China and Russia agreed to expand their economic cooperation using a planned banking system, which analysts say is aimed at supporting their militaries and undermining U.S.-led global order.

The two countries issued a joint communiqué agreeing “to strengthen and develop the payment and settlement infrastructure,” including “opening corresponding accounts and establishing branches and subsidiary banks in two countries” to facilitate “smooth” payment in trade.

The communiqué was issued when Chinese Premier Li Qiang met with Russian Prime Minister Mikhail Mishustin in Moscow on Wednesday, Russian news agency Tass reported the following day.

At the meeting, Mishustin said, “Western countries are imposing illegitimate sanctions under far-fetched pretext, or, to put it simply, engaging in unfair competition,” according to a Russian government transcript.

Mishustin also noted the use of their national currencies “has also expanded, with the share of roubles and RMB in mutual payments exceeding 95%,” as the two have strengthened cooperation on investment, economy and trade.

Li and Mishustin signed more than a dozen agreements on Tuesday on economic, investment and transport cooperation. Li was making a state visit to Moscow at the invitation of Mishustin.

David Asher, a senior fellow at the Hudson Institute, said, “This meeting between the Russians and the Chinese is important because it’s getting into a much widening aperture of cooperation” that would have “a bigger military dimension,” threatening U.S. national security.

Asher added that their bilateral cooperation could lead to “Russia’s assistance to China in the Pacific and the South China Sea” in return for Beijing’s support for Moscow’s economy and industry that aid Russia’s war efforts in Ukraine, “in defiance of the U.S.”

A spokesperson for the State Department told VOA Korean on Thursday that the U.S. is “concerned about PRC [People’s Republic of China] support for rebuilding Russia’s defense industrial base, particularly the provision of dual-use goods like tools, microelectronics and other equipment.”

The spokesperson continued: “The PRC cannot claim to be a neutral party while at the same time rebuilding Russia’s defense industrial base and contributing to the greatest threat to European security.”

“China is Putin’s only lifeline,” said Edward Fishman, an adjunct professor at Columbia University’s School of International and Public Affairs who helped the State Department design international sanctions in response to Russia’s aggression in Ukraine.

“Chinese firms have taken advantage of Russia’s weak bargaining position and cut a slew of favorable deals,” Fishman said. “But these deals have more than just commercial significance. They keep Putin’s war machine going.”

The U.S. Treasury Department on Friday imposed sanctions on more than 400 entities and individuals that support Russia’s war efforts in Ukraine, including Chinese firms that it said were helping Moscow evade Western sanctions by shipping machine tools and microelectronics.

In response to a China-Russia plan to set up a financial system to facilitate trade, U.S. Deputy Treasury Secretary Wally Adeyemo told the Financial Times that Washington “will go after the branch they’re setting up” and the countries that let them.

Analysts said China and Russia could increasingly turn to alternative methods of payments to evade sanctions.

Russia in June suspended trading in dollars and euros in the Moscow Exchange, in response to a round of sanctions the U.S. had issued targeting Russia’s largest stock exchange. The move by Russia prohibits banks, companies and investors from trading in either currency through a central exchange.

Shortly before Russia invaded Ukraine, the U.S. cut big Russian banks off from the U.S. dollar, the preferred currency in global business transactions.

“There is clearly a desire in both Moscow and Beijing to build financial and trade connections that operate beyond the reach of U.S.-led sanctions,” said Tom Keatinge, director of the Center for Finance and Security at the London-based Royal United Service Institute.

“This includes the development of non-U.S. dollar payment and settlement mechanisms and a wider ‘insulated’ payment system that allows other countries in their orbit to avoid U.S. sanctions,” he continued.

Other possible methods of payments could involve central bank digital currencies as well as cryptocurrencies and stable coins, Keatinge added.

The Chinese yuan replaced the dollar as Russia’s most traded currency in 2023, when the U.S. imposed sanctions on a few banks in Russia that could still trade across the border in dollars, according to Maia Nikoladze, an associate director of the Atlantic Council’s GeoEconomics Center, in a June report.

Nikoladze told VOA that transactions made in renminbi and in rubles allowed Moscow to mitigate the effects of sanctions until Washington in December 2023 created an authority to apply secondary sanctions on foreign banks that transacted with Russian entities.

“Since then, Russia has struggled to collect oil payments from China,” with some transactions delayed “up to six months,” even as Moscow found a way to process transactions through Russian bank branches in China, Nikoladze said.

According to an article this month from Newsweek, the Russian newspaper Izvestia reported that as many as 98% of Chinese banks are refusing Chinese yuan payments from Russia.

Hudson Institute’s Asher said even more critical than the Russian use of yuan is the use of U.S. dollars in Beijing-Moscow transactions through the Hong Kong Monetary Authority’s Clearinghouse Automated Transfer Settlement System (CHATS), a payment system used by banks such as HSBC that trade “hundreds of billions of dollars a year.”

“It can settle transactions in a way that is not visible to the U.S. government,” Asher said. “I’m talking about U.S. dollar reserves that are not in the United States, that are not controlled by the U.S. government, that we don’t have good visibility on, and Hong Kong is providing that financial service.”

The Hong Kong government has said it does not implement unilateral sanctions but enforces U.N. sanctions at the urging of China, according to Reuters.

William Pomeranz, an expert on Russian political and economic developments at the Wilson Center, said that despite Beijing’s and Moscow’s talk this week about financial and economic cooperation, “China does not want to get onto the bad side of European and American markets” and will not risk its economic ties with the West “just to help Russia in a problem that, quite frankly, is of Russia’s own making.”

HOWELL, Mich. (WXYZ) — The Michigan Bureau of Elections is now investigating allegations that the Livingston County Sheriff’s Office violated the state’s Campaign Finance Act by hosting former President Donald Trump this week.

On Tuesday Livingston County Sheriff Michael Murphy and his department hosted Trump for a “press conference,” but thousands of residents online took issue saying they found it largely inappropriate.

Former President Donald Trump talks crime, safety in Howell

Now we’re learning it may also be against Michigan law.

“Folks tend to be very very passionate about politics,” said Sheriff Michael J. Murphy in a Facebook video he posted previewing the event.

7 News Detroit reached out to Research Professor Emeritus at The Center for Political Studies at the University of Michigan, Michael Traugott, to ask if he has ever heard of a sheriff’s department doing something like this in the past.

Traugott responded, “Well it’s not very common because of the fact that it’s illegal.”

He’s referring to the Michigan Campaign Finance Act which says “public body or a person acting for a public body shall not use or authorize the use of funds, personnel, office space, computer hardware or software, property, stationery, postage, vehicles, equipment, supplies, or other public resources” to support political candidates.

7 News Detroit reached out the Sheriff Murphy asking for an interview and he gave our team the following statement, “I don’t believe I violated the Campaign Finance Act. I welcome the investigation.”

Traugott said Sheriff Murphy has been found guilty of breaking campaign finance laws before in 2018 and was fined $100 to the state and another $100 to the county.

“Which is essentially just a slap on the wrist and, obviously, didn’t dissuade him from doing this again,” said Traugott.

The controversy comes as on August 7 JD Vance held an event at the Shelby Township Police Department to “deliver remarks.”

JD Vance blasts Kamala Harris on illegal immigration in Shelby Township

Traugott said he believes these events are being called “remarks” and “press conferences” to avoid being labeled political events.

He added that if Sheriff Murphy is found in violation of the Michigan Campaign Finance Act there is a fine of up to $1,000 and, “In the end, the voters will have to decide how they feel about this because he’s an elected official.”

Once a determination in the investigation is made, it will be made public here.

Investors solidified bets on how deeply the Federal Reserve will cut interest rates this year after Fed Chair Jerome Powell said Friday the “time has come for policy to adjust.”

Powell noted the timing and pace of cuts will “depend on incoming data,” but markets quickly moved to fully price in four rate cuts of 0.25% by the end of 2024 on Friday morning after the Fed chair said the central bank has “ample room” to maneuver as policy enters its next phase.

“The current level of our policy rate gives us ample room to respond to any risks we may face, including the risk of unwelcome further weakening in labor market conditions,” Powell said.

Stocks rallied following Powell’s speech, with the S&P 500 (^GSPC) rising 1% and the tech-heavy Nasdaq Composite (^IXIC) gaining more than 1.3%. The Dow Jones Industrial Average (^DJI) rose about 1.1%, or more than 400 points, and the interest rate-sensitive Russell 2000 (^RUT) small-cap index soared, rising more than 2.5%.

Renaissance Macro head of Economics Neil Dutta highlighted in a note to clients that Powell didn’t use the word “gradual” when referring to rate cuts like some other Fed officials had in recent days.

This, Dutta argued, suggests “Powell is not removing the optionality of doing large moves as policy adjusts.”

Markets appear to agree.

Though with only three Fed meetings left in 2024, the looming question remains when the Fed would cut rates by 0.50% in a single meeting to reach the current investor expectation of four interest rate cuts this year.

Bets that a larger move will come in September moved up marginally on Friday morning. Markets are pricing in a 34.5% chance the Fed cuts by 50 basis points by the end of its September meeting, up from a roughly 24% chance seen the day prior, per the CME’s FedWatch Tool.

Economists have argued further weakness in the labor market would be the likely prompt for a larger cut in September. The July jobs report showed the second-weakest monthly job additions since 2020 and the highest unemployment rate, 4.3%, in nearly three years.

Powell addressed these developments on Friday, noting the cooling seen in the labor market is “unmistakeable” and that the downside risks to the central bank’s mandate for full employment have risen.

“It seems unlikely that the labor market will be a source of elevated inflationary pressures anytime soon,” Powell said. “We do not seek or welcome further cooling in labor market conditions.”

Capital Economics’ deputy chief North America economist Stephen Brown wrote in a note to clients that a weak August jobs report, set for release on Sept. 6, would be a likely catalyst for the Fed to cut by more than 25 basis points at its next meeting.

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“Fed Chair Jerome Powell’s dovish tone at Jackson Hole [on Friday] and pledge to do ‘everything we can to support a strong labour market’ implies that a 50 bp cut could be on the table at the September meeting, although such a move might require a further rise in the unemployment rate in the August Employment Report, which we judge to be unlikely,” Brown wrote.

Oxford Economics chief US economist Ryan Sweet agreed.

“The August employment report will determine whether the Fed cuts by 25 [basis points] or 50 [basis points] in September,” Sweet wrote.

The Fed’s next policy decision will be announced on Sept. 18.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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