SINGAPORE — China’s top nuclear-weapons research institute has bought sophisticated U.S. computer chips at least a dozen times in the past two and half years, circumventing decades-old American export restrictions meant to curb such sales.
A Wall Street Journal review of procurement documents found that the state-run China Academy of Engineering Physics has managed to obtain the semiconductors made by U.S. companies such as Intel Corp.
INTC,
-6.41%
and Nvidia Corp.
NVDA,
+2.84%
since 2020 despite its placement on a U.S. export blacklist in 1997.
The chips, which are widely used in data centers and personal computers, were acquired from resellers in China. Some were procured as components for computing systems, with many bought by the institute’s laboratory studying computational fluid dynamics, a broad scientific field that includes the modeling of nuclear explosions.
Such purchases defy longstanding restrictions imposed by the U.S. that aim to prevent the use of any U.S. products for atomic-weapons research by foreign powers. The academy, known as CAEP, was one of the first Chinese institutions put on the U.S. blacklist, known as the entity list, because of its nuclear work.
A Journal review of research papers published by CAEP found that at least 34 over the past decade referenced using American semiconductors in the research. They were used in a range of ways, including analyzing data and generating algorithms. Nuclear experts said that in at least seven of them, the research can have applications to maintaining nuclear stockpiles. CAEP didn’t respond to requests for comment.
The findings underline the challenge facing the Biden administration as it seeks to more aggressively counter the use of American technology by China’s military. In October, the U.S. expanded the scope of export regulations to prevent China from obtaining the most advanced American chips and chip-manufacturing tools that power artificial intelligence and supercomputers, which are increasingly important to modern warfare.
An expanded version of this report appears on WSJ.com.
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Russian forces pressed an offensive in eastern Ukraine on Friday, seeking to seize an advantage in the months before tanks pledged by Kyiv’s Western allies begin to arrive on the battlefield.
Ukrainian forces said on Friday they had repelled Russian attacks on Vuhledar and several other villages in the eastern Donetsk region over the preceding 24 hours. Russia also launched 148 attacks along the front line with Ukrainian forces in the southern Zaporizhzhia region over the past day using tanks, rockets and artillery, the regional military administration said.
Russia’s Defense Ministry said it had undertaken more offensive maneuvers over the past 24 hours both in Zaporizhzhia and Vuhledar, where it said it had launched strikes on Ukraine’s 72nd Brigade and had downed a Ukrainian Su-25 warplane.
The European Union on Friday, meanwhile, extended its economic sanctions on Russia for the next six months. The decision affects a swath of sanctions imposed last year, from financial sanctions on Russian banks and its central bank to export and import bans.
There had been concerns that Hungarian Prime Minister
Viktor Orban
could push to weaken the sanctions package. In recent months, he has attacked the EU’s sanctions, especially the EU oil import embargo on Moscow, saying they are more costly for Europe than for Russia. Decisions on sanctions are taken by consensus among the EU’s 27 member states.
While Hungary stepped back from objecting to renewing the economic sanctions, it is pushing for the EU to drop sanctions on several Russian executives who have been blacklisted by the EU, according to several EU diplomats. A decision is due in March on rolling over these sanctions.
Ukraine’s President
Volodymyr Zelensky
discussed the situation in Vuhledar and the city of Bakhmut at a meeting with military chiefs on Thursday, he said in his nightly address.
Russian servicemen in Ukraine launch rockets in an image released Friday by the Russian Defense Ministry.
Photo:
Russian Defense Ministry Press O/Zuma Press
After months of setbacks, Russian forces earlier this month broke through Ukrainian defenses in the east to seize the town of Soledar. That has made it harder for Ukraine to keep hold of neighboring Bakhmut, which has been at the epicenter of the war for several months. The city is central to Russia’s main goal: to take over the remainder of Donetsk, and the wider industrial area known as Donbas. But the fighting there has come at huge cost for both sides.
“The more Russia loses in this battle for Donbas, the less its overall potential will be,” the Ukrainian president said. “We know what the occupiers are planning. We are countering it.”
Ukrainian officials warn that Russia is gearing up for a renewed onslaught this spring after mobilizing some 300,000 men to shore up its faltering campaign last fall. For Moscow, there is a window before tanks pledged this week by Kyiv’s Western allies arrive in Ukraine, potentially tilting the battlefield again.
Russia’s Defense Ministry said Friday its forces had launched a series of strikes over the past day on Ukrainian military and infrastructure targets that had disrupted the transfer of weapons, including those from countries in the North Atlantic Treaty Organization, being delivered to the front.
Kyiv’s allies are rushing to assemble two battalions’ worth of Leopard 2 tanks from a range of European countries after Germany and the U.S. committed to provide their own tanks. The initial battalion is expected to arrive in Ukraine within three months.
A Ukrainian serviceman in Bakhmut rests next to an armored medical vehicle.
Poland, which has been at the forefront of pushing for increased military support for Ukraine, on Friday said it would send 60 upgraded T-72 tanks—half of them Polish-made PT-91 Twardy tanks—in addition to its contribution of 14 Leopards.
The U.S. has also pledged 31 M1 Abrams tanks, but those will take much longer to arrive in Ukraine because they are being procured through the defense industry instead of being pulled from existing American defense stocks.
Mr. Zelensky has urged Western countries to speed up the delivery of tanks and the training of Ukrainian forces to use them as Russia regains initiative.
Russian officials have said the tanks won’t alter dynamics on the battlefield and will only lead to escalation in the war.
Stefano Sannino,
secretary-general of the European Union’s European External Action Service, said during a visit to Japan that German and U.S. tank provisions weren’t escalatory and were meant to help Ukrainians defend themselves, rather than making them attackers. The decision to supply them is in response to Russian escalation, Mr. Sannino said, accusing Moscow of carrying out indiscriminate attacks on civilians and cities.
Shelling has caused damage in central Bakhmut as Ukrainian and Russian forces fight over the city.
Photo:
Emanuele Satolli for The Wall Street Journal
The tanks will enable Ukraine to destroy enemy tanks, offer greater protection and support combined operations, the U.K.’s Ministry of Defense said.
Assessing recent Russian claims of advances, the U.K.’s Defense Ministry said Russian forces had likely conducted local, probing attacks near Vuhledar in the east and Orikhiv in the Zaporizhzhia region but that Russia hadn’t achieved substantial gains.
Russian military sources are deliberately spreading misinformation in an effort to imply that the Russian operation is sustaining momentum, the ministry said.
Write to Isabel Coles at isabel.coles@wsj.com
As the U.S. and its allies start sending Abrams, Leopards and other tanks to help Ukraine, those vehicles are set to change the dynamics of the war along the front lines. WSJ examines how the tanks that Ukraine will receive from the West compare with Russia’s vehicles. Illustration: Adam Adada
WASHINGTON—The Biden administration is poised to send a significant number of Abrams M1 tanks to Ukraine, settling a rift that threatened the unity of the alliance supporting Ukraine at a pivotal moment in the war, U.S. officials said.
The move, which could be announced as soon as Wednesday, would be part of a broader diplomatic understanding with Germany in which Berlin would agree to send a smaller number of its own Leopard 2 tanks and would approve the delivery of more of the German-made tanks by Poland and other nations.
The shift in the U.S. position follows a Jan. 17 call between President Biden and German Chancellor
Olaf Scholz
in which Mr. Biden agreed to look into providing the Abrams tanks against the judgment of the Pentagon, which thought the tanks would be too difficult for Ukraine to field and maintain.
A German-built Leopard tank was used in a military exercise in May in Nowogard, Poland.
A senior German official said that the issue had been the subject of intense negotiation between Washington and Berlin for more than a week, which included discussions between National Security Jake Sullivan and his German counterpart.
The White House declined to comment on the deliberations or say when the first Abrams might be delivered. But some U.S. officials said it might take 12 months.
Germany’s defense minister, Boris Pistorius, told German television last week that German and U.S. tanks don’t need to be provided at the same time, leaving an opening for the U.S. to provide the Abrams at a later point.
A senior German politician said Tuesday that Germany’s government would pledge to provide around 14 Leopard 2 tanks to Kyiv from its stocks and approve third-party requests from other European countries to donate German-made tanks to Ukraine as soon as the agreement with the U.S. is announced.
Since the Russian invasion of Ukraine, the U.S. and Europe have sent Kyiv tens of billions of dollars in military aid, including heavy artillery, missile launchers, millions of munitions, air defenses and infantry fighting vehicles, but the infusion of new armor would come at a critical moment in the war.
Ukrainian officials have been planning a counteroffensive in the coming months to regain territory, including to the south where Russia has established a land bridge from Rostov to the Crimean Peninsula. Russia, which has been mobilizing hundreds of thousands of additional troops, is planning its own operations.
In a contentious meeting last week at Ramstein Air Base in Germany, the U.S. and its allies failed to persuade Germany to provide the tanks and allow other nations to send their German-made tanks. That exposed the first serious division in the alliance that has supported Kyiv, a coalition of nations assembled since Russia invaded Ukraine last February and that has been more or less defined by consensus.
German officials had initially said that they wouldn’t be the first to send tanks to Ukraine and wouldn’t do so unless the U.S. provided its own Abrams tanks. That put pressure on Germany but also the U.S. to contribute its tanks.
Poland’s defense minister said Tuesday that Poland had asked Germany for permission to send some of its German-made tanks to Ukraine. “The Germans have already received our request for consent to transfer Leopard 2 tanks to Ukraine,” Defense Minister
Mariusz Błaszczak
said. “I also appeal to the German side to join the coalition of countries supporting Ukraine with Leopard 2 tanks.”
Publicly, U.S. officials have praised Germany for weapons contributions it has made to Ukraine, including the IRIS-T air defense system and the promise to send a Patriot antimissile battery to supplement the ones pledged by the U.S. and the Netherlands, as well as Marder infantry-fighting vehicles.
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Privately, U.S. officials were frustrated by Germany’s refusal to approve the provision of German-made tanks and have debated how to persuade Berlin to change its stance.
Pentagon officials want Leopard tanks for Ukraine, but didn’t want to send the Abrams there now, arguing that the gas-guzzling tanks with their gas turbine engines, fuel requirements and substantial amount of training and logistics makes them less-than-desirable for this moment in the nearly yearlong conflict.
Some State Department and White House officials, however, had been open to meeting the German demands on the Abrams to avoid a diplomatic rupture among Ukraine’s backers and to expedite the delivery of more armor. Some Democratic lawmakers close to the White House, such as Democratic Sen. Chris Coons of Delaware, have also urged that some Abrams be provided.
The British promised earlier this month to send 14 Challenger 2 main battle tanks to Ukraine, but that wasn’t enough to persuade the Germans to release their hold on the Leopards.
A Ukrainian fighter fired a grenade launcher in Ukraine’s Zaporizhzhia region on Monday.
Photo:
STRINGER/REUTERS
Mr. Pistorius, who was sworn into office as German defense minister last week, has said several times that the ultimate decision about sending German tanks to Ukraine lay with Mr. Scholz.
Under German law, the Economy Ministry is responsible for such requests, which need to be coordinated with the Defense Ministry and ultimately be approved by the Chancellery.
Economy Minister
Robert Habeck,
whose Green Party rules in a coalition with Mr. Scholz’s Social Democrats, has come out in favor of sending German-made tanks to Ukraine, as has the Green foreign minister. Mr. Habeck would make sure the request is expedited, said officials familiar with his thinking.
U.S. and other NATO officials have suggested that the Leopard tank is most appropriate for Ukraine because of its availability in several countries and the possibility of quickly building supply and maintenance chains.
But German officials said that Mr. Scholz was concerned about ending up with a fleet of almost exclusively German-made tanks being used to fight the Russians in Ukraine, a scenario that could single his country out as a party to the conflict.
“We absolutely want to have German tanks in Ukraine but they need to be part of a broad coalition that would provide a mix of hardware, including the Abrams,” one official said.
The Engels air base, a key aviation hub, was one of the targets of strikes inside Russian territory. WSJ explains what images and videos of the incidents can tell us about Kyiv’s tactics to destabilize Moscow far from the front lines. Photo composite: Eve Hartley via Planet Labs/Maxar
Ukrainian officials said Western tanks were needed urgently and voiced hope that it would be a matter of time before the country receives them.
“The question of time is a question of life for us,”
Oleksiy Danilov,
the secretary of Ukraine’s Security and Defense Council, said in an interview with The Wall Street Journal.
In Moscow, chief of staff Gen.
Valery Gerasimov,
who led the initial invasion and was recently named commander of the Kremlin’s troops in Ukraine, said Russia was facing the entire “collective West” in the war and hadn’t faced such intensive fighting in its modern history.
In his first interview since the invasion, Gen. Gerasimov told government newspaper Argumenty i Fakty that Russia was forced to mobilize 300,000 reservists last year because of the West’s support for Ukraine. He said the draft, which exposed many of the problems of the Russian military including inadequate training and equipment, had faced snags but that the army had since addressed them.
Though President
Vladimir Putin
has said he doesn’t see a need for another mobilization, Russians are girding for a new round. After Russia suffered a string of losses in the early fall, the draft stabilized the front lines and has since appeared to tilt the calculus of attrition in Moscow’s favor, as Russia claimed a series of gains in Ukraine’s east and south this month.
—Evan Gershkovich contributed to this article.
Write to Michael R. Gordon at michael.gordon@wsj.com, Gordon Lubold at gordon.lubold@wsj.com and Bojan Pancevski at bojan.pancevski@wsj.com
administration official who led the White House’s Covid-19 response, to be his next chief of staff, according to people familiar with the decision.
Ron Klain,
Mr. Biden’s current chief of staff, is expected to step down in the coming weeks after more than two years on the job. The Washington Post earlier reported that Mr. Zients was expected to replace him. Mr. Zients didn’t respond to requests for comment, and the White House declined to comment.
Mr. Zients helmed the White House efforts to increase distribution of the Covid-19 vaccine during the first year of Mr. Biden’s presidency, helping to cobble together a network to make the shots available nationally.
He left the administration in April last year, saying he had no specific job plans, and in recent months was tapped by Mr. Klain to prepare for staff departures and help identify potential replacements, according to people familiar with the matter. Mr. Zients co-chaired Mr. Biden’s presidential transition team in 2020.
The president is turning to Mr. Zients as his next chief of staff because of his reputation as a manager with a history of navigating government bureaucracy, the people familiar with the matter said.
Mr. Zients is expected to bring to the job a more decentralized approach than the one favored by Mr. Klain, who was involved in nearly every aspect of day-to-day operations at the White House, some of the people familiar with the matter said.
While Mr. Zients is expected to focus on policy and governing, other longtime aides to Mr. Biden are likely to be more involved in advising the president on political matters as he faces investigations from newly empowered House Republicans and prepares to announce his reelection bid.
White House Chief of Staff Ron Klain and President Biden greeting each other at a White House event.
Photo:
KEVIN LAMARQUE/REUTERS
In the coming year, White House officials expect to focus on implementing a slate of laws signed by the president since he took office, including measures to fix the country’s aging infrastructure, invest in renewable energy and boost semiconductor manufacturing. Options for major legislative breakthroughs will be limited now that Republicans have taken control of the House.
Mr. Zients was a top economic adviser to President
Barack Obama,
serving as the director of the National Economic Council and a senior official at the Office of Management and Budget. Mr. Zients joined the board of
Facebook Inc.
—now part of Meta Platforms Inc.—in 2018 after leaving the Obama administration. He was a top executive with the Cranemere Group, an investment holding company.
At the beginning of Mr. Obama’s presidency, Mr. Zients was appointed the administration’s chief performance officer, a newly created role that centered on making the government more efficient. He later led a mission aimed at fixing HealthCare.gov, the federal website for the Affordable Care Act, when it experienced technological difficulties in 2013. He brought in private companies and technology firms to undertake a rapid review of the platform’s problems.
Mr. Zients is known as a meticulous planner. In his beginning days handling the Covid-19 response, he scheduled hour-by-hour what needed to be done to execute his pandemic plan. He and Mr. Biden spoke three to four times a week while he was overseeing the coronavirus response.
While Mr. Zients’ selection to handle the pandemic was initially criticized by some progressives who said he lacked public health experience, he earned bipartisan praise in hearings for his efforts to rapidly disseminate vaccines after a bumpy rollout during the end of the Trump administration. About 65% of the population, or more than 200 million people, were fully vaccinated by the time he announced in March 2022 that he would be leaving his position.
He also won high marks for shifting the administration from a more reactive approach to the pandemic to responding to Covid-19 as an ongoing public health issue. He pledged a wartime response to the administration’s global response to Covid-19 but some donations to poor countries fell short of targets because of low demand and limited funding.
Mr. Biden was criticized in 2021 for holding a massive July Fourth party on the South Lawn and declaring “we’re closer than ever to declaring our independence from a deadly virus” just as the Delta variant began spreading in the U.S., causing another round of shutdowns.
Later that winter when the Omicron wave caused infections to spike, the lack of testing kits caused long lines and concerns across the country. The president acknowledged in a January 2022 speech that the situation was “frustrating.”
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Messrs. Biden and Zients developed a relationship during the Obama administration, and became closer when Mr. Zients was brought on as an adviser to Mr. Biden’s 2020 presidential campaign. Mr. Zients doesn’t have the kind of decadeslong relationship with Mr. Biden that some of the president’s closest aides have. But those advisers—including senior White House aides
Mike Donilon,
Steve Ricchetti
and
Bruce Reed
—are expected to continue working closely with Mr. Biden as he prepares to announce his reelection bid in the coming month.
“He has the utmost integrity and that’s why everyone trusts him,” said Andrew Slavitt, who was a senior adviser for the Biden administration Covid-19 response. “He over-communicates and seeks out everyone’s views but does it in a way to push the ball down the field every day.”
Mr. Zients’ experience and ties in the business world has engendered skepticism from some progressive groups, many of whom developed close relationships with Mr. Klain.
Matt Stoller, the director of Research at the American Economic Liberties Project, a nonprofit that advocates for strict antitrust enforcement, called Mr. Zients “an ugly choice” for the job, noting that he joined the board of Facebook in the wake of the Cambridge Analytica scandal.
Write to Andrew Restuccia at andrew.restuccia@wsj.com, Stephanie Armour at Stephanie.Armour@wsj.com and Annie Linskey at annie.linskey@wsj.com
The Biden administration is preparing to seek congressional approval for a $20 billion sale of new F-16 jet fighters to Turkey along with a separate sale of next-generation F-35 warplanes to Greece, in what would be among the largest foreign weapons sales in recent years, according to U.S. officials.
Administration officials intend the prospect of the sale to prod Turkey to sign off on Finland and Sweden’s accession to the North Atlantic Treaty Organization, which Ankara has blocked over objections to their ties to Kurdish separatist groups. Congress’s approval of the sale is contingent on Turkey’s acquiescence, administration officials said. The two countries ended decades of neutrality when they decided to join NATO last year in reaction to Russia’s invasion of Ukraine.
The sale to Turkey, which the administration has been considering for more than a year, is larger than expected. It includes 40 new aircraft and kits to overhaul 79 of Turkey’s existing F-16 fleet, according to officials familiar with the proposals.
Congressional notification of the deal will roughly coincide with a visit to Washington next week by Turkey’s Foreign Minister
Mevlut Cavusoglu.
The sale to Turkey also includes more than 900 air-to-air missiles and 800 bombs, one of the officials said.
Turkish President Recep Tayyip Erdogan has faced U.S. pressure to approve NATO expansion.
Photo:
adem altan/Agence France-Presse/Getty Images
The separate sale to Greece, which was requested by the Greek government in June 2022, includes at least 30 new F-35s. The F-35 Joint Strike Fighter is the U.S.’s most advanced jet fighter. While officials described the timing of the notifications for both Turkey and Greece as coincidental, it could quell protests from Athens over the F-16 sale if its request is also granted. Greece and Turkey are historic regional rivals and a sale to Turkey alone would likely draw swift condemnation from Athens.
The potential sale of the aircraft could have far-reaching implications for Washington’s efforts to shore up ties with a pair of NATO allies amid the Western response to Russia’s assault on Ukraine.
A State Department spokesman declined to comment on potential arms transfers as a matter of policy until and unless they are formally notified to Congress. Congress has never successfully blocked a foreign arms sale requested by the White House.
The proposed deal with Turkey comes at a moment of tension in U.S.-Turkish relations, with Washington also attempting to convince President Recep
Tayyip Erdogan
to do more to enforce sanctions on Russia and to approve the entry of Finland and Sweden into NATO.
The proposal also sets up a possible showdown with some congressional leaders who have vowed to oppose weapons sales to Turkey. Sen.
Bob Menendez,
a Democrat from New Jersey who is the chairman of the Senate Foreign Relations Committee, has said he wouldn’t approve any F-16 sale to Turkey, citing human-rights concerns.
In recent months, Mr. Erdogan has also threatened to launch a new military incursion against Kurdish militants in Syria. Last month a Turkish court also convicted the mayor of Istanbul, a popular opponent of Mr. Erdogan, of insulting public officials in what human rights groups said was part of a crackdown on the Turkish opposition. The Turkish government says its courts are independent.
Under U.S. arms-export laws, Congress will have 30 days to review the deal. If Congress wants to block the deal it must pass a joint resolution of disapproval. Congress can also pass legislation to block or modify a sale at any time until the delivery.
The Biden administration is looking to sell at least 30 new F-35 jet fighters to Greece.
Photo:
robert atanasovski/Agence France-Presse/Getty Images
U.S. officials say they are encouraging Mr. Erdogan to drop his opposition to Finland and Sweden joining NATO. One official characterized the F-16s as the “carrot on a stick” to get Turkey to agree.
This, officials said, could ease opposition to the sale among some members of Congress. Officials within the State Department have argued for months that the expansion was imperative to NATO’s collective security. However, officials expect that while the Greece package could sail through Congress, the F-16s may be delayed over some members’ reluctance to embolden Ankara with the additional firepower.
Mr. Erdogan first threatened to veto the two countries’ entrance over their ties to Kurdish militant groups in Iraq and Syria. Turkey has fought a slow-burning war with Kurdish armed groups for decades in a conflict that has left tens of thousands dead.
NATO leaders say that Finland and Sweden have addressed Turkey’s concerns, upholding an agreement signed last year that called for both countries to evaluate Turkish extradition requests and drop restrictions on arms sales to Ankara.
Turkish officials say that Sweden hasn’t done enough to uphold its obligations to Turkey, citing what they say is continuing activity by the militant Kurdistan Workers’ Party in Sweden. The Turkish government this week summoned Sweden’s ambassador over a demonstration in Stockholm in which protesters hung a puppet of Mr. Erdogan by its feet. The Turkish president’s hard line against Sweden has broad support within Turkey, including among opposition parties, who have long opposed what they see as a permissive approach to Kurdish militant groups in Europe.
The timing of a vote on NATO expansion in the Turkish parliament will also depend on Turkey’s national election this year, in which Mr. Erdogan faces a close race amid public discontent over the country’s struggling economy.
The Turkish Ministry of Foreign Affairs didn’t respond to a request for comment.
The Biden administration remains cautiously optimistic that Turkey will eventually come around on Finland and Sweden. U.S. officials said last year that there would be no quid pro quo for Turkey’s approval of the NATO expansion, and said that the timing of the F-16 sale was dependent on the administration’s own internal process to complete the deal.
The proposed sales also come amid heightened tensions between Turkey and Greece, two longtime adversaries who have traded threats over the past year in the eastern Mediterranean.
Turkey was originally a participant in the U.S.’s cutting-edge F-35 program but was expelled after Mr. Erdogan approved the purchase of Russia’s S-400 air defense system. The U.S. government said the Russian weapons system could potentially hack the F-35.
Biden administration officials have argued that selling F-16s to Turkey could help restore ties with the country, which maintains the second-largest army in NATO.
Under Mr. Erdogan, Turkey has played an important role in the Ukraine crisis, facilitating negotiations over prisoner exchanges and helping to broker an agreement that allowed Ukraine to resume its exports of grain through Black Sea ports. Mr. Erdogan’s close relationship with Russia’s President
Vladimir Putin
has also raised concerns in Washington, with scrutiny of inflows of Russian money to Turkey, including oligarch assets.
Finland and Sweden have formally applied to join NATO, but Turkey has threatened to block them from joining. WSJ’s Shelby Holliday explains why Turkish President Recep Tayyip Erdogan sees the expansion as a threat to Turkey’s national security. (Video first published in May 2022). Photo composite: Sebastian Vega
—William Mauldin contributed to this article.
Write to Jared Malsin at jared.malsin@wsj.com and Vivian Salama at vivian.salama@wsj.com
The U.S. labor market is losing momentum as hiring and wage growth cooled in December, showing the effects of slower economic growth and the Federal Reserve’s interest-rate increases.
After two straight years of record-setting payroll growth following the pandemic-related disruptions, the labor market is starting to show signs of stress. That suggests 2023 could bring slower hiring or outright job declines as the overall economy slows or tips into recession.
Employers added 223,000 jobs in December, the smallest gain in two years, the Labor Department said Friday. Average hourly earnings were up 4.6% in December from the previous year, the narrowest increase since mid-2021, and down from a March peak of 5.6%.
All told, employers added 4.5 million jobs in 2022, the second-best year of job creation after 2021, when the labor market rebounded from Covid-19 shutdowns and added 6.7 million jobs. Last year’s gains were concentrated in the first seven months of the year. More recent data and a wave of tech and finance-industry layoffs suggest the labor market, while still vibrant, is cooling.
“I do expect the economy to slow noticeably by June, and in the second half of the year we’ll see a greater pace of slowing if not outright contraction,” said
Joe Brusuelas,
chief economist at RSM U.S.
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Friday’s report sent markets rallying as investors anticipated it would cause the Fed to slow its pace of rate increases. The central bank’s next policy meeting starts Jan. 31. The Fed’s aggressive rate increases aimed at combating inflation didn’t significantly cool 2022 hiring, but revisions to wage growth showed recent gains weren’t as brisk as previously thought.
The Dow Jones Industrial Average rose 700.53 points, or 2.13%, on Friday. The S&P 500 Index was up 2.28% and NASDAQ Composite Index advanced 2.56%. The benchmark 10-year Treasury yield declined 0.15 percentage point to 3.57%. Yields fall as bond prices rise.
The unemployment rate fell to 3.5% in December from 3.6% in November, matching readings earlier in 2022 and just before the pandemic began as a half-century low. Fed officials said last month the jobless rate would rise in 2023. December job gains were led by leisure and hospitality, healthcare and construction.
Historically low unemployment and solid hiring, however, might mask some signs of weakness. The labor force participation rate, which measures the share of adults working or looking for work, rose slightly to 62.3% in December but is still well below prepandemic levels, one possible factor that could make it harder for employers to fill open positions.
The average workweek has declined over the past two years and in December stood at 34.3 hours, the lowest since early 2020.
Hiring in temporary help services has fallen by 111,000 over the past five months, with job losses accelerating. That could be a sign that employers, faced with slowing demand, are reducing their employees’ hours and pulling back from temporary labor to avoid laying off workers.
The tech-heavy information sector lost 5,000 jobs in December, the Labor Department report showed. Retail saw a 9,000 rise in payrolls, snapping three straight months of declines.
Tech companies cut more jobs in 2022 than they did at the height of the Covid-19 pandemic, according to layoffs.fyi, which tracks industry job cuts. On Wednesday,
Salesforce Inc.
said it would cut 10% of its workforce, unwinding a hiring spree during the pandemic. The Wall Street Journal reported that
Amazon.com Inc.
would lay off 18,000 people, roughly 1.2% of its total workforce. Other companies, such as
Facebook
parent
Meta Platforms Inc.,
DoorDash Inc.
and
Snap Inc.,
have also recently cut positions.
Companies in the interest-rate-sensitive housing and finance sectors, including
Redfin Corp.
,
Morgan Stanley
and
Goldman Sachs Group Inc.,
have also moved to reduce staff.
Months where overall jobs gained
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More than 20 million jobs were lost near the start of the pandemic
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overall jobs gained
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overall jobs declined
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A monthly gain of more than 4 million jobs
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overall jobs gained
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overall jobs declined
By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019
More than 20 million jobs were lost near the start of the pandemic
Employment returns to prepandemic level
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overall jobs gained
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overall jobs declined
By the end of 2022, the U.S. had added nearly 2 million jobs since the end of 2019
More than 20 million jobs were lost near the start of the pandemic
Employment returns to prepandemic level
A monthly gain of more than 4 million jobs
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overall jobs gained
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overall jobs declined
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Other data released this week point to a slowing U.S. economy. New orders for manufactured goods fell a seasonally adjusted 1.8% in November, the Commerce Department said Friday. Business surveys showed a contraction in economic activity in December, according to the Institute for Supply Management. Manufacturing firms posted the second-straight contraction following 29 months of expansion, and services firms snapped 30 straight months of growth in December.
Economists surveyed by The Wall Street Journal last fall saw a 63% probability of a U.S. recession in 2023. They saw the unemployment rate rising to 4.7% by December 2023.
“We’ve obviously been in a situation over the past few months where employment growth has been holding up surprisingly well and is slowing very gradually,” said
Andrew Hunter,
senior U.S. economist at Capital Economics. “There are starting to be a few signs that we’re maybe starting to see a bit more of a sharp deterioration.”
Max Rottersman, a 61-year-old independent software developer, said he had been very busy with consulting jobs during much of the pandemic. But that changed over the summer when work suddenly dried up.
“I’m very curious to see whether I’m in high demand in the next few months or whether—what I sort of expect will happen—there will be tons of firing,” he said.
Despite some signs of cooling, the labor market remains exceptionally strong. On Wednesday, the Labor Department reported that there were 10.5 million job openings at the end of November, unchanged from October, well more than the number of unemployed Americans seeking work.
Some of those open jobs are at Caleb Rice’s home-renovation business in Calhoun, Tenn., which has been consistently busy since the start of the pandemic. The small company has raised pay and gone to a four-day week in an effort to hold on to workers.
“If I could get three more skilled hands right now, I’d be comfortable,” Mr. Rice said. “The way it goes is I’ll hire five, two will show up and of those two one won’t be worth a flip.”
Fed officials have been trying to engineer a gradual cooling of the labor market by raising interest rates. Officials are worried that a too-strong labor market could lead to more rapid wage increases, which in turn could put upward pressure on inflation as firms raise prices to offset higher labor costs.
The central bank raised rates at each of its past seven meetings and has signaled more rate increases this year to bring inflation down from near 40-year highs. Fed officials will likely take comfort in the slowdown in wage gains, which could prompt them to raise rates at a slower pace, Mr. Brusuelas, the economist, said.
“We’re closer to the peak in the Fed policy rate than we were prior to the report, and the Fed can strongly consider a further slowing in the pace of its hikes,” he said. “We could plausibly see a 25-basis-point hike versus a 50-basis-point hike at the Feb. 1 meeting.”
Write to David Harrison at david.harrison@wsj.com
Corrections & Amplifications A graphic in an earlier version of this article showing the change in nonfarm payrolls since the end of 2019 was incorrectly labeled as change since January 2020. (Corrected on Jan. 6)
WASHINGTON—The Senate Finance Committee has opened an inquiry into whether auto makers including
Tesla Inc.
and
General Motors Co.
are using parts and materials made with forced labor in China’s Xinjiang region.
In a letter sent Thursday, the committee asked the chief executives of eight car manufacturers to provide detailed information on their supply chains to help determine any links to Xinjiang, where the U.S. government has alleged the use of forced labor involving the Uyghur ethnic minority and others.
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The U.S. bans most imports from the region under the Uyghur Forced Labor Prevention Act. The letter to car companies cited a recent report from the U.K.’s Sheffield Hallam University that found evidence that global auto makers were using metals, batteries, wiring and wheels made in Xinjiang, or sourcing from companies that used Uyghur workers elsewhere in China.
According to that report, some car manufacturers “are unwittingly sourcing metals from the Uyghur region.” It said some of the greatest exposure comes from steel and aluminum parts as metals producers shift work to Xinjiang to take advantage of Chinese government subsidies and other incentives.
The U.S. ban on products linked to Xinjiang has already caused disruptions in the import of solar panels made there.
China has called Washington’s claim baseless. It disputes claims by human-rights groups that it mistreats Uyghurs by confining them in internment camps, with Beijing saying its efforts are aimed at fighting terrorism and providing vocational education.
Besides
Tesla
and GM, the letter signed by Finance Committee Chairman
Ron Wyden
(D., Ore.), was sent to
Ford Motor Co.
,
Mercedes-Benz Group AG
,
Honda Motor Co.
,
Toyota Motor Corp.
,
Volkswagen AG
and
Stellantis
NV, whose brands include Chrysler and Jeep.
GM said its policy prohibits any form of forced or involuntary labor, abusive treatment of employees or corrupt business practices in its supply chain.
“We actively monitor our global supply chain and conduct extensive due diligence, particularly where we identify or are made aware of potential violations of the law, our agreements, or our policies,“ the company said.
A Volkswagen spokesman said the company investigates any alleged violation of its policy, saying “serious violations such as forced labor could result in termination of the contract with the supplier.” A Stellantis spokesperson said the company is reviewing the letter and the claims made in the Sheffield Hallam study.
Other companies didn’t immediately provide comments.
“I recognize automobiles contain numerous parts sourced across the world and are subject to complex supply chains. However, this recognition cannot cause the United States to compromise its fundamental commitment to upholding human rights and U.S. law,” Mr. Wyden wrote.
The information requested includes supply-chain mapping and analysis of raw materials, mining, processing and parts manufacturing to determine links to Xinjiang, including manufacturing conducted in third countries such as Mexico and Canada.
General Motors says its policy prohibits forced or involuntary labor, abusive treatment of employees or corrupt business practices in its supply chain.
Photo:
mandel ngan/Agence France-Presse/Getty Images
The lawmakers are also asking the auto makers if they had ever terminated, or threatened to terminate, relations with suppliers over possible links to Xinjiang, and if so, provide details of the cases.
The committee’s action comes as the Biden administration and bipartisan lawmakers increase their focus on alleged forced-labor practices in China as a key component of their confrontation with Beijing over its economic policy. The United Auto Workers has called on the auto industry to “shift its entire supply chain out of the region.”
The State Department has said more than one million Uyghurs and other minorities are held in as many as 1,200 state-run internment camps in Xinjiang. Chinese authorities “use threats of physical violence” and other methods to force detainees to work in adjacent or off-site factories, according to the department.
The U.S. Customs and Border Protection investigated 2,398 entries with a total value of $466 million during the fiscal year ended September, up from 1,469 entries in the previous year and 314 cases in fiscal 2000.
Analysts expect the CBP’s enforcement activity to further increase this year, with a strong bipartisan push for a tougher stance on the forced-labor issue.
The researchers at Sheffield Hallam University found that more than 96 mining, processing, or manufacturing companies relevant to the auto sector are operating in Xinjiang. The researchers used publicly available sources, including corporate annual reports, websites, government directives, state media and customs records.
WASHINGTON—For the first time in more than a century, Congress is poised to pass legislation that would revamp the process of certifying presidential electors, a direct response to efforts by former President
Donald Trump
and his supporters to overturn the 2020 election results.
The Electoral Count Reform Act has been attached to a $1.65 trillion yearlong spending package currently moving through Congress that is expected to become law this week. The ECRA is the result of nearly a year of bipartisan Senate negotiations to update an 1887 law that came into focus during the certification of the presidential results on Jan. 6, 2021.
Current law requires Congress to convene for a joint session on Jan. 6 after a presidential election to count and ratify the 538 electoral votes certified by the 50 states and District of Columbia. The vice president, serving as president of the Senate, has the duty to count the votes in a joint session of Congress.
In 2021, Mr. Trump pressured then-Vice President Mike Pence to reject some electors unilaterally. Mr. Pence refused, saying such a move was beyond his power. After Mr. Trump urged his supporters to march on the Capitol in a speech on the Ellipse, a pro-Trump mob overran the Capitol, temporarily interrupting the proceedings. After Congress reconvened, 139 House Republicans and eight Senate Republicans voted against certifying the election results.
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The new legislation would make it clear that the vice president’s role is merely to count the votes publicly and that he or she has no power to alter the results. It also would significantly raise the threshold to sustain an objection to a state’s electors to one-fifth of both chambers, up from one House member and one senator now.
The proposal would also provide for an expedited federal court challenge if a state attempts to delay or tamper with election results. The bill holds that the court decision is final and requires Congress to accept that decision.
The current Electoral Count Act “is a time bomb under democracy, and we learned on Jan. 6 that its ambiguities and confusing terms are very dangerous,” said Maine Sen. Angus King, an independent who caucuses with Democrats.
Sen.
Susan Collins
(R., Maine) credited the work of a group of 15 senators who span the ideological spectrum in negotiating the bill. “The events of Jan. 6 clearly brought home the flaws in the law,” she said.
The Biden administration called the changes “a vital piece of legislation.”
Sen.
Josh Hawley
(R., Mo.) said he opposed changes to the current law. Mr. Hawley was the first senator to say he would object to the results of the 2020 presidential election, a move that forced lawmakers to debate and vote to affirm the states’ tallies on Jan. 6, 2021. As Mr. Hawley entered the Capitol ahead of the joint session that day, he was photographed fist-pumping to cheers from the pro-Trump crowd gathered outside.
“I think it’s fine, this is the democratic process,” Mr. Hawley said about the current rules. “I don’t think the objection caused the riot.”
Other lawmakers have used the process outlined in the Electoral Count Act to object to election results in recent years. Some Democrats objected, unsuccessfully, to certification of both of former President
George W. Bush
‘s wins as well as Mr. Trump’s.
In both cases the Democratic nominee for president had already conceded and wasn’t supportive of the objections. Mr. Trump has continued to call for overturning the results and to claim falsely that he won the 2020 election.
The House select committee investigating the Jan. 6 attack made four criminal referrals for Mr. Trump to the Justice Department on Monday after investigating the lead-up and attack itself. Mr. Trump has denied wrongdoing related to the riot. The Justice Department is currently conducting a parallel investigation of the events.
“I don’t care whether they change The Electoral Count Act or not, probably better to leave it the way it is so that it can be adjusted in case of Fraud,” Mr. Trump said in a post on Truth Social on Tuesday.
Mr. Trump has said the planned changes show that the vice president did indeed have the power to block electors under current law. Backers say they are trying to eliminate any loopholes that could be exploited by future candidates, including Mr. Trump.
Among the Electoral Count Reform Act provisions included in this week’s spending package is a requirement that each state’s governor, unless specified in the state’s laws or constitution, submit the slate of electors. That would keep states from submitting false electors as some sought to do in 2020.
It also would prevent state legislatures from overriding the popular vote in their states by declaring a “failed election,” except in narrowly defined “extraordinary and catastrophic” events.
Edward Foley, the director of Election Law at Ohio State University said the bill’s most significant provision is making sure the courts are the final backstop in case of false electors.
“We can look to courts as being the branch of government that is most immune from this kind of political denialism,” he said.
The version included in the spending bill is the Senate version, which had 38 co-sponsors, including both Majority Leader
Chuck Schumer
(D., N.Y.) and Minority Leader
Mitch McConnell
(R., Ky.).
In September, the House passed its own version of the legislation, 229-203. Nine Republicans joined Democrats in voting to pass the House bill. None of them are returning to Congress next year.
Write to Eliza Collins at eliza.collins@wsj.com and Lindsay Wise at lindsay.wise@wsj.com
Mr. Putin made a rare admission Tuesday that the war in Ukraine—where Russian forces have suffered a number of stinging setbacks since the summer—is facing obstacles.
Mr. Putin said that there were difficulties in the Ukrainian territories that the Kremlin has illegally claimed as Russian land.
In September, the Kremlin staged referendums in Russian-controlled Luhansk and areas of Donetsk, Kherson and Zaporizhzhia. It then declared that Moscow had annexed those regions, despite Russian forces only controlling some portions of them.
In video comments published Tuesday, marking Security Workers Day—a special holiday for employees in that sector—Mr. Putin described the situation in those territories as “extremely difficult.”
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Moscow has previously sought to play down any problems with Russia’s offensive in Ukraine, with the Kremlin’s propaganda machine, casting battlefield retreats as a necessary step to regroup and prevent the unnecessary loss of Russian service personnel.
In September, Mr. Putin ordered what he called a “partial mobilization” of 300,000 draftees, arguing that the move—unpopular among most Russians, polls show—was needed to defend Russia’s sovereignty and territorial integrity. The Kremlin leader acknowledging difficulties in the recently seized territories could be a strategy to prepare the Russian population for a protracted war or laying the groundwork for the call up of additional troops, some analysts who monitor Kremlin policy have said.
Although the country’s defense ministry announced in October that the mobilization was complete, the fact that Mr. Putin hasn’t signed a decree officially ending the draft has stirred concern among many Russians who fear another draft is imminent. But others view a new call-up as inevitable.
Mobilized soldiers received combat training this month outside Moscow.
Photo:
yuri kochetkov/Shutterstock
“Mobilization cannot be partial. If it is declared, then it goes until the end of the war in waves,” Igor Skurlatov, a political analyst who heads Third Power, a social group that unites Russian ultra-patriots, wrote on his Telegram channel Saturday. “These are military basics. Why anyone thinks otherwise is unclear.”
In November, Kremlin spokesman Dmitry Peskov told reporters that there were no discussions in the Kremlin of a new mobilization, but “I can’t speak for the defense ministry,” he said.
On Tuesday, Mr. Putin told the security services that people living in the Russian-controlled areas of Ukraine are citizens of Russia and it was their “duty to do everything necessary to ensure their security, rights and freedoms as much as possible.”
Security services personnel include employees of the Foreign Intelligence Service, the Federal Protective Service includes presidential security, the Main Directorate of Special Programs, and the Federal Security Service, or FSB, successor to the Soviet-era KGB.
Mr. Putin called on the FSB to enhance the monitoring of Russian society, including putting places of mass gatherings, strategic facilities, transport and energy infrastructure “under constant control.”
A “concentration of forces is now required from counterintelligence agencies, including the military,” Mr. Putin said. “It’s necessary to strictly suppress the actions of foreign intelligence services, to quickly identify traitors, spies and saboteurs.”
Vladimir Putin met on Tuesday with the Moscow-appointed head of the Donetsk region.
Photo:
Mikhail Klimentyev/Associated Press
The Kremlin has cracked down on protests against the war or other domestic dissent this year, jailing thousands who publicly opposed the campaign or protested September’s call-up of draftees that prompted hundreds of thousands of fighting-age Russian men to leave the country.
Mr. Putin’s comments come as fighting continues to rage across most of the territories that Russia absorbed from Ukraine. Last week, Russian-installed officials in Donetsk and Luhansk accused Kyiv’s forces of shelling residential areas, schools and a hospital. Areas inside Russia have also been struck, including the border regions of Kursk and Belgorod, where on Sunday a rocket killed at least one person.
Meanwhile, Russia this week launched fresh waves of drone attacks against Ukraine as the country struggled to repair damaged energy infrastructure that has left millions without power. On Friday, a significant Russian cruise-missile attack against Ukrainian infrastructure targets left Kharkiv and several other cities, including the capital, Kyiv, without power, water and heating for several hours. Serhiy Kovalenko, the chief executive of Ukrainian energy company Yasno, said Tuesday that for residents of the capital, 10-hour blackouts are the new reality.
On absorbing the four new territories in September, Mr. Putin vowed that the people living in these areas would be part of Russia forever. Ukrainian President
Volodymyr Zelensky
has pledged to retake the occupied areas, driving Russian forces from lands that he says rightfully belong to his nation.
In November, Russian forces ceded control of the city of Kherson, the only regional capital it had managed to take since invading Ukraine in February. The retreat marked the biggest setback in what the Kremlin calls its special military operation.
Ukrainian volunteers and servicemen distributed humanitarian aid to people in Kherson this week.
Photo:
sergey kozlov/Shutterstock
Western arms have helped Ukraine clinch a series of battlefield victories in recent months, but officials in Kyiv say the support so far isn’t enough to drive Russian forces out of all the territory they have occupied. Russia is betting that Western backing for Kyiv will wane as the war drags on and the cost of arming Ukraine and propping up its economy grows.
Mr. Putin has remained defiant, refusing to back down despite a series of international sanctions that have impaired Russia’s economy and amid growing isolation from the West.
On Tuesday, the Russian leader looked relaxed as he presided over a Kremlin ceremony to present the highest state award to those he described as “heroes, pioneers, creators, courageous and hardworking people who have made a huge contribution to the development of the country, who have proven themselves in our difficult but significant time.”
Among the recipients were the Russian-installed leaders of the illegally integrated Ukrainian regions.
WASHINGTON—Congressional leaders are set to return to the Capitol on Monday under pressure to negotiate a spending bill that would fund the federal government’s operations beyond Friday.
Negotiators have days to reach a deal on a full-year spending bill or pass a short-term measure delaying the deadline to avoid a partial government shutdown. To reach a longer-term deal, they will have to break the partisan deadlock between Republicans and Democrats, who are split over $26 billion in nondefense spending.
Republicans say that Democrats want big increases for entities such as the Internal Revenue Service that they say are already flush with cash. Democrats say their funding priorities, such as funding veterans’ healthcare, are critical.
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Democrats in the U.S. Senate need to convince at least 10 Republicans to agree to advance a spending bill with the 60 votes needed. In the House of Representatives, a spending bill can be passed with a simple majority.
Few other items remain on the congressional agenda before new lawmakers take over for the next session, which begins on Jan. 3. Lawmakers who see the spending bill as the last major piece of legislation to pass are also lobbying hard for negotiators to include other measures they see as top priorities.
Some lawmakers want the spending bill to include the Electoral Count Act, which would change an 1887 law governing how Congress deals with presidential-election disputes. The bill has been pitched as a way to prevent a repeat of what happened following the 2020 election when then-President
Donald Trump
pressured his vice president,
Mike Pence,
to reject the Electoral College votes from some states. Mr. Pence declined to do so.
Other lawmakers are trying to include a measure that would extend a Dec. 27 deadline for
Boeing Co.
to secure federal safety approvals for two new versions of the 737 MAX airplane. The company was required by law to install new cockpit-alerting systems to help pilots resolve emergencies in the wake of two deadly crashes.
Boeing has said it might cancel two new versions of one of its airplanes if it doesn’t get an extension on a safety-approval deadline.
Photo:
JASON REDMOND/REUTERS
The deadline was set by Congress two years ago, but Federal Aviation Administration approvals have taken longer than expected. Without an extension, Boeing said in a securities filing that it might cancel both planes, exposing it to losses of potentially tens of billions of dollars.
Sen.
Roger Wicker
(R., Miss.), the top Republican on the Senate committee that oversees transportation issues, said he was hopeful that an extension would be included in a spending bill.
“I think it’s a reasonable ask,” he said last week.
Lawmakers could also include a provision that would shield banks from penalties if they handle marijuana-related transactions.
Banks that do business with the cannabis industry risk losing their federal banking charters because marijuana, despite being legal in some states, remains illegal on a federal level. As a result, some marijuana businesses are excluded from credit-card processing and rely heavily on cash to operate, making them targets for robberies.
Sen.
Joe Manchin
(D., W.Va.) could look toward the spending bill as a way to pass a measure that would speed up environmental reviews of major energy projects, including natural-gas pipelines, electricity transmission lines, wind farms and solar-power installations.
Sens.
Martin Heinrich
(D., N.M.) and
Roy Blunt
(R., Mo.) are pushing to include a measure that would steer federal money toward projects to restore habitats for struggling species.
Sen. Joe Manchin (D., W.Va.) could press for changes to environmental reviews for energy projects.
Photo:
SARAH SILBIGER/REUTERS
The measure would fund state conservation plans, which are federally required strategies and wish lists that wildlife agency officials keep on struggling animal, fish and plant populations they monitor. Those plans say more than 12,000 species need conservation help because of extreme weather, habitat loss, invasive species and disease. Such plans received unstable funding in the past.
“Without enough resources, wildlife agencies have been forced to pick and choose which species are worth saving,” Mr. Heinrich said in a statement.
Senate lawmakers are expected this week to pass a defense policy bill that authorizes U.S. military leaders to purchase new weapons and increase pay for troops, and lifts a requirement for members of the military to get vaccinated against Covid-19.
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The annual National Defense Authorization Act would increase America’s total national security budget for fiscal year 2023 to $857.9 billion. House lawmakers passed the NDAA bill on Thursday with 350 votes in favor and 80 votes against it.
Republicans had pushed for the bill to end the Defense Department’s Covid-19 vaccine rule, arguing that scrapping it would help recruitment and prevent the loss of additional troops whose departures have left the U.S. military weaker.
Katherine Kuzminski,
a senior fellow and program director on military, veterans and society issues for the Center for a New American Security, a military think tank, said it is hard to assess whether vaccine-related discharges have hurt the U.S. military’s capability because it is unclear whether the people who left worked in high-profile, hard-to-fill specialized positions or whether they were easily replaceable.
On recruitment, she said that younger people who are weighing military service “are less likely to make decisions regarding military recruitment based on political debates.”
