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China’s treatment of local debt ‘ulcer’ threatens growth target

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China’s treatment of local debt ‘ulcer’ threatens growth target

China is scrapping a string of infrastructure projects in indebted regions as it struggles to reconcile a need to save money with this year’s target for economic growth.

Beijing has ordered a dozen highly indebted areas, many of them less-developed and far from the coast, to curb infrastructure spending as it tries to unwind a decade-long investment binge many believe is unsustainable.

But analysts say the austerity drive may make it even more difficult to achieve the ambitious 5 per cent target for annual growth set by Premier Li Qiang during China’s “Two Sessions” political gathering this month — with potentially far-reaching implications for the global economy.

Among the projects being scrapped are a highway in Yunnan province and a tunnel in Gansu. Guizhou province has sidelined so many infrastructure schemes that provincial outlays for major projects this year are projected to fall 60 per cent.

China’s economy is still bearing the impact of a real estate sector crisis that began after authorities sought to rein in developers’ vast borrowing.

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“In 2021 they went after property, this year they have been addressing the infrastructure side of the equation and local government debt,” said Michael Pettis, a finance professor at Peking University.

Investment in property and infrastructure had been significant sources of economic expansion, Pettis said. “So the question is: where is growth going to come from?”

In a policy document seen by the Financial Times, the State Council, China’s cabinet, ordered 10 debt-laden provinces and regions and two major cities to strengthen oversight and approvals of government projects.

The rules, which took effect on January 1, bar the 12 areas from launching many types of new projects, such as building highways or government buildings, and call for a suspension of some early-stage schemes.

“Governments of all levels better get used to belt-tightening and start to understand that this is not a temporary need, but a long-term solution,” finance minister Lan Fo’an told a press conference during the Two Sessions, which closed on Monday.

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Officials from several provinces sought debt relief from state bankers in discussions on the sidelines of the parallel sessions of the National People’s Congress, China’s rubber-stamp parliament, and the Chinese People’s Political Consultative Conference, an advisory body.

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Provincial delegates hailed the government’s clampdown on infrastructure spending.

“If you have an ulcer and you ignore it, you may just look healthy but actually are not,” said Wang Chunru, a CPPCC member from debt-stricken Inner Mongolia, one of the 12 province-level governments targeted. “Only by treating it and getting rid of it can you actually live longer and better.”

But analysts at Goldman Sachs describe the push to shelve projects in some of the most indebted areas, while providing enough fiscal stimulus elsewhere to boost economic growth, as a “balancing act”.

Beijing is betting that increasing infrastructure investment in richer coastal provinces such as Zhejiang or Guangdong can offset the cutbacks in the 12 targeted areas, which include the province-level cities of Tianjin and Chongqing and rustbelt north-eastern provinces.

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Together, Goldman said the 12 areas accounted for 22 per cent of China’s fixed asset investment and 18 per cent of gross domestic product last year.

Fixed asset investment was expected to fall this year by 60 per cent for the western province of Guizhou and between 11 per cent and 15 per cent for several others, Goldman said.

At the NPC, Premier Li said: “We will make concerted efforts to defuse local government debt risks while ensuring stable development.”

But analysts believe that will be easier said than done.

Li has signalled more support for the economy in 2024, with plans to issue Rmb1tn in long-term central government special bonds — an instrument used to raise extra funds.

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This should help overly indebted local governments to deleverage, said Chris Beddor of Gavekal Dragonomics. The deleveraging process started last year, with state banks restructuring debts. Local governments have also issued more than Rmb1.4tn in bonds to repay implicit debt from off-balance sheet financing vehicles.

“It’s clear that policymakers think they can get around this by essentially having the central government issue more bonds and do more of the fiscal work itself for the local governments while at least some of them engage in a sort of fiscal retrenchment,” said Beddor. “I think it creates a lot of room for policy error.”

While it was not his “base case”, it was possible the government could fail to calibrate the adjustment properly and the economy would actually “get a drag instead of a push”, Beddor said.

The enthusiasm for a spending clampdown expressed by some of those attending the Two Sessions is also likely to fuel economists’ concerns about the strength of Chinese consumption.

“All of us Chinese people need to tighten our belts, not just local governments,” said Zhang Shuyang, a Guizhou NPC delegate. “Living frugally is our glorious tradition as the Chinese nation.”

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Guizhou, one of China’s poorest provinces, is now home to nearly half of the world’s highest 100 bridges, including four of the top 10. Yuekai Securities estimates the province’s infrastructure building spree has left it with total debt, including off-balance-sheet liabilities, at 137 per cent of its GDP.

Chinese local government debt, including off-balance-sheet financing vehicles and shadow credit, was probably equivalent to between 75 and 91 per cent of national GDP in 2022, according to a paper last year by Victor Shih and Jonathan Elkobi of the University of California San Diego.

Twelve province-level governments had outstanding bonds alone equivalent to more than 50 per cent of their GDP, they wrote. China says its total central and local government debt is less than 51 per cent of GDP.

In the Chinese capital last week, Guizhou governor Li Bingjun said he understood living frugally was the new norm and pledged to strictly manage projects and cut expenditures.

“We continue to reduce various festivals, forums and exhibition activities,” Li told reporters. “If it’s not necessary, we don’t hold it.”

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Additional reporting by Wenjie Ding and Nian Liu in Beijing

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ICE should do traffic stops despite recent shootings, Trump says, seeming to oppose new suspension

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ICE should do traffic stops despite recent shootings, Trump says, seeming to oppose new suspension

WASHINGTON (AP) — The Immigration and Customs Enforcement agency should continue vehicle stops after recent fatal shootings, President Donald Trump said on Wednesday, seeming to oppose a new suspension of the practice used as part of his immigration crackdown.

ICE is “doing a GREAT job, one that has to be done,” Trump wrote on his social media site.

The Republican president said that to remove criminals he claims were let into the country under the previous Democratic administration “we must be strong, tough, and smart, and we CANNOT give up one of ICE’s most important and effective Crime Fighting tools, THE TRAFFIC STOP!” Trump said, “Once we do, we are playing right into the criminal’s hands.”

Trump administration officials have told Immigration and Customs Enforcement officers to suspend most vehicle stops after two deadly shootings within a week, people familiar with the decision said Tuesday.

The suspension was ordered after an ICE officer shot and killed a Colombian driver Monday in Maine and a week after another officer shot and killed a motorist in Houston, renewing criticism of the agency’s enforcement tactics that were widely condemned last winter after the killings of Alex Pretti and Renee Good in Minnesota.

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In Florida on Tuesday, a third man in roughly a week died during an encounter with immigration officers. This time, a 28-year-old man was killed after he was hit by a tractor trailer while running from immigration and other federal officers, authorities said.

It’s a narrative that has been repeated again and again since the Trump administration’s immigration crackdown began, with federal officers confronting drivers and then saying they opened fire when the drivers’ vehicles became a danger. That’s despite decades of warnings from policing experts that shooting into moving cars presents a danger of its own and should almost always be avoided.

There have been at least 10 deaths involving encounters with immigration agents since Trump launched his deportation campaign. At least four of those deaths involved people in vehicles, including the one last week in Houston, a trend so troubling that U.S. Sen. Susan Collins, R-Maine, said Tuesday that she had urged Department of Homeland Security Secretary Markwayne Mullin “to cease all non-urgent vehicle stops.”

John Sandweg, who was acting director at ICE, which is part of DHS, during President Barack Obama’s Democratic administration, estimated recently that there have been roughly 18 traffic stop shootings during the Trump immigration crackdown.

The office of Maine Sen. Angus King, an independent who caucuses with Democrats, was told by DHS that ICE was suspending traffic stops, office spokesperson Matthew Felling said.

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ICE, which has been under pressure to beef up arrest and deportation numbers, often says people it’s trying to arrest are increasingly resistant to leaving their homes. ICE officers blame immigration advocates who advise immigrants to stay in their homes unless ICE produces a warrant signed by an independent judge instead of the administrative warrants the agency generally uses that are signed by another ICE officer. So, ICE officers say, they’re forced to find other areas in which to make arrests.

Shooting angers Maine

Hundreds of people in Maine protested Tuesday over the fatal shooting of Johan Sebastián Durán Guerrero, a 25-year-old Colombian national. Advocacy groups said Guerrero, who had a wife and a young daughter, was authorized to work in the United States.

DHS said Monday that an officer, “fearing for public safety,” shot and killed Durán Guerrero while officers were watching the home of someone they believed was in the U.S. illegally and facing a final order of removal from the country. It said in a post on X that when ICE tried to stop a car driven by someone who came from the home, the person attempted to flee in the vehicle and the officer fired.

That was a shift from how King earlier described the encounter, when he said Mullin told him the officer opened fire after the man tried to use his vehicle as a weapon. King said Mullin told him the officers were trying to serve an arrest warrant but not for the man who was shot.

In a scathing post on X, outgoing Colombian President Gustavo Petro called the shooting a targeted killing “at the hands of the U.S. government.”

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Petro, who has openly quarreled with Trump, urged Trump to provide an explanation and accused ICE officers of treating Durán Guerrero as “an inferior being without rights.”

In Wednesday’s social media post, Trump told ICE to be “judicious, fair and smart, and go back and do your very important job.”

Maine’s congressional delegation on Tuesday demanded a “comprehensive, transparent, and expedited investigation.”

Questions surround the shooting

Photos showed bullet holes in Durán Guerrero’s car windshield, but the officers involved in the shooting didn’t have body cameras, leaving many questions. Among them are how close the officer was to the vehicle when shooting, whether officers told Durán Guerrero to stop and why ICE believes he had put the public in danger.

Border czar Tom Homan told reporters Tuesday that the investigation needs to play out and that officers will be held accountable if they are found to have acted inappropriately or illegally.

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Maine’s attorney general’s office, which said it is working with federal agencies to investigate, said initial statements suggest the driver was trying to flee in the direction of the officer, whose name hasn’t been released and who was placed on leave.

Collins said Mullin told her the DHS inspector general is investigating in cooperation with the FBI.

Democrats seeking to unseat Collins in November have sought to connect her with ICE’s methods, which have drawn public scrutiny and derision. Collins later said in a statement that although ICE needs to improve, eliminating the agency would make the nation less safe.

Maine Secretary of State Shenna Bellows, a Democrat who is vying for Collins’ seat, called the ICE officers at the shooting “thugs” during a vigil Tuesday in Lewiston.

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Whittle contributed from Biddeford, Maine; Brook from New Orleans; and Sisak from New York.

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Supreme Court Justices give chilling accounts of threats to their safety

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Supreme Court Justices give chilling accounts of threats to their safety

Supreme Court Justices Elena Kagan and Amy Coney Barrett testify before the House Appropriations Committee on Capitol Hill on July 14, 2026 in Washington, D.C.

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The Supreme Court did something Tuesday that it has not done in seven years. It sent two of the justices to Capitol Hill to testify about the court’s budget request for the coming year. The budget has grown dramatically in recent years because of the equally dramatic rise in the number and intensity of threats to the justices’ safety.

Designated as the court’s representatives were Justice Elena Kagan, appointed by President Obama, and Justice Amy Coney Barrett, appointed by President Trump.

As Kagan pointed out in her testimony, it was Republican Darrell Issa and Democrat Elijah Cummings who insisted that the court beef up its security ten years ago after Justice Antonin Scalia died in his sleep on a hunting trip, with no security anywhere nearby to respond quickly.  

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“They said, kind of like, we think you’re crazy, you know, that that you have less security than director of the Office of Personnel Management does,” she recounted the Congressmen as telling the Court, “and we think that you have to do better.”

Before that, the justices basically had little to no security. They drove their own cars to work; went to the movies and shopped at supermarkets unaccompanied, and did their private travel on their own. And frankly, they liked it that way, because having security is personally invasive.

In recent years, however, the court has undertaken major changes, including continually expanding the court police force to protect the justices and their homes at all times, and funding additional cybersecurity measures.

And yet, as Justice Kagan pointed out, the Court’s $207 million budget request is less than one tenth of one percent of the entire federal budget.

The justices spoke at length Tuesday about how rising threats impacted their lives. Justice Barrett came prepared with two harrowing stories. First was the day she brought home a bullet-proof vest. 

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“My 12-year-old son was standing in the doorway of my bedroom and he wanted to know what it was,” she testified, “and I didn’t know how to respond. I didn’t expect that performing this service was going to put me in the position of explaining to my children what a bulletproof vest was and why I had to wear one.”

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Mexico files criminal complaints in US over migrant deaths in custody

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Mexico files criminal complaints in US over migrant deaths in custody


Mexico has begun filing criminal complaints with state prosecutors in the United States over the deaths of its citizens in U.S. immigration custody and during enforcement operations, the foreign mini

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MEXICO CITY, July 13 (Reuters) – Mexico has begun filing criminal complaints with state prosecutors in the United States over the deaths of its citizens in U.S. immigration custody and during enforcement operations, the foreign ministry said on Tuesday.

Mexico’s government has also sent cease-and-desist letters to U.S. detention centers where Mexican nationals have died, the ministry added in a statement.

The filings follow the deaths of at least 14 Mexican nationals in ICE custody and several others during arrest operations, including the recent fatal shooting of a Mexican citizen by an ICE agent in Houston.

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President Claudia Sheinbaum announced Mexico’s intention to escalate its response to the deaths last Friday, as she claimed that the government “cannot turn a blind eye to the Mexicans who have died.”

In addition to the measures in the U.S., Mexico’s foreign minister also contacted the United Nations High Commissioner for Human Rights regarding the deaths of Mexican nationals in ICE custody.

Mexico expects the U.N. office to gather information from U.S. authorities, analyze the events and “refer the case to the relevant special procedures of the Human Rights Council,” the statement added.

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