How Extensive is the Privatization of Security?

John P. Ruehl

Photograph Source: conceptphoto.info – CC BY 2.0

In August 2024, due to a $4 million budget shortfall, Idaho’s Caldwell School District terminated its $296,807 contract with the local police department, opting instead for armed guards from Eagle Eye Security. The new $280,000 contract is just a drop in the bucket of the roughly $50 billion U.S. private security industry and the $248 billion global market that is reshaping law enforcement worldwide.

While private military companies (PMCs) like Blackwater (now Academi) and Wagner have gained notoriety in war zones, private security companies (PSCs) are rapidly expanding in non-combat settings. Despite some overlap between the two, PSCs generally protect assets and individuals. Often collaborating with law enforcement, the effectiveness and ethical standards of PSCs vary widely, and armed guards are increasingly common. Security guards in the U.S. in 2021 outnumbered police by about 3:2.

Public policy is still playing catch up. Unlike police forces, PSCs operate under contract rather than direct taxpayer funding. They also don’t have the same level of regulation, oversight, or accountability. Criticisms of the police—such as excessive force and inadequate training—are frequently directed at private security officers as well. Many former police officers with controversial histories find employment in PSCs, where barriers to entry are low. Turnover, meanwhile, remains high, while wages are minimal. Yet the sector’s ongoing expansion appears inevitable.

Government forces and private security forces have been a part of society for millennia. Government forces mainly responded to unrest rather than preventing crime, often relying on volunteers. Private security options included hiring guards and bounty hunters, while communal efforts like the “hue and cry”—where villagers collectively chased down criminals— were also common ways of enforcing security. With increasing urbanization, though, traditional law enforcement methods became less effective, prompting the creation of the first modern police force, the London Metropolitan Police, in 1829. Distinct from the military, more accountable to city authorities and business interests, and focused on crime prevention, this model was adopted by Boston in 1838 and spread to nearly all U.S. cities by the 1880s.

The emergence of public police forces coincided with the birth of the modern private security industry. Founded in the U.S. in 1850, the Pinkerton National Detective Agency, as it was eventually called, is considered the first modern PSC. With its nationwide reach, investigative expertise, and role in safeguarding companies, Pinkerton distinguished itself by protecting businesses from theft, vandalism, and sabotage. Its controversial role in events like the Homestead Strike of 1892, when the company “essentially went to war with thousands of striking workers,” led to greater regulatory scrutiny, but the company continued to drive industry growth.

After World War II, the rise in PSC use within U.S. residential communities boosted demand, further accelerated by the racially tinged civil unrest of the 1960s and 1970s, which spurred private initiatives to police cities. The 1980s brought deregulation and professionalization, as many corporations established in-house security departments and PSCs prioritized hiring former law enforcement officers over those with military backgrounds.

Today, private security has a global presence, providing services ranging from bouncers and bodyguards to crowd control units and specialized armed teams. PSCs are generally cheaper than using police forces, and the widespread adoption of surveillance and other technologies has increasingly leveled the playing field. However, private personnel primarily serve as a visible deterrent, discouraging crime through their presence rather than direct intervention. They are often focused on monitoring and patrolling, which can divert criminal activity rather than resolve it. As the demand for private security grows, debate continues over their role and broader societal impact.

U.S. ratios of police staffing to civilian population peaked around the early 2000s, and police agencies say shortages are now widespread. As police departments have struggled to boost their ranks, PSCs have filled the gap. Allied-Universal, with 300,000 American employees, is one of the largest private employers in the country. Meanwhile, for high-net-worth individuals like Mark Zuckerberg, personal security expenses can exceed $14 million annually.

PSCs have stepped in to respond to a variety of situations, including protests at universities. In January 2024, Apex Security Group personnel dismantled pro-Palestinian encampments at UC Berkeley, later clearing similar sites at Columbia University in April and UCLA in May. Many PSCs, however, pursue more lucrative long-term contracts. UCLA has paid Contemporary Services Corporation (CSC) for campus patrols for years, and UC San Francisco spent $3.5 million on CSC in 2023, according to watchdog group American Transparency.

PSCs are also widely employed to target the unhoused and address shoplifting in California. Following a rise in the state’s homeless population by 40 percent since 2019 and an increase in petty crime, PSCs have secured valuable contracts with local governments, private businesses, families, and individuals. The Bureau of Security and Investigative Services oversees the sector in the state, but incidents still raise concerns. In May 2023, an Allied Universal guard fatally shot Banko Brown, an unarmed Black person suspected of shoplifting. The San Francisco district attorney’s office chose not to file charges, sparking public outcry.

In Portland, police budget cuts spurred by defunding initiatives following the 2020 Black Lives Matter protests led to the disbanding of special units and a wave of officer resignations and retirements. 911 hold times increased fivefold from 2019 to 2023, as more lenient crime policies allegedly contributed to a rise in crime rates.

In response, thousands of private security personnel now patrol the city, with the number licensed to carry firearms rising by nearly 40 percent since 2019. More than 400 local businesses pay Echelon, a Portland-based PSC, to deploy dozens of guards around the clock. Echelon and its personnel have attempted to build relationships with the homeless and people suffering from addiction and mental illness by providing food, responding to overdoses, and de-escalating conflicts. While crime in Portland has gone down since its peak in 2022, this reflects nationwide trends and comes as the city has attempted to reinstate police numbers.

American PSCs are expanding their roles across the country. In Las Vegas, Protective Force International formed its own squad in May 2024 to clear out squatters from an apartment complex, in addition to its other security services in the city. In New Orleans, Pinnacle Security is one of many firms operating, with roughly 250 security guards patrolling neighborhoods, businesses, and government buildings.

In Chicago, a 2021 accusation by Mayor Lori Lightfoot that businesses were failing to take adequate theft prevention measures spurred greater private initiatives. The Fulton Market District Improvement Association, a local group supported by local restaurateurs and developers, launched private patrols with P4 Security Solutions in 2024. P4 personnel operate both on foot and by car and provide security to other Chicago neighborhoods, with plans to expand further.

Private security, however, is not just a U.S. phenomenon. PSCs are well established globally, no more so than in Latin America. From the 1970s onward, the War on Drugs fueled massive transnational criminal empires and widespread police corruption. As military dictatorships ended in the 1990s, the transition to democratic governments in Latin America often resulted in weak institutions, leading to instability and security challenges. In response, private security boomed, primarily serving the wealthy.

Today, Latin America is home to more than 16,000 PMCs and PSCs employing more than 2 million people, often outnumbering police forces in poorly regulated markets. Their rapid expansion has led to serious issues, including criminal infiltration of PSCs in Mexico and El Salvador and claims of extrajudicial killings in Guatemala. Western resource companies, in coordination with local authorities, have also used PSCs to safeguard their operations and confront protesters in the region.

Latin America has typically been a source of recruitment for the private security industry, with many U.S. PMCs employing personnel during the War on Terror. Recently, the region has also become a market for foreign PSCs. Chinese PSCs, while restricted domestically, are increasingly involved in China’s Belt and Road Initiative (BRI) projects in the region, as well as in private ventures.

Zhong Bao Hua An Security Company, for example, has contracts with businesses in El Salvador, Costa Rica, and Panama. Tie Shen Bao Biao offers personal protection services in Panama, while the Mexico-Chinese Security Council was established in 2012 to protect Chinese businesses and personnel from violence.

The collapse of security states in Eastern Europe in the 1990s, combined with the adoption of capitalism, created fertile ground for both PMCs and PSCs. In Bulgaria, early PSCs were often founded by sportsmen, particularly wrestlers, with connections to organized crime. By 2005, a United Nations report estimated that 9 percent of working men in Bulgaria were employed in private security—a pattern found across the former Eastern Bloc.

Though growth has been slower in Western Europe, PSCs have still expanded. France recently deployed 10,000 security guards across Paris for the 2024 Olympics, only for many of them to strike over working conditions weeks before the opening ceremony.

The European Union has increasingly relied on PSCs to manage its migrant crisis, generating massive profits for the industry. Private actors were quick to label migration as a security threat while supporting policies that promote instability abroad. Major arms dealers and security firms like Airbus and Leonardo, for example, sell weapons in conflict zones that fuel violence and displacement. They then profit again by selling security equipment to European border agencies.

While violence has decreased across Africa in recent decades, localized instability has led to a surge in the security industry. The distinction between PSCs and PMCs is often blurred on the continent, with PSCs frequently finding themselves undertaking quasi-military roles such as convoy protection, protection of natural resource extraction sites in hostile areas, and armed confrontations.

Chinese PSCs have become more prevalent to compensate for the security gaps left by African governments for BRI investments, contrasting to Russia’s use of conflict-oriented PMCs in Africa. Regulation varies, with minimal oversight in countries like the Democratic Republic of the Congo and more stringent controls in Uganda.

South Africa’s PSC industry in particular has flourished since the end of apartheid in the 1990s. Rising crime and falling police numbers have led citizens to rely more on the private sector for safety and asset protection. According to the Private Security Industry Regulatory Authority, there are 2.7 million registered private security officers working in South Africa, outnumbering police 4:1. Services include patrolling neighborhoods, providing armed guards, and tracking and recovering stolen vehicles.

The PSC industry’s rise has been fueled by gaps in state security measures. However, in areas where PSCs operate, crime rates frequently remain high due to their focus on protecting private property and individuals rather than maintaining public order. Financial incentives can also lead to problems being managed superficially rather than addressing underlying issues. Additionally, PSC employees frequently face burnout, low pay, and negative working conditions. As PSCs intersect with private prisons, this has raised further concern over their expanding influence and overlapping roles.

Despite its growth in recent decades, the PSC industry’s progress has proven reversible in the past. By 2001, Argenbright Security controlled almost 40 percent of U.S. airport checkpoints, but the creation of the Transportation Security Administration (TSA) after 9/11 centralized airport security back under government control, with limited private sector involvement.

Nevertheless, the industry is likely to continue expanding, particularly as new initiatives find uses for them. India, which has the world’s largest private security force at approximately 12 million, is expected to continue seeing strong industry expansion, especially in securing its increasing number of private communities, colloquially termed “gated republics.”

Private security already plays a major role in private cities, which are becoming more prevalent worldwide. In these cities, governance is largely handled by boards and CEOs rather than elected officials, and profit motives often overshadow public needs. The safety divide between rich and poor is further exacerbated, as security becomes a commodity instead of a public concern.

In Honduras, the island of Roatán is at the epicenter of a clash between the government and local communities on the one hand and international entrepreneurs behind Próspera, a company developing a private city on the island, on the other. The escalating tensions highlight the realities of under-resourced government forces facing off against well-funded companies backed by heavily armed private guards.

As the role of private security continues to expand, regulations must evolve at the same pace. In the U.S., with regulations primarily established at the state level and lacking uniformity, there is a need for greater oversight to address potential issues effectively. Failing to do so will undermine public accountability by allowing private companies to operate with minimal restrictions, as well as deepen societal divides.

Mounting concerns in US-NATO circles over critical minerals and war with China

Gabriel Black

The United States and its European allies are increasingly concerned that efforts taken so far to stop China’s control over the global critical mineral supply chain are inadequate, complicating US-led preparations for war.

Fighter aircraft from the US, Japan and South Korea conduct a trilateral escort flight of a US B-52H bomber in the Indo-Pacific region, Oct. 22, 2023 [Photo: Air Force Senior Airman Karrla Parra]

China is the single-largest processor of nearly every critical mineral, having operated for the last 40 years as the nexus of global capitalist production. China holds control over three-fourths of the world’s Electric Vehicle (EV) batteries, and its electric car companies now surpass Tesla in their function and cost.

To combat China’s relative dominance in critical minerals and battery technology, the United States and the European Union have both passed laws and measures to stimulate domestic production while putting in place tariffs on Chinese goods—such as a 100 percent mark-up on all Chinese EVs in the United States.

These measures, however, increasingly seem inadequate, prompting a chorus of advisers to the American and European ruling classes to substantially increase their efforts.

Last month, for example, a report from the Financial Times found that 40 percent of the projects sponsored by either Biden’s Inflation Reduction Act or Chips Act have experienced significant delays. According to the FT, “companies said deteriorating market conditions, slowing demand and lack of policy certainty in a high-stakes election year have caused them to change their plans.”

Partially in response to this report, the FT published an editorial statement on September 8 calling on the US and its allies to take “concerted action on mining, refining and research” to stop China’s “command of the sector.” Above all, it calls on governments to quickly and significantly reduce the regulations required for new major mining and refining projects for critical minerals—two notoriously dangerous and environmentally toxic industries.

The FT’s warning is just the latest of a string of increasingly panicked comments and actions coming from the American and European financial and geopolitical establishment.

In February, the Carnegie Endowment for International Peace warned in a major report that “NATO militaries could face shortages of critical minerals, especially if U.S.-China tensions escalate.” The report warned that the EU “imports between 75 and 100 percent of most metals it consumes” and that none of them have stockpiles.

The Carnegie Endowment cites extensively from histories of mineral consumption during World War II, emphasizing that a new war of similar proportions is on the horizon, requiring the mobilization of vast quantities of precious resources. Explicitly framing the war as a NATO-US conflict against China, they write, “in a possible U.S.-China conflict, the United States and other NATO countries would face increased risks of mineral shortages.”

Also in February of this year, the International Energy Agency launched a program which explores the possibility of holding critical minerals in an emergency strategic supply, similar to how the organization and several other countries hold a strategic petroleum reserve. The agency is run by the Organization for Economic Cooperation and Development (OECD)—a US-led, Euro-American Cold War economic coalition.

In April of 2024, the Center for Strategic and International Studies (CSIS) launched its own initiative, the Project on Critical Minerals Security. The new project highlights the “sense of urgency to increase U.S. security for these critical inputs” among the entire ruling class, Democratic and Republican parties alike.

In May, the Wall Street Journal declared that “China is Winning the Minerals War,” stating that “Western efforts to make a dent are languishing.” In a more recent article by the same WSJ author, they worry, “America’s War Machine Runs on Rare-Earth Magnets. China Owns That Market.”

In August, Politico reported that the Biden administration was considering a new scheme to “prop up” American critical mineral projects, as these worries mount. The reported measures would create a minimum price for critical minerals in the United States, paying the difference if prices go below that amount on the open market. This would be a significant development that put in place a price scheme that goes far beyond measures in the oil and gas market to prop up production.

Meanwhile, various Western green tech companies have gone bankrupt this year or showed signs of economic distress. This includes the Swedish battery company Northvolt, which lost a major contract with BMW over delayed development of its gigafactories, and TitanSolar, SunPower and Sunrun, three major US solar companies. 

The worries in the United States and Europe about “losing the mineral war” result from at least three key problems facing their ruling classes.

First, the projects that they are trying to start—new multibillion-dollar mines, refiners and manufacturing processes—are massive, long-term investments that oftentimes take at least a decade to begin production. Constructing these large projects requires time and assurance that the costs will be paid back.

Second, China has major cost advantages over these expensive new projects. New processors of minerals will have a very challenging time competing with China when it has been the epicenter of mineral refining for several decades, and generally it has lower wages and environmental regulations. Most recently this cost advantage has been reflected in the significant decline in the price of many critical minerals in 2023 and 2024. For example, lithium has dropped more than 80 percent. Albeit, these prices—connected to the global financial system and all its speculative activity—remain volatile.

Third, and most importantly, there are conflicting time horizons in the US-led attempt to counter China’s dominance of this sector. While the US and EU require time, at least 10 years, to secure for themselves new robust supplies of critical minerals in the event of war, the US fears that the longer it waits to go to war with China, the greater China’s ability may be to develop countermeasures to advanced US missile technology.

These combined factors put pressure on US policymakers to find other sources of critical minerals as quickly as possible.

As the WSWS has previously explained, this pressure informs the US-NATO proxy war with Russia, centered around Ukraine. The geostrategic benefits of fatally weakening Putin’s regime and, ultimately, breaking apart Russia into smaller states include control over the country’s vast resources. This would (1) further isolate China, by depriving it of its most minerally rich geostrategic partner, while (2) adding to US-NATO large quantities of hydrocarbons, diamonds, nickel, platinum group metals, rare earth metals, Niobium, cobalt and graphite—all already under active production. Ukraine also contains major prospective deposits of lithium.

China, for its part, has begun to flex its geostrategic control of critical minerals.

Most recently, China put in place restrictions on antimony, a largely unknown critical mineral that is used in armor-piercing ammunition, military optics and solar panels. Last year, Beijing launched similar restrictive measures on gallium, germanium and graphite—all of which it controls most of their global supply. These measures were put in place in response to US restrictions on the sale of advanced semiconductor chips to China – a ban which it seems Chinese business have largely been able to work around.

The restrictions on antimony, put in place earlier this month, has led to a doubling of its price on global markets.

This developing conflict over critical minerals underscores the immense danger posed by a US-China war.

Mpox cases on the rise in Canada

Omar Ali

Despite the World Health Organization (WHO) having declared mpox an international public health emergency, cases continue to mount in Canada. The latest surge in cases stems directly from the neglect of the threat posed by the mpox virus, irrespective of the clade of the virus, by governments at the federal and provincial level.

A colorized transmission electron micrograph of mpox particles (red) found within an infected cell (blue), cultured in the laboratory [AP Photo/NIAID]

As of mid-August, 164 cases have been recorded in the country this year, far outstripping the totals registered by the Public Health Agency of Canada (PHAC) in 2023. The government has been quick to note that the current spike is much lower than the figures observed during the initial spread of mpox globally in 2022 when more than one thousand were infected in Canada before the outbreak was unceremoniously declared over. 

Presently the clade 1 strain of mpox is ravaging parts of central Africa, particularly the Democratic Republic of Congo (DRC), prompting the declaration of the second public health emergency of international concern (PHEIC) for mpox by the WHO in August. The current declaration comes on the heels of a new strain of mpox, clade 1b, that emerged late last year in South-Kivu, one of 26 provinces located in the eastern part of the DRC. 

Initial investigation of the outbreak revealed it transmitted more easily between people and concerns were raised that the infection among the population was growing with its potential spread throughout the region and beyond the country’s borders. With a case fatality ratio of 3.6 percent, it made it far deadlier than infections with the clade 2b strain that has spread to more than a hundred countries across the globe. 

More recently, the presence of the clade 1b strain in the densely populated capital of Kinshasa, located 2,000 kilometers to the west of the epicenter of the outbreak, is raising new concerns. There are more than 17 million people living in the capital that has access to the rest of the world via its international airport, raising the immediate concerns that the clade 1 strains of the mpox virus may spread uncontrolled throughout the rest of the world.  

The presence of the clade 1b strain in Sweden and Thailand may be the proverbial canary in the coal mine signaling the all too real threat of this strain spreading broadly. The complete abandonment of any semblance of a response to the clade 2b mpox outbreak in 2022 raises ample concerns over how public health authorities will respond once the clade 1 strain takes hold.

The lack of any sound epidemiologic response by Canada’s health officials to the current strain of mpox is emblematic of the international anti-public-health response globally. At every turn, public health statements and announcements downplay the dangers posed by the virus and attempt to offer false assurances that these pathogens are no serious threat, and all the necessary tools are in place should they be needed. Statements like the one made by Chief Public Health Officer Theresa Tam, who admitted that the lack of any positive samples of clade 1 in wastewater “could change,” should raise eyebrows.

The mpox virus has primarily affected the province of Ontario, where 142 confirmed cases have been reported since the beginning of the year. Two cases have needed hospitalizations, and no one has died so far.

Few, if any, of the positive cases were associated with international travel. Once introduced, the virus fueled a large outbreak entirely driven by local community transmission. Only 15 percent of cases reported travel outside the province in the 21 days before the onset of symptoms and the positivity rate for testing has been higher than 27.3 percent since late June, according to the provincial health ministry. 

This implies health authorities have adopted the “live with the virus” strategy which has been taken in relation to the COVID-19 pandemic rather than fighting to eradicate the disfiguring and potentially deadly mpox virus.

Officials are hoping that existing therapies, principally the antiviral Tecovirimat, combined with targeted vaccination of at-risk populations, can limit the spread of the disease. 

However, individuals who have been recommended to get the vaccine in Toronto report experiencing extensive delays with booking appointments. Considering that post-exposure vaccines should be administered within two weeks of initial exposure according to Toronto Public Health, such delays can be catastrophic in a rapidly growing outbreak.

Additionally, the use of Tecovirimat did not seem to reduce the resolution of mpox lesions among children and adults in the DRC. What seemed to make the difference in mortality is hospitalization and delivery of high-quality supportive care. But a widespread epidemic can very quickly overwhelm health facilities, where they begin to act as vectors of spread of the disease.

Health Canada has cited its “sufficient supply” of vaccines as adequate in curbing the spread of the mpox virus even as the epidemiologists and other health professionals have criticized the futility of this approach, with one quoted by CTV News noting that “sooner or later that fire is coming for you.” 

A recent opinion piece in the medical journal BMJ denounced the vaccine nationalism of rich countries when it comes to mpox and pointed to the similarities with the response to COVID-19, where hoarding of vaccines led to untold deaths in poorer nations and ultimately facilitated the emergence of deadlier variants. The authors noted corporate interests at play, explaining that currently  

Africa CDC [reports] a need for approximately 10 million vaccine doses to control the outbreak, of which only about 280,000 are available, i.e., less than three percent of the estimated need, even as wealthy countries hoard, stockpile, and refuse to share vaccines. These same countries hoarded COVID-19 vaccines, actively blocked or delayed the patent waiver that could have enabled Global South countries to manufacture COVID-19 vaccines during the pandemic and eroded the equity clauses in the draft pandemic accord after lobbying by big pharmaceutical companies.

The Canadian government says it has no plans to share from its vaccine stockpile, which includes millions of doses of smallpox vaccines that are considered effective against mpox. With the eradication of smallpox in the early 1980s, younger age cohorts will not have received the smallpox vaccine at any point in their lives. 

Experts have noted that the characteristics of the mpox virus should make efforts to curb its spread far more manageable than COVID, even in the crowded conditions of displaced persons camps in the war-torn DRC. The major impediment to achieving this remains, as it does with the ongoing COVID-19 pandemic, the relegation of public health behind the profit interests of the capitalist ruling elite and the division of the world into competing nation states.

World’s two biggest economies show recessionary trends

Nick Beams

Economic developments in the US and China, the world’s number one and two economies respectively, point to recessionary trends in the global economy as a whole.

A young couple walk near office buildings in Beijing's Central Business District on March 2, 2024. [AP Photo/Andy Wong]

The latest data from the US released last Friday show a decline in the labour market while price numbers from China on Monday indicate that deflation is starting to become entrenched.

Chinese industrial producer prices fell by 1.8 percent, year on year, in August in the largest decline in four months, largely as a result of falling prices for steel. This compared with a decline of 0.8 percent in July and exceeded expectations of a drop of 1.4 percent.

The consumer price index rose by 0.6 percent year on year, slightly above 0.5 percent in July but below market expectations of a 0.7 percent rise, according to the National Bureau of Statistics.

As far as analysis of the direction of the economy is concerned, the main focus is not consumer price index but the GDP deflator which seeks to measure the growth of the economy after prices changes across the board are taken into account.

It has been negative for the past five quarters, giving rise to concerns that China is entering a deflationary spiral. If it extends into next year, as appears likely, that would amount to the longest period of deflation since data were first collected in 1993.

The deflationary trend has led to further calls for action by the government to stimulate the economy which so far it has been resisting, fearing this will only add to debt problems.

Commenting on the latest numbers, Robin Xing, chief China economist at Morgan Stanley, said: “We are definitely in deflation and probably the second stage of deflation.”

By this he meant that deflationary forces starting in one area of the economy spread more broadly, leading to falling wages and a decline in consumption spending.

“Experience from Japan suggests that the longer deflation drags on the more stimulus China will eventually need to break the debt-deflation challenge,” Xing said.

There is evidence of spreading deflation. Bloomberg reported that even in sectors of the economy which have been supported by the government as part of its drive to develop new “high quality productive forces”—such as electric vehicles and green technology—entry level wages have declined by almost 10 percent from their peak in 2022.

Chinese government officials have sought to prevent discussion of deflation and have told analysts not to use the term. But cracks are opening in the political establishment as the situation becomes more serious.

Speaking at the Bund Summit, an annual economic conference in Shanghai last Friday, the former governor of the People’s Bank of China, Yi Gang, directly addressed the issue.

The state-backed media outlet Caijing reported that he told the conference that policy makers they should loosen monetary policy and support the real economy.

He called for “proactive fiscal policy and accommodative monetary policy” and that officials “should focus on fighting deflationary pressure” with the aim of bringing the GDP deflator back into positive territory.

Apart from the ongoing slide in the housing and property market, which has been a mainstay of the Chinese economy for around a decade and a half, there are many other indicators of the slowdown in the economy.

The steel industry is one of them. Last month, the chief executive of one of the largest steel conglomerates warned of a “long winter” for the industry because of overcapacity that has reduced profitability. A recent survey, the results of which were reported in the Australian Financial Review, suggested that only 1 percent of Chinese steel mills were operating profitably.

Steel production in China dropped 6 percent in July compared to a year earlier with forecasts that it could fall further.

The price of iron ore, the export of which is crucial for Australia and Brazil in particular, has been falling, reaching $90 a tonne on Monday, its lowest level since November 2022.

The price of copper, regarded as a bellwether for the global industrial economy, has also fallen in recent months.

Another warning signal, reported on by the Financial Times (FT) is the fall in demand in office space. It said that offices in some of China’s largest cities were emptier than they were during COVID lockdowns. At least a fifth of high-end office space in Shenzhen, a centre of high-tech, was vacant in June.

According to Lucia Leung, a research analyst at the global real estate firm Knight Frank: “The biggest challenge is still the significant reduction in market demand due to the weakening of China’s growth expectations.”

There is now considerable doubt that the official target for growth of 5 percent will be met with major global banks cutting back their estimates for growth this year and next.

The economic situation in the US presents itself very differently but the same underlying trends are present.

Much attention has been focused on the US labour market in recent days in the search for clues as to the size of the expected cut in interest rates by the US Federal Reserve when it meets later this month.

The labour market report issued last Friday showed that 142,000 jobs were created in August, well below forecasts of 160,000. But in some ways even more significant was the revising down of the July number from 114,000 to 89,000. This followed the downgrading of the number of jobs created in the year to March by 818,000.

It has been noted that such downward revisions most often occur when the economy is starting to move into recession.

Other data showed that the number of US job openings in July fell to its lowest level in more than three years and has been falling steadily since reaching a peak in 2022 and declining by 13 percent over the past year.

There are signs of financial turbulence as well amid speculation about the size of the Fed’s interest rate cuts. On Friday, Wall Street closed down after having had its worst week in more than a year, before rising again this week. But the gyrations are signs of a worsening economic outlook. High tech stocks, which have led the market up, have been the hit with the tech-heavy NASDAQ index dropping 5.8 percent last week.

The AI chipmaker Nvidia, which has had led the tech frenzy, lost 14 percent in market value. The decline of $406 billion in market value was the largest weekly drop by a single company ever recorded, according to Dow Jones Market Data.

The FT reported that last week US companies issued a record amount of debt as they sought to bolster their cash holdings to counter economic and financial turbulence.

An official at Bank of America told the newspaper the reason for the high debt issuance was an “effort to de-risk ahead of potential economic risks out there, including upcoming economic data reports, the Fed’s decision on interest rates, the election and ongoing geopolitical risk.”