By Eliana Raszewski

BUENOS AIRES (Reuters) -Argentina’s economy ministry on Sunday announced a series of benefits for workers and pensioners intended to soften the blow of a severe economic crisis which has seen inflation spiral and the government devalue the country’s currency.

The government will give nearly 7.5 million pensioners a package of 37,000 pesos (around $105 at the current official exchange rate) over the next three months, Economy Minister Sergio Massa said in part of a series of messages on his Instagram account.

Massa, who is also the ruling party’s presidential candidate for the Oct. 22 elections, will face ultra-libertarian outsider Javier Milei whose support from disillusioned voters propelled him to victory in a primary vote this month.

Massa said workers will receive 400 billion pesos in loans, while self-employed workers will be offered six months of tax relief and those on food benefits will receive additional stipends.

He also announced a suspension of export taxes for some industrialized regional goods such as wine, rice and tobacco, as well as funding for fertilizers to help farmers whose last harvest suffered from a historic drought.

The government, helped by bank financing, will also offer $770 million in funding to help boost export sales and companies have been ordered to provide bonuses to some 5.5 million workers who earn below 400,000 pesos per month, Massa said, equivalent to $1,140 at the official rate but roughly $500 at the informal parallel exchange rate.

“The goal is that every economic sector receives some state support,” Massa said.

The move comes two weeks after the government devalued the peso by nearly 20%, accelerating annual inflation which already was hovering around 115% as Argentines saw their purchasing power dwindle further.

Massa said the devaluation resulted from a request from the International Monetary Fund as it renegotiates a $44 billion loan program with the South American government.

Polls for the October elections have narrowed giving an equal share of the vote to Massa, opposition candidate and former security minister Patricia Bullrich and Milei, who has pledged to dollarize the economy and shut the central bank.

Experts believe the vote could pass to a run-off in November. Meanwhile, tensions have risen and a series of lootings have taken place across the country.

($1 = 350 Argentine pesos)

(Reporting by Eliana Raszewsi; Writing by Lizbeth Diaz and Sarah Morland; editing by Diane Craft and Chris Reese)

By Winni Zhou and Tom Westbrook

SHANGHAI/SINGAPORE (Reuters) -China’s banks will cut deposit rates soon as part of efforts to make mortgages more affordable and revive property demand, analysts reading China’s cryptic policy messages reckon.

Beijing’s decision to leave a key mortgage benchmark lending rate unchanged even as it cut short-term policy rates this week seemed at odds with a pledge made just weeks ago to support the property sector via monetary policy.

But China did not opt for a broad rate cut that would further depress banks’ narrow net interest margins, instead deferring to banks to cut their deposit rates and give themselves room to cheapen mortgages, analysts said.

Like in previous instances of monetary easing, major state-owned banks might take the lead in cutting deposit rates, setting off a chain of such cuts, two banking sources told Reuters. Lowering deposit rates will give banks much needed wiggle room to cut mortgage rates.

Bankers also said households are making a beeline for bank-issued certificates of deposit (CDs) to lock in current yields.

“Further reductions to the deposit rates are ‘arrows on the string,'” said Wang Yifeng, banking analyst at Everbright Securities.

“At the current stage, the biggest uncertainty lies in the contradiction among the narrowing net interest margins (NIM) at banks, supporting the real economy and maintaining financial stability.”

Such concern among policymakers is rare in the communist state that has in the past often pressed banks into national service, demanding commercial banks sacrifice profits to serve the economy.

In its second-quarter monetary policy statement published this month, the PBOC said “commercial banks need to maintain a reasonable level of profit and net interest margin, in order to keep prudent operations and prevent financial risks.”

It speaks to the state of the economy, struggling to grow after three years of strict COVID restrictions and regulatory crackdowns, and the systemic risks to bank balance sheets from the debt burdens of property firms and local governments.

Chinese commercial banks’ net interest margins, a gauge of profitability, was at a record low of 1.74% at the end of June, below a regulatory red line of 1.8%.

China cut its one-year loan prime rate (LPR) by 10 basis point this week but left the five-year tenor, which influences the pricing of mortgages, unchanged at 4.2%. The People’s Bank of China (PBOC) has reduced rates on its lending to banks.

RATE CUTS WILL CASCADE

Outstanding personal mortgages in the country amounted to 38.6 trillion yuan ($5.30 trillion) in June, according to PBOC data. Rates for existing mortgage loans are revised every year, based on the 5-year LPR in December.

Zhu Qibing, chief macro analyst at BOC International China, estimates the weighted average rate of new mortgages is 4.11%, while the average rate on all existing mortgages is at least 100 basis points higher.

The five-year LPR has been trending down, it was 4.3% in December and 4.45% in July 2022. The LPR is one among rates set by China’s banks, and counts among the de facto policy rates as the PBOC does not set bank rates directly.

If banks cut their interest rates for existing mortgage by 30 basis points, their annual interest earnings will shrink by more than 70 billion yuan, or about 3% of the 2.3 trillion yuan net profit of the banking industry in 2022, Zhu said.

Lu Ting, chief China economist at Nomura, wants markets to pay close attention to whether Beijing nudges banks to lower deposit rates in the coming weeks.

With the need for protecting their net interest margin, banks will only lower their new loans’ lending rates when they are able to reduce their deposit rates,” Lu said.

Xing Zhaopeng, a senior China strategist at ANZ, points to how deposit rates are pegged to the one-year LPR and estimates banks will cut those by 20 basis points. He also expects a tweak to rules so that existing mortgage rates can be reset lower.

“The plan to reduce existing mortgage rates is in the making,” Xing said.

($1 = 7.2890 Chinese yuan)

(Reporting by Winni Zhou in Shanghai and Tom Westbrook in Singapore; Additional reporting by Samuel Shen in Shanggai; Editing by Vidya Ranganathan and Jacqueline Wong)

By Joseph White, David Shepardson and Shivansh Tiwary

(Reuters) -The United Auto Workers (UAW) union on Friday said members voted overwhelmingly in favor of authorizing a strike at the Detroit Three automakers if agreement is not reached before the current four-year contract expires on Sept. 14.

The authorization was approved by 97% of voting members at General Motors, Ford Motor and Stellantis, said UAW President Shawn Fain, who leads the union that represents about 150,000 workers.

Fain reiterated that the union did not plan to extend the deadline to get a new labor contract. “The deadline is Sept. 14. We have a lot of options that we are looking at but extension on the contract is not one of them.”

Separately, President Joe Biden, who met with Fain last month, told reporters in Nevada he is concerned about a potential UAW strike.

“I think that there should be a circumstance where jobs that are being displaced are replaced with new jobs” for UAW members “and the salaries should be commensurate.”

Some senators want national UAW agreements to cover jobs at battery joint ventures that currently pay less.

Fain said workers had made numerous concessions over the last two decades including giving up wage hikes, defined benefit pensions and post-retirement health care benefits.

“We’re fed up,” Fain said, listing a series of demands. “We’ve sat back for decades while these companies continue to just take and take and take from us.”

Fain has outlined an ambitious set of demands, including wage hikes of 46%, an end to the tiered wage system that pays new hires less than veterans, reinstating cost-of-living adjustments and restoring defined-benefit pension plans for new hires that the automakers ended in 2007. At Stellantis, just 30% of hourly U.S. workers are eligible for defined benefit pensions.

Fain said he expected the Detroit Three to come to the bargaining table next week with counter proposals to the UAW demands. He said talks were “still going slow” after opening in July. Analysts estimate a more than 50% chance of a strike.

It was not clear how long it would take a strike to significantly reduce Detroit Three inventories. Through July, Stellantis U.S. Ram, Jeep, Chrysler and Dodge each had more than 100 days’ inventory but many specific popular models have less.

The vote does not guarantee a strike will be called, only that the union has the right to call a strike if there’s no agreement by Sept. 14.

GM, Ford and Stellantis have said they want to reach a deal that is fair to workers but also gives the companies flexibility, as the industry shifts to electric models that have fewer parts and require less labor.

Ford shares were up 1%, while General Motors were unchanged in afternoon trade.

(Reporting by Shivansh Tiwary in Bengaluru, Joe White in Detroit and David Shepardson in Washington, Additional reporting by Nathan Gomes and Steve Holland in Nevada; Editing by Arun Koyyur and Emelia Sithole-Matarise and David Gregorio)

By David Shepardson

BEIJING (Reuters) -U.S. Commerce Secretary Gina Raimondo arrived in Beijing late on Sunday for a four-day visit aimed at boosting business ties between the world’s two largest economies while declaring American national security trade measures off-limits for debate.

“If you wanted to put a tagline to the trip and the mission, it’s protect what we must and promote where we can,” Raimondo told reporters on Friday before departing for China. “I’m not going to pull my punches next week when I am there but I intend to be practical.”

Relations are tense as the United States works with allies to block China’s access to advanced semiconductors, while Beijing is restricting shipments from prominent chip company Micron Technology and raided and fined U.S. firm Mintz Group $1.5 million for doing “unapproved statistical work.”

Raimondo, who was greeted upon arrival by Chinese Commerce Ministry official Lin Feng, will hold bilateral meetings with Chinese officials on Monday and Tuesday in Beijing before she heads to Shanghai. She will be joined by U.S. Ambassador to China Nicholas Burns.

Raimondo spoke to President Joe Biden on Thursday about her visit and his message was enhanced dialogue with China can ease tensions.

“We want to have a stable commercial relationship, and core to that is regular communication,” Raimondo said. “We need to communicate to avoid conflict.”

Republicans in Congress have criticized the possibility Raimondo will establish a working group with China during the visit to discuss U.S. semiconductor export controls.

Raimondo did not confirm plans for any working group but emphasized she would tell Chinese officials “when it comes to national security we don’t negotiate. We don’t give concessions. We don’t compromise.”

The United States is using government incentives and tax policy to wean American businesses off Chinese supply chains and ramp up U.S. semiconductor production.

“Just because we’re investing in America does not mean at all that we want to decouple from China’s economy,” Raimondo said.

China’s ambassador to the United States, Xie Feng, who met Raimondo last week, said China seeks “mutual respect, peaceful coexistence and win-win cooperation”.

The White House this month moved to start prohibiting some U.S. investment in sensitive technologies in China and plans to soon finalize sweeping export restrictions on advanced semiconductors adopted in October.

‘MANY CHALLENGES’

Raimondo, the fourth high-level U.S. official to visit China recently, is the first commerce secretary to make the trip in seven years.

She spoke to more than 100 senior business leaders before the visit and vowed to raise their concerns.

“There are so many challenges to doing business in China and exporting to China and China’s unfair trading practices have hurt American workers and companies,” Raimondo said.

Wendy Cutler, vice president of the Asia Society Policy Institute, said that with a possible visit to the U.S. by President Xi Jinping less than three months away, “Beijing has an interest in working with the United States to identify practical areas in the economic relationship where cooperation may be possible.”

Raimondo also wants to boost travel and tourism between the two countries.

China and the United States agreed this month to double the number of flights permitted between them – still a fraction of the number before the pandemic.

If China returned to 2019 U.S. tourism levels, it would add $30 billion to the U.S. economy and 50,000 U.S. jobs, Raimondo said.

Raimondo is considering a visit to Shanghai Disneyland, a joint venture of Walt Disney and Chinese state-owned Shendi Group, a source told Reuters.

Another looming question is when Chinese airlines might resume taking deliveries of Boeing 737 MAX jets after a four-year hiatus. Raimondo said in 2021 that the Chinese government was preventing its airlines from buying “tens of billions of dollars” in Boeing aircraft.

Boeing says it is ready to deliver airplanes to Chinese airlines “when that time comes.”

(Reporting by David Shepardson in Beijing; additional reporting by Michael Martina in Washington; editing by Robert Birsel and Bill Berkrot)