Good morning. The Biden administration has unveiled a ban on US investment into quantum computing, advanced chips and artificial intelligence sectors in China, as it ratchets up efforts to ensure that the Chinese military does not benefit from American technology and capital.
President Joe Biden on Wednesday issued an executive order establishing the prohibitions, which will largely affect private equity and venture capital firms as well as US investors in joint ventures with Chinese groups.
A senior US official said it would create a “very targeted” programme that would focus on the three sectors that the Biden administration has also marked out in a series of other technology-related measures aimed at China.
The latest move threatens to hurt continuing efforts to resurrect top-level engagement between the US and China. Washington has said the rule, which will not take effect until next year, will protect US security. But Beijing has countered that previous US actions are designed to crimp its technological progress.
Meanwhile, Republicans criticised the order for not tackling more kinds of investment. “To stop funding China’s military, we have to stop all US investment in China’s critical technology and military companies, period,” said Nikki Haley, one of the GOP presidential contenders.
However, another US official said private equity and venture capital had been targeted because they could introduce Chinese groups to other technology companies and experts. “What we are trying to get at here is the intangible benefits,” the official said. “Ultimately, China doesn’t need our money.” Read the full story.
More on the US-China tech war: China’s internet giants are rushing to acquire high-performance Nvidia chips vital for building generative artificial intelligence systems, making orders worth $5bn in a buying frenzy fuelled by fears the US will impose new export controls.
Here’s what else I’m keeping tabs on today:
Economic data: US inflation numbers released today are expected to show consumer prices rising to 3.3 per cent year on year in July, up from 3 per cent in June. Meanwhile, Opec issues its August Oil Market Report and the European Central Bank publishes its Economic Bulletin.
Monetary policy: The Reserve Bank of India is expected to hold benchmark rates steady when it makes its monetary policy decision today. (Reuters)
Results: Alibaba, Rakuten and Eneos Holdings report earnings.
India: Prime minister Narendra Modi is expected to address a no-confidence motion over the continuing conflict in the north-eastern state of Manipur. While the motion is certain to be defeated, Modi will be compelled to speak on a security crisis that he has shown “brazen indifference” towards, according to India’s opposition.
Five more top stories
1. Consumer prices in China have declined for the first time since early 2021 as the world’s second-largest economy continues to buck the global trend of high inflation. The consumer price index fell 0.3 per cent year on year in July, according to official statistics released earlier today. Read more on the Chinese economy’s slide into deflation.
More China news: AstraZeneca has signed a deal with Chinese pharmaceutical company CanSino Biologics to develop potential messenger RNA vaccines.
2. European natural gas prices surged almost 40 per cent on Wednesday as the potential for disrupted global liquefied natural gas supply from Australia spooked traders betting on further price declines. The increase was triggered by reports that workers at important LNG plants in Australia were planning strike action. Here’s what a cut in Australian supply could mean for Asia.
3. SoftBank is in talks to bring in Amazon as an anchor investor in Arm’s forthcoming initial public offering as part of a widening search to find customers willing to take a long-term stake in the UK-based chip designer. Discussions have also expanded to Google, Apple, Amazon and companies in other industries heavily dependent on semiconductors. Here are more details.
4. Elon Musk’s X, formerly known as Twitter, was fined $350,000 after missing a deadline for complying with a secret search warrant for Donald Trump’s account as part of the January 6 investigation. The US Department of Justice’s search warrant directed X to produce data and records related to Trump’s @realdonaldtrump Twitter account. Here’s how X responded.
More Trump news: The former president admitted that he may be forced off the campaign trail to defend himself against what he called “bullshit” criminal charges and predicted that he could be facing a fourth indictment as early as next week.
5. WeWork has warned for the first time that it faces “substantial doubt” about its ability to continue as a going concern. The US office space company, once valued at $47bn, said its outlook depended on a series of plans including further restructuring and a search for additional capital over the next 12 months. Read more on WeWork’s struggle to survive.
The Big Read
China dominates the supplies of many of the key building blocks for clean energy technology. Its control has drawn comparisons to the high level of influence that Saudi Arabia enjoys in the oil market — and potentially complicates the world’s transition to renewable energy.
We’re also reading . . .
TED talks draw Beijing’s ire: The group’s days of spreading ideas to China’s 1.4bn people are in question after crossing a Communist party “red line” on free speech.
Biden’s Middle East push: The US plan to normalise relations between Israel and Saudi Arabia would remake the region, but it faces big obstacles.
What Britain can learn from Taiwan: A difficult inheritance can be overcome by working on “social infrastructure”, writes Yuan Yang.
Chart of the day
Indian equity exchange traded funds took in a net $1.5bn in July, according to BlackRock’s data, the second-highest monthly figure for India on record, beaten only by the $2.3bn witnessed in March this year. The inflows suggest investor enthusiasm for India, which is widely expected to take the baton from China as the world’s fastest-growing large economy in the decades to come.
Take a break from the news
New York’s West Village has become the centre of a dining revolution. Kyle Beechey traces the former counter-cultural hub’s journey back to fashionability after years of stagnation.
Additional contributions from Tee Zhuo and Gordon Smith
Source: Economy - ft.com
