China’s leaders assemble amid uncertain economic backdrop

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• Apple was hit with a €1.8bn fine from Brussels for stifling competition from rival music streaming services, the first time the iPhone maker has been punished for breaching EU law. Competition chief Margrethe Vestager said the tech giant had restricted developers “from informing consumers about alternative, cheaper music services available outside of the Apple ecosystem”.

• It’s an important week in the US presidential race as Donald Trump prepares to secure the Republican nomination while incumbent Joe Biden delivers his State of the Union speech. The US Supreme Court ruled today that Trump could remain on the Colorado ballot. US national editor Ed Luce will be one of our key commentators in this election year: watch him here talk about power and politics in Washington DC.

• Central banks might have to delay interest rate cuts because of stubbornly strong services price inflation, the Bank for International Settlements said. The sector is labour-intensive and so more sensitive to movements in wages, keeping prices high.

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Good evening.

It’s a huge week for China as thousands gather in Beijing for the annual session of the National People’s Congress, the country’s rubber-stamp parliament, to hear the leadership’s plans for the year ahead and an update on the nation’s sluggish economy.

The backdrop is challenging. The country is still suffering from a real estate crisis, foreign direct investment has fallen to its lowest level in decades and manufacturing remains in the doldrums: PMI survey data on Friday showed activity falling for the fifth month in a row. Add to that growing trade frictions with the US and Europe and it becomes clear that China’s rulers have their work cut out.

Another news story today highlights the growing problem of deflation. The country’s agricultural ministry unveiled regulations for tighter control of pig herds (China has the world’s largest pig population) after overcapacity had pushed down prices of pork, a staple good and the most important component of the country’s closely watched consumer price index.

As our main China story today explains, policymakers are expected to resist market pressure for much stronger stimulus to spur economic recovery and instead focus on President Xi Jinping’s plans to turn the country into an advanced manufacturing superpower.

Some experts have argued that both short-term macro policy support and medium-term structural policies are needed to boost the economy and confidence, but in the view of the FT’s China specialist, James Kynge, strenuous fiscal interventions are no longer in Beijing’s preferred playbook. Kynge argues there is a growing consensus in China, further fuelled by an ageing population, that its troubles are not transitory, but rather long term and structural in nature. 

Some of this has been addressed in Beijing’s bold attempts to reshape world trade on its own terms, building an alternative system focused on developing countries.

The government has also been successful in building up key industries of the future, most notably in electric vehicles, where Chinese models are powering ahead of inferior US rivals and currently account for 60 per cent of all sales worldwide. Its solar and wind power industries are also global leaders, its factories install about half of all industrial robots and its tech companies file more patent applications than any other country.

Beijing is also giving a leg-up to its artificial intelligence start-ups by offering “computing vouchers” to help them with rising data centre costs as supplies of crucial chips become more scarce.

However, Kynge notes, Xi’s tech-centric growth model may struggle to resolve the nation’s chronic youth unemployment problem and weak consumer spending. After decades of spectacular growth and its emergence as a technological superpower, Xi’s China may settle into a new phase where its people feel that their quality of life is slipping into reverse, he writes. 

In the meantime, all eyes will be on premier Li Qiang’s “work report” tomorrow outlining this year’s priorities. Analysts think Li will set a target for economic growth of 5 per cent, matching last year’s figure, which was the lowest in decades. 

Need to know: UK and Europe economy

UK Chancellor Jeremy Hunt warned of the “long path” ahead to cut the country’s tax burden as he prepared for his crucial Budget statement on Wednesday, amid speculation of possible cuts in national insurance or income tax. Look out for Wednesday’s DT for full coverage of Hunt’s speech and expert analysis.

The Church of England rejected a call to set aside £1bn for a new fund to address its involvement in the transatlantic slave trade, after a group with oversight of the church’s response said current plans to earmark past wrongs was insufficient.

Russia accused Germany of planning to attack its territory as it leaked a recording in which German air force personnel appeared to discuss supplying Ukraine with long-range missiles. Ukraine risks losing the “energy war” with Russia unless US aid arrives soon, according to the head of the country’s largest private power producer.

Need to know: global economy

Opec+ members led by Saudi Arabia and Russia extended cuts to oil production for another three months in a bid to boost prices.

The $26.5tn US Treasury market, the world’s biggest bond market and the mechanism by which the Federal Reserve executes monetary policy and through which the US government borrows, is bracing for huge reforms. Our Big Read explains.

John Kerry is to remain involved in raising finance for the clean energy transition after stepping aside as the top US climate official, to be replaced by another White House veteran John Podesta.

Javier Milei, Argentina’s new president, wants to use his popularity to force through a plan for radical austerity. A Big Read explains how he plans to do it through social media.

Need to know: business

European stock markets are in crisis. Trading volumes are sinking, initial public offerings are scarce and some of its biggest companies prefer the appeal of the US. Here’s why in charts.

US defence contractors are missing out on a global military boom as legislative deadlock in Washington creates government spending uncertainty.

A 20-year inheritance feud has been dividing the Fiat dynasty since the death of industrialist Gianni Agnelli. Here’s the tale of how it unfolded.

China, the world’s largest spirits market, has traditionally been dominated by sales of the domestic spirit baijiu, but domestic producers have begun turning their attention to single malt whisky.

The World of Work

Can I refer you to the manual of me? A growing number of companies are adopting “personal user manuals”— accessible documents packed with details about what people are actually like in the workplace.

Women are still more likely to break through the glass ceiling to get top jobs only when things are dire, the risk of failure is high and men are less interested in the gig.

In the technology sector, however, the gender gap is narrowing, thanks in part to flexible working enabling more women to join the workforce.

UK boards and investors are pushing up chief executive pay to US levels in a bout of transatlantic remuneration wars.

Some good news

Artificial intelligence is enabling huge progress in cardiovascular medicine, particularly in the all-important role of imaging.