Month: September 2017

Thousands of small factories in China, making everything from steel to chemicals, are scrambling for access to the country’s clogged rail network as Beijing curbs the use of diesel trucks in an effort to tackle air pollution.

The Ministry of Environmental Protection (MEP) last month gave tens of thousands of companies in 28 cities until Nov. 1 to halve their use of diesel trucks over the winter months, when pollution is at its worst.

The ministry, in a policy document, also set more stringent, permanent targets for more than 20 power and steel companies, including Zhengzhou Xinli Power, Xingtai Iron & Steel and Hebei Risun Coke, directing them to send at least half their shipments by rail.

Trucking is a cheaper and preferred mode of transport for heavy industry in China, especially for inland companies moving goods over relatively short distances and those far from railways.

Some provinces have taken even tougher stances on trucks.

In Hebei and central Henan, some steel producers must deliver as much as 90 percent of their products via rail on a permanent basis, up from around 50 to 60 percent currently.

The moves are the latest in Beijing’s years-long battle to tackle the pollution that blankets the north as houses turn up the heat between November and March, drawing on the nation’s power plants, which are mainly fueled with coal.

China is also forcing steel mills and other factories to shut up to 50 percent of capacity across the north to try and prevent toxic air during the winter.

The truck restrictions follow bans earlier this year on transporting coal by diesel trucks in major port cities.

A shift to using more of the country’s 120,000 km of railroads, one of the world’s largest networks, is also a cornerstone of Beijing’s Belt and Road initiative, which aims to revive old trade routes linking Chinese companies with overseas markets.

The scale of the change under way is immense. Highways accounted for 77 percent of more than 43 billion tons of freight transported last year, compared with 8 percent for rail.

“It’s another indication of how seriously they’re taking the environmental impact, although it’s a blunt way of doing it and some trips won’t make sense by rail,” said Jonathan Beard, head of transportation and logistics in Asia for Arcadis, a design and consultancy company.

The Ministry of Rail declined to comment. The MEP and the state planner that oversees rail freight prices did not respond to requests for comment from Reuters.

‘Railway Armageddon’

Companies were already preparing for a grim winter, having been ordered to slash output as part of measures to clean up the air in Chinese cities.

Now, many are struggling to get space on the rail network by the Nov. 1 deadline.

Major state-owned companies like Sinopec and Aluminium Corp. of China have long-term access to the railroad, leaving little room for smaller companies. Many of the factories are also hundreds of miles away from any station.

There are also concerns that bottlenecks could create chaos, cutting off supplies of critical raw materials and hurting the ability of companies to get products to market, executives interviewed by Reuters said.

Rail is also more expensive and takes longer for some routes.

An executive from Xingtai Iron & Steel estimated that using rail will add as much as 40 yuan per ton, or 10 percent, to his costs. The executive and others interviewed by Reuters requested anonymity as they were not authorized to speak to the media.

“We might resort to reducing production in the winter if we cannot get enough supplies and have difficulties sending our products due to the railway Armageddon,” said a manager with Yanzhou Coal Mining Co’s coke plant in Shandong province, which produces two million tons per year.

In Shandong, the nation’s eastern industrial and agricultural heartland, the rail bureau proposed hiking freight rates by 1 cent per ton per kilometer at an internal meeting with key clients two weeks ago, according to the Yanzhou Coal manager.

That is equivalent to an almost 10 percent increase to move products to Jiangsu, about 100 miles to the south. It is not clear whether the plan has been submitted to the state planner for approval. The state planner sets freight prices.

“Some of our clients are only 40 miles away from us,” said a sales manager with Xingtai Iron & Steel’s steel wire subsidiary.

“Trucking is more flexible than rail and cheaper,” the manager said. “For our clients in Zhejiang and Jiangsu, about 500 miles away, rail takes almost a week but trucking takes one or two days.”

Under orders

Rail traffic has increased this year due to increased shipments of coal. Rail is the most popular mode of transport for coal, which accounted for a third of traffic last year. China’s rail network is mainly run by China Railway Corp.

State-owned companies such as China National Coal Group and coal miner China Shenhua Energy also own some specific routes, giving them lower transportation costs.

Many are bewildered by the enormity of the undertaking ahead. A manager with Longyu Chemical Co. in central Henan province said he had no access to rail.

“I honestly have no idea how we are going to deal with it this winter,” he said. “The trucking freight rate is also rising because of the crackdown on diesel trucks.”
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More than a third of migrant fishermen in Thailand clearly were victims of trafficking over the past five years, and even more workers in the industry were possibly trafficked as well, according to a report published Thursday.

Routinely underpaid and physically abused, three-quarters of migrants working on Thai fishing vessels have been in debt bondage, working to pay off an obligation, said the study by the anti-trafficking group International Justice Mission (IJM).

Thailand’s multibillion-dollar seafood sector came under fire in recent years after investigations showed widespread slavery, trafficking and violence on fishing boats and in onshore food-processing factories.

The politically unstable country, which is under military rule, has vowed to crack down on trafficking and recently introduced reforms to its fisheries law.

The IJM study of 260 fishermen from Myanmar and Cambodia found 38 percent were clearly trafficked and another 49 percent possibly trafficked.

Only 13 percent reported fair labor conditions at sea and no exploitative recruitment, it said.

Three-quarters reported working at least 16 hours a day, and only 11 percent said they were paid more than 9,000 Baht ($272 U.S.) per month, the legal monthly minimum wage in Thailand.

One fisherman was quoted in the report as saying he was held in debt bondage, owing 20,000 Baht ($604) to his brother, who worked as a supervisor overseeing fishermen.

In debt to brother

“I fear for my life as he has killed in front of me before,” he was quoted as saying. “I don’t dare to run. He would kill my children.”

Field researchers surveyed the 260 fishermen in 20 Thai fishing localities in 2016, collecting information on fishing jobs they had held in the previous five years.

Thailand, the world’s third-largest seafood exporter, had more than 42,000 active fishing vessels as of 2014, and more than 172,000 people were employed as fishermen, the study said.

The study was funded by the Walmart Foundation, the charitable arm of giant U.S. retailer Walmart. With release of the study, the foundation announced a grant to help the IJM improve law enforcement efforts against human trafficking in the Thai fishing industry.

Neither Walmart nor the charity would specify the value of the grant.

Walmart spokeswoman Marilee McInnis told the Thomson Reuters Foundation by email that “combating forced labor remains a key challenge throughout the world.”

“Regardless of where it occurs in the global supply chain, Walmart is committed to help eliminate forced labor through transparency and collaboration,” she wrote.

Gary Haugen, the chief executive of IJM, said in a statement that “no person should have to live under the oppression or ownership of another.

“As consumers, we shouldn’t have to wonder if the products we’re purchasing are the result of violent injustice,” he said.
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An automated teller machine. The cash machine. In Britain, a cashpoint. ATMs, known for spitting out $20 bills (and imposing fees if you pick the wrong one), turn 50 years old this year. They’re ubiquitous – and possibly still a necessity, despite the big changes in how people pay for things.

It was a radical move when Barclays installed cash machines in a London suburb in 1967. The utilitarian machine gave fixed amounts of money, using special vouchers – the magnetic-striped ATM card hadn’t been invented yet. There was no way for a customer to transfer money between accounts, and bank employees tabulated the transactions manually at the end of each day.

As the ATMs became familiar, though, they changed not only the banking industry but made people comfortable interacting with kiosks in exchange for goods. Now that means getting movie tickets and boarding passes, self-checkout at grocery stores, and online shopping that brings products to your door with a few clicks. All are based on the idea that people can handle routine transactions by themselves without a teller or cashier.

“The ATM tapped into that innate force in people that gives gratification for doing a task on their own and it grew from there,” said Charles Kane, a professor at the MIT Sloan School of Management.

It was a radical concept at the time. The ATM wasn’t the first self-service device – vending machines and the automat had been popular before. But those dispensed items people could hold in their hand.

Bernardo Batiz-Lazo, a business professor and ATM historian (yes, they exist!) at Bangor University in Britain, said early users of automated tellers were often checking their balances twice: once to see how much was in their account, then again after withdrawing money to see if it registered.

“They were popular, but it took a long time to slowly convince customers to learn about ATMs and use them regularly,” Batiz-Lazo said.

For the banking industry, ATMs meant banks could be in thousands of places at once, not just in branches, and earn billions of dollars in fees from non-customers. Banks used to staff dozens of tellers at each branch to handle routine transactions, now many staffers work on other tasks, like sales or account maintenance.

Around the U.S. today are roughly 3 million cash machines, according to the ATM Industry Association. Most are actually not owned by banks, but by private companies that install them at convenience stores, restaurants and bars in hopes of grabbing customers who don’t want to find a bank branch.

The wide acceptance of the ATMs changed the types of cash Americans typically carry in the pocketbooks. Since ATMs became more widely available in the early 1980s, the twenty-dollar bill has regularly been the second-most printed bank note each year by the Bureau of Engraving and Printing. The first place spot is held by the $1 bill.

Even as people use cash less, and credit cards or mobile payments more often, the ATM isn’t going anywhere for a while. At least, that’s what historians and – unsurprisingly – the ATM industry says. Devon Watson, vice president at Diebold Nixdorf, the world’s largest manufacturer of ATMs, says 85 percent of all transactions worldwide are still in cash.

Newer ATMs have more functions than ever. They accept check deposits, can transfer money between accounts, show an account balance, pay a credit card or mortgage payment, or even sell you stamps. NCR, another major manufacturer of ATMs, say the latest models are also designed to act more like smart devices. Kevin King of NCR says that includes “swipe, gesture, multi-touch.”

And future ATMs will likely start selling products as well. Have a checking account? The ATM will ask you whether you want to open a brokerage account. Much like tellers did.
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French labor unions staged fresh protests against President Emmanuel Macron’s contested labor law reforms Thursday — a day before he adopts them by executive order.

The nationwide action backed by the powerful, hard-left CGT trade union, saw protesters take to the streets in the second round of public opposition to the long-touted reforms that will give more power to employers to hire and fire workers. Macron says that’s needed to power the stagnant French economy and boost jobs.

In cities across the country, demonstrators waved anti-capitalist placards and angry personal messages against Macron, whose popularity has recently taken a hit.

In Paris, demonstrators brandishing posters reading “The state ruins the people” marched past the posh La Rotonde restaurant where Macron was branded arrogant for prematurely celebrating his victory in the first round of the elections before he had won the presidency.

The latest protests come a week after hundreds of thousands of protesters — half a million, according to the unions — took to the streets in the first major challenge to Macron’s fledgling presidency.

Macron is waving away the opposition and his government is pressing ahead with the labor reforms, backed by a robust majority in parliament.

 
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The number of Americans seeking unemployment benefits dropped by 23,000 last week to 259,000 as the economic impact of Hurricane Harvey began to fade.

The Labor Department said Thursday that the less-volatile four-week average rose by 6,000 to 268,750. Overall, nearly 2 million Americans are collecting jobless aid, down almost 6 percent from a year ago.

In early September, jobless claims shot up by the most in five years as Harvey battered Texas. But last week claims in Texas fell 45 percent as more people returned to work. Hurricane Irma continued to have an impact on the job market in Florida, where claims more than doubled from the previous week.

Despite the weather shocks, claims nationwide remain low by historic standards. New weekly claims have remained below 300,000 for the longest stretch going back to 1970.

Claims are a proxy for layoffs, and most employers are confident enough to be holding onto staff. Unemployment is near a 16-year low at 4.4 percent. Employers are adding an average 176,000 jobs a month so far in 2017, down from 187,000 last year and 226,000 in 2015. Some businesses say the job market is so tight that they can’t find workers to fill job openings.
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The federal agency responsible for ensuring that markets function as they should and for protecting investors was hacked last year and the intruders may have used the nonpublic information they obtained to profit illegally.

The disclosure arrived two months after a government watchdog said deficiencies in the computer systems of the Securities and Exchange Commission put the system, and the information it contains, at risk.

In July, the Government Accountability Office issued a critical report about the security measures employed by the SEC, citing a number of deficiencies in “the effectiveness of SEC’s controls for protecting the confidentiality, integrity, and availability of its information systems.” It issued 26 recommendations that it said would make SEC systems more secure.

According to the SEC, the breach was discovered last year, but the possibility of illicit trading was uncovered only last month. It did not explain why the hack itself was not revealed sooner, or which individuals or companies may have been impacted.

In a prepared statement, SEC Chairman Jay Clayton said a review of the agency’s cybersecurity risk profile determined that the previously detected incident was caused by “a software vulnerability” in its filing system known as EDGAR, short for Electronic Data Gathering, Analysis, and Retrieval system. Clayton said SEC has been conducting an assessment of its cybersecurity since he took over as chairman in May.

The SEC files financial market disclosure documents through its EDGAR system, which processes more than 1.7 million electronic filings in any given year. Those documents can cause enormous movements in the market, sending billions of dollars in motion in fractions of a second.

The revelation from the critical agency comes as Americans grapple with the repercussions of a massive, months-long hack at the credit agency Equifax, which exposed highly sensitive personal information of 143 million people. Clayton said the agency’s breach did not result in exposing personally identifiable information.

The SEC hasn’t said whether it is investigating the hack at Equifax, but the agency for years has leaned on publicly traded corporations to strengthen their own cybersecurity systems.

An investigation into the breach and its possible consequences is ongoing, and the SEC said that it is cooperating with the “appropriate authorities.”

 
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The Standard & Poor’s rating agency cut China’s credit rating Thursday due to its rising debts, highlighting challenges faced by Communist leaders as they cope with slowing economic growth.

The downgrade added to mounting warnings about the dangers of increasing Chinese debt, which has fueled fears of a banking crisis or a drag on economic growth. Moody’s Investors Service cut its own rating for China in May.

S&P lowered its rating on China’s sovereign debt by one notch from AA- to A+, still among its highest ratings. The agency had given a warning sign of a possible downgrade in March 2016 when it changed China’s outlook to negative.

“A prolonged period of strong credit growth has increased China’s economic and financial risks,” S&P said in a statement. “Although this credit growth had contributed to strong real GDP growth and higher asset prices, we believe it has also diminished financial stability to some extent.”

The ratings cut, announced after Chinese financial markets closed for the day, could raise Beijing’s borrowing costs slightly, but the more significant impact is on investor sentiment.

Phone calls to the Chinese Finance Ministry were not answered. After the Moody’s downgrade in May, the ministry said the agency had used improper methods and misunderstood China’s economic difficulties and financial strength.

Communist leaders have cited reducing financial risk as a priority this year. They have launched initiatives to reduce debts owed by state companies, including by allowing banks to accept stock as repayment on loans. But private sector analysts say they are moving too slowly.

Beijing relied on repeated infusions of credit to prop up growth after the 2008 global crisis.

That helped propel total nongovernment debt to the equivalent of 257 percent of annual economic output by the end of last year, according to the Bank for International Settlements. That is unusually high for a developing country and up from 143 percent in 2008.

Chinese economic growth fell from 14.2 percent in 2007 to 6.7 percent last year, though that still was among the world’s strongest.

The government is trying to make the economy more productive by giving market forces a bigger role. It is trying to shrink bloated industries such as steel and cement in which supply exceeds demand, which has depressed prices and led to financial losses.

Beijing is trying to steer the economy to slower, more sustainable growth based on domestic consumption instead of investment and exports. But growth has dipped faster than planners wanted, raising the risk of politically dangerous job losses. Beijing has responded by flooding the economy with credit.

Official efforts to rein in debt “could stabilize the trend of financial risk in the medium term,” S&P said. “However, we foresee that credit growth in the next two to three years will remain at levels that will increase financial risks gradually.”

S&P kept its outlook for China stable. It said that reflected expectations the country will “maintain robust economic performance over the next three to four years.”

“We may raise our ratings on China if credit growth slows significantly and is sustained well below the current rates while maintaining real GDP growth at healthy levels,” S&P said. “A downgrade could ensue if we see a higher likelihood that China will ease its efforts to stem growing financial risk and allow credit growth to accelerate to support economic growth.”

 
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