Archive for June, 2016

Bipartisan Disapproval Follows Bill Clinton’s Meeting With Loretta Lynch

June 30, 2016

“No lawyer in their right mind should have been in this meeting under these circumstances. Every law school student knows that.”

By Carrie Johnson
June 30, 2016
National Public Radio (NPR)

Attorney General Loretta Lynch said she discussed family, golf and travel with Bill Clinton — not ongoing Justice Department investigations. Drew Angerer/Getty Images

A strange thing is uniting Democrats and Republicans in Washington: the widespread disapproval of a meeting between Attorney General Loretta Lynch and former President Bill Clinton on an airport tarmac in Arizona.

Lynch told reporters the impromptu conversation on her government aircraft in Phoenix Monday centered on social issues, from talk of grandchildren and Clinton’s golf game to their recent travels. Nothing came up, the attorney general said, about any ongoing Justice Department investigations.

But the chat took place in the midst of an FBI investigation into the security of Hillary Clinton’s private email server, which she used to conduct government business as Secretary of State. And that’s creating a major appearance problem for the presumptive Democratic nominee for the White House and the top federal prosecutor in the country.

Democratic political strategist David Axelrod tweeted:

I take @LorettaLynch & @billclinton at their word that their convo in Phoenix didn’t touch on probe. But foolish to create such optics.

On CNN, Sen. Chris Coons, D-Del., praised the attorney general for her law enforcement bona fides but offered this advice: “I think she should have said, ‘look, I recognize you have a long record of leadership on fighting crime but this is not the time for us to have that conversation. After the election is over, I welcome your advise and input.'”

Clinton’s political opponent in the race for the White House was less measured. Republican Donald Trump told radio talk show host Mike Gallagher the meeting was “terrible.”

“I think it’s the biggest story, one of the big stories of this week of this month, of this year,” Trump declared. “I’ve been talking about the rigged system, how it’s rigged and, you know, this is terrible … You see a thing like this and even in terms of judgment, how bad of judgment is it for him or for her to do this? I mean, who would do this? ”

The number two Republican in the U.S. Senate, John Cornyn, had been calling for a special prosecutor to investigate the Clinton email set-up since last September. In congressional hearings since then, Cornyn has pushed the attorney general about the independence of the inquiry and whether the White House was receiving updates on the status of the case.

Cornyn said the disclosure of the meeting between Bill Clinton and Lynch only heightened his concerns. “‘This incident does nothing to instill confidence in the American people that her department can fully and fairly conduct this investigation, and that’s why a special counsel is needed now more than ever,” Cornyn said in a statement.

From the standpoint of legal ethics, Lynch did nothing wrong, said New York University law school professor Stephen Gillers. Gillers said he didn’t think the attorney general needed to recuse herself from overseeing the email probe. But Gillers took a sterner tone with Bill Clinton.

“It was the height of insensitivity for the former president to approach the attorney general,” Gillers said. “He put her in a very difficult position. She wasn’t really free to say she wouldn’t talk to a former president,” after Clinton boarded her plane in Arizona.

“He jeopardized her independence and did create an appearance of impropriety going on to her plane,” Gillers added.

Gillers said he takes Lynch at her word that no sensitive law enforcement matters came up in the 30-minute airport chat.

But, he said, the episode “feeds the dominant narrative that the Clintons don’t follow the usual rules, that they’re free to have back channel communications like this one and that’s true even if we assume as I do that nothing improper was said. The public will be suspicious.”

White House spokesman Josh Earnest said he didn’t want to “second guess” Lynch and that her 30-year career in law enforcement should be a “source of trust.”


There might not be a fire here, but there sure is a lot of smoke…

Michelangelo statue of Jesus to go on display in London

June 30, 2016


Michelangelo’s Risen Christ which will go on display at the National Gallery

The Daily Telegraph

30 JUNE 2016 • 4:09PM

500-year-old marble statue of Christ will form the centrepiece of a blockbuster exhibition on Michelangelo at the National Gallery after curators negotiated a deal to bring it to London from its permanent home in a monastery in Italy.

The statue of the Risen Christ, weighing almost a ton, is one of almost 30 works which will go on show at the National Gallery next year in its first major exhibition on perhaps the greatest of all Renaissance artists in more than 20 years.

The Michelangelo exhibition, two years in the making, could set new visitor records. The show, which opens in March 2017 and runs until the end of June, will focus on Michelangelo’s friendship and collaboration with the artist Sebastiano del Piombo and their acrimonious falling out.

Michelangelo’s Risen Christ, which weighs almost a ton, goes on display in London from March 15. The statue weighs about 1 ton. CREDIT: ALESSANDRO VASARI

The artworks, including the sculpture, drawings and paintings, have been assembled from across Europe and the US as well as two rare oil paintings from the National Gallery’s permanent collection.

“Michelangelo is one of the great great figures of the Renaissance. We have not had a Michelangelo show here for 20 years,” said Gabriele Finaldi, the recently installed director of the National Gallery. “The show focuses on his friendship with Sebastiano and a very fruitful artistic relationship. The exhibition will give exposure to their remarkable relationship and a very, very significant moment in the history of Renaissance art through sculpture, paintings and drawings.”

Sebastiano del Piombo’s Pieta c. 1512-16 CREDIT: COMUNE DI VITERBO

Michelangelo drawing used as inspiration for Sebastiano oil painting above CREDIT: ALBERTINA, WIEN

The sculpture was only recognised as a Michelangelo at the turn of this century by an art historian. It had stood in the church of San Vincenzo Martire, part of a monastery, at Bassano Romano, a village just outside Rome, since 1644.

Michelangelo began working on the statue in 1515 but abandoned it when he discovered a black vein in the marble. It was completed in the 17th century.

A second, more famous version is in the church of Santa Maria Sopra Minerva in Rome. Sebastiano, then Michelangelo’s great friend, declared that the “knees alone were worthy of more than the whole Rome”.

Matthias Wivel, the National Gallery’s curator of 16th century Italian paintings who is responsible for putting the exhibition together, said the negotiations to bring the statue to London had been “complicated” but that the monastery had been keen to have it shown to wider audience. It will be transported to the UK on a lorry with special suspension.

Only one Michelangelo marble sculpture is on permanent display in the UK – a marble relief  of the Virgin and Child at the Royal Academy.


Michelangelo drawing
Michelangelo drawing which inspired Sebastiano oil painting CREDIT: THE TRUSTEES OF THE BRITISH MUSEUM

Dr Wivel said the exhibition would demonstrate the close collaboration between the two great artists and will contain drawings by Michelangelo which were used as inspiration for oil paintings by Sebastiano.

The exhibition will also contain correspondence between the two men. The friends fell out in 1534, allegedly because Sebastiano had recommended that Michelangelo paint The Last Judgment in the Sistine Chapel in oils rather than as a fresco.

Dr Wivel said: “There was a macho fascination with fresco. Michelangelo said oil painting is for women and Sebastiano.”

For Michelangelo-Sebastiano: A Meeting of Minds to break the record for paid for exhibitions it will need to attract in the region of 330,000 visitors.

The National Gallery’s 2011 exhibition on Leonardo da Vinci attracted 324,000 paid visitors.

The exhibition will be displayed in the North Galleries with permanent paintings by the likes of Rembrandt and Poussin moved to spaces on the ground floor.

The exhibition is one of a series unveiled by the National Gallery at a press conference on Thursday.

Chris Ofili

The gallery will depart from its normal remit of showing European art with a show entitled Australia’s Impressionists while it will also break with the tradition of showing pre-20th century art with a new work by Chris Ofili, the Turner Prize-winning artist.

Ofili, 47, famous for incorporating elephant dung into his paintings, is producing a specially-commissioned tapestry. The tapestry being made in secret at a studio in Edinburgh before going on display in London from April 26 to August 28 next year.

The prospect of the National Gallery displaying the work by Ofili will raise eyebrows in the art world. There have been concerns that the National Gallery is stepping on territory normally reserved for the Tate by showing a contemporary artist. The two galleries have a loose agreement in place that post-1900 art work is shown at Tate and anything before that at the National. That agreement is due for renewal in 2019.

While Secretary of State, Hillary Clinton Aides Sent Emails To The Clinton Foundation and Another Bill Clinton Venture At The Rate of 700 Per Month — But The Taxpayers Can’t See Them…

June 30, 2016

By Richard Pollock
The Daily Caller
June 30, 2016

Department of Justice officials filed a motion in federal court late Wednesday seeking a 27-month delay in producing correspondence between former Secretary of State Hillary Clinton’s four top aides and officials with the Clinton Foundation and Teneo Holdings, a closely allied public relations firm that Bill Clinton helped launch.

If the court permits the delay, the public won’t be able to read the communications until October 2018, about 22 months into her prospective first term as President. The four senior Clinton aides involved were Deputy Assistant Secretary of State Michael Fuchs, Ambassador-At-Large Melanne Verveer, Chief of Staff Cheryl Mills, and Deputy Chief of Staff Huma Abedin.

The State Department originally estimated that 6,000 emails and other documents were exchanged by the aides with the Clinton Foundation. But a series of “errors” the department told the court about Wednesday evening now mean the total has grown to “34,116 potentially responsive documents.”

During Clinton’s four years as America’s chief foreign diplomat, her aides communicated with officials at the Clinton Foundation and Teneo Holdings where Bill Clinton was formerly both a client and paid consultant, on the average of  700 times each month, according to the Justice Department filing.

David N. Bossie, president of Citizens United, which requested the documents under the Freedom of Information Act, called the delay “totally unacceptable” and charged that “the State Department is using taxpayer dollars to protect their candidate, Hillary Clinton.”

“The American people have a right to see these emails before the election,” Bossie told the Daily Caller News Foundation.

U.S. District Court Judge Rudolph Contreras, a President Obama-appointed judge, had previously ordered the State Department to release the requested documents by July 21. But Department of Justice lawyers informed Contreras Wednesday night that “the [State] department discovered errors in the manner in which the searches had been conducted in order to capture documents potentially responsive to plaintiff’s request.” The motion was filed by Justice Department attorney Joseph Borson on behalf of the State Department.

Borson also provided new details about how few resources the State Department has devoted to answering 106 separate Freedom of Information Act requests that are pending before it, many of them ordered by federal judges. Only 71 “part-time” retired foreign service officers are being used to review all of the pending FOIA requests.
The State Department also revealed that despite the large number of requests seeking information about Secretary Clinton’s ties to the Clinton Foundation over the last two years, the Obama administration has not requested additional funds for reviewers.

The amount budgeted has remained at about $16 million over the last several years, according to Eric Stein, co-director of the State Department Office of Information Programs and Services. The department claims with its current workforce, it would only be able to release 500 documents each month.

The FBI has a “public corruption” probe underway investigating whether Clinton used her position to benefit or recruit donors to the Clinton Foundation.

Bossie told TheDCNF that “the conflicts of interest that were made possible by the activities of Hillary Clinton’s State Department in tandem with the Clinton Foundation are of significant importance to the public and the law enforcement community.”

In addition to the Clinton Foundation, Citizens United requested communications between the four aides and Teneo Holdings, the firm created by Doug Band, Bill Clinton’s personal aide in the White House and thereafter as a former chief executive. The former President was a paid consultant to Teneo until 2012.

Huma Abedin simultaneously served as an employee for both Teneo and as deputy chief of staff to Clinton at the State Department in 2012, an issue which Congress has raised as a key conflict of interest.

Mills, Clinton’s chief of staff also worked at the Clinton Foundation and the Clinton Global Initiative while she served at the State Department.

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Tags: Bill Clinton, Citizens United, David N. Bossie, Hillary Clinton, Investigative Group

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There might not be a fire here, but there sure is a lot of smoke…

Snack Giant Mondelez Makes $23 Billion Takeover Bid for Hershey

June 30, 2016

Any deal for the chocolate company would be contingent on approval from the Hershey Trust

Above: Hershey’s famous chocolate kisses are made at the West Hershey plat in Hershey, Pa. Photo credit, Jeff Lautenberger for the Wall Street Journal.


Updated June 30, 2016 2:23 p.m. ET

Mondelez International Inc. has made a roughly $23 billion bid for chocolate giant Hershey Co. in what would be a blockbuster deal uniting two of the world’s best-known candy makers.

Mondelez, which makes Oreo cookies and Cadbury chocolate bars, recently sent a letter to Hershey proposing the tie-up at $107 a share, according to people familiar with the matter. The bid is 50% cash and 50% stock, they said.

Hershey shares surged 15% to $111.87 after The Wall Street Journal first reported on the bid. Mondelez gained 5% to $45.13.

Hershey’s Chocolate bars travel through the West Hershey plant in Hershey, Pa.

Photo credit, Jeff Lautenberger for the Wall Street Journal

Hershey promptly rejected the approach, saying its board determined the expression of interest provided no basis for further discussion with Mondelez.

The maker of eponymous Kisses and chocolate bars had a $21 billion market value Thursday ahead of the report. Mondelez had a $69 billion market value.


Any sort of deal would be contingent on the approval of the Hershey Trust, which holds 8.4% of the famous company’s common stock and 81% of its voting power. The Trust has beenopposed to selling the company in the past, though Mondelez is prepared to go to lengths to win it over. Hershey’s brief statement made no mention of the trust.

Mondelez is pledging to protect jobs following a merger of the companies, locate its global chocolate headquarters in Hershey, Pa., and rename the company Hershey, according to one of the people.
Any sort of deal would be contingent on the approval of the Hershey Trust, which holds 8.4% of the famous company’s common stock and 81% of its voting power. The Trust has been opposed to selling the company in the past, though Mondelez is prepared to go to lengths to win it over. Hershey’s brief statement made no mention of the trust.

Mondelez is pledging to protect jobs following a merger of the companies, locate its global chocolate headquarters in Hershey, Pa., and rename the company Hershey, according to one of the people.

A Mondelez-Hershey deal would create the world’s biggest candy company, bringing together the second- and fifth-largest industry players by revenue, according to research firm Euromonitor. Mondelez currently ranks as the world’s second-largest confectionery maker, after Mars Inc.
The bid would be expected to face little resistance from antitrust authorities, as Mondelez doesn’t have its own presence in the U.S. chocolate market. Hershey, meanwhile, has a limited non-U.S. presence.

Still, it’s far from clear the offer will lead to a deal.

For one thing, the bid could cause others who have long coveted the iconic company to come out of the woodwork. Nestlé SA is one possibility. The Swiss food giant already licenses the KitKat brand to Hershey in the U.S. Nestlé has the right to reclaim control of the chocolate-covered wafer treat if someone else buys Hershey—at no cost, which could diminish Hershey’s value to Mondelez by $3 billion, according to a person familiar with the matter. Nestlé could have greater antitrust issues in the U.S. if it were to try to buy Hershey, however.



Finally the Time for Hershey to Get Hitched? Hershey has long been Wall Street’s wish as a takeover play. Problem is the candy giant’s ownership structure as the company is controlled by the Hershey Trust, which hasn’t been enthused over the years with selling out. But it also has made dissatisfaction known the past decade in driving changes both in director membership and the executive suites. Shares have been trading sideways for more than 2 years, so perhaps selling out might seem a little a little sweeter now. Hershey spikes to record highs on the WSJ report. (; @kevinkingsbury)

Hershey Trust Looms Large Over Mondelez Bid. Mondelez or any other suitor could want Hershey all the want. But approaches go nowhere if the company’s controlling shareholder doesn’t oblige. A trust established by founder Milton Hershey more than a century ago controls about 77% of Hershey’s voting power, and it has been reluctant to sell in the past. In 2002, it scuttled a planned merger with Wrigley, and there are some legal restrictions on sales of Hershey stock. (; @lizrhoffman)

Should Mondelez Eat or Be Eaten? Mondelez making an approach to Hershey is likely to surprise some who eventually expected Mondelez to be more of a target than a buyer. William Ackman originally poured $5.5 billion into Mondelez, though he pared that recently and now holds a 5.6% stake. There’s been speculation Mondelez would fit well back with Kraft Heinz under the control of cost-cutting Brazilian billionaires 3G. Meanwhile, Trian and Nelson Peltz, who now has a Mondelez board seat, had been urging a combination with Pepsi snack arm Frito Lay. But swallowing Hershey, now sporting a $24 billion market cap with today’s 18% bounce, would make Mondelez a mouthful and possibly raise eyebrows among those looking for a sale. (; @DaveCBenoit)

Deal Would Join Two Top Five Confectionery Makers. WSJ reports that Mondelez made a takeover approach to Hershey this month. That deal would bring the world’s second and fifth largest confectionery companies under one roof, according to research firm Euromonitor. Mondelez ranks as the world’s second-largest confectionery maker, after Mars. Hershey is the world’s fifth largest. Nestle and Ferrero are the third and fourth largest confectionery companies in the world, respectively.(; @DanaMattioli)

Market Talk is a stream of real-time news and market analysis that is available on Dow Jones Newswires.

Then there’s the trust, which was established by the 122-year-old company’s founder, Milton Hershey, and runs a school in Hershey for underprivileged children. The trust’s mandate extends beyond simply maximizing shareholder value.

Mr. Hershey was considered as much a philanthropist as an entrepreneur. His Mennonite background led the son of German immigrants to a belief that businesses and their leaders are morally obligated to share their wealth with society. So as he built the chocolate company, he raised a town as well, erecting a bank, a department store, churches, golf courses, a zoo and a trolley system—public accouterments that were all completed by the early 1900s. Then he and his wife, Catherine, founded a school for orphan boys, now called the Milton Hershey School. The prime beneficiary of the Hershey School Trust is the Milton Hershey School, which was set up in 1909 to serve disadvantaged students and is now a lavishly appointed institution.

More than a decade ago, Wrigley, now a unit of the privately held candy giant Mars, tried to buy Hershey, but resistance from the trust scuttled the deal at the last minute.

There has been turnover recently on the trust’s board. The Pennsylvania Attorney General is investigating the board for alleged overpayment of directors and conflicts of interest. This year, several board members of the Trust have resigned or been fired, and it’s possible the shake-up could change the dynamic of the board vis a vis a possible sale. Indeed, a person familiar with the matter said the trust may be more open to a sale that it was before. The trust has said it is working with the attorney general’s office on the investigation.

It’s also unclear what reception any deal would get in the town of Hershey, where the company is based and where the streetlights along Chocolate and Cocoa Avenues are topped with giant Hershey kisses.

Hershey had sales of $1.8 billion in the first quarter, a 5.6% decline from the year-earlier period, in part because of adverse currency moves. In 2015, the candy maker had sales of $7.4 billion and earnings of $513 million. Today, the company has about 80 brands, and has recently moved to court more health-conscious consumers.

Mondelez, based in Deerfield, Ill., had sales of $29.6 billion in 2015, a 13.5% drop from the year-earlier period—also in part because of currency pressure. In the first quarter, the company had revenue of $6.5 billion, down nearly 17% from the year earlier amid pressure on its coffee business.

Mondelez has a complicated deal-making history. The company is the product of a 2012 separation from Kraft Foods Inc., which had been under pressure from Trian Fund Management LP and other activist investors. That came only two years after Kraft had acquired the U.K. chocolate company Cadbury PLC for $19 billion, and the chocolate assets went with Mondelez in the separation, while Kraft Foods Group Inc. kept cheeses, nuts and other well-known grocery-store brands.

In 2015, Kraft Foods merged with ketchup giant Heinz, owned by Brazilian private-equity giant 3G Capital Partners. William Ackman’s Pershing Square Capital Management LP disclosed a $5.5 billion stake in Mondelez last year, betting the company would become a target, rather than an acquirer, in a coming wave of consolidation in the snack industry. Mr. Ackman, an investor in 3G, has pushed Mondelez to either cut costs or consider selling to Kraft Heinz Co., as it’s now known.

Amid trouble in his own portfolio, which led that bet to become an outsize holding proportionally, Mr. Ackman recently trimmed the Mondelez stake to 5.6% including options.

The West Hershey plant in Hershey, Pa.
The West Hershey plant in Hershey, Pa. Photo credit, Jeff Lautenberger for the Wall Street Journal
Hershey Kisses move along the production line at the West Hershey plant in Hershey, Pa.
Photo credit, Jeff Lautenberger for the Wall Street Journal
Wrapped Hershey Kisses at the West Hershey plant in Hershey, Pa.
Photo credit, Jeff Lautenberger for the Wall Street Journal
Hershey’s Chocolate bars travel through the West Hershey plant in Hershey, Pa.
Photo credit, Jeff Lautenberger for the Wall Street Journal
Hershey’s Chocolate bars travel through the West Hershey plant in Hershey, Pa.
Photo credit, Jeff Lautenberger for the Wall Street Journal
Trian also has a big Mondelez holding and firm founder Nelson Peltz is on the snack company’s board.

Trian in 2013 unveiled stakes in PepsiCo Inc. and Mondelez and began pushing for a merger of the two to be followed by a spinout of Pepsi’s beverage business, which Mr. Peltz argued was dragging down its more profitable and faster-growing snack business.

Pepsi rejected the idea, and Trian dropped its call for a merger when Mr. Peltz joined Mondelez’s board in 2014. Trian owns about 3% of the snack maker’s stock, a stake worth more than $2 billion at recent prices.

—Annie Gasparro contributed to this article.

Write to Liz Hoffman at, Dana Mattioli at, Dana Cimilluca at and David Benoit at

New Philippine President Duterte: No Hard Line With China

June 30, 2016


In that meeting, President Duterte said a favorable ruling from the UN tribunal is a “moral victory” for the Philippines. But he also cautioned Foreign Affairs Secretary Perfecto Yasay Jr. against adopting a hardline stance against China over the matter. Bolando

MANILA, Philippines – President Duterte yesterday said he would not “taunt or flaunt” a favorable ruling on a highly sensitive legal challenge against Beijing over a South China Sea dispute.

But it was unclear whether Duterte intended to telegraph his soft diplomatic punches, with his comments made during his first Cabinet meeting yesterday that was broadcast live on national television before being cut abruptly during the discussions on China.

In that meeting, Duterte said a favorable ruling from the UN tribunal is a “moral victory” for the Philippines. But he also cautioned Foreign Affairs Secretary Perfecto Yasay Jr. against adopting a hardline stance against China over the matter.

Duterte said the UN tribunal ruling would be a “cliffhanger.”

Duterte said he is against issuing strong statements against China even if the ruling goes in favor of the Philippines.

Duterte urged the agencies concerned to study all options the Philippines would take should it get a favorable ruling.

“We will study progressively on how we would utilize it. Of course, it would be a moral victory but we can’t put the country in an awkward position,” he added.

As much as possible, Duterte said he does not want to instigate violence if there’s opportunity to talk peace.

“As for me, I do not want it (violence). God knows, I really do not want any fighting with anybody. If we can have peace by just talking, I will be really very happy,” he said.

Yasay said some foreign governments had been urging the Philippines to make stronger statements against China.

“I am averse to that idea and I told them in no unmistakable terms,” Yasay said.

Yasay did not name the governments that had been pushing for stronger statements, but described them as “those who are concerned about ensuring freedom of navigation.”

The United States has been one of the most vocal nations calling for China to ensure “freedom of navigation” in the South China Sea.

Yasay then started discussing what the Philippines should do if China “will dig in and put us to the test.”

He said a favorable ruling “has not kicked into play the mutual defense agreement.”

“But the bottom line question is what will happen if the decision is in our favor, meaning that the arbitral tribunal will make a declaration about the legality of the nine-dash-line, and will say that this is part of our economic shoal, including Scarborough Shoal. What if, in the face of these circumstances, China will dig in and put us to a test? They will dislodge fisherman again from fishing in Scarborough Shoal,” he said.

Yasay discussed the issue before the Cabinet members but then the live telecast was abruptly stopped.

Almost immediately afterwards the broadcast, which was distributed by PTV 4 and carried live on commercial networks as well as Internet portals for about 40 minutes, was also cut.

The Cabinet meeting took place a few hours after Duterte was sworn in as president.

Duterte took over from Benigno Aquino III who put the Philippines’ long-running dispute with China at the top of his foreign policy agenda, publicly drawing comparisons between Beijing’s expansionist efforts in the sea and Nazi Germany’s takeover of parts of Europe.

Aquino also launched the legal action with the UN-backed tribunal in The Hague, arguing that China’s claims to most of the strategically vital and resource-rich sea were in violation of international law.

China’s claims extend close to the Philippines’ coast, as well as those of other Southeast Asian countries.

The tribunal is set to issue a verdict on July 12.

Infuriated by Aquino’s strategy, China has vowed to ignore the tribunal’s ruling and repeatedly expressed hopes of better ties with the Philippines under Duterte.

China’s foreign ministry said Beijing will reject the ruling by the international tribunal.

Beijing has consistently rejected the tribunal’s right to hear the case and has taken no part in the proceedings, mounting a diplomatic and propaganda drive to try to undermine its authority.

“With regard to territorial issues and maritime delimitation disputes, China does not accept any means of third party dispute settlement or any solution imposed on China,” foreign ministry spokesman Hong Lei said in a statement on its website.

Hong said the tribunal was established on the basis of “illegal conduct and claims of the Philippines” and “has no jurisdiction over the relevant matters.”

At a regular briefing yesterday, Hong added that by bringing the case to the Arbitration Court, the Philippines “disregards China’s choice to resolving disputes in ways of its own choosing.”

The Philippines lodged the suit against China in early 2013, saying that after 17 years of negotiations it had exhausted all political and diplomatic avenues to settle the dispute.

Spanning more than three years, two hearings and nearly 4,000 pages of evidence, the arbitration case in The Hague is extremely complex.

The Hague-based Permanent Court of Arbitration (PCA) informed the parties that the Tribunal will issue its “Award” in the arbitration initiated by the Philippines against China under Annex VII to the United Nations Convention on the Law of the Sea (UNCLOS).

The PCA said the award will first be issued via e-mail to the parties.

Originally signed versions of the ruling will be received by the parties. Hard copies of the Award will also be sent to the embassies of the governments that were granted observer status during the hearings. There will be no in-person meeting or ceremony for the rendering of the court decision. – Aurea Calica, Pia Lee-Brago

Hillary Clinton’s email — FBI still investigating — Huma Abedin Says The Private Email System Impeded Secretary of State Clinton in Her Government Work

June 30, 2016


Hillary Clinton is seen in a December 8, 2011, file photo, as she was U.S. Secretary of State.

By Julian Hattem06/30/16 06:00 AM EDT

The FBI’s investigation of Hillary Clinton’s email is this election’s never-ending story.

Just weeks before the Democratic National Convention, the FBI has yet to issue a report on its findings.

It’s been nearly a year since inspectors general from the State Department and federal intelligence agencies referred the case of Clinton’s server to the Justice Department last July.

At the time, officials expressed concern that some of the materials in her private inbox were classified at some level, suggesting possible mishandling of sensitive information.

The issue has dogged Clinton’s presidential campaign ever since and proven to be reliable ammunition for Donald Trump and other Republicans.

Many watchers expected the investigation to be drawing to a close this spring, when a flurry of reports claimed senior aides had begun sitting down for interviews with FBI agents and federal prosecutors. Government lawyers appeared to be circling around Clinton, with an eye on interviewing the candidate herself.

“I hope that this is close to being wrapped up,” Clinton said on CBS’s “Face the Nation” in May.

But nearly two months later, there have been no reports that an interview with the former top diplomat has taken place.

“I, like other people, am a bit surprised that it hasn’t come to a resolution yet,” said Douglas Cox, a professor at the City of New York School of Law.

He added that within Clinton’s campaign, “I would think internally that there would have to be a little bit of concern.”

Spokespeople for Clinton’s campaign did not to respond to an inquiry from The Hill on Wednesday.

FBI officials have routinely refused to discuss the case, while FBI Director James Comey has repeatedly insisted that his bureau conducts its investigations without regard to the political calendar.

“We want to do it well, and we want to do it promptly,” he said last month. “As between the two things, we will always choose ‘well.’”

Clinton survived this week’s release of a Republican-led congressional investigation into Benghazi unscathed, as the report did little to change the narrative surrounding the attack on the U.S. diplomatic compound in Libya, which left four people dead.

Rep. Trey Gowdy (R-S.C.), the panel’s chairman, emphasized that the report was a look at the administration as a whole and not Clinton.

With Benghazi now largely in Clinton’s rearview mirror, the question of whether the FBI could ever indict her over her use of a private email server while at State may be the only potential deathblow left for her campaign.

In a federal court filing earlier this month, Justice Department lawyers warned against releasing the terms of the immunity agreements reached with IT aide Bryan Pagliano, which they said “could prematurely reveal the scope and focus of the pending investigation.”

Federal prosecutors have a policy to avoid having their investigations affect the outcome of an election, and officials are clearly aware that their probe is happening against a backdrop of intense political scrutiny.

Despite Comey’s comments, many watchers have speculated that the Justice Department has an unofficial deadline of the party conventions next month to finish its probe one way or the other.

Attorney General Loretta Lynch reportedly met privately with Clinton’s husband, former President Bill Clinton, in Phoenix on Monday evening. But Lynch insisted that the discussion was purely social and did not touch on Benghazi or the email investigation.

“There was no discussion of Benghazi, no discussion of State Department emails,” Lynch said at a news conference.

Multiple legal experts are skeptical that the presumptive Democratic nominee will be indicted, given the high hurdle of proving that she willfully set up the system to take classified documents out of secure locations.

But the possibility has been a fascination among Republicans who want to see her barred from the White House. And some staunch supporters of Sen. Bernie Sanders (I-Vt.) have held out hope that a federal indictment will catapult him to the Democratic nomination.

Critics are sure to characterize a decision not to press charges as a political move to protect Clinton.

“I think that [federal prosecutors] would want to get all their ducks in a row,” said Cox. “They would want to make sure that their decision was as insulated as it could be from any charges that a decision not to bring charges would be politically motivated or be driven by political considerations.”

If Clinton were to be indicted, she would not automatically be booted from the presidential race, though the pressure for her to withdraw would certainly be immense.

It’s anybody’s guess what would happen next.

If an indictment were handed down before the convention and she stepped aside, Clinton could push delegates to support Sanders or another prominent Democrat, such as Vice President Biden.

If it happened afterwards, the Democratic Party would likely be responsible for selecting a replacement.

But either scenario would dramatically upset the presidential race, which is why some predict that the Justice Department would stay mum until after the election if it wants to press ahead with charges.

“If the FBI concludes that Clinton did not engage in any criminal conduct … I anticipate that we will know about those findings before the election, to remove the cloud,” said Steven Levin, a former federal prosecutor.

“If the FBI were to identify criminal conduct, such a disclosure would affect the election, something that the Department of Justice has a policy against doing,” he added. “So I think we should expect to see something of that nature post-election.”

Other former prosecutors and defense lawyers questioned that hypothesis, claiming that a decision to wait to indict a potential president-elect would be a far bolder move than acting ahead of time.

But in any case, it’s clear that without answers, many will continue to assume the worst.

While in high school, student body candidates for President asked Ashleigh Axios to design their posters and campaign materials. Several years later, the White House called on… Read More

“Whenever there is an open criminal charge or an open criminal investigation, it puts a shadow over people,” said David Deitch, a former federal prosecutor in Washington. “And of course it’s even worse if it’s a political figure who’s up for election.”

“We have this wonderful presumption of innocence in this country, but often that’s something that people say in fancy rhetorical language, but in their gut they want to believe that people who are under investigation must be guilty,” he added.

“And it’s an unfortunate thing, because some are, of course. But a lot are not.”

Britain’s Jeremy Corbyn under fire over Israel comments — Allegedly compared the state of Israel to “self-styled Islamic states.”

June 30, 2016


© AFP | The leader of Britain’s opposition Labour Party Jeremy Corbyn leaves his home in London on June 30, 2016

LONDON (AFP) – Embattled British opposition leader Jeremy Corbyn came under fire Thursday for allegedly comparing the state of Israel to “self-styled Islamic states.”

Britain’s chief rabbi condemned the comments, made at the launch of a report on anti-Semitism in the party, as “offensive” and said they were likely to cause more concern about Labour’s stance.

Veteran socialist Corbyn is clinging to office despite a huge revolt by Labour lawmakers who say he did not campaign hard enough to keep Britain in the EU in last week’s vote for Brexit.

“Our Jewish friends are no more responsible for the actions of Israel or the Netanyahu government than our Muslim friends are for those of various self-styled Islamic states or organisations,” said Corbyn.

Amid a barrage of criticism, Corbyn denied comparing Israel with the so-called Islamic State (IS) group.

But Chief Rabbi Ephraim Mirvis said: “The comments by the leader of the Labour party at the launch, however they were intended, are themselves offensive, and rather than rebuilding trust among the Jewish community, are likely to cause even greater concern.”

Labour commissioned the report in response to multiple allegations of anti-Semitism among its members.

Jeremy Corbyn

In the most high-profile case, former London mayor Ken Livingstone was suspended from the party after saying that Adolf Hitler “was supporting Zionism” before he “went mad and ended up killing six million Jews”.

Livingstone’s comments were in defence of a Labour MP who was suspended for sharing posts on social media two years ago suggesting that the solution to the Palestinian conflict was to move Israel to the United States.

While criticising Corbyn’s comments in a statement posted on his Twitter account, the chief rabbi welcomed the report itself.

Its recommendations included that Labour members should “resist the use of Hitler, Nazi and Holocaust metaphors” and avoid terms such as “Paki” and “Zio”.

“There is much in the (report) that can herald an important step forward — in particular its acknowledgement that some within the Labour Party have peddled the prejudice of anti-Semitism, using language, innuendo and accusations that are deeply offensive and which should be universally condemned,” Mirvis said.

Palestinian Killed in Coastal City After Stabbing 2 Israelis — 13 Year Old Israeli Girl Stabbed to Death in Her Sleep Earlier

June 30, 2016



JERUSALEM — Jun 30, 2016, 1:23 PM ET

Israeli police says a Palestinian attacker has been shot and killed after he stabbed two Israelis in the coastal city of Netanya.

Police spokeswoman says an armed civilian shot the attacker on Thursday after the stabbing at Netanya’s outdoor market. Two Israelis, a woman and a man, were wounded in the attack.

The incident occurred several hours after a Palestinian assailant fatally stabbed a 13-year-old Israeli in a West Bank settlement. That attacker was also shot and killed.


Palestinian Man Stabs and Kills 13-year-old Israeli Girl Asleep in Her West Bank Home

Scene of terror attack that killed 13-year-old Hillel Yaffe Ariel in her Kiryat Arba home on June 30, 2016.Zaka Rescue Services
A civil guard responding to the Kiryat Arba attack shoots and kills the assailant while another Israeli is also wounded in the incident.


Chaim Levinson, Gili Cohen and Ido Efrati 30.06.2016 11:18 Updated: 3:34 PM


A Palestinian man stabbed and killed an Israeli teenage girl as she slept inside her home on Thursday in the West Bank settlement of Kiryat Arba. A civil security guard responding to the attack shot and killed the assailant at the scene.

The terrorist, identified as Mohammad Tra’ayra, 19, from the nearby Palestinian village of Bani Na’im, jumped the settlement’s perimeter fence and then broke into the isolated home, stabbing 13-year-old Hallel Yaffe Ariel in her sleep.


13-year-old Hallel Yaffe Ariel With her family.Courtesy

The settlement’s security guards rushed to the scene, alerted by the electronic system triggered when Tra’ayra jumped the fence, and shot the assailant dead. An Israeli guard, 31, was also wounded in the attack, apparently by Tra’ayra who stabbed him before being shot. Security forces were also investigating the possibility he was shot and wounded by a separate force that entered the home in response to the attack.


Ariel was critically wounded in the upper torso and rushed to hospital where she died of her injuries. The guard was listed in serious condition.


Israeli soldiers set up a checkpoint on the road near the Jewish settlement of Kiryat Arba where a 13-year-old Israeli girl was fatally stabbed in her bedroom on June 30, 2016.Hazem Bader, AFP

Ariel was to be buried in nearby Hebron at 6 P.M. local time.

After the attack the Israel Defense Forces locked down the perpetrator’s village, launched searches and questioned family members. Prime Minister Benjamin Netanyahu said Israel would also revoke the work permits of the terrorist’s relatives.


A victim of the attack in the Kiryat Arba settlement arrives at the hospital, June 30, 2016.Magen David Adom


In the days before the attack, Tra’ayra has been praising terrorists in Facebook posts. Tra’ayra specifically praised a Palestinian woman who rammed into a car in Kiryat Arba a week ago, causing no casualties though she was shot and killed at the scene. In a Facebook post, he called her a martyr whose “name has been exalted, you’re free and Jerusalem is proud of you.”

In a separate post before the attack on Thursday, Tra’ayra wrote that “death is a right and I demand the right to die.”

Relatives and friends said his Facebook posts had changed since March when his cousin was killed after carrying out a car ramming attack near Kiryat Arba, in which an IDF soldier was lightly wounded.
Soldiers enforcing a lockdown on the village have arrested Tra’ayra’s father.

Earlier this month, four Israelis were killed in shooting attack at Tel Aviv’s Sarona Market, an upscale food and retail center located across from a military compound and near government buildings.

Police said the two Palestinian attackers had entered Israel illegally. They were identified as two cousins from the West Bank town of Yatta near Hebron.

Tensions in Jerusalem rose this week as Palestinians threw rocks from the Temple Mount at worshippers at the Western Wall, injuring a woman of 73. It was the first such case in several years, and police saw the incident as a worrisome development.


Chaim Levinson
Haaretz Correspondent
read more:

UK Conservative MPs in Uproar as Boris Johnson ‘Rips Party Apart’ and Quits PM Race

June 30, 2016


The Telegraph
June 30, 2016

Vote Leave campaign leader, Boris Johnson, waves as he finishes delivering his speech in London, Britain June 30, 2016.

The battle for the Conservative leadership was dramatically transformed today after Boris Johnson ruled himself out of the race.

It followed the shock declaration from Michael Gove that he would throw his hat in the ring because he didn’t believe his close friend was up to the job.

He said: “I have come, reluctantly, to the conclusion that Boris cannot provide the leadership or build the team for the task ahead. I have, therefore, decided to put my name forward for the leadership.”

Conservative MPs who turned up for what they thought would be Boris Johnson’s decision to stand for the Tory leadership at the St Ermine hotel near Scotland Yard are absolutely furious.

The MPs who spoke to the Telegraph said they had no idea the Mr Johnson had planned to withdraw from the Tory leadership.

One MP who attended Mr Johnson’s launch said: “Any politician who trusts Michael Gove needs their head examined.

The chaos sent shock waves through the campaign as Home Secretary Theresa May announced her bid to succeed David Cameron this morning.

At midday Graham Brady, chairman of the 1922 Committee, announced that Theresa May, Michael Gove, Stephen Crabb, Liam Fox and Andrea Leadsom will fight it out to succeed David Cameron.

Mr Brady announced that the first set of voting will take place on Tuesday as the party’s MPs winnow down the field of five candidates to two.

With the least successful contender eliminated at each round, further ballots will be held on Thursday, then successive Tuesdays and Thursdays until two front-runners emerge to be put forward to the party membership in the country for a final decision.

Mr Brady said the committee wants a winner to be chosen by September 9.

A handful of Tory MPs reacted with disbelief as news that Mr Johnson would not be seeking the leadership filtered through as they waited for Mr Brady’s announcement.

 ‘That leak of Sarah Vine’s email was clearly not an accident’

Sir Edward Garnier, one of a number of Tory MPs backing Boris Johnson, says he is “very angry”.

He has told BBC Newsnight: “I’m confused, is the short answer. By and large I pick a candidate and stick to it. I feel confused, let down and concerned.

“As I understand it, Michael Gove wanted to be head of the (EU) negotiating team or a senior cabinet job.

“Boris told him he was not picking his cabinet now. That leak of Sarah Vine’s email was clearly not an accident.”

“It just reminds me of student union politics. I can’t be dealing with this and I think it’s shameful. ”


Amber Rudd backs Theresa May 

To build a One Nation society and deal with challenges ahead, we need a strong, experienced leader. I’m backing@TheresaMay2016 for next PM.


Who was backing Boris? 

For the record these are the Tory MPs who turned up for Boris Johnson’s leadership campaign launch – only to see him pull out:

Nigel Adams, James Cleverly, Crispin Blunt, Kwasi Kwateng, Sir Edward Garnier, Nadhim Zahawi, Zac Goldsmith, Nadine Dorries, Bill Wiggin, Bob Blackman, David Davis, Andrew Murrison, Jake Berry, James Duddridge, Jonathan Djanogly, Sheryll Murray, Gareth Johnson, Steve Baker, Jesse Norman, Rob Buckland, Chris Pincher, Andrew Mitchell, and Mark Field.

Boris Johnson MP 

‘Most challenging prime ministership since Suez Crisis’

Jeremy Hunt, the Health Secretary, has been on Sky News discussing why he is backing Theresa May to be the next Prime Minister.

“Now that we’ve made that decision, everyone is thinking about the practical consequences and I think this could be the most challenging prime ministership since the Suez Crisis, possibly since the Second World War.

“I think the person who has the experience, the depth and the values to take us forward is Theresa May who I think will be absolutely outstanding.”

Jeremy Hunt 

Boris has ‘ripped the Tory Party apart’

Lord Hesletine, the former Deputy Prime Minster has accused Boris Johnson of having “ripped the Tory Party apart” and creating “the greatest constitutional crisis in peacetime in my life”.

The Conservative grandee who stood against Margaret Thatcher in the 1990 Conservative Party leadership contest and was seen as being largely responsible for her subsequent resignation went onto add that; “he’s like a General who marches his army to the sound of guns and the moment he sees the battleground he abandons it.

“I have never seen anything like it and he must be answerable for the consequences”.

He made the comments on BBC Five Live.

Report from James Somper

Lord Michael Heseltine at home in London
Lord Michael Heseltine at home in London CREDIT: GEOFF PUGH


‘Any politician who trusts Gove needs their head examined’

Conservative MPs who turned up for what they thought would be Boris Johnson’s decision to stand for the Tory leadership at the St Ermine hotel near Scotland Yard are absolutely furious.

The MPs who spoke to the Telegraph said they had no idea the Mr Johnson had planned to withdraw from the Tory leadership.

One MP who attended Mr Johnson’s launch said: “Any politician who trusts Michael Gove needs their head examined.

Michael Gove and Boris Johnson
Michael Gove and Boris Johnson CREDIT: STEFAN ROUSSEAU/PA WIRE

“I suspect people were getting more and more alarmed about the idea of watering down pragmatism that was being proposed.”

Another MP James Duddridge, a Foreign Office minister, who turned up for Mr Johnson’s statement, told The Telegraph: “I am devastated that Boris is not going forward.

“I think he has a vast amount to offer the Conservative party and would very much hope that he is part of the next step with the Conservative in a very senior role in Cabinet.”

David Cameron and Micheal Gove
David Cameron and Micheal Gove CREDIT:  PAUL GROVER

One source close to Boris pinned the blame firmly on Michael Gove, suggesting that the leaked email was deliberated. The source said: “Michael Gove is a tremendous s**t.

“Boris took the view that he did not want a nuclear war in the Conservative party between him and Michael Gove. It would split the party.”

Meanwhile Liam Fox, one of the outsiders for the leadership, said he would be writing to Graham Brady, the 1922 chairman, asking him to extend the leadership race.

Hon Liam Fox MP

He said he was “gobsmacked” by Mr Johnson’s decision,” adding: “It throws the contest into turmoil. “The leadership race is now wide open.”

He added that Mr Johnson’s withdrawal is “one of the most extraordinary thing that has happened in a most extraordinary week.”

Report from Christopher Hope 


Germany reacts to Theresa May leadership bid

Our colleagues in Germany are seeing parallels between Theresa May and the German chancellor


‘Gove can lead us out of Europe’

Andrea Jenkyns, the Tory MP, has said why she is backing Michael Gove.

Michael Gove took the landmark decision to support a vote to Leave the European Union and in doing so very probably changed the course of British history for the better.

Michael is a formidable campaigner and a wonderful Secretary of State, who has led incredible reforms in Justice and Education.

He is committed to making life better for everyone in Britain through reforms that make opportunities open for everyone and I know this will be at the heart of the negotiations he will lead to take us out of Europe and into the world.

You only have to listen to his past statements on leadership to understand that this is not a decision he will have taken because of personal ambition or political manoeuvring, but because he believes it is what is best for the country.

I feel this will make his position all the stronger, especially in negotiations in Brussels.

We are lucky as a party that we have an exceptionally strong field of candidates for leadership.

I look forward to the contest ahead and a robust debate about the future of our Party and the country.


‘Es tu Brute’

Boris Johnson’s father has likened Michael Gove to the assassins who murdered Julius Caesar.

Asked about Mr Gove’s brutal attack which knocked his son out of the Tory leadership race, Stanley Johnson quoted Caesar’s supposed last words after he was stabbed by his former friend Brutus.

“‘Es tu Brute’ is my comment on that,” he told BBC Radio 4’s The World at One. “I don’t think he is called Brutus, but you never know.”

Stanley Johnson

Mr Johnson senior said Mr Gove’s devastating denunciation of his ability to lead the country had taken his son by surprise.

“This has obviously been a very, very stressful time. I think he was probably very surprised by Michael Gove’s sudden move as indeed many people are,” he said.

Despite having backed the Remain campaign in the EU referendum, he praised his son’s brilliant “career move” in putting himself at the head of Leave campaign.

Michael Gove

“Boris’s career move I think was in a sense an absolutely brilliant move in one way because it did put on the table crucial issues for the British electorate,” he said.

“It put on the table the immigration issue, the direction of travel issue, the sovereignty issue – all those things.”

Report from PA


Political journalist reacts to Boris announcement


‘I’m surprised at what he has done’

Andrew Mitchell has told ITV News he is “surprised” by Michael Gove’s decision to enter the Tory leadership race.

He said: “I’m surprised at what he has done.

“He’s an incredibly talent guy and a Brexiteer. But he has been telling all of us for the last five years that he doesn’t want to do it and he doesn’t think he’s got it in him to do it so his conversion on the road to Damascus has come pretty late.”

Andrew Mitchell MP 
Andrew Mitchell MP 


Calls for leadership election to be extended

Liam Fox: “The leadership race is now wide open.” Calls in 1922 chairman Graham Brady to delay result of election


Boris’ father says his son was ‘right person to be a candidate’

Boris’ father Stanley Johnson is on World at One, calling from his holiday “thousands of miles away”.

He says he thinks his son was “probably very surprised by Michael Gove’s sudden move as indeed many people are.

“From my point of view I think I was 100 per cent persuaded… post-referendum that Boris was the right person to be a candidate in the leadership election and I absolutely would have backed him as a potential Prime Minister.”


Fox: I was ‘absolutely gobsmacked’ by Boris’ decision

Dr Liam Fox admits he was surprised to learn that Michael Gove was standing against him for the Tory leadership but was “absolutely gobsmacked” to hear that Boris Johnson was pulling out.


China Hears Trump: May tolerate weaker yuan — But no intention to promote trade competitiveness through depreciation of the yuan

June 30, 2016
China says it has no intention to promote trade competitiveness through depreciation of the yuan

Thu Jun 30, 2016 7:18am EDT

China’s central bank is willing to let the yuan fall to 6.8 per dollar in 2016 to support the economy, which would mean the currency matching last year’s record decline of 4.5 percent, policy sources said.

The yuan is already trading at its lowest level in more than five years, so the central bank will aim to ensure a gradual decline for fear of triggering capital outflows and criticism from trading partners such as the United States, said government economists and advisers involved in regular policy discussions.

Presumptive U.S. Republican Presidential nominee Donald Trump already has China in his sights, saying on Wednesday he would label China a currency manipulator if elected in November.

Investors keep a close watch when the yuan is in decline. A surprise devaluation of the yuan last August sent global markets into a spin on worries the world’s second-biggest economy was in worst shape than Beijing had let on, prompting massive capital outflows as investors sought safe havens overseas.

“The central bank is willing to see yuan depreciation, as long as depreciation expectations are under control,” said a government economist, who requested anonymity due to the sensitivity of the matter.

“The Brexit vote was a big shock. The market volatility may last for some time.”

Other emerging market currencies have also fallen in the wake of Britain’s vote to leave the European Union, but the yuan is the weakest major Asian currency against the dollar this year.

The currency CNY=CFXS fell as low as 6.6549 per dollar following the Reuters report, near a 5-1/2 year intraday low on Monday. State-owned banks were suspected of intervening to sell dollars, currency traders said.

At the low, the yuan had fallen about 2.4 percent this year.

After the report, the People’s Bank of China, the central bank, said China had no intention to promote trade competitiveness through depreciation of the yuan, a comment that has also been made repeatedly by Chinese Premier Li Keqiang.

Without citing any media by name, it said on its website that some media continuously published “inaccurate information” on the yuan’s exchange rate. These reports interrupt the normal operation of the market and help “speculative forces” short – or bet against – the yuan, it said.


Currency dealers said the dollar’s strength and weakness in China’s economic growth, which hit a 25-year low in 2015, justified a decline in the yuan.

But a significant decline is likely to leave investors and trading partners concerned in the wake of August’s devaluation and another sharp decline in the currency over a matter of days in January, which analysts said was engineered by the central bank.

In the past decade, China has also faced criticism from Western lawmakers who say it held back the appreciation of the yuan.

Earlier this month, U.S. Treasury Secretary Jack Lew said it would be “problematic” if the yuan only went down over time and Trump has said he would take a hard line on trade disputes with China if elected.

Labeling China a currency manipulator “should’ve been done a long time ago,” he said on Wednesday.

China’s Foreign Ministry said on Wednesday the exchange rate was not the reason for unbalanced trade with the United States, which runs a goods and services trade deficit with China.

However, the sources acknowledged the diplomatic risks of a steep fall in the yuan.

“The pressure from the United States could rise if China allows sharp depreciation,” said a government source.

China has the biggest global exports market share of any country since the United States in 1968, so the yuan’s exchange rate acts as a bellwether for other exporting countries.

While a South Korean finance ministry official said “we are concerned” about the yuan’s slide, a person familiar with Japan’s currency diplomacy said the yuan’s decline didn’t seem out of line considering the dollar’s strength.

“I don’t think Japan has much to complain about,” this official said.

The officials of these major exporters declined to be identified given the sensitivity of the issue.


“We should gradually let market forces play a bigger role. The market believes that the yuan is under pressure, so our foreign exchange policy should follow this trend,” said a researcher with the Commerce Ministry.

“China needs to safeguard its economic growth and trade but also make sure we don’t create competitive devaluation.”

Julian Evans-Pritchard, China economist at Capital Economics, said in a note last week that a sharp fall “could set off a renewed bout of fears over renminbi depreciation and a pick-up in capital outflows.” The yuan is also known as the renminbi.

But he said the central bank would want to avoid “panic” so was likely to intervene to stabilize the currency if need be.

The PBOC has been trying to reform the way it manages the yuan by making it more market-driven and transparent.

It sets the yuan’s daily mid-point versus the dollar based on the previous day’s closing price, taking into account changes in major currencies, analysts and officials said.

This year, the PBOC has been guiding the yuan lower by pegging it to the dollar when the U.S. currency weakens and pegging it to a basket of currencies when the dollar rises, they said.

The currency regime gives the central bank more room to allow two-way swings in the yuan versus the dollar, deterring one-way bets on the currency.

The CFETS RMB Index, a trade-weighted exchange rate index that was unveiled by the central bank in December, fell 5.6 pct between the end of 2015 and June 24 of this year, although the central bank has pledged to keep the yuan basically stable against the basket.

(Reporting by Kevin Yao and monitoring desk in BEIJING; Nate Taplin and Lu Jianxin in SHANGHAI; Leika Kihara in TOKYO and Christine Kim in SEOUL; Editing by Neil Fullick.)