U.S. sanctions highest ranking Chinese official yet over Uighur rights

WASHINGTON (Reuters) – The United States on Thursday imposed sanctions on the highest ranking Chinese official yet targeted over alleged human rights abuses against the Uighur Muslim minority, a move likely to further ratchet up tensions between Washington and Beijing.

Washington blacklisted Xinjiang region's Communist Party Secretary Chen Quanguo, a member of China's powerful Politburo, and three other officials. The highly anticipated action followed months of Washington's hostility toward Beijing over China's handling of the novel coronavirus outbreak and its tightening grip on Hong Kong.

A senior administration official who briefed reporters after the announcements described Chen as the highest ranking Chinese official ever sanctioned by the United States.

The blacklisting is “no joke,” he said. “Not only in terms of symbolic and reputational affect, but it does have real meaning on a person's ability to move around the world and conduct business.”

The Chinese embassy in Washington did not respond to a request for comment. But China has denied mistreatment of Uighur Muslims and says the camps provide vocational training and are needed to fight extremism.

The sanctions were imposed under the Global Magnitsky Act, which allows the U.S. government to target human rights violators worldwide by freezing any U.S. assets, banning U.S. travel and prohibiting Americans from doing business with them.

Sanctions were also imposed on Zhu Hailun, a former deputy party secretary and current deputy secretary of regional legislative body the Xinjiang's People's Congress; Wang Mingshan, the director and Communist Party secretary of the Xinjiang Public Security Bureau; and former party secretary of the bureau Huo Liujun.

U.S. Secretary of State Mike Pompeo said Washington was also barring Chen, Zhu, Wang and their immediate families, as well as other unnamed Chinese Communist Party officials, from traveling to the United States.

U.S. Republican Senator Marco Rubio, who sponsored legislation signed by U.S. President Donald Trump in June that calls for sanctions over the repression of Uighurs, told Reuters the move was “long overdue” and that more steps were needed.

“For far too long, Chinese officials have not been held accountable for committing atrocities that likely constitute crimes against humanity,” Rubio said.

Despite Trump's hardline public remarks about Beijing, former national security adviser John Bolton alleged in his recent book that Trump said Chinese President Xi Jinping should go ahead with building detention camps in Xinjiang and sought Xi's help to win reelection in November.

Trump said in an interview last month he had held off on tougher sanctions on China over Uighur human rights due to concerns such measures would have interfered in trade negotiations with Beijing.

Treasury Secretary Steven Mnuchin had also raised objections to the Treasury sanctions, especially against a Politburo member, out of concerns they could further damage U.S.-China relations, according to a person familiar with the matter.

“The United States is committed to using the full breadth of its financial powers to hold human rights abusers accountable in Xinjiang and across the world,” Mnuchin said in a statement.

Peter Harrell, a former U.S. official and sanctions expert at the Center for a New American Security, said Thursday's move may signal a continued shift by the Trump administration of “paying more attention to human rights abuses in China … after several years of relative neglect.”

Chen made his mark swiftly after taking the top post in Xinjiang in 2016, when mass “anti-terror” rallies were held in the region's largest cities involving tens of thousands of paramilitary troops and police. He is widely considered the senior official responsible for the security crackdown in Xinjiang.

The United Nations estimates that more than a million Muslims have been detained in camps in the Xinjiang region.

Venezuela congress taps two U.S. firms to manage offshore funds

Opposition leaders are hoping to use some of the funds to provide stipends for doctors and nurses working on the front lines of the coronavirus epidemic.

Delaware based companies BRV Disbursement Co. LLC and BRV Administrator Co. LLC will manage the resources in exchange for $1.25 million, congress said in a statement.

Reuters was unable to obtain comment from the firms, which do not appear to have websites.

Guaido does not control Venezuela's state institutions or armed forces, but his allies control offshore assets including refiner Citgo and some funds that had been held by Maduro's government in U.S. accounts.

Despite a sweeping set of sanctions enacted in early 2019, Guaido's allies have struggled to obtain access to funds frozen in the United States due in part to the stringent requirements of U.S. authorities.

Maduro's government has accused Guaido and others of stealing the nation's resources with the help of the Trump administration.

South Korea Tries to Cool Home Prices Without Derailing Recovery

Affordable housing has been one of President Moon Jae-in’s key policy objectives since taking office in May 2017 with a vow to improve the living standards of a wider range of people. Yet a mismatch of supply and demand in popular neighborhoods and widespread investment purchases have seen prices soar in Seoul.

South Korea Urges Officials to Sell Homes as Prices Fuel Anger

Record-low interest rates aimed at supporting the virus-hit economy have also contributed upward pressure on prices. Politicians with multiple homes have further complicated the issue by giving the impression they are benefiting from the circumstances.

The Moon administration has already unleashed a series of measures that have cooled price increases in many parts of the country. The challenge is to come up with further steps that can address the remaining pockets of soaring prices without buckling the wider property market or limiting potential stimulus for a sputtering economy.

South Korea’s overheating property market has been largely confined to Seoul and its surrounding areas, with prices broadly stable in other large cities and declining in some smaller regions over the past three years.

The average apartment price in Seoul surged more than 50% to 925 million won ($774,000) from May 2017 to June 2020. That compares with a gain of 2% in Busan and 15% in Daegu, where prices are only a third of those in the capital.

The government has expressed concern about excess liquidity flowing into the property market. Broad money supply — known as M2 — rose by 9.1% in April from a year earlier, the fastest pace since 2015, as the government expanded loans to struggling companies and handed out cash to families to relieve pandemic pain. The money supply has previously displayed a correlation with Seoul house price growth.

The BOK has cut interest rates by 75 basis points since the pandemic struck, delivering a corresponding decline in lending rates. While that’s a sign of effective monetary policy transmission, it’s a concern when property prices are still rising rapidly.

“There’s not much the central bank can do at this stage,” said Kim Jin-myoung, an economist at Hanwha Investment & Securities Co. in Seoul. “You can’t raise rates for the sole purpose of reining in property prices when the economy is still in a slump from the coronavirus.”

BOK Governor Lee Ju-yeol has repeatedly pledged to keep monetary policy accommodative until the economy recovers from the virus downturn. Minutes of the latest May interest rate decision showed some board members expressed concerns about housing market instability, while proceeding with a rate cut to help the economy.

Construction investment led South Korea’s economic expansion under the former administration, as interest-rates were cut and property regulations eased to buoy a then-stagnant property market. The trend has reversed in recent years, with tighter rules and a correction from the previous housing oversupply.

President Moon vowed late last year that the government wouldn’t use the property market as a means to boost growth. Yet the pandemic has deteriorated the outlook for the economy, which is now expected by analysts to contract this year for the first time since the late 1990s Asian financial crisis.

“The property curbs are negative for the construction investment outlook,” said An Young-jin, an economist at SK Securities. “But the government is willing to endure that as they place greater urgency on reining in the property market.”

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USTR Lighthizer says bilateral trade pacts conflict with multilateral trading system

WASHINGTON (Reuters) – U.S. Trade Representative Robert Lighthizer on Thursday said the world needed either a multilateral system to govern global trade or a series of bilateral agreements, but the two were in conflict with each other.

Speaking in a webcast event hosted by the London-based Chatham House think-tank, Lighthizer said that Europe's proliferation of some 77 bilateral free trade agreements (FTAs) was “one of the biggest challenges to the multilateral trading system.”

He said that to revive the multilateral trading system enshrined in the World Trade Organization, there needed to be a “reset” on global tariff rates, an end to making new trade rules through WTO litigation and new ways to effectively deal with China's state-directed economic model and non-tariff barriers such as product and food safety standards.

“The FTAs, in my opinion, we should just get rid of them. We should have a multilateral system or a bunch of bilateral systems,” Lighthizer said. “And to be honest, I can go either way. But we can't have people who…profess to multilateralism and then go around basically being the biggest proponents of a bilateral system.”

The United States last week launched a new trade deal with Mexico and Canada and is in the process of negotiating bilateral trade deals with the United Kingdom and Kenya after activating a “Phase 1” trade agreement with China in February.

Lighthizer and U.S. President Donald Trump have long argued that bilateral trade deals were better for the United States than multilateral ones, such as the Trans-Pacific Partnership. Trump pulled the United States out of TPP on his third day in office in 2017.

Lighthizer also said that Britain's former trade secretary Liam Fox is “one of the favorites” to become the next director general of the World Trade Organization, but said there were other good candidates as well and the Trump administration is still considering which of the seven to support.

“If you say what are we looking for? Number one, we have someone who understands that we have a fundamental need for reform,” Lighthizer said, adding that the WTO was at “a turning point” that could significantly shift its current form. The next WTO chief will also need to understand that China is “state capitalism,” he said.

Canada not looking to impose China sanctions for now, seeks to avoid escalation

OTTAWA (Reuters) – Canada is not considering immediate sanctions against China over its treatment of Hong Kong and does not want to escalate a dispute between the two nations, a Canadian government source said on Thursday.

Last week, Liberal Prime Minister Justin Trudeau suspended an extradition treaty with Hong Kong, banned the export of sensitive military items and said Canada could boost immigration from the former British colony after Beijing imposed new national security legislation.

Some members of the main opposition Conservative party want Trudeau to impose sanctions on Chinese officials but such a move is off the table for now, said the source.

“There are a lot of options we have at our disposal,” said the source, who requested anonymity given the sensitivity of the situation.

Asked about sanctions, the source replied: “Right now it's not necessarily something that is being considered in the immediate term but lots of things can happen.”

Canada-China relations froze in late 2018, when Canadian police detained Huawei Technologies Co's chief financial officer, Meng Wanzhou, on a U.S. arrest warrant.

“We're not seeking to escalate any current dispute with China,” said the source when asked about the Canadian measures on Hong Kong. “It's not a question of trying to do something deliberately provocative, it's to take a step in response to a step that the Chinese took.”

For the time being Canada is more focused on measures to boost immigration from Hong Kong.

Australia said on Thursday that Hong Kong students, graduates and workers in the country on temporary visas will have the opportunity to stay and work for an extra five years and then apply for permanent residency.

Canadian Immigration Minister Marco Mendocino, asked on Thursday what Canada would do, said Ottawa was exploring options but did not give details.

Ireland's Donohoe takes Eurogroup helm during worst recession

BRUSSELS (Reuters) – The Eurogroup of euro zone finance ministers on Thursday elected Ireland's Finance Minister Paschal Donohoe as its new chair, a job that will see him try to steer the group's coronavirus-damaged economies out of their worst recession.

Dubbed “Prudent Paschal” by some local media, the Dubliner eschewed demands for bigger tax cuts and spending increases to deliver Ireland's first budget surplus in a decade. He is also strongly against a potential EU tax on digital firms.

Donohoe was elected after two rounds of votes in which he defeated Spain's Economy Minister Nadia Calvino and his Luxembourg counterpart Pierre Gramegna.

He will take over from the outgoing president Mario Centeno on July 13 and will serve a two and half year mandate until the end of 2022.

Despite criticism for its opacity, and recently for its perceived irrelevance, the Eurogroup remains a powerful institution which played a key role during the financial crises of the last decade, ultimately helping to avoid the collapse of the common currency.

Donohoe will have to steer the 19-nation euro zone out of its worst ever recession, with the European Commission estimating the bloc's economy will shrink by 8.7% this year before growing by 6.1% in 2021 – should the coronavirus crisis be under control by then.

He will have to mediate between a southern bloc which supports a permanent watering down of the bloc's fiscal rules and a northern front led by the Netherlands that prefers a quick return to Brussels' checks on national budgets.

Requirements that states keep fiscal deficits below 3% of gross domestic product and reduce high debt have been suspended during the pandemic, in an unprecedented move.

“As President, I will seek to build bridges amongst all members of the Euro Area, and to engage actively with all member states, to ensure that we have a consensus-based approach to the recovery of our economies and our societies,” Donohoe said in a statement after his election.

He added that fiscal policy in the euro zone should return to normal only after the recovery is well underway.

EU economics commissioner Paolo Gentiloni said he was confident Donohoe will play a crucial role “at a time of unprecedented challenges” for the euro zone.

CENTENO FAREWELL

“In times of crisis the appropriate fiscal stance is one supportive of economic activity. We must not rush in pulling back our economy stimulus as this may harm our economy,” Portugal's Centeno said in his farewell message.

But, maintaining his traditionally balanced approach, he added: “What is temporary should be treated as temporary”.

Centeno fully saw his role as a mediator, in the footsteps of Luxembourg's Jean-Claude Juncker.

Juncker held the post from its creation in 1998 until he was replaced in January 2013 by former Dutch finance minister Jeroen Dijsselbloem, who was seen as less diplomatic.

Market stress could return, UK finance industry warns BoE

Minutes published on Thursday from a June 2 meeting of the BoE's UK Money Markets Committee (MMC), which includes major banks, showed unease about a possible repeat of market chaos that struck in March when the COVID-19 pandemic escalated.

“While it was clear that liquidity had now returned… some members were more pessimistic about the potential recovery and noted the potential for stress to return,” the minutes said.

In March, a frenzied “dash for cash” prompted investors who were normally willing to buy safe assets such as British government bonds to swap them for money held with central banks.

BoE Governor Andrew Bailey has said there was a risk that Britain's government would have struggled to raise money without the central bank's intervention to calm the market.

Minutes from the BoE's June MMC meeting also hinted at nerves about the end of the government's job-protecting furlough scheme, which is due to shut at the end of October.

“It was noted that this, in conjunction with Brexit and geopolitical risks, could make year-end challenging,” the minutes said.

The world's sixth-biggest economy shrank by 25% in March and April and could be heading for its biggest fall in 300 years in 2020, with the unemployment rate on course to more than double to about 10%, according to official projections.

Under a new bonus plan announced by finance minister Rishi Sunak on Wednesday, employers will be paid 1,000 pounds ($1,256) after the furlough scheme expires for every worker who returns to their job, provided they are kept on through to the end of January.

The BoE also published minutes from an extraordinary MMC meeting on March 18, around the height of the market tensions, which showed worry about the pressure heaped on banks.

“The banking sector was facing significant balance sheet constraints, in part as a consequence of corporates drawing down on, or expected to draw down on, revolving credit facilities (RCFs),” the minutes said.

Some MMC members also asked the BoE if had planned to expand its emergency funding scheme for large companies – the Covid Commercial Financing Facility – to include the financial sector.