Economy

DHAKA (Reuters) – A Bangladesh court has sentenced the country’s only Nobel laureate, Mohammad Yunus, to six months in jail over labour law violations, a crime he says he did not commit, days ahead of a Jan. 7 general election boycotted by the main opposition party.Below is a summary of key facts in Yunus’ tangles with the law in Bangladesh, with Prime Minister Sheikh Hasina often criticising the 83-year-old, who won the peace prize in 2006 for his work in making microloans accessible to the impoverished:* Yunus started a microfinance movement in late 1976, offering loans below $100 apiece to women in Bangladesh’s port city of Chittagong to help them escape poverty and vulnerability to loan sharks.* He and Grameen Bank, the rural-focused microfinance organization he founded, became Bangladesh’s first Nobel winner for providing small loans to the poor, a practice that spread to more than 100 nations from the United States to Uganda.* Yunus, a professor of economics who had been Grameen Bank’s managing director since 2000, was removed as head of the bank in 2011 by Prime Minister Sheikh Hasina’s government on the grounds he had stayed on past the legal retirement age of 60.* His popular image and fame came under fresh focus in 2007 as he attempted to form a political party, when the country was under a de-facto military government with a civilian outfit.* Despite his microfinance’s global success, there have been concerns such lenders charge excessive interest rates.* A Norwegian documentary alleged in 2010 that Grameen bank was dodging taxes. The documentary sparked criticism in Bangladesh and abroad of Yunus, whose bank has provided about $10 billion in small loans to people, most of them women, to fund businesses and help them escape poverty.* Lauded abroad by politicians and financiers, Yunus has been under attack from Hasina’s government since the documentary alleged that Grameen Bank was dodging taxes. Hasina, in 2011, famously called Yunus a “blood-sucker of the poor” and sharply criticised Grameen Bank’s microlending practices.* Yunus has denied financial irregularities and his supporters say he is being discredited by the government because of a feud with Hasina dating back to 2007, when he tried to setup a rival political party.* Yunus faces more than 100 cases in court, including two criminal charges over labour law violations and alleged corruption.* In September, Amnesty International called on the Bangladesh government to “immediately end their harassment and intimidation of Yunus”. The rights group called Monday’s court verdict a blatant abuse of labour laws and political retaliation for his work.* 190 global leaders, including former United States President Barack Obama and over 100 Nobel laureates, wrote an open letter in August to Hasina urging her to stop “continuous judicial harassment” of Yunus.* Reacting to Yunus’ conviction on Monday, Bangladesh’s Road Transport and Bridges Minister Obaidul Quader said no one was above the law. More

This article is an on-site version of our Central Banks newsletter. Sign up here to get the newsletter sent straight to your inbox every TuesdayGreetings from Washington, where we’re gearing up for what promises to be a lively 2024. I’m Claire Jones, standing in for Chris Giles.Federal Reserve chair Jay Powell finished 2023 in high spirits, delivering a dovish message on December 13 along with forecasts that show most rate-setters are now firmly in the soft-landing camp. That is, the rate-setting Federal Open Market Committee believes unemployment will rise only a touch above current levels as inflation shows more progress towards steadying around rate-setters’ targets of 2 per cent. That progress means that, as we head into the new year, most people expect the Fed to call time on a rate-raising cycle that saw officials lift interest rates by 525 basis points since March 2022 to a 22-year high. The big question is by how much will they cut. A better than expected 2023, which saw US growth outpace almost every other advanced economy and inflation decline sharply, has paved the way for officials to predict they’ll make three quarter-point cuts to interest rates over the coming 12 months. However, many investors expect more than that, with futures markets pricing in as many as six cuts this year. At the moment, a lot of economists’ bets are somewhere in between what rate-setters and markets expect. One explanation for the variation is that there’s a lack of clarity about how the US central bank thinks about financial conditions. In early November, Powell sounded the alarm about an excessive tightening of financial conditions. In the six weeks leading up to the penultimate meeting of 2023, the US government’s cost of borrowing for 10 years had soared by about 50bp to 4.88 per cent. The rate of interest on a 30-year mortgage, meanwhile, hit 7.79 per cent on October 26, the highest level since 2000. That de facto tightening prompted the Fed to add the bold text to its policy statement: Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring and inflation. The extent of these effects remains uncertain. Those two words might not sound like much. But for Fed-watchers they were seen as enough to imply that officials felt as though the markets’ pricing of risk was doing some of their work for them, meaning that there was less need to consider rate increases. In the six weeks leading up to the December vote, however, financial conditions eased substantially. The 10-year yield dropped to 4.2 per cent, while bets on rate cuts helped to lower the 30-year mortgage rate to just a touch above 7 per cent. That had led some to speculate ahead of the meeting in December that the Fed would drop the reference to “tighter” financial conditions. In the event, that line remained — suggesting that even more easing in borrowing costs would be tolerated. It also surprised many that when asked directly by Nick Timiraos of the Wall Street Journal how he felt about markets easing policy on his behalf, the Fed chair appeared sanguine, saying that despite the “back and forth” on market movements, he and his fellow rate-setters were “just focused on what’s the right thing for us to do”. He also said that, in the long run, it was important that financial conditions became aligned with what rate-setters were trying to accomplish, and that “ultimately” they would be. But it’s hard to see how we get to that point in an environment where the Fed’s response to gyrations in financial markets is rather opaque. So how much easing of borrowing conditions would constitute too much? Since the meeting, the 10-year Treasury yield has fallen to 3.88 per cent. The 30-year mortgage rate is 6.61 per cent. The kickback from other FOMC members since the decision suggests some rate-setters are not keen on market pricing that effectively strong-arms them into cutting rates as soon as March. But, other than that, economists say there is little clarity. “The Fed had spoken not that long ago about the market doing some of the work for them,” said Andrew Patterson, economist at Vanguard. “Now equities are up seven or eight weeks in a row. Investors are no longer helping bring inflation down. In fact, we think the opposite is happening right now.” “The inconsistency in guidance on how important the financial conditions index is gives you the impression that they make their minds up and then look for evidence that supports their position,” said Gavyn Davies, chair of Fulcrum Asset Management. “If the evidence changes, but they don’t necessarily change with it, then that’s confusing.” There may be more clues in the minutes of the December vote, which are due out in the coming weeks. If the Fed gets its wish and its shift into the soft-landing camp proves correct, it may remain pretty happy with financial conditions easing. Signs that inflation is proving more durable than it hoped, however, might bring some kickback. My best bet is that the Fed’s forecasts will prove reasonably accurate, and its communications will prove a little clearer as the data confirms that price pressures in the US are indeed dissipating. Until then, though, expect some uncertainty in reading the runes of how US rate-setters think about how markets are pricing things. What I’ve been reading Tej Parikh thinks Team Transitory is still wrong, despite recent falls in inflation. I enjoyed Nic Fildes’ take on Australian kids’ TV phenomenon Bluey. This, by Martin Sandbu, on the rise (and recent reputational hit) to the philosophy of effective altruism is worth a read. A chart that mattersThe US performed far better than the eurozone economy in 2023. Economists think that trend will continue into 2024, according to a poll conducted by Martin Arnold and Alexander Vladkov from the FT’s Frankfurt bureau, which shows growth in the bloc of 20 member states is set to remain weak. Here are the main threats to growth: Recommended newsletters for you Free Lunch — Your guide to the global economic policy debate. Sign up hereUnhedged — Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here More

BRASILIA (Reuters) – Brazil’s record 2023 trade surplus may be tough to repeat this year, private economists and government officials agree, as falling interest rates are expected to boost imports.Brazil’s oil, mining and farm sectors have built a robust trade surplus over the past decade that is the envy of many regional peers. However, last year’s surplus grew more than 50% from 2022 to nearly $100 billion largely due to a 12% drop in imports, as the value of exports was almost flat.That dynamic is likely to change this year, analysts say, as fixed investments are seen rebounding from a 2023 slump due to falling interest rates and major public infrastructure projects drawing private partners.Data over the past decade show Brazil’s fixed investments and imports typically move in tandem. In the third quarter, fixed business investment recorded its fourth straight quarterly drop, a sequence last seen in early 2016, when Brazil grappled with one of its worst recessions in history.Slumping 2023 imports, along with stronger volumes of farm and mineral exports that offset weaker prices, lifted Brazil’s trade surplus to a record. That helped cut the current account deficit in 12 months through October to 1.62% of GDP, the lowest since February 2018.”It seems important…and little-discussed that the improvement in the trade balance and current account is also a reflection of the low dynamism of investments,” said Gilberto Borça Jr., an associate researcher at FGV Ibre.Even if investments do not surge dramatically, they are likely to rebound in 2024, he added, which could also lift imports. A government trade official, who requested anonymity to discuss internal forecasts, said the government does not consider the level of the 2023 trade surplus to be structural. Exports are being supported by higher volumes, which may be hard to maintain, said the official, while stronger investments are likely to boost imports.After a year of high borrowing costs, Brazilian industry expects a more favorable environment in 2024 due to lower interest rates, said Igor Rocha, chief economist at the Sao Paulo State Industries Federation (Fiesp).After keeping interest rates at a six-year high to curb inflation, Brazil’s central bank kicked off an easing cycle in August and has already cut its policy rate by 200 basis points to 11.75%, signaling further reductions ahead. More

1. Futures dip ahead of first trading session of 2024U.S. stock futures were lower ahead of the start of a new trading year, as investors attempted to gauge the staying power of a bumper 2023 for equities on Wall Street.By 06:35 ET (11:35 GMT), the Dow futures contract had slipped by 115 points or 0.3%, S&P 500 futures had dropped by 23 points or 0.5%, and Nasdaq 100 futures were down by 128 points or 0.7%. Markets were closed for the New Year’s Day holiday on Monday.The main indices surged last year despite initial worries that an unprecedented string of Federal Reserve interest rate hikes could spark a recession. But resilience in the U.S. economy helped fuel optimism that the Fed could engineer a so-called “soft landing,” in which inflation is cooled without causing an economic meltdown.Investors will have the chance to parse through a bevy of fresh data this week that could shed light on the state of the world’s largest economy — and, particularly, its all-important labor market — in the final days of 2023.2. U.S. indices post blockbuster 2023The major averages all slipped marginally on Friday, although the declines took little away from what was a stellar 2023 on Wall Street.The benchmark S&P 500 surged by 24.2% annually, closing out the year with a streak of nine consecutive winning weeks — its best since 2004. The tech-heavy Nasdaq Composite also soared by 43.4%, driven in part by strength in mega-cap stocks and emerging enthusiasm over the possible applications of artificial intelligence.Meanwhile, the 30-stock Dow Jones Industrial Average jumped by 13.7%, boosted by seven record closing levels in the last days of the year.Equities endured several shocks throughout 2023, including a regional banking crisis marked by the collapse of Silicon Valley Bank and the outbreak of fresh hostilities in the Middle East. Attention now turns to the new year, with some analysts wondering if the solid returns of 2023 may have left stock valuations overstretched.3. BYD production figures add to pressure on TeslaChina’s BYD said it sold a record 526,000 battery-powered cars in the fourth quarter, putting further pressure on U.S. rival Tesla’s position as the world’s largest manufacturer of electric vehicles (EVs).For 2023, Shenzhen-based BYD also sold over 3 million new EVs and hybrids, a roughly 62% increase, figures released by the company on Monday showed. The result leaves Elon Musk’s Tesla, which offers only battery-powered automobiles, potentially on track to sell fewer cars than BYD for the second straight year.Tesla’s output in the first nine months of 2023 clocked in at 1.35 million cars. The group is set to release its full-year production and delivery numbers on Tuesday.BYD, which counts Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) as a major investor, controlled around 17% of the global market for electric-only vehicles at the end of the third quarter, matching Tesla’s market share.4. Bitcoin clears $45,000Bitcoin rose sharply to a 21-month high on Tuesday on increased speculation that the U.S. Securities and Exchange Commission was close to approving a spot exchange traded fund (ETF) for the world’s largest cryptocurrency.By 05:05 ET, Bitcoin had jumped by 7.0% to $45,630.9, reaching its highest level since early-April 2022.The increase came as an extension of a strong recovery in 2023 for Bitcoin, when the token surged more than 100% in value after starting the year at around $17,000.Partly driving the gains was speculation over the SEC’s approval of an ETF that directly tracks Bitcoin’s prices. The regulator has a January 10 deadline to approve or reject a spot ETF application from Ark and 21 Shares, according to a Reuters report. The ruling could set the precedent for ETF applications from several other fund managers for a similar product.5. Oil risesOil prices rose Tuesday, rebounding after hefty losses in 2023, on concerns over potential supply disruptions in the Middle East.Reports said on Tuesday that an Iranian warship had entered the Red Sea, a vital trade route between Europe and Asia. The news added to fears over the flow of supplies in the region, which has been impacted recently by a series of strikes by Iran-backed Houthis on several military and commercial vessels.By 05:04 ET, the U.S. crude futures was trading 2.2% higher at $73.25 a barrel, while the Brent contract had climbed 2.3% to $78.81 per barrel. Both benchmark contracts had shed over 10% each in 2023, coming under pressure from persistent concerns over sluggish demand and higher-than-expected supply conditions. More

JAKARTA (Reuters) -Indonesia has reduced its 2023 budget deficit significantly to 347.6 trillion rupiah ($22.48 billion), equivalent to 1.65% of gross domestic product (GDP) based on unaudited figures, its finance minister said on Tuesday.As a percentage to GDP, the deficit was the slimmest since 2011. In nominal terms, it was significantly smaller than the government’s original 2023 fiscal deficit plan of 598.2 trillion rupiah, said Sri Mulyani Indrawati.Indonesia’s fiscal deficit in 2022 stood at 2.35% of GDP. The government plans to spend $216 billion this year, with a fiscal deficit oulook of 2.29% of GDP.Total spending last year reached 3,121.9 trillion rupiah ($201.87 billion), 0.8% up from 2022. Total revenues stood at 2,774.3 trillion rupiah, above target and representing a 5.3% gain from the previous year.”The positive performance of the 2023 budget will be a good foundation for 2024, to guard the economy in 2024 against political cycle and geopolitics,” Sri Mulyani said, referring to Indonesia’s general elections due in February and rising geopolitical tensions in other countries.Indonesia has been trying to cut its fiscal deficit to navigate rising borrowing costs globally and better manage its debt after large expenditure during the COVID-19 pandemic.The small deficit in 2023 came even as economic activity in Indonesia slowed with its exports shrinking amid falling commodity prices and weakening global trade.Growth in Southeast Asia’s largest economy likely decelerated to around 5% in 2023 from 5.3% in the year earlier, Sri Mulyani said, predicting growth of 5.2% in 2024.Last year was also the first year since 2012 when the government booked a primary surplus, Sri Mulyani said, referring to the fiscal balance excluding net interest payments on public debt.For 2024, the government plans to use 51.38 trillion rupiah of its accumulated cash to cover the budget deficit and reduce debt issuance, said Suminto Sastrosuwito, the ministry’s head of budget financing, adding the figure would evaluated based on needs.($1 = 15,465.0000 rupiah) More

(Reuters) -A U.S. court on Friday upheld a Federal Trade Commission (FTC) order to block IQVIA’s acquisition of DeepIntent, a healthcare advertising firm, as it may harm competition.DeepIntent, owned by Propel Media, a digital advertising company, entered into an agreement with U.S. headquartered healthcare data and analytics firm IQVIA in 2022 with the intent to facilitate seamless communication between patients and healthcare providers.Earlier this year, the FTC intervened to block IQVIA and DeepIntent’s proposed merger so as to prevent increased concentration in health care programmatic advertising. The merger would harm competition and would lead to increased prices for consumers, and hurt patients, the FTC had said.DeepIntent’s chief executive officer previously in an open letter said that the company would walk away from the deal and would remain an independent company had the regulator won the block. The financial terms of the deal are not known.Speaking in favor of the FTC, District Judge Edgar Ramos granted the U.S. antitrust department a preliminary injunction to block the deal.In the ruling, Ramos said, “The FTC has shown that there is a reasonable probability that the proposed acquisition will substantially impair competition in the relevant market and that the equities weigh in favor of injunctive relief.”IQVIA said in an emailed statement to Reuters it was disappointed by the court’s decision and was reviewing the decision and evaluating its options.”We maintain that the FTC’s arguments in this case are inconsistent with the reality of the marketplace and unsupported by the law,” IQVIA said.DeepIntent and the FTC did not immediately respond to a Reuters request for comment. More

(Reuters) – Investor optimism that the Federal Reserve will start cutting interest rates is breathing new life into the market for junk debt, providing timely relief to the lowest-rated companies and likely capping the rate of defaults in 2024. As the U.S. central bank started to raise rates in 2022 and worries about defaults grew, companies rated below investment grade saw tepid demand from investors for their loans and bonds. Many such companies turned to roundabout ways to raise money to get ahead of a $300 billion wall of bond and loan maturities in the next two years.In the last few months, however, yields have fallen as investors bet the Fed, emboldened by its progress in slowing a surge in prices that pushed inflation to 40-year highs last year, will soon start cutting rates. Markets are now pricing the U.S. central bank’s key policy rate to fall as much as 1.5 percentage points below the current 5.25%-5.50% range by the end of next year. Expectations of such a pivot have led to a resurgence in demand for high-yielding debt. Junk bond spreads, or the premium investors charge over U.S. Treasuries for taking on the risk, have on average tightened 38 basis points since September to 343 basis points, the lowest level since April 5, 2022, according to the ICE BAML index. In December, insurance brokerage USI Inc, a company rated deep in the junk territory, became the first borrower in its category to tap the primary markets since April, according to data provider Informa Global Markets.”While it is possible defaults may increase slightly toward historical averages, a lot of this appears to be priced into the market today,” said Manuel Hayes, senior portfolio manager at Insight Investment.Estimates vary, but analysts expect junk bond default rates to top out at 4% to 5% this year, compared with 2% to 3% in 2023 and far lower than the double-digit readings touched during the 2008 financial crisis. Default rates on leveraged loans, whose interest rates are not fixed but change with the market, are expected to tick up to 5%-6%.One reason for the relatively low rates of default is that some companies have been deploying creative ways to tap financing markets, which has given them the breathing room to meet their debt obligations.  These include distressed exchanges, where investors agree to get paid less than what they were entitled to in exchange for new or restructured debt secured by collateral. They also have been extending the maturity on old debt by agreeing to more restrictive terms on new debt, and putting up collateral or equity to raise money from direct lenders and other private credit providers.A more involved strategy is to raise debt through a local or foreign subsidiary from new and existing lenders, with the proceeds then sent back to the parent company to buy its maturing debt at a discount. The strategy, part of liability management exercises, raises the risk of legal disputes, as it increases some creditors’ claims on assets during bankruptcy by diluting others.”Distressed exchanges are on the rise, as are the use of creative debt-raising solutions, as less creditworthy companies look to raise liquidity to live now to fight another day,” said Glenn Reynolds, the founder of Macro4Micro, a research firm. MIX OF REACTIONSSome analysts said many risks remain. A default cycle may become unavoidable if the Fed surprises markets and doesn’t cut rates as aggressively or as soon as people think. And the use of creative financing strategies may only go so far.”Even if investors participate in such creative trades, whether they would have a higher claim on the company’s assets during bankruptcy is still untested in courts,” said Ian Walker, head of legal innovation at Covenant Review, a research firm.Creditors are already becoming more wary. “A lot of our clients are starting to consider putting protections in credit documentation to make sure that they don’t get short-changed by these liability management transactions,” said Jason Ewart, a partner in the global financial markets team at Clifford Chance, a law firm.”It is a mix of investor reactions, with some supporting the need for such trades as a temporary liquidity measure while others are simply keen to close such loopholes,” Ewart said.    More than $190 billion of the debt maturing in 2024-2025 belongs to the lowest-rated high-yield companies, according to CreditSights.     “We could push right up against it but may not entirely get a full-fledged default cycle,” said Meghan Robson, the head of U.S. credit strategy at BNP Paribas (OTC:BNPQY). More

Chinese shipments to Russia of an important class of advanced machine tools have increased tenfold since the full-scale invasion of Ukraine, with the country’s producers now dominating trade in high-precision “computer numerical control” devices vital to Moscow’s military industries.The soaring shipments of CNC units, which permit extremely precise metal milling, have become a major concern to Ukraine’s allies as they seek to crack down on Russia’s access to the equipment.Russian customs returns show Chinese producers shipped $68mn worth of CNC tools in July, the latest verifiable figure available, up from just $6.5mn in February 2022 when Moscow launched the full-scale invasion.Michael Raska, assistant professor at Singapore’s S Rajaratnam School of International Studies, said CNC exports were an example of how China and Russia were being drawn into a deepening military-industrial partnership.“China and Russia share the same political interest, which is to challenge and confront the US,” Raska said. “The fact is Russia has been cut off from importing European machinery, it has no choice but to rely on China.” You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.Russian imports of CNC tools from the EU, historically its main source, have dramatically fallen as restrictions have tightened since February 2022. Analysts said Moscow was seeking to obtain CNC tools from sources that would not be closed off by international controls.The customs returns show Chinese-origin CNC devices made up 57 per cent of Russian imports by value in July, up from just 12 per cent before the war. They suggest Moscow also continued to import substantial amounts of CNC tools made in Taiwan and South Korea. In November, the US imposed sweeping sanctions on all significant Russian importers of CNC tools — including some that had moved less than $200,000 of equipment since the invasion in February last year. Chinese companies that continue to trade with the Russian importers now risk action from the US that would imperil their ability to trade in other markets.Beijing insists it does not ship lethal weapons to Moscow and denies supporting its neighbour’s war effort, but also rejects the use of sanctions. Chinese shipments of products including oil, machinery, consumer goods and cars are helping to sustain Russia’s sanctions-hit economy. Xi Jinping, president of China, told Russia’s Vladimir Putin in October that annual trade between the two countries had hit a “historic high” of nearly $200bn.Allen Maggard, an analyst at the Washington-based conflict analysis organisation C4ADS, said CNC tools could “rapidly produce complex components from metal and other rigid materials with a consistent degree of precision and accuracy. These qualities make CNC machine tools particularly valuable for defence manufacturing.”.They are also often large pieces of equipment, making them harder to smuggle into Russia from the west than smaller components such as microchips.A Financial Times analysis of export records shows some major winners from the Russian surge have strong links with China’s People’s Liberation Army. Wuhan Huazhong Numerical Control, for example, has increased exports to Russia. In 2017, it was the main contractor in a “Brain Switch Project” — a scheme to replace foreign CNC systems with domestic ones in the defence industry — and has worked with Chinese jet fighter maker Shenyang Aircraft Corporation.HuazhongCNC was itself the subject of US sanctions between 2008 and 2010 under an act banning the transfer of weapons technology or equipment to Syria, Iran and North Korea. The company did not respond to a request for comment. Emily Kilcrease, a former deputy assistant US trade representative, said Washington had been reluctant to use financial sanctions to target Chinese companies helping Russia because of concern that doing so would reduce the effectiveness of such measures in case of a crisis with Beijing.“That dynamic about overuse is very much on the administration’s mind,” Kilcrease said. “They know that these sanctions and export controls are never going to be perfect. And so what they’re really focused on is making sure that what Russia can get is inferior goods. It’s cost imposition — making it much more difficult and expensive for Russia to get these sorts of machine tools.” Analysis by the Bank of Finland Institute for Emerging Economies suggests the median price to Russia of a basket of Chinese goods that could support its war effort rose 78 per cent from 2021 to 2023. The price of Chinese exports of the same goods to other countries rose just 12 per cent.Existing US sanctions and export controls against Beijing’s military contractors over other issues have led many Chinese companies to disregard potential US sanctions risks, according to Alexander Gabuev, director of the Carnegie Russia Eurasia Center in Berlin.Many Chinese companies “expect that sooner or later, all companies linked to the People’s Liberation Army will be sanctioned”, Gabuev said. “So they think either you can try to stay on the market by avoiding deepening your military ties and get sanctioned anyway, or you can just go ahead with it.”How Russia has deployed the Chinese CNC devices it has imported is unclear. Maggard said he believed Russian defence plants were only “beginning to use Chinese CNC machine tools”. Analysts are yet to positively identify any being used on social media or during hours of propaganda footage filmed inside Russia’s high-tech military factories. CNC devices pictured are still all from European, Taiwanese, Korean or Japanese suppliers.This picture is supported by other sources. For example, customs records show CFT, a large now-sanctioned Russian importer of CNC devices, imported very few Chinese-origin products up to July. A leaked internal document from CFT shows it is a supplier to Russian defence manufacturers including Aeroscan, which produces the Lancet kamikaze drone that has inflicted serious losses on Ukrainian forces. CFT did not respond to a request for comment.Olena Yurchenko, an analyst at investigative and advocacy organisation the Economic Security Council of Ukraine, said it would be “almost impossible” to use a Chinese CNC machine in a plant that had based its production processes around a tool from another producer with different specifications.A preference among defence manufacturers for equipment from other countries may also reflect scepticism about the quality of Chinese machines. Maggard noted recent public comments from a Russian sector expert who said that Chinese tools were less precise, less accurate, and had shorter operational lifetimes than equipment made by German and Japanese companies.Video: Ukraine tech sector goes to war | FT Film More