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China watches as Ukraine war makes U.S., EU and Japan show unity

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Chinese President Xi Jinping and Russian President Vladimir Putin attend a meeting during the BRICS (Brazil, Russia, India, China, and South Africa) summit in Brasilia on November 14, 2019.

Pavel Golovkin | Afp | Getty Images

BEIJING — Since taking office last year, President Joe Biden has pursued a strategy of restoring relationships with allies to put pressure on Beijing.

The Russian invasion of Ukraine nearly two weeks ago showed what those allies can do.

For China, the speed and severity with which the U.S. and its allies sanctioned Russia is a warning sign that could guide future economic and foreign policy.

Chinese officials have increased efforts to buttress their country’s self-reliance since President Donald Trump sanctioned telecommunications giant Huawei and slapped tariffs on billions of dollars’ worth of Chinese goods.

But Trump did all that singlehandedly — while simultaneously damaging ties with Europe and provoking uncertainty among U.S. allies in Asia.

The response to Ukraine has been anything but a go-it-alone move by the United States.

“Given the success that the U.S. has had in coordinating the financial sanctions and export controls not just with Europe but also with Japan, a key player in tech value chains — this is extremely alarming for China,” said Reva Goujon, senior manager for the China corporate advisory team at Rhodium Group.

“This is a very multilateral moment,” Goujon said. “At a high level, you would think China would benefit from [the U.S.] having a big distraction in Europe, but actually [this] only accentuates those policy debates over critical exposure and vulnerabilities to Chinese supply chains.”

From Germany to Japan, many countries have joined the U.S. in freezing the assets of Russian oligarchs, restricting access of Russia’s biggest banks to the global financial system, and cutting off Russia from critical technology.

China condemns ‘unilateral’ sanctions

China’s Foreign Ministry has repeatedly said it “opposes all illegal unilateral sanctions.” It has not elaborated on how the sanctions against Russia, which have been imposed by many countries, could be considered unilateral.

When asked about an “alliance of Western nations” pushing Russia out of the SWIFT banking network, Foreign Ministry Spokesperson Wang Wenbin said last week that “China does not agree with resolving issues with sanctions, still less unilateral sanctions that lack the basis of international law,” according to an English-language press conference transcript.

Later in the week, spokesperson Wang reiterated that position in response to a question about whether Western sanctions on trade with Russia would affect China.

Sanctions “only create serious difficulties to the economy and livelihood of relevant countries and further intensify division and confrontation,” he said.

China’s Europe balance

Escalating trade tensions between the U.S. and China in the last few years had already accelerated Beijing’s efforts to firm up ties with Europe. The Ukraine war threatens all that.

China’s “balancing act” of trying to quietly support Russia while keeping up relations with Europe is “going to be more and more difficult. That has consequences for trade links, primarily with the EU,” said Nick Marro, global trade leader at The Economist Intelligence Unit.

I think the West is very caught up in the moment, … this idea that the U.S.-led liberal order is back, Germany has woken up, even Switzerland.

Marro noted that reputational risks rise for China “the more China tries to fudge its stance on Russia and focus its criticism on NATO and the U.S.”

“China was hoping to use the EU as a way to offset the pressure it was facing from the U.S.,” Marro said. “Right now, Europe sees Russia as an existential threat.”

“Right now the impact for China [from the sanctions] really is secondary,” Marro said. “This conflict raises bigger questions around industrial policy and China’s diplomatic relations with the West.”

China’s big economy

Read more about China from CNBC Pro

Because Western trade with China is far greater than it is with Russia, a full trade war with China “would be quite costly [for the West] and in nobody’s interest,” said Alexander-Nikolai Sandkamp, a fellow at the German-based Kiel Institute for the World Economy.

“The West would welcome it if China took a stand against Russia and joined more actively the Western protests,” he said. “Now that China is remaining relatively neutral, that’s probably the best that we can expect.”

The Ukraine war and sanctions will likely lower global gross domestic product by only 0.2% this year, with a bigger impact in Europe, according to Tommy Wu, a lead economist at Oxford Economics.

China, Russia and SWIFT

Global finance provides a clear example of the limits on China’s ability to support Russia. Just days after the war began, the U.S. and EU pledged to remove some Russian banks from SWIFT, the standard interbank messaging system for financial institutions.

“If all Russian institutions are banned from joining the SWIFT network, then I think the level of political pressure is very different from what it is now,” said ­­Zhu Ning, professor of finance and deputy dean at the Shanghai Advanced Institute of Finance.

“Then any attempt to avoid punishment” would be considered “complicit,” he said. “Quite tricky for Chinese financial institutions.”

The Beijing-based Asian Infrastructure Investment Bank announced last week it was suspending activities related to Russia and Belarus.

Short-lasting Western unity?

On the other hand, there’s also the matter of general political dysfunction in the United States, where the Democrat and Republican parties are increasingly unable to work together to achieve even widely supported domestic goals.

Rhodium Group’s Goujon pointed out that the U.S. presidential election in 2024 poses a risk to how long the unity lasts among U.S. allies.

“I think the West is very caught up in the moment, … this idea that the U.S.-led liberal order is back, Germany has woken up, even Switzerland,” she said.

“But there are other countries like Mexico, like India, that we see embrace the Chinese narrative of the multipolar order more readily,” she said, “and that’s where I think China is waiting for the heat of the war to die.”

Regardless, the Biden administration is trying hard to unify the world’s democracies — and since the Ukraine war started, more of them seem to be listening.

Last week, the leaders of the Quad — Australia, India, Japan and the U.S. — held a call about the conflict and to reaffirm their commitment to work together as a group. However, India has yet to condemn Russia’s invasion of Ukraine.

Strengthening the Quad is part of Biden’s strategy “to restore American leadership in the Indo-Pacific,” as announced in a fact sheet published in February. A U.S. official told reporters in a briefing last month there was no intention to engage Beijing on the economic aspects of building up the Indo-Pacific.  

When asked Monday about Biden’s Indo-Pacific strategy, Chinese Foreign Minister Wang claimed the U.S. goal is to create an Indo-Pacific version of NATO. “China wants all parties to join us in doing the right thing,” he said, via an official translator. “Together we will reject attempts to create small, divisive circles within the Pacific.”

Wang said during the annual press briefing that China opposes bloc politics. He portrayed Beijing’s ties with Europe, India, Southeast Asia, Latin America, Africa and other countries and regions as separate from China’s other foreign relations.

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Teladoc Tumbled 38% After Big First-Quarter Loss. Is It Just a Pandemic Play?

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After pandemic drop, Canada’s detention of immigrants rises again By Reuters

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© Reuters. FILE PHOTO: Two closed Canadian border checkpoints are seen after it was announced that the border would close to “non-essential traffic” to combat the spread of novel coronavirus disease (COVID-19) at the U.S.-Canada border crossing at the Thousand Isla

By Anna Mehler Paperny

TORONTO (Reuters) – Canada is locking up more people in immigration detention without charge after the numbers fell during the pandemic, government data obtained by Reuters shows.

Authorities cite an overall rise in foreign travelers amid easing restrictions but lawyers say their detained clients came to Canada years ago.

Canada held 206 people in immigration detention as of March 1, 2022 – a 28% increase compared with March 1 of the previous year. Immigration detainees have not been charged with crimes in Canada and 68% of detainees as of March 1 were locked up because Canada Border Services Agency (CBSA) fears they are “unlikely to appear” at an immigration hearing, according to the data.

The rise puts Canada at odds with Amnesty International and other human rights groups that have urged Ottawa to end its use of indefinite immigration detention, noting CBSA has used factors such as a person’s mental illness as reason to detain them.

A CBSA spokesperson told Reuters that “when the number of entries (to Canada) goes up, an increase in detention is to be expected.” CBSA has said in the past it uses detention as a last resort.

A lawyer told Reuters her detained clients have been in Canada for years.

In the United Kingdom, too, immigration detention levels rose last year after dropping earlier in the pandemic, according to government statistics. Unlike Canada, the United States and Australia, European Union member states have limits on immigration detention and those limits cannot exceed six months.

The rise in detentions puts people at risk of contracting COVID-19 in harsh congregate settings, refugee lawyers say.

Julia Sande, Human Rights Law and Policy Campaigner with Amnesty, called the increase in detentions “disappointing but not surprising,” although she was reluctant to draw conclusions from limited data.

The number of immigration detainees in Canada dropped early in the pandemic, from a daily average of 301 in the fourth quarter (January through March) of 2019-20 to 126 in the first quarter (April through June) of 2020-21.

FEW NO-SHOWS AS DETENTIONS DROPPED

Detaining fewer people did not result in a significant increase in no-shows at immigration hearings – the most common reason for detention, according to Immigration and Refugee Board data.

The average number of no-shows as a percentage of admissibility hearings was about 5.5% in 2021, according to that data, compared to about 5.9% in 2019.

No-shows rose as high as 16% in October 2020, but a spokesperson for the Immigration and Refugee Board said this was due to people not receiving notifications when their hearings resumed after a pause in the pandemic.

Refugee lawyer Andrew Brouwer said the decline in detention earlier in the pandemic shows Canada does not need to lock up as many non-citizens.

“We didn’t see a bunch of no-shows. We didn’t see the sky fall … It for sure shows that the system can operate without throwing people in jail,” Brouwer said.

He added that detainees face harsh pandemic conditions in provincial jails – including extended lockdowns, sometimes with three people in a cell for 23 hours a day.

Refugee lawyer Swathi Sekhar said CBSA officials and the Immigration and Refugee Board members reviewing detentions took the risk of COVID-19 into account when deciding whether someone should be detained earlier in the pandemic but are doing so less now.

“Their position is that COVID is not a factor that should weigh in favor of release,” she said.

“We also see very, very perverse findings … [decision-makers] outright saying that individuals are going to be safer in jail.”

The Immigration and Refugee Board did not immediately respond to a Reuters request for comment.

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Nasdaq futures rise as market attempts comeback from April sell-off, Meta shares soar

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Stock futures rose in overnight trading as the market shook off the April sell-off and investors reacted positively to earnings from Meta Platforms.

Futures on the Dow Jones Industrial Average added 70 points or 0.2%. S&P 500 futures gained 0.7% and Nasdaq 100 futures jumped 1.2%.

The moves came as shares of Meta surged more than 18% after hours following a beat on earnings but a miss on revenue, a sign that investors may see signs of relief in the beaten-up tech sector. Shares were down 48% on the year heading into the results.

Meanwhile, shares of Qualcomm gained 5.6% in extended trading on the back of strong earnings while PayPal rose 5% despite issuing weak guidance for the second quarter.

“I think a lot of people want to believe that earnings are going to pull us out of this, but earnings are not what got us into this,” SoFi’s Liz Young told CNBC’s “Closing Bell: Overtime” on Wednesday. “… But the reality is there are so many macro headwinds still in front of us in the next 60 days that the market is just hard to impress.”

The after-hour activity followed a volatile regular trading session that saw the Nasdaq Composite stoop to its lowest level in 2022, as stocks looked to bounce back from a tech-led April sell-off. The index is down more than 12% since the start of April.

In Wednesday’s regular trading, the tech-heavy Nasdaq ended at 12,488.93, after rising to 1.7% at session highs. The Dow Jones Industrial Average rose 61.75 points, or 0.2%, to 33,301.93 propped up by gains from Visa and Microsoft, while the S&P 500 added 0.2% to 4,183.96.

Investors await big tech earnings on Thursday from Apple, Amazon and Twitter, along with results from Robinhood. Jobless claims are also due out Thursday.

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