Business

BEIJING — China on Sunday warned it would take "necessary measures" to protect Huawei and other firms after the United States announced new restrictions on the Chinese company purchases of semiconductor technology.

      Washington on Friday ramped up sanctions on the company at the centre of US spying allegations, cutting Huawei off from global chipmakers.

      "China will take all necessary measures to resolutely protect the legitimate rights and interests of Chinese firms," the Ministry of Commerce said on Sunday.

      "China urges the US to immediately cease its wrong actions," the ministry added, calling the restrictions a "serious threat to global supply chains."

      The threat of retaliation comes a day after Beijing condemned the US move as "unreasonable suppression of Huawei and Chinese enterprises."

      The US Commerce Department said on Friday its new sanctions would "narrowly and strategically target Huawei's acquisition of semiconductors that are the direct product of certain US software and technology."

      US officials have repeatedly accused the Chinese technology giant of stealing American trade secrets and aiding China's espionage efforts, ramping up tensions with the rival superpower while both sides were involved in a long-simmering trade war. 

      As a result, Huawei has increasingly relied on domestically manufactured technology, but the latest rules will also ban foreign firms that use US technology from shipping semiconductors to Huawei without US permission.

      The new restrictions will cut off Huawei's access to one of its major suppliers, the Taiwanese chipmaker TSMC, which also manufactures chips for Apple and other tech firms. 

      Huawei has not yet responded to requests for comment.

BEIRUT — Lebanon, whose currency has been pegged to the dollar for 23 years, is ready to float the pound only after it secures billions in aid, Finance Minister Ghazi Wazni said on Friday.

      Speaking to AFP after talks started on Wednesday with the International Monetary Fund (IMF) on a plan to rescue Lebanon's free falling economy, he also said a restructuring of the banking sector would entail halving the number of banks in the country.

      A hard currency crunch in recent months has strained the official fixed rate of 1,507 to the dollar, with the pound losing more than half of its value to fetch well over 4,000 on the black market.

      "The IMF always asks for the freeing of the pound's exchange rate," Wazni said.

      But "we need to change the stabilisation policy to one of a flexible exchange rate in a first stage and for the forseeable future," he said, referring to an initial managed flotation.

      "When we receive financial support from abroad, we will transition to floatation" according to the market, he said.

      "The Lebanese government has asked for a transitional period to pass through a flexible exchange rate before we reach floatation," he added.

      Wazni said the first phase would involve "a gradual increase of the exchange rate to the dollar," in coordination with the central bank.

      He said this was necessary because the government feared "huge deterioration of the pound exchange rate" otherwise.

      Lebanon, which was hit last autumn by unprecedented protests, asked the IMF for financial assistance on May 1 after laying out a much-awaited financial rescue plan.

      That plan aims to drum up billions of dollars in aid, reduce the deficit, restructure a colossal debt, and reorganise an oversized banking sector.

      Wazni said the restructuring would be done "step by step".

      "Lebanon counts 49 commercial banks and it is normal for that number to decrease to around half of that in the next stage," he said.

      Lebanon is in the grips of a severe liquidity crunch, with depositors unable to make transfers abroad or withdraw dollars.

      The Mediterranean nation is one of the most indebted countries worldwide with a debt equivalent to 170 per cent of its gross domestic product. 

      It defaulted on a repayment for the first time ever in March.

NEW YORK — US department store JCPenney, which has not turned a profit since 2011, on Friday became the latest American retailer to be pushed into bankruptcy by the coronavirus pandemic.

      The iconic business said it was filing for Chapter 11, a mechanism which allows a company that can no longer pay its debts to restructure.

      The group, based in Plano, Texas, will close some stores across the US as a result, it said in a statement. 

      It has $500 million in cash and has received financing commitments of $900 million from lenders, it added. 

      The company missed a debt interest payment in April, fueling rumors of an impending bankruptcy. 

      "The Coronavirus (COVID-19) pandemic has created unprecedented challenges for our families, our loved ones, our communities, and our country," chief executive officer Jill Soltau in a statement. 

      "The American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business," she continued. 

      "Until this pandemic struck, we had made significant progress rebuilding our company... While we had been working in parallel on options to strengthen our balance sheet and extend our financial runway, the closure of our stores due to the pandemic necessitated a more fulsome review to include the elimination of outstanding debt," Soltau said. 

      Founded in 1902 in Wyoming by James Cash Penney, the chain survived the Great Depression and established itself in the second half of the 20th century as an anchor of giant suburban shopping malls, then symbols of American consumerism. 

      But -- like clothing company J.Crew and department store Nieman Marcus, which have also filed for bankruptcy since the pandemic began -- it has struggled for years.

      Its decline began a decade ago with the advent of online shopping and the rise of Amazon as well as trendy, cheap chains like H&M and Zara. 

      In February, JCPenney had about 90,000 employees and nearly 850 stores in the United States, according to documents provided to the US Securities and Exchange Commission (SEC). 

      The company plans to reduce its number of stores in stages as part of its comprehensive restructuring plan. 

      It reported sales of $10.7 billion in 2019, a decrease of more than $7 billion in 10 years. 

NEW YORK — Global stocks were mostly firm on Friday as investors shrugged off weak economic data from Germany and the United States and focused on the easing of lockdowns rather than on fears of another coronavirus wave.

Equity investors in Europe went fishing for bargains a day after stocks tanked on news of spiking jobless claims in the United States.

"After two down days for the markets, the week is ending on a more positive note for equities," said AJ Bell investment director Russ Mould.

The German economy shrank by 2.2 per cent in the first quarter of 2020, federal statistics agency Destatis said, calling the quarter-on-quarter decline "the worst since the global financial crisis" in 2009.

The agency also revised its gross domestic product figure for the final quarter of 2019 from zero growth to a contraction of 0.1 per cent. That means Germany has experienced two consecutive quarters of decline, meeting the technical definition of a recession.

In spite of that, the DAX 30 finished up 1.2 per cent, with analysts viewing Germany as better situated than other eurozone members.

The downturn "was significantly smaller than the average for the eurozone and less than half the impact seen in the countries that saw the harshest lockdowns such as France and Spain," Oxford Economics said in a note.

On Wall Street, stocks were initially pressured following weak retail sales data and US actions against Chinese telecom giant Huawei that escalated Washington's tensions with Beijing.

But the Federal Reserve's muscular response to the coronavirus crisis has reassured equity investors, said Gregori Volokhine of Meeschaert Financial Services.

These programmes include vehicles to purchase corporate debt, which means "solvent borrowers have a backup and that lifts their shares," he said.

In one bright spot for the US, the University of Michigan monthly survey showed consumer sentiment improved slightly in May, ticking up to 73.7 per cent from 71.8 per cent in April.

But Oxford Economics warned the bounce was "fragile," according to a note Friday. 

"Whether it can be sustained will depend in part on whether the government enacts further stimulus measures to help households and whether the relaxation of restrictions results in a resurgence in COVID-19 infections," the note said.

SAN FRANCISCO — Authorities in California say Tesla's only assembly plant in the United States could open as early as next week, albeit with enhanced safety measures because of the pandemic, after a very public anti-lockdown tirade by Elon Musk with support from President Donald Trump. 

      In a series of tweets on Wednesday, authorities in Alameda County, which includes the city of Fremont, home to the plant, said they had met with Tesla representatives, reviewed the electric carmaker's safety plans for the factory and made some extra recommendations.

      "If Tesla's Prevention and Control Plan includes these updates, and the public health indicators remain stable or improve, we have agreed that Tesla can begin to augment their Minimum Business Operations this week in preparation for possible reopening as soon as next week," the county health agency said.

      Musk said on Monday the company was resuming production, defying authorities and escalating a feud over the Pacific state's pandemic shutdown.

      "I will be on the line with everyone else," Musk tweeted. "If anyone is arrested, I ask that it only be me."

      Musk's move comes amid rising disputes over the pace of easing the lockdowns imposed by states to contain the deadly coronavirus outbreak.

      The new statement from the county said police in Fremont would be on hand to verify that Tesla is observing social distancing and that other agreed upon safety measures for workers are being upheld.

      Tesla did not immediately respond to the announcement.

      Musk has been raging on Twitter for days about his unsuccessful efforts to restart production, claiming the ban violates "our Constitutional freedoms & just plain common sense!"

      The US administration is pushing a reopening of the world's largest economy, battered by weeks of lockdown, even as the daily death toll has generally been rising by 1,000 to 2,500 in recent weeks.

      Trump weighed in Tuesday in support of Musk.

      "California should let Tesla & @elonmusk open the plant, NOW. It can be done Fast & Safely!" Trump said in a tweet.

      Over the weekend, Musk threatened to move Tesla's headquarters and factory out of California as a result of the standoff.

PARIS — The rebalancing of the oil market is underway and will accelerate, the OPEC cartel said on Wednesday, days after some of its members voluntarily increased their production cuts.

      The world oil market was thrown into disarray earlier this year as lockdown measures imposed by governments to slow the spread of the coronavirus led to plunge in demand just as crude producers had been stepping up output in a war for market share.

      Prices tumbled, with the price of the benchmark US oil futures contract briefly plunging below zero.

      But OPEC and its allies have agreed on major cuts in production, by 9.7 million barrels per day, and the cartel believes an improvement is on the horizon. 

      "The speedy supply adjustments in addressing the current acute imbalance in the global oil market has already started showing positive response, with rebalancing expected to pick up faster in the coming quarters," OPEC said in its monthly report.

      The collapse in oil prices -- the main international benchmark has fallen by half since the start of the year -- is leading some producers to shut down wells and the cartel now expects non-OPEC production to decline by 3.5 million barrels per day this year.

      It believes the worst drop in demand will be recorded in the current April-June quarter.

      The easing of restrictions and the massive stimulus programmes adopted by governments could now help the market bounce back.

      OPEC said it now expects daily demand in 2020 to drop by some 8.5 million barrels per day from last year's level, which is a roughly 8.5 per cent drop.

RIYADH — Saudi Arabia unveiled plans on Monday to triple its Value Added Tax (VAT) and halt monthly handouts to citizens, as part of a series of austerity measures, amid record low oil prices and a coronavirus-led economic slump.

      The measures, which state media said would boost state coffers by 100 billion riyals ($26.6 billion), come as the government steps up emergency plans to slash spending to deal with the twin economic blow.

      The austerity drive comes amid an already high cost of living.

      "It has been decided the cost of living allowance will be halted from June 2020 and VAT will be raised from 5 per cent to 15 per cent from July 1," Finance Minister Mohammed Al-Jadaan said in a statement released by the official Saudi Press Agency.

      Jadaan said the measures were necessary to shore up state finances amid a "sharp decline" in oil revenue as the coronavirus pandemic saps global demand for crude.

      The government was also "cancelling, extending or postponing" expenditure for some government agencies and cutting spending on projects introduced as part of the ambitious "Vision 2030" reform programme to diversify the oil-reliant economy, the minister added.

      Jadaan last week warned of "painful" and "drastic" steps to deal with the double shock of the novel coronavirus and record low oil prices.

      Saudi Arabia, the top crude exporter and the Arab world's biggest economy, has shut down cinemas and restaurants, halted flights, and suspended the year-round umrah pilgrimage in a bid to contain the deadly virus.

      Saudi Arabia, along with other Gulf states, imposed a five per cent tax on goods and services in 2018 in a bid to generate additional revenue.

      The country had also introduced handouts worth billions of dollars to citizens, known as the cost of living allowance, to cushion the impact of rising costs.

      But the savings from the austerity measures are unlikely to plug the kingdom's huge budget deficit, which the Saudi Jadwa Investment group said would rise to a record $112 billion this year.

      Riyadh has posted a budget deficit every year since the last oil price rout in 2014.

     In April, the International Monetary Fund projected that the Saudi economy would contract by 2.3 per cent this year.

      Jadaan has said he expected Riyadh could lose half of its oil income, which contributes about 70 per cent of public revenues, as oil prices have fallen two-thirds since the start of the year.

      He said the world's leading crude exporter would borrow close to $60 billion this year to plug the budget deficit.

SINGAPORE — Oil prices were down in Asian trade on Monday after big gains last week on signs of a demand revival as some governments ease coronavirus lockdown measures.

      US benchmark West Texas Intermediate (WTI) was down 2.95 per cent to $24.01 a barrel in morning trade.

      International benchmark Brent was changing hands at $30.27 a barrel, down 2.26 per cent.

      Both contracts were up on Friday, with WTI advancing 25 per cent from the previous week following unprecedented output cuts by major crude producers and hopes of demand returning as some key economies began to ease strict measures to contain the virus.

      It was the first back-to-back weekly gain for WTI since February.

      The number of active US oil rigs also continued to fall in a sign of dampened drilling activity.

      Analysts said traders were locking in profits on Monday, causing prices to fall.

      "Oil prices have eased this morning on light profit-taking flows, helped by data from India suggesting oil demand nearly halved last month," OANDA senior market analyst Jeffrey Halley told AFP.

      Analysts, however, expect the decline to be limited.

      "Crude oil prices continue to find support from increasing supply cutbacks amid the improving macro backdrop," ANZ Bank said in a note.

      "The US shale oil industry has been hit hard by the lower prices, with drilling activity already curtailed sharply."

      Oil markets were battered in April as the virus strangled demand owing to business closures and travel restrictions, with US crude falling into negative territory for the first time.

     But the market found support after some countries from Asia to Europe began rolling back restrictions as they passed the peak of their outbreaks.

      A deal agreed between top producers to reduce output by almost 10 million barrels a day also came into full effect on May 1.

      "While price action is bound to be choppy as economies try to move out of lockdowns, it is probably safe to say that traders have planked a base on oil prices," said AxiCorp global market strategist Stephen Innes.

      "Oil fundamentals are showings signs of improvement by the week."

DAMASCUS — Syria's government on Sunday banned cars with large engines from receiving subsidised petrol in the latest move to curb a hydrocarbon crisis, in the war-torn country, which the government blames on sanctions.

      Heating fuel, petrol and cooking gas have been in short supply over the past two years, with Damascus ordering a series of caps on consumption to try to cope.

      Oil and Mineral Resources Minister Ali Ghanem said there would be no more subsidised fuel for cars with engines larger than 2,000 cc as of Sunday.

      Individuals or companies with more than one vehicle were also no longer allowed to benefit from the subsidies.

      Before these measures, any car owner was entitled to 100 litres of subsidised petrol per month.

      With state help, a 20-litre tank refill used to cost 5,000 Syrian pounds (around $7).

      Now those hit by the new rations will have to pay 9,000 Syrian pounds (around $12) for the same volume.

      Ghanem said the measure "lifted subsidies for only nine per cent" of cars, according to state news agency SANA.

      "Oil derivatives and crude oil supplied to Syria do no just entail international oil prices, but also the cost of transport and financial transactions as a result of the harsh economic measures" imposed on the government, he said.

      Damascus has repeatedly blamed the fuel crisis on Western sanctions.

      The latest petrol rationing has sparked criticism in the streets and online.

      Actress Shukran Murtaja wrote on Facebook: "Can I possibly spend more on my car than on my home? I've decided to sell it."

      Ghanem has said Syria needs 146,000 barrels of crude oil per day, whereas it produces just 24,000 locally.

      Syria used to produce almost 400,000 barrels per day before civil war broke out in 2011.

      But nine years of conflict have ravaged production, and seen US-backed Kurdish-led forces seize control of the largest oil fields in the country.

      Syria is in the grips of a severe economic crisis that has seen the value of the local currency plummet to record lows on the black market, and food prices double in a year, according to the World Food Programme.

DUBAI — Gulf aviation giant Emirates said on Sunday it would take at least 18 months for travel demand to return to "a semblance of normality", despite reporting bumper pre-pandemic profits.

      The Dubai carrier, the largest in the Middle East, posted 1.1 billion dirhams ($288 million) in net profit for the financial year ending March, up from $237 million the previous year.

      It was the 32nd straight year of profit for Emirates, which operates a fleet of 115 Airbus A-380 superjumbos and 155 Boeing-777 airliners.

      It had suspended flights on March 22 before resuming some services two weeks later.

      Emirates Group chief Sheikh Ahmed Bin Saeed Al-Maktoum said the airline had performed strongly in the first 11 months of the fiscal year.

      "However, from mid-February things changed rapidly as the COVID-19 pandemic swept across the world," he said in a statement.

      This caused "a sudden and tremendous drop in demand for international air travel as countries closed their borders and imposed stringent travel restrictions."

      "We expect it will take 18 months at least, before travel demand returns to a semblance of normality," he added.

      Emirates' profits were boosted by a fall in oil prices, causing a 15 per cent decline in fuel costs to $7.2 billion -- around 31 per cent of its operating costs.

      However, the carrier saw its annual revenues decline by six per cent to $25 billion due to the coronavirus pandemic and the closure of a runway at Dubai airport.

      The airline said it had transported just over 56 million passengers in the fiscal year, a drop of four per cent year-on-year, while cargo had declined by a tenth to 2.4 million tonnes.

      The strong US dollar eroded $272 million of profits, while intensive competition also affected the bottom line.

      Even before the coronavirus pandemic paralysed the aviation industry, Emirates had slimmed its orders from both Airbus and Boeing, cutting tens of billions of dollars-worth of aircraft.

      The government of Dubai, whose economy heavily depends on aviation and tourism, said last month it would inject capital into Emirates to help it cope with the impact of coronavirus.