US condemns Hong Kong's arrest warrants targeting overseas activists
"We will not tolerate the Hong Kong government's attempts to apply its national security laws to silence or intimidate Americans or anyone on U.S. soil," U.S. Secretary of State Rubio said in a statement, adding that "the Hong Kong government continues to erode the autonomy that Beijing itself promised to the people of Hong Kong following the 1997 handover."
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July 29 (Reuters) - A U.S. senator's recent push to strip the Federal Reserve of a key aspect of how it controls interest rates and the battle over who will succeed Fed Chair Jerome Powell point to a future where some of the tools policymakers use to influence the economy come under greater scrutiny. There's no sense of imminent changes in the Fed's monetary policy mechanics. But that may not always be the case, especially as President Donald Trump, a persistent critic of the central bank who wants it to reduce interest rates, prepares to name a successor for Powell, whose term expires next May. The first sign of shifting ground came from Republican Senator Ted Cruz, who last month pushed to end interest payments paid by the Fed on bank reserves parked at the central bank. Ending this practice was also cited, among other back-to-basics proposals, in the influential Project 2025 effort that has helped drive some of Trump's agenda since he returned to power in January. 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"The current regime has a number of positive attributes that people I don't think fully appreciate," said William Dudley, a former head of the New York Fed who also managed the implementation of monetary policy when the new system was created. "It makes monetary policy execution really easy" and saves the Fed from active intervention in markets to manage reserve levels. The system, however, has been dogged by criticism that it is an unfair financial sector subsidy. It has also pushed the Fed from a consistent profit maker to a money loser, and the profits it once handed to the Treasury to defray federal deficits are gone until the central bank can clear the red ink. Cruz argued that his push to end the power was ultimately about lowering deficits. But critics contend his goal of a de facto return to the pre-crisis policy system was full of unintended consequences and misunderstandings. Dudley said losses are not inherent to the current rate-control system but arise from the Fed having bought longer-dated bonds as a form of stimulus, creating the current mismatch between income and interest expenses that's led to losses. Powell told a U.S. Senate committee in June that "if you were to want to go back to scarce reserves, it would be a long and bumpy and volatile road." Losing interest rate-paying power could force the Fed to aggressively retire the excess liquidity that its current toolkit relies upon to prevent short-term rates from spiraling out of control. And that would likely mean the Fed would sell a substantial portion of the bonds it now owns. "I understand there is a desire on the part of some to go back to the pre-(global financial crisis) framework for operating monetary policy," said Ellen Meade, a former top Fed staffer who is now an economics professor at Duke University. 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China stake in CK Hutchison port sale could ease Beijing pressure but US geopolitical risks remain
HONG KONG/NEW YORK, July 29 (Reuters) - The proposed inclusion of Chinese shipping giant COSCO in Hong Kong conglomerate CK Hutchison's contentious global ports sale is a potential win for Beijing in a strategic sector, but the deal is far from final and could face resistance from Washington, sources and analysts say. Since the deal was announced on March 4 to sell 43 of CK Hutchison's ports in 23 countries, including two along the Panama Canal, to a consortium led by U.S. firm BlackRock, (BLK.N), opens new tab and Italian billionaire Gianluigi Aponte's family-run shipping company MSC, it has sparked a firestorm of criticism from China. While the U.S. government might oppose the inclusion of state-run COSCO over perceived geopolitical risks posed by Chinese influence, bringing in the shipping giant could provide a more level playing field rather than one company being dominant, said a person with knowledge of the deal. 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It also said changes to the composition of the consortium and structure of the transaction would be necessary to secure regulatory approval. Two sources with knowledge of the matter told Reuters the investor was COSCO ( opens new tab - a shipping and ports conglomerate that is now one of the world's dominant, vertically integrated marine transportation firms. While any stake by COSCO is not yet clear, a triparty agreement with BlackRock and MSC would alleviate China's national security concerns and have its blessing, the sources said. "The potential acquisition of Hutchison Ports is driven by the strategic need to secure key port resources amid global competition and U.S.-China tensions," JPMorgan wrote in a research report. The report also noted that while the inclusion of COSCO would "relieve some concerns by the Chinese government, thus boosting the likelihood of a green-light scenario", not all ports in the original agreement might be included. COSCO is requesting a bigger stake while the other parties in the consortium are keen to keep it a minority, the sources said. China's Foreign Ministry spokesperson Guo Jiakun told reporters on Monday in response to a question on the deal that Beijing "will conduct lawful regulation, firmly safeguard national sovereignty, security and development interests, and uphold justice and fairness in the market." A deal involving COSCO would be a "loud reaffirmation of China's geopolitical influence across the global maritime trade and transport sector, and of its effective leverage in trade negotiations with the U.S.," Isaac Kardon, Senior Fellow for China Studies at the Carnegie Endowment for International Peace, told Reuters. "Beijing's disapproval clearly forced Hutchison to back off and change tack — and not merely in the optics of the transaction, but in its basic structure and national ownership." Should the deal proceed, it would be a crucial off-ramp for CK Hutchison, with the Americans wary of COSCO's growing maritime heft that could undermine U.S. national security. There could also be further blowback amid ongoing and complex bilateral trade talks. Some analysts say the Panama ports, in particular, will be a focus for the Trump administration, and could be taken out of the transaction to meet U.S. strategic interests. "The inclusion of this behemoth Chinese central state-owned enterprise as an owner seems like it should be a non-starter for the Trump administration seeking to strip Chinese control and restore some kind of American suzerainty over the Canal Zone," added Kardon. The CK Hutchison assets up for sale span the globe, including ports in Rotterdam in the Netherlands, Barcelona in Spain, Felixstowe in the United Kingdom, Mexico, Poland and the Bahamas - enlarging Beijing's global shipping networks and options at a time of great trade and tariff uncertainties. "At the moment they (Beijing) are in a place generally where they want to assert themselves and say, hey, don't mess with us," said Andrew Cainey, a senior associate fellow with the defence and security thinktank RUSI (Royal United Services Institute) in London. "If the U.S. were to come back and object to it, China could try to block the deal or demand more (from CK Hutchison)."
