Economy

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.“Planet Earth is big enough for the two countries to succeed,” said Xi Jinping, China’s president, as he met his US counterpart Joe Biden in San Francisco. It was one of several upbeat messages between the US and Chinese leaders as they made their clearest bid to stabilise ties since a bitter trade war erupted in 2018. Though it remains tentative, the indications are that the two men achieved at least the beginnings of a “reset” in relations that have slumped to their lowest ebb in 40 years.More than four hours of talks delivered some key agreements. Most significant was China’s undertaking to reopen military-to-military communications channels that it shut down after the then US House Speaker Nancy Pelosi visited Taiwan in August 2022. Beijing said it would curb the export of chemicals used to make fentanyl, the potent synthetic opioid that has been linked to hundreds of thousands of deaths in the US.There were signs of efforts, too, to reduce tensions over Taiwan. Xi is said to have voiced some “exasperation” over suggestions by US officials that China might use military action as early as 2027 to reunify the self-governing island with the mainland — and to have said there were no such plans. While Chinese officials have been unsettled by remarks by Biden that he would order the US military to defend Taiwan from a Chinese attack, the US president pointedly sidestepped post-meeting questions over whether he stood by those statements.The US president’s reference in a press conference to Xi as a “dictator” highlighted the depths of the distrust between the two sides — and the risks that progress could still unravel. For now, though, both countries have compelling reasons to attempt to put relations on a firmer footing.For the US, stabilisation with Beijing has become increasingly desirable as Washington finds itself grappling with wars in both Ukraine and the Middle East. Concern that the Israel-Gaza conflict could escalate into a broader regional conflagration has led US officials to see China as a potential moderating influence over key regional actors, above all Iran.On top of the deteriorating geopolitical situation, China has been unsettled by mounting economic problems at home, including slowing growth, local government debt, a faltering property market, and what is set to be the first fall in foreign direct investment this year for 25 years. Beijing has become convinced that it needs to court foreign business communities more assiduously. Xi’s visit included an appeal to a 300-strong US business audience, extolling the opportunities of the Chinese market.Relations are not set to improve overnight. A resurgence of western investment in China is unlikely if Beijing continues to engage in what are seen as unfriendly actions, such as raids on US consultancy firms. US officials will be watching closely to see if China actively follows through on its pledge to curb the trade in fentanyl precursors. The return of military communication between the two sides is only a first step in rebuilding confidence, though it allows for a minimal level of conflict avoidance.There are opportunities to build on this week’s progress with further efforts to co-operate on climate at the coming COP28 conference, and on containing regional conflicts. Further flare-ups, such as the diplomatic storm over the Chinese “spy” balloon over the US that derailed a hoped-for reset earlier this year, may be unavoidable. Yet the Biden-Xi meeting provided encouraging signs that both sides are attempting to manage relations despite their deepening strategic rivalry. If they are to avoid eventual conflict, that is the only option they have. More

This article is an on-site version of our Britain after Brexit newsletter. Sign up here to get the newsletter sent straight to your inbox every weekGood afternoon. It’s honestly hard to know where to start this week. Over the past seven days Brexitland has been led in a dizzying circle. Last weekend Suella Braverman was at peak culture war stridency, before she was sacked to make way for the surprise return of David Cameron to the cabinet on Monday. But the ink had barely dried on all those opinion pieces about Sunak reclaiming the Cameroonian centre ground, before the prime minister was promising to defy the ruling of “foreign courts” after the UK Supreme Court eviscerated his Rwanda asylum policy. Having seen this blowhard movie before, it was hard, honestly, to find anyone on the EU side getting overexcited by talk of the UK leaving the European Convention on Human Rights, which underpins the Good Friday Agreement and the security chapters of the EU-UK trade deal.It was also noted that James Cleverly, the new home secretary, chose his words carefully in a marked change of tone from his predecessor. Given the life-expectancy of this government, the ECHR membership question is not an issue of imminent concern.More pertinently, perhaps, the EU is itself wrestling with the legality of Italy’s migration deal with Albania to process migrants offshore and, according to more than one EU diplomat, member states will be watching carefully to see if Sunak is able to rescue his own agreement.Beyond that, it’s not clear that Sunak’s political contortions really alter much in the management of the EU-UK relationship, except to confirm that British politics is wrestling with many of the same demons as other parts of Europe.But beneath the rhetoric, there was actually quite a lot of Brexit news that shows that the EU-UK relationship is plodding on, within the limited framework set for it by the Trade and Cooperation Agreement.A statement released this week on EU-UK relations ahead of the EU council meeting in December talked about “exploiting the full potential” of the TCA “bearing in mind the limits stemming from the current agreements”.And speaking of those “limits” it’s notable that the discussion on whether to delay imposition of planned ‘rules of origin’ for electric vehicles remains unresolved. My colleague Andy Bounds in Brussels tells me that EU Affairs ministers discussed the EV issue on Wednesday but — according to diplomats — France was still resisting any change.The Franco-German wrangling on this issue of mutual concern highlights how slowly EU-UK trade matters move. But it also suggests that a future UK government would be advised to try to reframe the discussion around areas of broader common strategic interests like net zero, rebuilding Ukraine or Balkans security.This week the British Chambers of Commerce boss Shevaun Haviland was in Brussels looking at ways to deepen EU-UK trade ties, including a meeting with Maroš Šefčovič, the European Commission vice-president.Shared interestsThinking about mutual strategic interest, it was notable that Haviland said she’d raised the issue of the Carbon Border Adjustment Mechanism (CBAM) and alignment on emissions trading schemes and future regulation with Šefčovič. “It’s only by keeping this dialogue open and understanding the aims and intentions of both sides that we can reach the best outcome for business and our economies,” she added.The use of pronouns is important in that sentence — making the discussion about “our economies” and not presenting a British wishlist. As one person close to the conversation put it to me, there needs to be a “commonality of challenge” and shared sense of potential solutions.Taking a more holistic “neighbourhood” approach will have to be foundational to any attempt by a Sir Keir Starmer-led government to reboot relations. So this week, my colleagues reported that Jeremy Hunt will introduce a UK CBAM. That, however, looks fundamentally to be a defensive UK-centred trade measure to avoid the dumping of high-carbon products on the UK market after the EU’s scheme goes live in 2026.The question for a Labour government will be whether to seek to link the EU and UK carbon pricing schemes (a move for which there is provision in the TCA) as part of increasing investment and improving energy security across Europe as a whole.UK business lobbies are aware that they have a better chance of success in Brussels by co-opting the support of their European confrères — as they have done with the EV rules of origin issue by enlisting German industry and government to pressure the Commission to move.Because if the rules of origin issue on electric vehicles cannot be resolved, then EVs will face 10 per cent tariffs in both directions, something that will only increase the advantage of Chinese manufacturers at the expense of European and UK ones. That doesn’t make sense for either side. There are recent examples of UK and EU lobbies joining forces. In 2016-2020 they worked together over common issues related to cars, food and chemicals but failed to move the Commission. The argument that the UK should not avoid the consequences of Brexit always prevailed — Starmer must try to create a less defensive atmosphere.Deals that cut both waysThere are other issues that cut both ways, like a youth mobility deal. There were hints of receptiveness to a more collaborative approach from the EU side this week. Šefčovič said there was consensus for a deal on a “pan-European” level “based on reciprocity and non-discrimination”.Another is the UK-EU border arrangements. This week the cabinet office minister Baroness Neville-Rolfe said the government would press ahead with its plans to introduce a UK border on EU exports to the UK, starting in January.Leave aside bigger questions about the need for the interoperability of trade facilitation technology, when the UK border is imposed it should lend impetus (as EU businesses feel the pain) for the EU and UK to work on mutual approaches to using technology to reduce friction as far as possible.No one should be too starry-eyed about what’s possible within the limits set by Starmer — outside the EU single market and customs union — but by the same token, it would be foolish not to try to imagine a different, less zero-sum approach to the EU-UK relationship than emerged from the bitter divorce years.Brexit in numbersYou are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.This week’s striking chart comes via the Institute for Government and the FT’s data visualisation team. It shows that the “churn rate” of the four top positions in government has broadly tripled in the wake of the Brexit vote.Arguably the longevity of Tony Blair and Margaret Thatcher skews the picture when it comes to prime ministers, but for the other major offices of state — the chancellor, home and foreign secretaries — the picture is pretty stark.Go further down the food chain to ministries such as Defra and education — important for key long-term agendas like national skills development and the environment — and the ministers come and go even more rapidly.Investors often talk about whether they can “look through” political cycles to see a clear and stable regulatory environment, but in recent years the chopping and changing has taken place within political cycles.As noted above, the UK is introducing its new border from January in order to beef up biosecurity and level the commercial playing field, but it’s not so long ago (April last year) that Jacob Rees-Mogg was telling trade groups that such borders were unnecessary. It’s the kind of uncertainty that makes investors take a ‘wait and see’ approach, or even decide to put their money elsewhere.Britain after Brexit is edited by Gordon Smith. Premium subscribers can sign up here to have it delivered straight to their inbox every Thursday afternoon. Or you can take out a Premium subscription here. Read earlier editions of the newsletter here.Recommended newsletters for youInside Politics — Follow what you need to know in UK politics. Sign up hereTrade Secrets — A must-read on the changing face of international trade and globalisation. Sign up here More

Stay informed with free updatesSimply sign up to the More

The UAW and Mack Trucks had reached a tentative deal in October that included a 19% pay raise, but union workers overwhelmingly rejected it and went on a strike.The deal had also included a $3,500 ratification bonus, improved retirement benefits and a reduction in the time needed to get to top pay, but some Mack Workers complained the raise was too small to keep up with inflation.”After 39 days on strike, UAW members at Mack Trucks have voted by 93% to ratify their new contract with significant local improvements,” the union said in a post on messaging platform X, earlier known as Twitter.Mack Trucks said the new contract guaranteed “significant wage growth,” and covered its employees at facilities in Pennsylvania, Maryland and Florida.However, the UAW and Mack Trucks did not reveal details of the new contract and did not reply to requests for comment.The deal comes as the UAW is the midst of labor ratification votes at Detroit’s Big Three automakers, where workers went on strike for more than six weeks seeking better wages, working conditions and cost-of-living adjustments.General Motors (NYSE:GM)’ tentative labor deal with the union closed in on ratification as the votes were counted on Wednesday. Voting at Ford (NYSE:F) and Stellantis (NYSE:STLA) is still under way, and workers at both companies were favoring ratification by comfortable margins.Mack Trucks, which was bought by Volvo in 2000, is one of North America’s largest makers of medium-duty and heavy-duty trucks. More

As per the latest circular issued by the RBI today, the risk weight for consumer and retail loans, excluding home, education, vehicle, gold loans, and lending against gold jewelry, will now be 125%. The central bank has also specified that banks will have a higher risk weight of 150% for credit card receivables. Non-bank finance companies (NBFCs) will face a risk weight of 125% for the same.This regulatory adjustment is expected to make lending more costly for banks and NBFCs as they will now need to hold more capital against these loans. The decision follows a cautionary note from RBI Governor Shaktikanta Das on October 6, where he highlighted the swift expansion in consumer credit sectors such as personal loans and advised financial institutions to strengthen their internal surveillance mechanisms to mitigate potential risks.In addition to this, there was a corresponding rise in the risk weight on credit card receivables of these financial institutions. This revision has escalated the risk weight on consumer credit exposure for commercial banks and NBFCs by 25%, excluding categories like housing loans, education loans, vehicle loans, and gold-secured loans.The central bank’s action is aligned with its mandate to maintain financial stability and is a preemptive step to ensure that the banking sector remains resilient against any future financial stress that may arise from unsecured lending practices.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.President Xi Jinping plans to renew China’s “panda diplomacy” with the US. He has promised new pandas for American zoos. These cuddly looking bears may appear to soothe Sino-US foreign relations. But that will not help investors fretting over Chinese stocks trading at historically low valuations.Biden said the meeting with Xi in the US yielded progress. Xi claims China is ready to be a partner and friend of the US. They agreed to resume military communications after several years of tension over a possible Taiwan conflict.Markets should focus on what was left unsaid. There was no discussion on US curbs on advanced chip sales, US investments in Chinese technology and the disputed areas of the South China Sea. Last month, the US further tightened a sweeping set of chip export controls implemented in 2022. In August, Washington said it would limit US investments in advanced Chinese technology. Worse, in response to a question at his post-summit press conference, Biden referred to Xi as a “dictator”. This sparked an angry response from the Chinese foreign ministry on Thursday, inflaming existing tensions.Gains in Hong Kong and mainland listed Chinese stocks in the lead up to the summit anticipated an improvement in US-China relations. That now looks overly optimistic. Chinese stocks were among the worst performing in Asia on Thursday, led by tech and electronics stocks including Lenovo, Alibaba and Xiaomi. The latter fell 7 per cent.All this comes when Chinese stocks look historically cheap. Shanghai’s Composite Stock Index trades at just 1.2 times its estimated book value. That is a discount to most of its regional peers and near the bottom of its 10-year range. The same holds true for the index’s forward price/earnings ratio at under 10 times.But the market is cheap for a reason. Bottom-fishing investors seeking bargains worry most about the local property sector. On Thursday, October data on home prices fell the most in eight years. The real estate crisis is getting worse, confirming that Beijing’s monetary easing measures have little power to improve the situation. Real estate shares, even those of the safest developers such as China Vanke, have plummeted in recent weeks. The recent rally in Chinese shares should falter. No number of cute pandas can offset the asset deflation threatening the property sector.If you are a subscriber and would like to receive alerts when Lex articles are published, just click the button “Add to myFT”, which appears at the top of this page above the headline. More

This new agreement earmarks $110 million for the parent company of CRDB Bank and an additional $5 million for its subsidiary in Burundi. The funds are intended to enhance investments across various sectors, including agriculture, oil and gas, and trade. This development represents a transition from mere transactional interactions to a strategic alliance that aims to promote shared growth and prosperity.The deal comes on the heels of a productive period for CRDB Bank. Just last month, the bank secured a substantial $150 million facility agreement with Intesa Sanpaolo (OTC:ISNPY) and Investec Bank. Additionally, it successfully raised Sh171.82 billion from Green Bond sales, signaling strong market confidence in its operations and future prospects.During discussions at the IATF 2023 Diaspora Day, Abdulmajid Nsekela, CEO of CRDB Bank Group, underscored Tanzania’s welcoming environment for diaspora investments. He pointed out opportunities in the agriculture, infrastructure, health, and real estate sectors, specifically mentioning the Fumba Town project as an example.Underlining this commitment to engaging with the diaspora, Nsekela highlighted policy amendments by the Tanzanian Central Bank that now allow diaspora members to open bank accounts and invest in their home country more easily. He also noted the establishment of the Diaspora Digital Hub (DDH), which is supported by CRDB Bank with an investment of Sh100 Million.CRDB Bank has made concerted efforts to encourage diaspora investment through various services such as loans and advisory offerings. It has integrated its digital banking systems, including ‘SimBanking,’ ‘Internet banking,’ and TemboCard, with its Tanzanite Account to facilitate these investments. Moreover, the bank collaborates with leading remittance partners like Western Union (NYSE:WU), World Remit, Ria, and Upesi to streamline financial transactions for the diaspora community.This series of strategic initiatives and partnerships underscores CRDB Bank’s commitment to fostering investment within Tanzania and throughout Africa. With these developments, CRDB Bank is positioning itself as a key player in driving economic growth and facilitating cross-border trade on the continent.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

Amid frosty U.S.-China relations, Xi Jinping emphasized friendship in an address to executives from Apple, Boeing, Nike and others.The streets outside the San Francisco hotel where Chinese leader Xi Jinping addressed a crowd of American business executives Wednesday night were chaotic, echoing with police sirens and the chants of protesters. A woman had strapped herself to a pole 25 feet in the air in front of the hotel, yelling “Free Tibet!” as a cold rain fell.But inside the ballroom of the Hyatt Regency, the atmosphere was warm and friendly. More than 300 executives and officials listened attentively as Mr. Xi — the leader of a country often considered America’s greatest rival — spoke for over half an hour about an enduring friendship between China and the United States that could not be diminished by recent turmoil.Mr. Xi spoke of pandas. He spoke of Ping-Pong. He spoke of Americans and Chinese working together during World War II to battle the Japanese. He addressed the tensions that have rocked U.S. and Chinese relations in the past year only briefly and obliquely, comparing the relationship to a giant ship that was trying to navigate through storms.“The number one question for us is: are we adversaries, or partners?” Mr. Xi asked. Seeing the other side as a competitor, he said, would only lead to misinformed policy and unwanted results. “China is ready to be a partner and friend of the United States.”Among those who paid thousands of dollars to attend the dinner and hear Mr. Xi’s message were Tim Cook, the chief executive of Apple, Larry Fink of BlackRock, and Jerry Brown, the former governor of California. They mingled with executives from Boeing, Pfizer, Nike and FedEx. Elon Musk popped by during the cocktail hour to greet Mr. Xi, but departed before dinner began.Mr. Xi’s tone was welcomed by many of those in attendance, who believe that more engagement between the United States and China will improve the lives of people in both countries, reduce misunderstandings and potentially even deter a war.“I think it’s important Americans and Chinese are meeting again face to face,” John L. Holden, managing director for China of McLarty Associates, a consultancy, said as he queued outside the hotel. “This is not a magic bullet, but it is something that can provide possibilities that wouldn’t exist otherwise.”President Biden met with Mr. Xi earlier in the day at the Filoli Estate outside of San Francisco.Doug Mills/The New York TimesMr. Xi’s positive tone, and the enthusiasm of some of the event’s attendees, struck a sharp contrast with much of the recent conversation in the United States about China, which has focused on potential economic and security threats.Republican lawmakers have blasted President Biden for his “zombie engagement” with China. Recent polls have shown that Americans are more concerned about the rise of China than at any point since the end of the Cold War.At a news conference Wednesday, Mr. Biden celebrated a successful meeting with Mr. Xi earlier that day, which had resulted in agreements to fight drug trafficking and increase communication between the countries’ militaries. But when asked if he still thought Mr. Xi was a dictator, Mr. Biden replied: “Well, look, he is.”China has for decades been an attractive market for American businesses because of its size and growth, but the country’s slowing economy and increasingly authoritarian bent have been cooling the enthusiasm executives feel toward China.Foreign companies say the Chinese government has been slowly squeezing them out in favor of local competitors. While some think Chinese leaders have been shaken by a recent drop-off in foreign investment in China and are motivated to mend ties, executives are still concerned about recent crackdowns in China on foreign business and strict regulations, including on how companies use Chinese data.For companies that manufacture in China, supply chain disruptions during the pandemic also sent a strong message that firms should not rely on a single country for their goods, and kicked off a trend toward “de-risking.” Still, some American businesses are still making a lot of money in China. “I don’t think that anybody thinks that one dinner, or one visit, or one conference is going to reverse all the hostility that has built up between the U.S. and China,” Michael Hart, the president of the American Chamber of Commerce in China, said in an interview on Tuesday. But he added that if Mr. Xi had a friendlier stance toward the United States, “that will hopefully mean a slightly more friendly operating environment toward U.S. business in China.”Supporters of Mr. Xi near his hotel in San Francisco on Tuesday.Jim Wilson/The New York TimesIn the ballroom, 34 tables were laid with roses and orchids. They were numbered 1 to 39, skipping any number with a four, which in Chinese sounds similar to death, as well as unlucky number 13. Guests chose between a coffee-crusted Black Angus steak and vegetable curry with jasmine rice and toasted pistachios.Gina Raimondo, the U.S. secretary of commerce who spoke at the dinner, thanked Mr. Xi for a productive meeting earlier that day, where Chinese officials had met with Mr. Biden and his deputies.“We all know that we have differences,” Ms. Raimondo said at the dinner. “I’m not going to pretend otherwise. That being said, President Biden has been very clear that while we compete with China and other countries, we do not seek conflict and we do not seek confrontation.”“We want robust trade with China,” Ms. Raimondo said. She said that many of the people in attendance remained keenly interested in doing business in China. “I know that because many of you come to see me and tell me that,” she said, to laughter.Mr. Xi, who has overseen China’s military modernization and increasingly robust projection of power abroad, emphasized China’s commitment to a rules-based international system, its efforts to eradicate poverty, and its peaceful nature. Mr. Xi also touted his personal connections to the United States, including the time he spent in Iowa in the 1980s and an old photo he said he keeps of himself in front of the Golden Gate Bridge.“China has no intention to challenge the United States or unseat it,” he said.Stephen A. Orlins, the president of the National Committee on United States-China Relations, one of the groups sponsoring the event, said he was there when the committee hosted previous Chinese leaders in the United States — Deng Xiaoping, Jiang Zemin and Hu Jintao — and that all had projected a friendly demeanor. He recalled Mr. Deng famously donning a cowboy hat during a U.S. visit in 1979.“When they stand in front of an American, they tend to be more constructive and pro-American. It’s just part of what happens,” Mr. Orlins said. “They’re not going to come to an event like this and put their thumb in the eye of us as the sponsors and the audience.”Mr. Xi touted his connections to the United States during his speech. Jeff Chiu/Associated PressMr. Orlins’ group and the other organizer of the event, the U.S.-China Business Council, went through a logistical Olympics to set up the dinner. Because of security concerns, the organizers could not reveal the location until the day before, and guests received an invitation to an event with an unnamed “senior Chinese leader.”Mr. Orlins said his group knew that Mr. Xi had attended every meeting of the international grouping known as the Asia-Pacific Economic Cooperation, and concluded that he would do the same when the meeting occurred in San Francisco this week. So they extended an invitation nine months ago to host Mr. Xi.Three or four weeks ago, Mr. Orlin said he was told that Mr. Xi’s presence was still uncertain, but that he should start preparations.The Chinese protocol office peered over every attendee; they were extremely sensitive about security, especially since someone had crashed a sedan into the Chinese consulate in San Francisco just weeks before. The White House insisted that the dinner happen after Mr. Biden’s meeting with Mr. Xi Wednesday, so as not to upstage that event.The groups had to hire copious security and staff, and even fly in translation equipment, since local supplies were already claimed by the Asia-Pacific conference. Even though far more people wanted to attend the event than there was capacity for, Mr. Orlin said the $40,000 the groups charged for some tables would only partially recoup the costs of the event.Mr. Orlins said the Chinese had prepared three versions of a speech Mr. Xi could deliver that night. After Wednesday’s events with Mr. Biden, Mr. Xi had picked the friendliest one. More