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China wants couples to have more kids. Chinese people are less enthusiastic.



China’s shopping malls increasingly feature activity centers similar to this one in Beijing, where kids make cakes on Children’s Day on June 1, 2020.

Zhao Jun | China News Service | Getty Images

BEIJING — For many Chinese people, government restrictions have long ceased to be their main reason for not having more children.

That poses a greater challenge for Chinese authorities when trying to limit the negative effects on the economy from a decades-old policy restricting households to one child.

The central government announced Monday that each couple could now have three children, generating a buzz of online discussion — primarily on why it isn’t practical to have children, let alone three, in modern China.

More than 30,000 respondents to a simple online poll from state news agency Xinhua overwhelmingly said they weren’t considering having more children as a result of the new policy. The poll was soon deleted.

High education costs and insufficient support for maternity leave and retirement have contributed to a growing reluctance to have children. Loosening the restrictions to two children per couple in the last few years has done little to stall a drop in births, and keep a population of 1.4 billion people from aging rapidly.

The new policy is “completely inadequate to reverse the demographic decline,” Rory Green, senior China economist at TS Lombard, said Tuesday on CNBC’s “Street Signs Asia.” He said structural changes, such as improving access to childcare, “are much more important than simply removing the numerical limit on the number of kids you can have.”

“One of the jokes online, after this (new policy) came out, was, ‘Why would I want to have another kid when I have to look after four elderly parents, already two kids and potentially nine grandchildren afterwards,” he said.

Marriage registrations drop

On Weibo, China’s version of Twitter, the top four trending hashtags as of Tuesday morning were about the new three-child policy. Each hashtag had a few hundred million views.

One popular post under the hashtag “What changes the three-child policy will bring” discussed how it would likely become harder for women to pursue a professional career.

“If you aren’t married, HR will worry whether you will need to take marriage leave,” the Chinese-language post said, according to a CNBC translation. “If you are married without children, HR will worry whether you will need to take maternity leave.”

“If you are married with one child, HR will worry whether you will have a second child,” the post added. “If you are married with two children, HR will worry whether you will have a third child. If you are married with three children, HR will worry whether you can still manage work with three children.”

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Another major concern for Chinese couples is whether they can afford a house in a good school district, extracurricular courses and the many other costs needed to raise a child who they believe can then successfully get a good job in a highly competitive environment.

The frenetic rat race within what are often elite, narrow social groups in China has gained so much attention recently it has popularized its own term — “nei juan” — which The New Yorker magazine translated last month as “involution.”

Even before considering the question of children, fewer people are forming families. Marriage registrations in mainland China fell 12% last year, marking a seventh year of decline, according to data from Wind Information.

Too little, too late?

In China’s case, the country is much poorer than Japan so its productivity growth has more room to rise, preventing the economy from falling into Japan’s situation in the near future, Shaun Roache, S&P Global Ratings’ Asia-Pacific chief economist, said Tuesday on CNBC’s “Squawk Box Asia.”

But he noted that China is aging more rapidly than Japan and western Europe, creating a problem that needs to be addressed quickly.

“If people feel the whole of society is aging very, very quickly, they worry about who is going to be paying their pension. They save much more and consume less,” Roache said. “You get an unbalanced economy that creates problems in the property market, that leaves the economy too reliant on exports.”

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Stock futures are flat as investors await Federal Reserve update



U.S. stock index futures were little changed during overnight trading on Tuesday, ahead of the Federal Reserve’s update on Wednesday.

Futures contracts tied to the Dow Jones Industrial Average gained 17 points. S&P 500 futures were up 0.06%, while Nasdaq 100 futures advanced 0.12%.

Stocks pulled back from record levels during Tuesday’s trading session, with the S&P 500 closing 0.2% lower after hitting an all-time high earlier in the day. The Dow slid nearly 100 points and the Nasdaq Composite dipped 0.7% amid weakness in shares of Big Tech.

The Federal Reserve kicked off its two-day meeting on Tuesday. The central bank is not expected to make any policy moves, but it could signal that it’s beginning to think about easing its bond-buying policy. The Fed will also release new forecasts on Wednesday, which could indicate a possible first rate hike penciled in for 2023. Previously, Fed officials hadn’t come to a consensus for a rate hike through 2023.

The meeting comes as inflation heats up, with producer prices rising at their fastest annual rate in nearly 11 years during May. This has prompted some, including Paul Tudor Jones, to call for the central bank to re-think its easy monetary policy.

“On a one-year basis, inflation is indeed high,” said Brad McMillan, chief investment officer at Commonwealth Financial Network. “On a two-year basis, which captures the downturn and the upturn, inflation is still in the normal range over the past decade. The one-year numbers are simply misleading … When you dig in, on time frame and components, inflation is not nearly as bad as the headline numbers suggest,” he added. McMillan said he expects the Fed to stay the course and keep policy simulative.

The central bank has been buying $120 billion worth of bonds each month as the economy continues to recover from the coronavirus pandemic.

Minutes from the central bank’s last meeting showed that some Fed officials said it could be appropriate to start discussing adjustments to the bond-buying program should the economy continue to recover. Economists predict that while some of these discussions could begin, concrete details will not be revealed until later this year.

“The key component to watch at Wednesday’s press conference is an acknowledgement by Fed Chair [Jerome] Powell that the tapering discussion is underway and that officials are pondering a timeframe as to when they will communicate to the markets that the tapering train is scheduled to depart the station,” noted Danielle DiMartino Booth, CEO and chief strategist at Quill Intelligence. “Market participants anticipate a loud and clear tapering signal will arrive at August’s Jackson Hole meeting.”

Wells Fargo Investment Institute released its 2021 midyear outlook on Tuesday, saying it sees an intensified economic recovery into 2022 thanks to the continued vaccine rollout, among other things. Inflation, tax and interest rates are the firm’s chief concerns over the next 18 months, but the firm doesn’t see them derailing the rally.

“They appear to us very unlikely to douse the economic recovery or to alter our investment preferences for equities over fixed income and for cyclical equity sectors over defensive and growth-oriented sectors,” the firm said.

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Ken Salazar to Mexico and Tom Nides to Israel



Former U.S. Sen. Ken Salazar

Joe Amon | Denver Post | Getty Images

WASHINGTON — President Joe Biden announced that he would nominate former Secretary of Interior Ken Salazar to be the U.S. ambassador to Mexico, and Morgan Stanley vice chairman Tom Nides to be ambassador to Israel.

Biden also announced that he will nominate Capt. C. B. “Sully” Sullenberger as an ambassador-rank U.S. representative to the Council of the International Civil Aviation Organization. Sullenberger is a retired airline pilot, known best for successfully landing US Airways flight 1549 on the Hudson River in 2009.  

For the prestigious ambassador-rank post of U.S. permanent representative to NATO, Biden has chosen Julianne Smith. A former deputy national security advisor to Biden when he was vice president, Smith also directed NATO policy at the Pentagon.

The announcements were largely expected. But coming as they did while Biden is traveling overseas, they encapsulate Biden’s broader aim of staffing U.S. embassies abroad with experienced and widely respected diplomats.

In addition to the intended nominees above, Biden also tapped:

  • Julie Chung, for ambassador to Sri Lanka 
  • Sharon L. Cromer, for ambassador to Gambia
  • Troy Damian Fitrell as ambassador to Guinea
  • Marc Ostfield for ambassador to the Republic of Paraguay
  • Julianne Smith for U.S. permanent representative to NATO 
  • Dr. Cynthia Ann Telles for ambassador to Costa Rica

This is a developing story, please check back for updates.

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Lordstown Motors shares soar after new chairwoman says production plans remain on track



The Lordstown Motors Corp. Endurance electric pickup truck sits on stage during an unveiling event in Lordstown, Ohio, U.S., on Thursday, June 25, 2020.

Matthew Hatcher | Bloomberg | Getty Images

Embattled electric truck company Lordstown Motors has enough funding to operate through May 2022 and remains on track to begin limited production of its Endurance electric pickups in late-September following an executive shakeup that ousted the start-up’s CEO and founder, executives said Tuesday.

The company’s new Chairwoman Angela Strand called it a “new day” for the company, which raised bankruptcy concerns after warning investors last week that it had “substantial doubt” about its ability to continue as a going concern in the next year.

Shares of Lordstown Motors soared by as much as 14% during the event before leveling off at about $10.20 a share, up 10.2%.

“It’s a new day at Lordstown and there are no disruptions, and there will be no disruptions, to our day-to-day operations,” she said during a webcast for the Automotive Press Association. “We remain committed to inspiring, building and maintaining confidence and transparency in our relationships with each other at Lordstown and, very importantly, with our customers, our partners, our suppliers and our shareholders.”

The comments come a day after Lordstown’s chairman and CEO Steve Burns and CFO Julio Rodriguez resigned from the company after the board released a summary of an internal investigation into claims made by short-seller Hindenburg Research that Lordstown misled investors.

The company said the internal investigation found Hindenburg’s report “is, in significant respects, false and misleading.” The probe, however, did identify “issues regarding the accuracy of certain statements regarding” Lordstown’s pre-orders, specifically the seriousness of the orders and who was making them.

President Rich Schmidt said the company needs more experienced leadership. And while the company didn’t say the investigation led to Burns’ and Rodriguez’s resignations, he indicated the findings contributed, at least in part, to their abrupt departures. “It was a little bit of both,” he said.

Hindenburg accused Lordstown in March of using “fake” orders to raise capital for its Endurance electric pickup. The short seller said the pickup was years away from production, but Lordstown has maintained it’s on track to start making the vehicle in September. The company on Monday said customer deliveries are scheduled to begin in the first quarter of 2022.

Strand, who was Lordstown’s lead independent director, is overseeing Lordstown’s transition until a permanent CEO is identified, according to the company.

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