Negotiations between the White House and the Republican Party, which holds a majority in both houses of the U.S. Congress, are progressing towards an agreement on the national debt ceiling and federal government spending limitations for two years.

In recent days, the two sides have narrowed their differences in talks, but the agreed-upon details are still tentative, and a final decision has not been reached yet, according to Bloomberg. One key outstanding issue is the amount of spending limits, on which the White House and Republicans have not yet reached an agreement. The Biden administration has advocated for a 3% increase in defense spending in 2024.

Republicans have secured an agreement to expedite permits for pipelines and other fossil energy projects. The agreement also includes provisions to modernize the U.S. electric grid by incorporating renewable energy sources, as reported by Bloomberg. Additionally, Republicans have agreed to reduce the proposed budget increase for the U.S. Internal Revenue Service by $10 billion, lowering it from the original $80 billion.

Initially, Republicans suggested raising the national debt ceiling until March 2024 in exchange for 10 years of spending limits. However, they are now discussing a two-year period for spending cuts. While there are still differences to be resolved, both parties are aware of their areas of disagreement, and work will continue until a final agreement is reached, according to House Speaker Kevin McCarthy.

Reports of progress in the negotiations have led to a slight rise in U.S. Treasury yields. Stock markets in Japan and South Korea experienced mostly positive movement, while the main indexes in Australia remained relatively stable. Goldman Sachs analysts Jan Hatzius and Alec Phillips noted that the likelihood of reaching a deal is now at its highest point ever in the negotiations. If a deal is reached promptly, a vote in the House of Representatives is expected to take place on Tuesday, May 30, allowing the document to reach the president before the June 1 deadline set by the U.S. Treasury Department.

Earlier we reported that the head of Rockefeller International criticizes China’s economic recovery as a farce.

Ruchir Sharma, the Head of Rockefeller International, argues that China’s economic recovery is merely a facade due to weak growth heavily reliant on government stimulus and debt. He believes that such a model has always been unsustainable and is currently exhausted.

While Wall Street speculates that China’s GDP will grow by 5% and corporate earnings will increase by 8%, the reality is that corporate earnings in the first quarter only grew by 1.5%.

Corporate earnings are lagging behind GDP in 20 out of the country’s 28 sectors, and the MSCI China Stock Index has declined by 15% since its peak in January.

Imports, which reflect consumer demand, also experienced an 8% decline in April, and credit growth was half of what was predicted. The labor market in China is also facing challenges, with youth unemployment reaching 20% and continuing to rise.

Since 2008, China’s economic model has relied on government stimulus and increasing debt, particularly in the real estate sector, which accounts for one-third of disposable income and 3% of GDP compared to 10% in the US. However, China’s growth potential is only half of the targeted 5% due to a shrinking population.

Earlier we reported that the U.S. called China’s ban on Micron Technology products “baseless”.

The U.S. has criticized China’s ban on Micron Technology’s products as “baseless,” according to a report by Reuters. There is concern among investors that similar measures could be implemented against other major U.S. technology companies such as Tesla and NVIDIA.

Micron Technology, the microelectronics company, strongly opposes these restrictions, stating in a released statement that they have no basis in reality.

China’s state cyberspace office has issued a ban on national critical information infrastructure operators from purchasing products from Micron Technology, citing concerns that the company’s products have not passed cybersecurity tests and could pose a threat to national security.

U.S. authorities have expressed their intention to collaborate with key allies and partners to address these violations in the Chinese market. However, the specific actions to be taken have not been specified.

Previously, the leaders of the G7 countries issued a joint statement affirming their commitment to combating China’s non-market practices that distort the global economy, including the illegal transfer of technology or data disclosure.

Earlier we reported that the U.S. debt limit negotiations will resume on May 22.