Engineer Who Fled Charges of Stealing Chip Technology in US Now Thrives in China



Jordan Robertson and Michael Riley
Sun, June 5, 2022

(Bloomberg) -- Few companies are better positioned to benefit from the crippling shortage of computer chips than ASML Holding NV, a Dutch manufacturer whose equipment plays an integral role in making the world’s most advanced semiconductors.

But four lines tucked halfway into an otherwise upbeat, 281-page annual report from February hinted at a potentially incendiary problem. ASML accused a Beijing-based firm, regarded by Chinese officials as one of the country’s most promising tech ventures, of potentially stealing its trade secrets. Behind the brief disclosure is an extraordinary multiyear tale of intellectual property theft and a broader threat facing the $556 billion semiconductor industry.

In the report, ASML said the Chinese company, Dongfang Jingyuan Electron Ltd., is related to a defunct Silicon Valley firm, Xtal Inc., which ASML sued for intellectual property theft. A 2018 trial in California, which received scant attention at the time, provided more detail. Dongfang and Xtal were essentially the same, created a month apart in 2014 by a former ASML engineer named Zongchang Yu, ASML’s attorney told the court. The two companies worked in tandem toward the same goal: obtaining ASML’s technology and transferring it to China, which is seeking to foster its own semiconductor industry, often at the expense of Western companies, the attorney argued.That technology was secured in sometimes audacious fashion: one engineer was accused of stealing all 2 million lines of source code for critical ASML software and then sharing part of it with Xtal and Dongfang employees in the US and China, according to transcripts of the proceedings.“It’s not an accident. It’s not anything else,” Patrick Ryan, ASML’s lead attorney, told the court. “But it is a plot to get technology for the Chinese government.” Xtal lost and filed for bankruptcy protection. It was ordered to pay $845 million, which ASML deemed “uncollectable.”ASML declined to comment for this story. A Dongfang representative declined to comment. Yu, 60, who has an outstanding arrest warrant in California on allegations of stealing trade secrets from ASML, couldn’t be reached for comment. He now runs Dongfang in Beijing with ample support from the Chinese government, according to company statements and other Chinese documents. The allegations the company made in court and in its annual report reflect the delicate position ASML finds itself in, trying to grow its business in China while pursuing claims of IP theft against a Chinese company.

China is the world’s largest market for semiconductors. Its electronics factories and growing middle class are vital consumers of chips. Semiconductor companies have struggled for years to balance access to China against concerns the country is seeking to pilfer their intellectual property and overtake them.

For now, China lags in semiconductor manufacturing, leaving its most important industries dependent on technology dominated by foreign companies. Making its own advanced chips is a priority that’s complicated by US sanctions that limit access to the latest equipment. Beijing has taken unprecedented steps to clear such hurdles, including launching a $150 billion semiconductor initiative in 2014 to turbocharge domestic production.

China has also encouraged people to steal technology that advances Beijing’s interests, according to the FBI. “China recognizes it needs to make leaps in cutting-edge technologies,” FBI Director Christopher Wray said. “Instead of engaging in the hard slog of innovation, China often steals American intellectual property and then uses it to compete against the very American companies it victimized.”

ASML’s allegations offer a detailed example of what national security authorities describe as China’s playbook to acquire advanced technology. It’s a set of strategies, they say, that depends on inducements from Beijing, theft by well-placed workers, and in at least some cases, a reluctance to complain by corporate victims seeking to preserve or enhance access to the Chinese market.

“Taken individually these cases can seem really anecdotal, and some victim companies might say there’s not really any master plan,” said Anna Puglisi, senior fellow at the Center for Security and Emerging Technology at Georgetown University. “But take this together with other cases over time and you can see the silent—and in some cases not so silent—hand of the Chinese government.”

China’s Ministry of Foreign Affairs called the allegations “malicious hype.” “Anti-China politicians in the US have been using ‘IP theft’ topics to tarnish China,” the ministry said in a statement. “China didn’t make its technology achievements by stealing or robbing from others.”

Veldhoven, Netherlands-based ASML makes technology that’s crucial for manufacturing the fastest, most powerful computer chips. According to research firm Gartner Inc., as of 2021, ASML controlled more than 90% of the $17.1 billion global market for lithography equipment, which is used to shrink and then print patterns of transistors onto silicon wafers that are then sliced into individual chips.

A single machine can be the size of a small house and cost roughly $170 million. That technology is why the company’s market capitalization has more than quadrupled in four years, to $284 billion at the end of 2021.

At the center of the litigation is software called optical proximity correction, or OPC. It makes up less than 1% of ASML’s revenue. But without it, lithography machines can’t accurately print tiny circuits, according to trial testimony.

“If you didn’t do any OPC, then the pattern on the chip is totally scummed,” testified Yu Cao, an ASML executive who was general manager of the division that develops the software. “This would be a chip that doesn’t work.”

China is developing its own lithography machines, but it could take years to catch up to ASML, if ever, according to Robert Castellano, president of The Information Network, a Pennsylvania-based semiconductor research firm. Mastering OPC software could close some of the gap by allowing Chinese manufacturers to improve those machines and pack more transistors onto chips they produce, he said.

That leap could have implications beyond consumer devices. “This is not about making a better smartphone,” Castellano said. “It’s about making weapons that are more sophisticated than they are right now.”

The year 2014 was important for China’s semiconductor ambitions. That’s when the country created its $150 billion fund to jumpstart companies to compete with foreign behemoths.

It’s also when Yu started his two companies. Educated in China, he had worked mostly in Japan and the US, including at ASML, which he left in 2012, according to court documents. In January 2014, he incorporated Xtal, based in an office park near San Jose International Airport. A month later, he founded Dongfang, in a government-funded industrial enclave in Beijing.

Yu created the companies at the direction of Jingyuan Han, a member of China’s economic elite who retains close ties to the Communist Party, Ryan, ASML’s attorney, alleged in court. Han serves as chairman and chief executive officer of China Oriental Group Co., a large steel producer, where his biography lists multiple Communist Party roles.

The goal was to tap into incentive programs while delivering critical technologies for China’s semiconductor initiative, Ryan alleged.

Despite its industrial-age specialization, China Oriental is a player in the country’s race to become a global technology superpower, often through investments by the company or by Han personally, according to corporate filings and Ryan’s courtroom arguments. Until 2019, China Oriental, through subsidiaries, owned more than 50% of Dongfang, according to Datenna, a Dutch firm that tracks the ownership of Chinese companies. It has since sold its stake as other investors have come onboard, Datenna said.

Representatives for China Oriental didn't return messages seeking comment.

As trial testimony alleged, Yu recruited engineers from the ASML division where they worked developing OPC software, and the departing employees assured their managers they would be working on unrelated technologies.

But after Song Lan, director of engineering, resigned in August 2015, ASML examined his computer. Investigators found he was working for both companies at the same time and had downloaded ASML files to a hard drive that he took to his new employer, according to a filing by the Dutch company in Xtal’s bankruptcy proceedings. The company said it found similar violations involving others who left for Xtal.After Xtal began marketing OPC software, ASML sued.

The data taken by Lan, who became Xtal’s vice president of engineering, included source code for ASML’s OPC software, according to the filing. Lan testified that he took the code inadvertently, while backing up his ASML email to preserve personal data. The code was in a file attached to an email that Lan said he never opened.

ASML’s attorneys said they weren’t able to learn the full scope of Lan’s activities. After ASML informed Xtal of its intent to sue, Lan used a wiper program on the hard drive and erased as much as 61 gigabytes of data, according to the filing. Lan didn’t address the deletion in his testimony, as Xtal’s attorneys objected to a question about it.

Another former employee, Wanyu Li, who became Xtal’s IT director, downloaded the source code for ASML’s OPC software—all 2 million lines of it—to a hard drive, according to testimony from ASML forensic experts. Investigators found evidence that Li used it immediately at Xtal, uploading part of the code to a GitHub server where it was accessible to about 30 engineers with Xtal and Dongfang, according to the testimony.

The judge informed the jury that Li admitted to destroying evidence, breaking the hard drive’s circuit board into pieces before turning it over to Xtal’s attorneys on the eve of trial, according to trial transcripts.

Xtal’s attorney, Donald Putterman, acknowledged that Li stole the source code and damaged the hard drive. “There's no sugarcoating with what Wanyu Li did,” Putterman told the court. “You can’t do it. It was wrong. It was illegal. Off the charts.”

However, he said no one at Xtal knew that Li had the stolen code. “It was never actually used by Xtal,” he said. “Xtal never made a penny on it.”

ASML attorneys referred the case to Santa Clara County’s District Attorney’s Office, which filed criminal charges in April 2019 alleging theft of trade secrets against Yu, Li and Lan, according to court documents.

Li, 56, pleaded guilty to a felony charge and Lan, 48, to a misdemeanor charge, both for taking computer data, according to prosecutor Erin West. Li was sentenced to seven months of electronic monitoring, and Lan to 90 days of community service, she said.

Both men, through their attorneys, declined to comment. When authorities went to arrest the three men in May 2019, Yu had left for China, West said.

ASML’s attorneys accused Yu of orchestrating the thefts. Yu was on emails where his employees discussed using the Dutch company’s source code to help speed up Xtal’s software development, according to testimony from ASML’s forensic experts. He also had copies of confidential ASML technical manuals and emailed them to his staff, they testified.

Yu testified that at the time he didn’t believe there was a problem using some internal ASML materials to help guide Xtal’s work.

“It is very good reference for our modeling work,” Yu wrote in one email.

By using stolen data as a roadmap, Xtal shaved years off the time needed to develop the software, Ryan argued.

In January 2016, Xtal won a $27 million contract with South Korea's Samsung Electronics Co., a longtime ASML customer, to supply OPC software, according to trial testimony. In two years, Yu’s company had replicated a technology that ASML said it had spent $100 million and 10 years developing.

“Xtal didn’t have to go down dead ends, because it knew which ones were dead ends, and it knew which ones were the path to glory, the path to speed, the path to development, the path to the money,” Ryan told the jury.

Samsung said it doesn’t have a current relationship with Xtal or Dongfang. The company pointed to a statement by ASML saying that Samsung wasn’t involved in “any malicious actions against ASML.” The Dutch company didn’t lose any business because the work between Samsung and Xtal was “thwarted” when the theft was discovered, according to the statement.

After ASML’s court victory, a Dutch newspaper Het Financieele Dagblad published a report alleging a link between the thefts and China. ASML refuted it and offered a different motive that didn’t involve China. “The wide speculation about a government-directed ‘conspiracy’ to steal our IP and trade secrets is therefore just that: wide speculation,” ASML said, in an April 2019 press release.

Chief Executive Officer Peter Wennink reiterated that position. “The suggestion that we were somehow victim of a national conspiracy is wrong.”“The facts of the matter are that we were robbed by a handful of our own employees based in Silicon Valley who had broken the law to enrich themselves,” he said.

“The suggestion that we were somehow victim of a national conspiracy is wrong” — ASML CEO Peter Wennink

However, months earlier, ASML’s own attorneys had directly linked Yu’s companies to China’s technology ambitions. “It’s consistent with a broader strategy that is being employed the Chinese government,” Andrew Winetroub, an ASML attorney, told the court. ASML had evidence, he argued, that Dongfang was receiving funds from the Chinese government and that “Xtal is intimately involved.”“They want to essentially be ASML in China,” Ryan, the lead ASML attorney, argued. “Stealing our software was a step in the right direction.”

ASML sought to introduce evidence that its lawyers said would support those claims. Putterman, Xtal’s attorney, argued that it amounted to “repetitive efforts” to “back-door prejudicial intonation” about China. The judge instructed ASML to focus on allegations limited to the US company, Xtal.

ASML’s case highlights the complications many Western companies face dealing with China.

China is ASML’s third-biggest market. Since 2019, the Dutch government has prevented the company from selling its most advanced lithography equipment there because the chips the equipment makes have potential military uses. ASML has opposed the restrictions.

Nick Eftimiades, a senior fellow at the Atlantic Council, said China “put ASML in an extraordinarily awkward position.”

“This isn’t the first time that a company’s been stolen from and refused to make it a big issue publicly,” said Eftimiades, a former US Department of Defense official who tracks Chinese IP theft and espionage cases. “Many companies go to extraordinary lengths to keep these events from being known to the public, stockholders and investors."

For Yu, Xtal’s troubles did little to slow Dongfang’s ascent.

In 2015, Dongfang signed a research agreement with the Institute of Microelectronics of the Chinese Academy of Sciences, the government’s semiconductor research center, according to Chinese documents. There, Yu caught the attention of Tianchun Ye, the institute’s director and the chief scientist directing China’s chip equipment development. Dongfang and the institute created a joint venture for chip technology development. Since then, Dongfang has won repeated honors and praise from the Chinese government.

Despite losing the Xtal case, Chinese authorities granted Dongfang a wide-ranging patent in 2019 that includes OPC software. Last year, Dongfang announced that it was named a “little giant” by China’s Ministry of Industry and Information Technology, a designation often followed by significant new investment and expectations of rapid growth.

Since returning to Beijing, Yu has raised millions of dollars while being courted by Chinese officials. He appeared on the reviewing stand for a military parade marking the 70th anniversary of China’s founding—an invitation-only affair reserved for elites.

A 2020 book of interviews with Chinese tech entrepreneurs portrayed Yu as a “flagbearer” for semiconductor development. He told the authors one of his biggest dreams was to help China create its own OPC software—and “break the foreign monopoly.”

IMPERIALISM HIGHEST STAGE OF STATE CAPITALI$M

Chinese debt traps in Africa? The bigger worry is bondholders, study finds


Mon, June 6, 2022

The rise in African debt due to Chinese lending pales in comparison with the debt burden created by private creditors in the last decade, according to a new report taking aim at accusations that Beijing engages in "debt-trap diplomacy" on the continent.

The study - by Harry Verhoeven from the Centre on Global Energy Policy at Columbia University, and Nicolas Lippolis from the department of politics and international relations at the University of Oxford - says the debt-trap narrative is a function of China-US strategic and ideological rivalry rather than a reflection of African realities or perspectives.

"What keeps African leaders awake at night is not Chinese debt traps. It is the whims of the bond market," the report says.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.


Debt-trap diplomacy involves extending loans to countries and taking control of key assets if the debtor defaults on repayments.

While China is the continent's biggest bilateral creditor, most of the debt is due to private Western holders of African debt, according to the researchers. Capital, in the form of debt repayments, thus continued to flow from Africa to Europe and North America, the study said.

Verhoeven said the percentage of African debt owed to China was less compared to that borrowed from private creditors.

"[Chinese debt] is not the most rapidly growing segment of debt. Other credit lines have grown a lot more in recent years, especially those towards commercial creditors," said Verhoeven, co-author of the report "Politics by Default: China and the Global Governance of African Debt".

"These are bondholders, people from London, Frankfurt and New York who are buying African debt. That segment in the last couple of years has grown much faster than any liabilities that African states owe other creditors."

The report cited confidential estimates of international financial institutions (IFIs) that showed sub-Saharan Africa's government debts to Chinese entities at the end of 2019 totalled around US$78 billion. This was about 8 per cent of the region's total debt of US$954 billion and 18 per cent of Africa's external debt.

The researchers said roughly half of Africa's public debt was domestically issued, and the other half was owed to external actors. Of the latter, one-third was owed to bilateral official partners, one-third to international financial institutions and one-third in the form of Eurobonds denominated in a currency other than that of the issuing state. Of the bilateral debt, the IFIs estimated that about half was owed to China, the researchers said.

This is broadly supported by the World Bank's publicly available International Debt Statistics, which show the continent has about US$427 billion in external debt.

Moreover, the publicly available data shows that Chinese-held debt makes up roughly half of the bilateral debt stock, again in line with the IFI estimates.

The Global Development Policy Center at Boston University and the China Africa Research Initiative at Johns Hopkins University estimate that Beijing has lent about US$150 billion to African countries since 2000, mostly through the China Eximbank (60 per cent) and the China Development Bank (25 per cent), suggesting that about US$75 billion has been paid off already.

"This is a sizeable amount, but not large enough to have been the main driver of the debt build-up since 2004-05," the study said.

Furthermore, it said the data revealed that Chinese lending, rather than driving a continentwide expansion of debt, was heavily concentrated in five countries: Angola, Ethiopia, Kenya, Nigeria and Zambia.

"The idea that Chinese debt traps jeopardise the entire continent is hyperbolic," the study said.

It is also a claim that China has repeatedly rejected.

In Nairobi in January, Chinese Foreign Minister Wang Yi said the debt-trap claims were an "utterance trap" created by those forces that do not want to see Africa speed up development.

"China has never attached any political strings or imposed anything on others," Wang said.

Some African leaders have also dismissed the debt-trap allegations, saying Chinese money had helped build infrastructure on the continent that the West had shunned.

Among them is Zimbabwean President Emmerson Mnangagwa who said last month: "We have seen Chinese capital supporting landmark and iconic infrastructural projects across the African continent.

"Here in Zimbabwe, China has helped fund and implement several projects in the sectors of energy, air transport, water, real estate, industrial value addition, mining and defence."

In the last two years, China has also come in for criticism for allegedly not doing enough to help African countries struggling to make repayments amid the coronavirus pandemic.

To give poor nations time to cope with the ravages of the pandemic, the Group of 20 wealthy nations, the IMF and the World Bank, proposed the Debt Service Suspension Initiative (DSSI) and followed up with the Common Framework plan for restructuring debt.

Beijing, through the Ministry of Commerce and China International Development Cooperation Agency, and China Eximbank signed up to the G20 initiative, freeing up more than US$1.3 billion in service payments from dozens of low and middle-income countries, mostly from Africa.

CDB and Industrial and Commercial Bank of China, which Beijing claims are not official creditors but rather for-profit lenders, initially opted out. In response to US criticism, these institutions made numerous "goodwill" gestures, postponing roughly US$750 million in repayments by countries such as Angola and Zambia, the study said.

According to the World Bank, from May 2020 to December 2021, the DSSI suspended US$12.9 billion in debt-service payments owed by participating countries to their creditors.

But little else has happened as a result of the DSSI and the Common Framework. Only three countries - Chad, Zambia and Ethiopia - sought help and not one of them has received any debt relief.

In any case, private capital is the single greatest growth factor for African debt in the last decade, and it is under no obligation to abide by the DSSI or the Common Framework, according to the authors.

"Contrary to the debt-trap narrative, if a wave of African defaults materialises in the near future, as IFI officials have been fearing since at least 2015, it will be catalysed more by private-sector manoeuvring and intransigence than by Chinese scheming," the study said.

"All efforts are demanded of official creditors - which is a very clear targeting of China," Verhoeven said. "We argue it is more about the competition for power and influence between the United States, and China rather than thinking about what African states need."

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.

China to conclude cybersecurity probe, Didi app to be restored - WSJ


Didi, Lenovo founders go private on China social media, joining retreat from spotlight

Mon, June 6, 2022

(Reuters) - Chinese regulators are concluding their probes into Didi Global Inc, preparing to allow the ride-hailing company's mobile app back on domestic app stores as early as this week, the Wall Street Journal reported on Monday.

Didi's U.S. shares rose 46% in pre-market trade.

Last year, the Cyberspace Administration of China (CAC) ordered app stores to remove 25 mobile apps operated by Didi - just days after the ride-hailing giant listed in New York. It also told the company to stop registering new users, citing national security and the public interest.

Regulators are also planning to allow the apps of logistics platform Full Truck Alliance Co and online recruitment services company Kanzhun Ltd back on Chinese app stores this week, the WSJ said, citing people familiar with the discussions.

Chinese regulators will also lift a ban on the companies adding new users, WSJ said.

Didi, Full Truck, and Kanzhun did not immediately respond to Reuters' requests for comment. The Cyberspace Administration of China (CAC) was not immediately available for comment.

The three companies are expected to face financial penalties, along with offering 1% equity stakes to the state and give the government a direct role in corporate decisions, WSJ reported.

Last year, Chinese authorities launched a cybersecurity probe into the companies, after which their apps were removed.

(Reporting by Maria Ponnezhath in Bengaluru; editing by Uttaresh.V and Louise Heavens)

Deloitte research reveals inaction on climate change could cost the world's economy US$178 trillion by 2070

NEWS PROVIDED BY

Deloitte Global 

By contrast, the global economy could gain US$43 trillion over the next five decades by rapidly accelerating the transition to net-zero

Key highlights:

• Deloitte's Global Turning Point Report finds that unchecked climate change could cost the global economy US$178 trillion over the next 50 years, unless global leaders unite in a systemic net-zero transition  
  
  
• The recently launched Deloitte Center for Sustainable Progress (DCSP) will focus on holistic, data-driven analysis and results-oriented thought leadership, to guide organizations through their sustainability journeys

DAVOS, Switzerland, May 23, 2022 /PRNewswire/ -- A new report from the Deloitte Center for Sustainable Progress (DCSP) released today during the World Economic Forum's annual meeting indicates that—if left unchecked—climate change could cost the global economy US$178 trillion over the next 50 years, or a 7.6% cut to global gross domestic product (GDP) in the year 2070 alone. If global warming reaches around 3°C toward the century's end, the toll on human lives could be significant—disproportionately impacting the most vulnerable and leading to loss of productivity and employment, food and water scarcity, worsening health and well-being, and ushering in an overall lower standard of living globally.

Deloitte's Global Turning Point Report is based on research conducted by the Deloitte Economics Institute. The report analyzed 15 geographies in Asia Pacific, Europe, and the Americas, and found that if global leaders unite in a systemic net-zero transition, the global economy could see new five-decade gains of US$43 trillion—a boost to global GDP of 3.8% in 2070.

"The time for debate is over. We need swift, bold and widespread action now—across all sectors," said Deloitte Global CEO Punit Renjen. "Will this require a significant investment from the global business community, from governments, from the non-profit sector? Yes. But inaction is a far costlier choice. The data bears that out. What we have before us is a once-in-a-generation opportunity to re-orient the global economy and create more sustainable, resilient, and equitable long-term growth. In my mind the question is not why we should make this investment, it's how can we not?"

Transforming the economy for a low-carbon future will require extensive coordination and global collaboration throughout industries and geographies. Governments will need to collaborate closely with the financial services and technology sectors—leading the charge on sustainable progress through global policymaking, greater investment in clean energy systems, and a new mix of green technologies across industries. According to the Deloitte Economic Institute's  research, collectively pivoting from an economy reliant on fossil fuels to an economy primarily powered by renewable energy would spur new sources of growth and job creation. Global cooperation and regulation are vital to setting the stage for a successful transformation.

"It's important that the global economy evolves to meet the challenges of climate change," said Dr. Pradeep Philip, Deloitte Economics Institute. "Our analysis shows that a low-carbon future is not only a societal imperative but an economic one. We already have the technologies, business models, and policy approaches to simultaneously combat the climate crisis and unlock significant economic growth, but we need governments, businesses, and communities globally to align on a pathway toward a net-zero future."

"In order to find new and lasting solutions to these societal challenges, we must model new forms of cooperation and pursue a multi-party, holistic approach. The Turning Point analysis lays a powerful foundation of economic benefit and growth for decision-makers, influencers and participants to work from for individual and shared prosperity," said Prof. Dr. Bernhard Lorentz, founding chair of the DCSP and Deloitte Global Consulting Sustainability & Climate Strategy leader.

The report details four key stages for decarbonization globally:

1. The public and private sectors unite, collaborating to build effective and foundational frameworks and policies to drive actionable change.
   
   
2. Business and governmental leaders make significant investment, sparking structural changes to the global economy that prioritize low-emissions industries and accelerate the transition to net-zero.
   
   
3. The world's geographies approach their respective "turning points"—when the benefits of a net-zero transition begin to outweigh the costs—and ultimately drive regional net-positive growth and value.
   
   
4. Following the turning point, society realizes a greener future—where interconnected, low-carbon systems underpin a clean economy that grows at an increasingly faster rate than its carbon-intensive alternative.

The analysis shows that no two paths to net-zero are the same. Each region will undergo its own journey based on a range of factors, such as the way governing bodies and societies are structured, exposure to climate change and overall risk profile, and marketplace strengths and capabilities. Similarly, each region will have its own unique turning point. For example, Asia Pacific is expected to see the benefits of a low-carbon transition as early as the 2020s, while Europe will not see returns on investment until the 2050s. The transition is expected to play out at varying speeds, however, if rapid action is taken, all regions are expected to achieve their turning point by 2070 and continue to reap the benefits long after.

More about the Deloitte Center for Sustainable Progress

The DCSP builds upon Deloitte's aspiration to address climate and sustainability challenges more broadly by acting as a convener of specialists, industry influencers, and thought leaders from around the world. The DCSP delivers actionable, data-driven, and trusted research and thought leadership that meets the urgency of this moment – when insights and collaboration for societal transformation are more important than ever before.

Notes: 

• Deloitte's Global Turning Point Report is a culmination of several regional reports examining the economic impact of climate change globally.
  
  
• Learn more about Deloitte's recently announced Sustainability & Climate practice.

Please visit Deloitte's website for more information on Deloitte's Sustainability & Climate practice and services.

About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited ("DTTL"), its global network of member firms, and their related entities (collectively, the "Deloitte organization"). DTTL (also referred to as "Deloitte Global") and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please see http://www.deloitte.com/about to learn more.

Deloitte provides industry-leading audit and assurance, tax and legal, consulting, financial advisory, and risk advisory services to nearly 90% of the Fortune Global 500^® and thousands of private companies. Our professionals deliver measurable and lasting results that help reinforce public trust in capital markets, enable clients to transform and thrive, and lead the way toward a stronger economy, a more equitable society and a sustainable world. Building on its 175-plus year history, Deloitte spans more than 150 countries and territories. Learn how Deloitte's more than 345,000 people worldwide make an impact that matters at www.deloitte.com.

 View original content to download multimedia:https://www.prnewswire.com/news-releases/deloitte-research-reveals-inaction-on-climate-change-could-cost-the-worlds-economy-us178-trillion-by-2070-301552395.html

SOURCE Deloitte Global

US Treasury takes aim at World Bank over climate change inaction

todayuknews

The World Bank Group leadership is under fresh fire from the US administration to step up its climate change efforts, after a blunt complaint from the US Treasury about its failure to take the level of action required.

A letter to the international financial institution headed by Trump appointee David Malpass, seen by the Financial Times, says progress had been made to meet Treasury secretary Janet Yellen’s requests but there remained “specific gaps and room for increased climate ambition”.

It also urges more “forceful and constructive leadership”. A US Treasury official said that while it “appreciated” the steps taken by the World Bank to advance climate ambitions over 2021, it had “continued to make clear” its position about the the bank falling short on its climate ambition.

The US is the largest World Bank Group shareholder, and the only member nation that has a veto power over certain changes in the bank’s structure.

The bank provides loans and grants to poorer countries and is seen as critical in distributing money to the developing world to help limit global warming as those economies grow.

It has been increasingly criticised by the UN as well as climate experts for failing to align its funding activities with the ideal Paris agreement goal of keeping global warming to 1.5C since the 1800s.

The US Treasury letter to World Bank senior management includes a series of requests about avoiding the financing of fossil fuel projects, in particular to help developing countries shift away from coal.

The World Bank chose not to join the numerous countries and development banks that pledged at COP26 to end public financing for coal, oil and gas internationally this year, and the group’s climate plan does not include a deadline for phasing out direct and indirect fossil fuel financing.

The letter also asks that the institution “only support gas investments in limited circumstances” and where there are “no other credible options”.

Treasury officials have also made clear in meetings with civil society organisations that they are dissatisfied with the climate policies of multilateral development banks, and the World Bank in particular, according to a person familiar with the meetings.

In an email to several non-profit organisations, a Treasury official said the department had been “pressing [World Bank] management to be more ambitious and proactive in a number of areas” such as “exercising greater [climate] leadership” and on the transition to clean energy.

Under Malpass, the bank’s commitment to tackling climate change was criticised by UN special adviser Selwin Hart, who lambasted it at COP26 for being “an ongoing underperformer”. Former US president and climate expert Al Gore has described the bank as “missing in action”.

The financial institution pushed for the joint statement by development banks at last year’s UN COP26 climate summit to be shortened and weakened, according to people with knowledge of the talks.

The bank’s red tape has also made it difficult for developing countries to access financing related to climate change, say its critics.

The letter from the US Treasury asks the bank to “significantly increase” funds available for climate adaptation and resilience. It also requests that the bank set “clear, specific and ambitious” targets for mobilising climate sector finance.

Egypt’s finance minister recently told the FT that he believed multilateral development banks, such as the World Bank, were “not providing enough support on climate change, on financing”.

“I would like to see better terms and better conditions and lower costs,” Mohamed Maait said. Conditions, such as the obligation on recipients to extensively monitor and report on the use of the money, created a substantial burden on countries with limited resources, he added.

In response to the US Treasury letter, the World Bank Group said it was “committed to helping countries meet the goals of the Paris Agreement” and had “stepped up our [climate] financing”.

“We will continue to work with client countries and international partners to support the transition to low-carbon, resilient growth, particularly for the poorest and most vulnerable countries,” the group said.

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Bank of China, Everbright Bank fined US$2.2 million for flouting asset management rules
WITH CHINESE CHARACTERISTICS

Sun, June 5, 2022, 

China's banking regulator imposed multimillion-yuan fines on two banks for violating rules on wealth management products, the first such penalty since they came into effect in January.

The fines were imposed on Bank of China and China Everbright Bank and their wealth management units, both of which were established by their parent companies in 2019.

The rules seek to stamp out shadow banking risks by imposing stringent requirements such as leverage limits and banning malpractices like providing investors with an implicit guarantee against losses.

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Bank of China and its wholly-owned wealth management unit were fined 6.6 million yuan (US$991,000), while China Everbright Bank and its wealth unit were penalised 8.3 million yuan, according to the China Banking and Insurance Regulatory Commission (CBIRC) on Friday.

China Everbright Bank and its wealth unit were penalised 8.3 million yuan by the mainland's banking regulator. Photo: AFP alt=China Everbright Bank and its wealth unit were penalised 8.3 million yuan by the mainland's banking regulator. Photo: AFP

"Leading state-owned banks have rarely been subjected to such penalties as they generally have more stringent internal risk management than other commercial banks," said Chen Shujin, an analyst at Jefferies. "The fines underscore how banks are still adjusting their businesses to fully comply with the new rules."

Since details of the new rules was announced in August 2018, banks had until the end of 2021 to align themselves with the new requirements. To adhere to the changes, Chinese banks have set up dedicated wealth management subsidiaries.

The CBIRC said on Friday that the two banks and their subsidiaries had products that flouted regulatory requirements. This included exceeding a 30 per cent market cap on a single security held by all wealth products marketed by a bank and crossing a leverage limit that caps total assets to net assets at 140 per cent for open-end mutual funds.

Chinese banks continue to actively developing their wealth management business to compensate for the sluggish growth in their interest income, which has been weighed down by reducing lending rates to borrowers as banks heed Beijing's call to support the economy ravaged by the Covid-19 pandemic.

Banks still have room to grow their fee and commission income from wealth management services, analysts said.

The country's wealth management segment grew 12.1 per cent to 29 trillion yuan, servicing 81 million investors in 2021, according to a report issued by China Central Depository & Clearing.

The banks' wealth subsidiaries, meanwhile, reported a combined net profit of 24.4 billion yuan in 2021, more than double from 2020, an EY report on China's banking sector from May showed.

"With the new regulations, the new wealth management business model will also face challenges in customer onboarding, investment research capability, risk management capability and system optimisation," Kelvin Leung, EY's Greater China financial services banking and capital markets leader, said in the report.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.

Meet a teacher with $303,000 in student debt who says Biden's $10,000 loan-forgiveness plan 'is not even a drop in the bucket'

Ayelet Sheffey
Sun, June 5, 2022

President Joe Biden has not confirmed an amount for any student-loan forgiveness but some reports have suggested he is looking at some relief for federal borrowers making less than $150,000 a year.

AP Photo/Carolyn Kaster

Reports have suggested Biden is considering $10,000 in student-loan relief for federal borrowers.


Cheryl told Insider that amount wouldn't make a difference to her $303,000 student-debt load.


She said she has no problem paying back what she borrowed, but the interest just keeps growing.

If it weren't for compounding interest, Cheryl — who requested her last name be withheld for privacy concerns — thinks President Joe Biden's plans to forgive $10,000 in student debt for federal borrowers might have made a difference for her.

But with $303,000 in federal student debt — and an additional $20,000 in private student loans — the president's plan just isn't enough.

"It is not even a drop in the bucket," Cheryl, 53, told Insider. "If you wanted to make a real difference, you could do away with half the interest we've accrued, but for now I'll never be able to cover the payments."

As a teacher in Massachusetts, Cheryl had to take out student loans for her bachelor's degree in English and her master's degree in education. While she said she has no problem paying back the debt she borrowed, the problem is the interest that accrued while she was in school and her loans were in forbearance. That's making it nearly impossible for her to touch her principal balance at her current income level.

Biden has not confirmed an amount for any student-loan forgiveness he might implement, but recent reports have suggested he is looking at $10,000 in relief for federal borrowers making under $150,000 a year. While that's an amount he pledged to fulfill on the campaign trail, many Democratic lawmakers and advocates had hoped he would go bigger and are disappointed he appears to be settling on an amount that would hardly make a dent in the US's $1.7 trillion student-debt load.

"At the end of the day, we have to recognize that $10,000 is not enough," Wisdom Cole, the national director of the NAACP Youth & College Division, previously told Insider. "$20,000 is not enough. $30,000 is not enough. We have to cancel a minimum of $50,000 or more. Isn't the goal to get the most amount of relief to the most borrowers?"
'I'm totally screwed' when student-loan payments restart

The Biden administration has emphasized that before student-loan payments are set to resume after August 31, it will make an announcement on broad relief. But if it's $10,000 in forgiveness, Cheryl said she will not be able to afford her federal debt bill on the income she makes right now — especially as she's getting ready to send her nephew, who she is financially supporting, to college.

"I'm totally screwed," Cheryl said. "And now I'm trying to put a kid through college and he got a good scholarship, but it doesn't pay for everything. I have no idea how I'm going to do it, I guess I'll have to get another job."

During the payment pause, Cheryl was still making around $400 monthly payments on her private student loans, and not having to make the $200 federal monthly payments under her income-driven repayment plan provided a slight financial reprieve that helped her afford other basic necessities.

"I have $200 to get gas, and groceries and everything else, and there's not much left after that," Cheryl said. "It keeps you in this nasty little loop that you can't get out of because I can't afford to pay it down and the interest keeps coming."

Although Cheryl's profession technically qualifies for the Public Service Loan Forgiveness (PSLF) program, which forgives student debt for public servants after ten years of qualifying payments, she was denied due to what she said was her time spent in payment forbearance while in school.

The Education Department has announced actions to allow past payments to be counted toward forgiveness, but Cheryl is still waiting and said "the money made from teaching will never come close to what you need to borrow to become one."

How lawmakers are reacting to the potential $10,000 in relief

Biden himself has not confirmed an amount of student debt he will cancel for federal borrowers, but when he said $50,000 in relief was off the table last month, some Democratic lawmakers and advocates grew concerned. Massachusetts Sen. Elizabeth Warren — one of the leading voices for broad student-loan forgiveness — released data that emphasized how going bigger on relief will be much more impactful.

The data found that $50,000 in debt relief would zero out balances for 30 million, or 76%, of all federal borrowers, compared to 13 million borrowers for $10,000 in relief.

"As this analysis clearly shows, canceling student debt is a matter of racial justice and about providing relief to millions of hard-working people who invested in their education but are now drowning in debt," Warren said in a statement. "The more President Biden cancels, the more we narrow the racial-wealth gap among borrowers and the bigger the boost to Americans' economic futures. This is the right thing to do."

But Republican lawmakers are saying the exact opposite. Insider previously reported on GOP concerns that Biden is canceling student debt to win Democratic votes at the midterms, and Virginia Foxx — a top Republican on the House Committee on Education and Labor — has frequently said canceling student debt would exacerbate inflation and cost taxpayers, referring to the $150 billion cost of the pandemic pause on payments.

For Cheryl, the issue is simple — she wants to pay back what she borrowed, and nothing more.

"I don't mind paying back the money I borrowed," Cheryl said. "But I do mind the government making their money off my back."

Azzi: The patriarchy's worst fear – women who think and compete

Robert Azzi,
Portsmouth Herald
Sun, June 5, 2022, 

“In the nineteenth century," Adrienne Rich wrote in The Theft of Childbirth, "the educated woman was seen as a threat to the survival of the species…. Patriarchal society would seem to require not only that women shall assume the major burden of pain and self-denial for the continuation of the species, but that a majority of that species—women—shall remain essentially uninformed and unquestioning.”

Today, in the twenty-first century, 50 years after the passage of both Title IX and Roe v. Wade, it appears that patriarchal interests continue to assault - from the womb to the football pitch - women's bodies and interests.

Much has been written recently, after the leak of Justice Alito's hateful attack, about Roe v. Wade and what overturning it would mean to women.

Less has been reported about attacks on Title IX, which was passed to prohibit sex discrimination - including on issues of pregnancy, sexual orientation, and gender identity - in any education program or activity receiving federal financial assistance.

Over time it created new opportunities for women - opportunities denied them for generations by the misogynistic manipulations of cisgendered, patriarchal white men.

Before 1972 there were fewer than 300,000 girls playing sports in only about 15,000 American high schools, compared with over 3,600,000 million boys in virtually every school.

Today, because of Title IX, there are over 3,400,000 girls (in over 312,000 schools) competing across a sports spectrum - including at what Americans call soccer - with many hopeful for college scholarships unavailable before 1972.

Last month, 50 years after Title IX was passed; 50 years after women were given sports platforms upon which to compete and showcase their athletic abilities, an historic agreement was struck that guarantees that all national team soccer players - regardless of gender - will receive equal pay when representing America.

Finally, the U.S. Soccer Federation (USSF) agreed to pay athletes equally for doing exactly the same job: A job, I might add, where men, since 1934, have never finished above 8th place while America's women have won four World Cups since 1991!

“When my coach said I ran like a girl," Mia Hamm recounted, "I said that if he could run a little faster he could too.”

A job where previously women soccer players couldn't earn more than $260,000 while male losers could earn more than $1,000,000.

According to the NY Times, “U.S. Soccer will distribute millions of extra dollars to its best players through a complicated calculus of increased match bonuses, pooled prize money and new revenue-sharing agreements that will give each team a slice of the tens of millions of dollars in commercial revenues that U.S. Soccer receives each year ...”

This isn't about equity - it's about equal pay for equal work!

Right-wing activists have for some time been attempting to conflate "equality" and "equity," in the minds of suggestible followers, intimating that somehow Democrats and progressives are trying to assure equal societal outcomes.

Nothing's further from the truth: Equity and Equality may sound similar but they're not.

Equality means all individuals or groups should be given the same resources or opportunities while equity recognizes that because some individuals or groups have different (often limited) circumstances they may need different resources and opportunities in order to equally compete.

For example, students with broadband at home are advantaged over students who have to sit on the curb in front of McDonalds to access the internet.

Teams with fully-equipped weight rooms are advantaged over teams that don't.

To suggest that women athletes should not be equally compensated with men because they've been competing for fewer years is to suggest, perhaps, that Black American votes should count less since they've been voting for fewer years than privileged whites.

Perhaps, as women have only been voting for 102 years, their votes should be devalued by 50%; perhaps Justice Sandra Day O'Connor's opinions should've mattered less because she occupied a seat believed reserved for white men.

Some critics whine that sports “equity” means that some male sports programs may have been eliminated by making room for women, reasoning that ignores that for generations only men decided who got to play what.

Today, an overwhelming number of high-ranking women executives at Fortune 500 companies say their opportunity to compete in sports contributed to their success in fields previously dominated by white men.

Perhaps that is really patriarchy's fear.

"When I was a little boy," Will Smith recounts in King Richard, "my mom used to say, 'Son, the most powerful, the most dangerous creature on this whole earth is a woman who knows how to think.'"

Women who think: May their presence persist.

Robert Azzi, a photographer and writer who lives in Exeter, can be reached at theother.azzi@gmail.com. His columns are archived at theotherazzi.wordpress.com

This article originally appeared on Portsmouth Herald: The patriarchy's worst fear – women who think and compete