Xi tries to restore investor confidence in China

Today’s top stories

• Former UBS and Citigroup trader Tom Hayes failed in his attempt to overturn his conviction for rigging an interest rate benchmark in a London appeals court. Hayes became the first person in the world to be found guilty by a jury over the Libor scandal and served five-and-a-half years in prison.

• Piero Cipollone, the European Central Bank’s newest board member, warned against an “excessive focus” on waiting for slower wage growth before it starts cutting interest rates, suggesting he may argue for a reduction at the ECB’s April meeting.

• Five of Germany’s top research institutes slashed their growth forecasts for Europe’s largest economy as exports and domestic demand remain weak. They predict growth this year of 0.1 per cent, down from their earlier expectation of 1.3 per cent six months ago.

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Good evening.

China’s economy has not “peaked” and its growth prospects remain “bright”. That was the message delivered by President Xi Jinping today to US business leaders gathered in Beijing amid concerns that the country is investing heavily in manufacturing to overcome a deep property slowdown, leading to oversupply and potential dumping in international markets.

As our latest Big Read details, Xi is betting big on a “made in China” strategy but it is unclear whether the rest of the world would accept more Chinese-made goods. Industrial oversupply could even lead to a “slow-motion train accident for world trade”, according to the president of the EU Chamber of Commerce in China.

Xi also promised that “China’s reforms will not stall, and our opening up will not stop” after IMF chief Kristalina Georgieva had warned on Sunday that his country was at a “fork in the road”, where it must choose between past policies or “pro-market reforms” to unlock growth.

Georgieva and a host of western guests were in Beijing for the China Development Forum, the country’s flagship international business conference. US executives are back in greater numbers in a sign that bilateral tensions have eased slightly after falling to new lows last year due to a spy balloon incident. Apple boss Tim Cook is among those trying to build bridges, emphasising China’s “critical” role in its business.

Beijing has been at pains to present a more welcoming picture to investors after data showed foreign direct investment at its lowest level in decades. Xi also met US business leaders in San Francisco in November during his summit trip to meet US President Joe Biden in an attempt to allay some of the national security concerns expressed by China hawks in Congress.

Tensions continue to flare however over subjects such as Chinese electric vehicle imports. A report yesterday suggested a quarter of EVs sold in the EU this year will be made in China, including western brands such as Tesla. Chinese-branded vehicles, led by BYD, are set to take around 20 per cent of the market by 2027. China this week filed a World Trade Organization case against US EV subsidies, after being on the receiving end of similar charges from the US and EU.

Other points of conflict include shipbuilding, the solar industry and social media platform TikTok, which lawmakers insist should be divested by Chinese parent company ByteDance if it is to continue operating in the US.

Xi’s pivot to manufacturing may pose a threat to western interests through a wave of high-tech low-cost exports, but some economists doubt it will be enough to deliver on China’s growth targets.

Others say the plan makes sense in terms of Xi’s aims for regime stability and national security. “The long-term goal is a world economic order that really favours China,” says one academic. “We are just at the very beginning.”

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Need to know: UK and Europe economy

The Bank of England warned of the risks to British businesses by a potential reversal of the long-running private equity boom, with implications for leverage, transparency and valuations. It said that the likelihood of a “sharp correction” in some markets had increased since December.

Whatever happened to “Global Britain”? Politicians are failing to champion UK trade and inward investment, argues the British Chambers of Commerce, because they are frightened of reawakening old divisions on Brexit.

Gloom also surrounds Europe’s second-largest economy after France’s budget deficit widened more than expected. Finance minister Bruno Le Maire said the fiscal hole was caused by tax revenues falling as inflation slowed, but argued that spending was not out of control and growth had been maintained.

Bulgaria’s government has collapsed after coalition problems, heralding a likely sixth election in three years. Our Europe Express newsletter (for Premium subscribers) explains what it means for the rest of the EU.

Need to know: global economy

The US faces a Liz Truss-style market shock if the government ignores the country’s surging federal debt, warned the head of Congress’s independent fiscal watchdog. The debt pile shot up following Donald Trump’s tax cuts in 2017 and huge stimulus spending during the pandemic.

BlackRock chief Larry Fink said the world faced a looming “retirement crisis” that requires a rethink of pensions and working patterns as people live longer. One in six people globally will be older than 65 by 2050, up from one in 11 in 2019.

The FT revealed that Russia has started supplying oil directly to North Korea in defiance of UN sanctions, dealing a new blow to international efforts to contain Pyongyang. Recent shipments are the first documented direct seaborne deliveries from Russia since the UN Security Council — with Moscow’s approval — imposed a cap on oil transfers in 2017 in response to Pyongyang’s nuclear weapons tests.

The price of cocoa surged past $10,000 a tonne for the first time thanks to poor harvests in Africa. The “out of control” market means higher price tags on the way for chocolate bars.

Chief economics commentator Martin Wolf turns his mind to global politics to send out a warning: we may not be witnessing a return of fascism in the historical sense, but we are seeing the rise of authoritarianism with fascistic characteristics, he argues.

Need to know: business

Insurers and carmakers are bracing for the impact of the Baltimore bridge disaster, where at least six people are presumed dead. Motor suppliers face bottlenecks in a crucial entry point for vehicles while repair estimates are soaring. Read our explainer on what happened and what it says about the quality of US infrastructure.

Donald Trump may be mired in legal problems but the US presidential hopeful has received a huge boost from his social media business after it soared more than 50 per cent on its New York stock market debut, making his stake worth more than $4.6bn. Here’s a new Big Read on Trump’s new inner circle.

WTO chief Ngozi Okonjo-Iweala said the first customs duties on digital products such as online films and software downloads will hit consumers and businesses in 2026, increasing prices in some countries.

China’s Longi Green Technology, the world’s largest solar manufacturer, is laying off thousands of workers as it grapples with overcapacity and fierce competition, piling pressure on billionaire founder Li Zhenguo.

Robin Zeng, China’s “battery king”, told the FT that the much-hyped solid-state battery for electric was still years away. Japanese carmaker Toyota has trumpeted its progress, pledging to deliver the technology as early as 2027.

Artificial intelligence is helping speed up the energy transition, say industry leaders, as it transforms key functions such as lowering carbon emissions, dealing with cyber attacks and predicting mechanical failures. Read more in our special report: The Future of AI

The World of Work

Pandemic predictions of the death of the commute were greatly exaggerated, according to FT analysis of transit data, but new hybrid work options still pose challenges to policymakers and transport authorities.

Managing people is normally a prerequisite for climbing the corporate ladder, but is it possible to dodge it? Listen to the new Working It podcast.

Some good news

Damage to the optic nerve can lead to irreversible blindness but US researchers have shown that a protein previously thought unimportant can stimulate regrowth of nerve cells, giving hope to sufferers of diseases such as glaucoma.

Source: Economy - ft.com