the list of actions that European authorities have taken against the tech industry for anticompetitive business practices, unpaid taxes and lax privacy standards. And more regulation looms. Amazon and Facebook are facing antitrust inquiries from the European Commission.

France and Britain are mulling new social media laws to stop the spread of hate speech and other harmful content. Ireland has several investigations open against Facebook and Google for violating European privacy laws.

The companies have taken advantage of old rules that allow profit to be booked based on where value is created. Without a brick-and-mortar business that sells physical goods, digital services can funnel profits through low-tax countries. In 2016, the European Commission ordered Apple to repay $14.5 billion in unpaid taxes to Ireland.

On Thursday, Britain provided further details about its own proposal to tax tech companies. Starting in 2020, it plans to impose a 2 percent tax on revenue from companies that provide a social media platform, search engine or online marketplace to British users. The proposal was unveiled last year.

In Britain Google paid 66 million pounds in taxes last year on revenue in the country of over 1.4 billion pounds, according to a regulatory filing. In 2017, Facebook paid 17 million pounds in British taxes on sales of 1.3 billion pounds. Spain and Germany have also mulled a digital tax.

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