Aurelia Butler

Jia Tianhao and his friends thought they would be running a fast-growing tech start-up by now. But like many entrepreneurs and private sector companies in China, they are finding growth harder to come by as the world’s second-biggest economy stumbles.Their four-year-old software company, based in Alibaba’s hometown of Hangzhou is “slowing down”. “We’re taking a step back and using this time to improve ourselves,” says Jia, 26.For China, such sentiment is a problem. Headlines in recent weeks have focused on thorny debt problems which have battered the property sector and strained local government coffers. But another problem is standing in the way of the country’s economy returning to a path of sustained growth: a lack of confidence among businesspeople.Metrics of this may be imperfect but there is evidence that confidence among consumers and entrepreneurs in China has not recovered from a plethora of policy measures under Xi Jinping’s administration, including the leader’s sweeping “common prosperity” campaign in 2021 which tackled inequality and excess while also reasserting the Chinese Communist party’s control over the country’s entrepreneurial class. Business confidence in August fell to its lowest point in a year, according to the Caixin services survey. “The biggest problem right now is a loss of confidence on the part of Chinese entrepreneurs,” says Andy Rothman, an investment strategist at the Matthews Asia fund. “That’s the part of the economy that drives most of the job creation, most of the wealth creation, most of the innovation and most GDP growth,” he says.A new tracker from the Peterson Institute for International Economics shows that in the first half of this year, the share of China’s state sector among the country’s largest listed companies rose to 61 per cent, from 57 per cent. The share of the private sector dropped below 40 per cent for the first time since the end of 2019, declining further from a peak of 55.4 per cent in mid-2021.PIIE researchers Tianlei Huang and Nicolas Véron point out that their tracker “echoes . . . other dismal recent private-sector numbers”. Among them, China’s private-sector fixed asset investment shrank in the first half of the year compared with the same period in 2022.In July, political leaders in Beijing acknowledged they had a problem. The party’s Central Committee, one of China’s top decision-making bodies, and the State Council, the country’s cabinet, issued a rare joint statement in support of developing the private sector in China. Since then there have been signs of green shoots: some restrictions over the real estate sector have been eased and more moves have been made to boost domestic consumption. Even Jack Ma, one of the key targets of the 2021 campaign, has resumed some public appearances.Liqian Ren, who manages China investments at WisdomTree Asset Management, argues the real estate bubble bursting is the “overarching factor” weighing on private sector investment. “Naturally, whether it’s in China or outside China, where you have these kinds of macro conditions, people are cautious,” she says.

Rothman says entrepreneurial sentiment is eventually going “to turn around”. But the timing, he concedes, is uncertain. “Over the last several decades, the Chinese economy has gone through a lot of challenging periods . . . in the end, the government has, after it’s made a lot of mistakes, been pragmatic, and in the end, Chinese entrepreneurs and households have been resilient.”To that end, Wang Ziyi, co-owner of a Hangzhou company that develops digital luxury goods supply chains, is among those who see an opportunity in the downturn. She says that with cheap rent it is a good time to expand and open new stores. Still, most analysts believe far more needs to be done to convince businesspeople that unpredictable regulations and sudden crackdowns are a thing of the past. They point to the inherent tension between Xi’s priorities of party control and national security, and unleashing the animal spirits of China’s entrepreneurs and consumers.Yu Jie, a China expert at the UK think-tank Chatham House, said that the “common prosperity” campaign created a sense of uncertainty, spooking private investors and private companies. “It is very easy to undermine confidence, it will take a much longer time to restore the sense of confidence that would be required to get the economy back on track,” she said.Additional reporting by Nian Liu More

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.Never underestimate the Bank of Japan’s ability to move markets.Just as the dollar’s rally appeared to be accelerating and worries over Asian currency weakness deepening, BOJ governor Kazuo Ueda indicated a possible shift away from a negative interest rate policy, perhaps before the year is out.Ueda’s comments ignited the Japanese Government Bond and currency markets – the yen scored its biggest rise in two months and the 10-year JGB yield leaped to its highest in almost 10 years, scaling 0.70% for the first time since January 2014.Analysts at Barclays reckon BOJ officials could flesh out more of their thinking at next week’s policy meeting, while Deutsche Bank economists radically changed their BOJ forecasts.They now expect the central bank’s ‘yield curve control’ policy to end in October, compared with April 2024, and for the negative interest rate policy to end in January 2024, versus December 2024.The prospect of a radically different – that is, far more hawkish – monetary policy stance in the world’s third largest economy has reverberations far beyond Japan’s domestic markets, especially in foreign exchange.Investors bearish on Asian currencies, partly on the view that continued weakness in the Chinese yuan will spur a domino effect of competitive FX depreciation across the continent, may have to think twice.Most Asian currencies on Monday rose against the dollar, which posted its biggest one-day decline in two months. The main exceptions being the Indonesian rupiah and Philippine peso, which were little-changed on the day.Of course, the BOJ may stick to the cautious long game it has been playing for years, and the hawkish flurry of repricing Japanese assets and Asian currencies will quickly dissipate. But for now, there is much more two-way risk in the market and investors are taking Ueda’s words at face value.Beyond the Japanese policy drama, investors will also have the latest Indian inflation and industrial production data, and Australian business and consumer sentiment figures to digest on Tuesday.Annual consumer price inflation in India is expected to have eased in August to 7.00% from a 15-month high of 7.44% in July. But that would still be above the upper end of the Reserve Bank of India’s 2% to 6% target for a second consecutive month.The rupee has steadied in recent sessions but last week hit a record closing low against the dollar. The currency is getting little support from the interest rate outlook – economists currently expect the RBI to keep rates on hold then start easing policy the second quarter of next year.Here are key developments that could provide more direction to markets on Tuesday:- India inflation (August)- Australia consumer sentiment (September)- Bank of Korea monetary policy meeting minutes (By Jamie McGeever; Editing by Josie Kao) More

The SEC found the firms had not met requirements of a 2020 rule that bans advisers from touting hypothetical performance to investors unless they have policies designed to ensure that it is relevant to the intended audience, among other things.The charged companies were Banorte Asset Management, BTS Asset Management, Elm Partners Management, Hansen and Associates Financial Group, Linden Thomas Advisory Services, Macroclimate, McElhenny Sheffield Capital Management, MRA Advisory Group and Trowbridge Capital Partners, the SEC said in a statement.The firms, which did not admit or deny the SEC’s allegations, were hit with penalties ranging from $50,000 to $175,000, the SEC said.Representatives for each of the firms did not respond immediately to requests for comment. More

Good morning. We start today in the UK, where the revelation that a British parliamentary researcher was arrested on suspicion of spying for Beijing in March has focused a spotlight on the government’s approach to China.Cabinet Office minister Oliver Dowden said on Monday there was “a strong case” for tough new action against Beijing, and that ministers were looking at whether to include China in an “enhanced tier” of countries under the government’s new National Security Act, which is intended to “protect the safety or interests” of the UK.However, the Treasury is concerned about any new government moves against China that could damage the UK economy and Rishi Sunak has resisted pressure from Conservative MPs to label Beijing “a threat”.“It’s not like all of our partners are taking an ever-tougher line against China — they are not,” said Lord Kim Darroch, a former UK national security adviser. “If you designate China they will retaliate.” Read the full story.Go deeper: The British government faces questions about which ministers knew what — and when — about the arrest, and whether the matter has been factored into Britain’s foreign policy on China, which critics deride as too soft. Calling Financial Times subscribers: join our webinar this Wednesday (0730 ET/1230 UK) on China’s economic slowdown. Register for your free ticket now and send in your questions for James Kynge, Yuan Yang, Eleanor Olcott, Yu Sun, and UBS economist Tao Wang.Here’s what else I’m keeping tabs on today:Economic data: Opec publishes its Oil Market Report for September.Apple: The tech giant will unveil the iPhone 15 at its latest product launch, as it closes in on Samsung as the world’s largest handset maker. But will China worries overshadow Apple’s moment of triumph? Vladimir Putin-Kim Jong Un meeting?: Neither Russia nor North Korea has said when the meeting to discuss weapons sales will take place. But it’s expected to happen in Vladivostok, where Putin speaks today at the Eastern Economic Forum.Five more top stories1. The banks underwriting Arm’s $50bn listing will close orders for shares a day earlier than planned owing to strong demand for the biggest initial public offering in nearly two years. The IPO for the UK-based chip designer, which is more than five times oversubscribed, will close on Tuesday, instead of Wednesday as previously intended. People familiar with the matter said pricing could land towards the top end of the initial range of $47-$51 a share or even higher than that. Here are more details.2. The US and Vietnam have agreed billions of dollars in business deals and partnerships led by companies including Boeing, Microsoft and Nvidia. US president Joe Biden hailed the move to strengthen co-operation in areas including cloud computing, semiconductors and artificial intelligence while in Hanoi on a two-day trip to mark the formal upgrading of the countries’ relationship, in response to China’s growing influence.3. Nato is preparing its biggest live joint command exercise since the cold war next year, assembling more than 40,000 troops to practise how the alliance would attempt to repel Russian aggression against one of its members. The Steadfast Defender exercise will start in the spring as part of Nato’s rapid push to transform from crisis response to a war-fighting alliance.4. Beijing gave a strong warning against bets on renminbi depreciation and released a batch of positive lending data earlier than usual, spurring China’s currency to bounce back from a 16-year low touched last week. “The central bank showed its muscle this time and made a difference,” said a Shanghai-based currency trader. Here’s more on the People’s Bank of China’s statement.5. Alibaba’s former chief executive Daniel Zhang has unexpectedly stepped down as head of the company’s cloud computing division as the Chinese ecommerce group starts its break-up into six units. Zhang had been expected to continue to lead the company’s cloud business into a planned spin-off. “The timing is peculiar on the day the transition was set to take place,” said one Alibaba insider.The Big Read

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A billion-dollar money laundering investigation in Singapore comes at a sensitive and destabilising time. The city-state is wrestling with rising inequality — linked to unrestrained capital inflows, especially from China — as it prepares for its first change of leader in almost 20 years. While Singapore’s open, trade-reliant economy has proved resilient to external shocks, some are questioning whether the model is still working. We’re also reading . . . North Korea’s reopening: The country is embarking on a belated reopening from some of the most stringent Covid-19 restrictions in the world. Western banks in China: The era when foreign lenders in China were immune to geopolitical tensions between Beijing and the west has come to an end, writes Patrick Jenkins.History wars: Sins of omission and distortion from politicians are complicating the real point of the discipline, writes Stephen Bush.Map of the dayThe powerful earthquake that struck Morocco on Friday night has killed some 2,681 people and levelled scores of mountain villages in the north African country. The FT’s Alice Morrison reports fromOuirgane in the remote High Atlas region, which has borne the brunt of the most powerful quake to strike the country in 120 years.Take a break from the newsBiographer Walter Isaacson tells the FT’s Gillian Tett what he learnt during two years spent with “total access” to Elon Musk, and why the tech tycoon “is driven by demons.”

Additional contributions from Grace Ramos and David Hindley More

WASHINGTON (Reuters) – The U.S. House of Representatives returns this week for an expected political brawl over spending cuts and impeachment that could paralyze the Republican-controlled chamber, as Congress struggles to avoid a government shutdown.The House and the Democratic-controlled Senate are due to be in session for about 12 days before funding expires on Sept. 30, leaving little time to agree on a package of 12 appropriations bills that can pass each chamber and win Democratic President Joe Biden’s signature.The main bone of contention among House Republicans is a demand by roughly three-dozen members of the hardline House Freedom Caucus to cut spending for fiscal 2024 to $1.47 trillion — about $120 billion less than Biden and Republican House Speaker Kevin McCarthy agreed in May.The White House and Senate leaders — including top Republican Mitch McConnell — have rejected that demand.That dispute and other hardline demands, including opposition to Ukraine aid and calls for an impeachment inquiry against Biden, could imperil efforts to pass a short-term stopgap, known as a continuing resolution or “CR,” which would keep federal agencies afloat while lawmakers debate full-scale appropriations.”Everything’s coming to a head after a long recess,” Republican Representative Kelly Armstrong told Reuters, referring to the six-week-long House summer break that ends Tuesday. “We’re a pretty diverse caucus, with a five-vote majority. So, threading the needle is something that’s really difficult to do.”McCarthy’s eight-month-old speakership could be threatened if he seeks Democratic support to avoid a shutdown or fails to move forward with an impeachment inquiry that former President Donald Trump’s House allies are seeking despite a lack of votes. Political brinkmanship over the debt ceiling has already prompted the Fitch rating agency to downgrade U.S. debt to AA+ from its top-notch AAA designation, partly because of repeated down-to-the-wire negotiations that threaten the government’s ability to pay its bills.White House spokesperson Andrew Bates warned that failure to enact $24 billion in supplemental funding for Ukraine and $16 billion for disaster-stricken U.S. communities in states including Hawaii and Florida could put lives at risk, while delaying money to combat the deadly opioid fentanyl.SOME PREFER SHUTDOWNHardline Republicans want offsets for spending on disaster relief and Ukraine aid included in any CR, as well as tighter immigration and border security policies. “Without these spending cuts, we’re a ‘no’ vote. I say ‘we’ – me and a good many others,” Representative Ralph Norman, a Freedom Caucus member, said in an interview. “I’d rather shut the government down.”That could mean trouble for McCarthy’s hopes of restarting action on spending legislation this week with an $886 billion defense appropriations bill.The House, which Republicans control by a thin 222-212 majority, has passed only one appropriations bill so far. The Senate plans to move forward on Monday with bipartisan bills. Senators of both parties hope floor action will give them the upper hand in negotiations with the House. House hardliners vehemently reject a proposal to lump border security and Ukraine aid in a separate measure. “We’re going to have to see some significant win for the American people,” Freedom Caucus Chairman Scott Perry told Reuters. “We’ve been abundantly clear, transparent and precise about how you get votes out of members in the Freedom Caucus.” Hardliners, who forced McCarthy to endure 15 floor votes before he became speaker in January, shut down the House floor in June to protest his spending deal with Biden.Their demands have irked more centrist Republicans.With the Senate and White House in Democratic hands, Representative Don Bacon said House Republicans should accept the higher spending level set by the McCarthy-Biden agreement and adopt a relatively clean CR. “There’s no reason to do a shutdown when you already have a bipartisan agreement,” Bacon told Reuters. “I know that 20 or 30 people don’t like it. But they don’t represent the whole House and they don’t represent the whole country.”Firebrand Representative Marjorie Taylor Greene vowed not to support funding measures unless the House votes to begin an inquiry on unproven allegations that Biden was involved in his son Hunter’s overseas business dealings while vice president. Biden and the White House deny the claims. Other Republicans reject the idea of tying an impeachment inquiry to the spending debate.Democrats have dismissed impeachment talk as little more than an effort to distract from Trump’s extensive legal woes.” … Until you have the votes, it seems kind of silly,” Democratic Senator John Fetterman told reporters. More