FirstFT: Sunak plans to follow US lead on Chinese investment restrictions

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Good morning. On his way to Japan for the G7 summit, British Prime Minister Rishi Sunak said he planned to follow Washington’s lead in impose new restrictions on domestic companies investing in critical industries in China.

US President Joe Biden has drawn up a plan to limit investment in key sectors of the Chinese economy by US companies that has yet to be announced.

Sunak said any joint action regarding tighter controls on Western investment in China was still ongoing and would not be agreed at the Hiroshima summit as the US did not yet have a “fully formed opinion”. . But the Prime Minister added: ‘In general terms, absolutely, it will be something we will talk about.

Imposing additional export controls on China will also be discussed by Western allies at the G7 meeting with “economic security” high on the agenda, Sunak said.

• UK-China relations: Rishi Sunak has went back on his promise to ban the Confucius Institutes from operating in Britain, in the latest sign of the British Prime Minister trying to improve relations with Beijing.

Here’s what else I’m looking at today:

• Biden meets Kishida: As US President Joe Biden is due to arrive in Hiroshima for the G7 summit, he is expected to meet Prime Minister Fumio Kishida.

• China-Central Asia Summit: President Xi Jinping is hosting a two-day summit with the leaders of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan.

• Earnings: Alibaba, BT Group, Burberry, easyJet, Investec, Premier Foods and Walmart are among the companies reporting results today.

Five other top stories

1. Population aging is weighing on public finances worldwide, as recent interest rate hikes increase the impact of rising pensions and healthcare costs, rating agencies have warned. Moody’s, S&P and Fitch have all warned that deteriorating demographics are already hitting government credit ratings with probable downgrades without radical reforms.

2. Taiwan’s largest opposition party picks Hou Yu-ih as presidential candidate for the January elections. Hou, the popular mayor of the country’s largest municipality, said that while he opposes Taiwan independence, he also rejects the Chinese government under “one country, two systems”. Learn more about the mayor of New Taipei City.

3. Joe Biden was “confident” that the United States could avoid an unprecedented default, as he prepared to travel to Japan for the G7 summit on Wednesday. Biden also left the door open to respond to a Republican request to add new work requirements to anti-poverty programs. Here are the latest details on the tax standoff, on which Biden plans to cut short his trip to Asia.

4. South Korea is trying to reduce tech leaks to China with three major tech leaks in the first quarter of 2023. The country’s government now has a database of chip engineers to monitor their whereabouts and has also tried to facilitate the pursuit of potential leaks.

5. Japan has emerged from a technical recession thanks to a post-Covid recovery in household spending and tourism, sending stocks to a new 33-year high in Asia’s most advanced economy. Economists have warned, however, that the strength of the recovery in Japan has been modest.

great read

Investors are pumping billions into companies that claim to be able to analyze DNA to detect cancer early. The technology has been hailed as ‘revolutionary’ and ‘cutting edge’ by UK and US health chiefs, but some scientists question if it really works.

We also read. . .

• Fly high: Thomas Flohr aimed to disrupt the private jet industry. But after 19 years, the billion in debt held by his company VistaJet raise concerns.

• ‘Defining decade’: Soaring commodity prices have helped Australia’s Labor Party balance the books, but the nation will soon have to deal a host of assembly invoices.

• Redemption of shares: Corporate buybacks of their own shares hit a world record $1.3 billion last year, but such programs are no substitute for thoughtful investment in growth and decent compensation for staff, writes Brooke Masters.

Graphics of the day

Global temperatures are likely to exceed 1.5 C above pre-industrial levels for the first time in human history in the next five years, the World Meteorological Organization said in its latest annual assessment.

Take a break from the news

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Additional contributions from David Hindley and Gary Jones