Economy

When the Russian invasion of Ukraine started two weeks ago, Jane Yan, a senior executive at a machine parts maker in eastern China, says she was not too worried about the impact. After all, buyers in Russia and Ukraine accounted for less than 5 per cent of the company’s overseas sales last year.But as the full ferocity of the Russian onslaught started to become apparent, the outlook shifted dramatically. Important clients in countries such as Poland and Germany cancelled orders with the Zhejiang-based company.“A Munich-based client said ‘it feels terribly wrong to send money to a country that is tolerating war in Ukraine — sorry’,” said Yan, who asked that her employer not be identified. She added that inquiries from European buyers have also fallen sharply since the conflict started. “I hope the war ends as soon as possible.”For Xi Jinping, some of the very same pressures are starting to build. In the early days of the Russian invasion, China tried to keep its head down — perhaps in the hope that a short, sharp incursion would not cause too many reverberations. But over the past week, as Russia has intensified its bombardment of urban areas, Xi has found himself facing the potential for two interlocking crises. As the biggest importer of oil and a big buyer of food from around the world, China’s economy is deeply exposed to the market turmoil that the war and subsequent sanctions have unleashed. It also risks a deep diplomatic backlash, especially in Europe, where many see it as little short of an accomplice to the invasion. Only last month, Xi and Vladimir Putin, the Russian leader, signed a “no limits” partnership in Beijing, which one US senior official described as the “coming out party” for their growing allegiance. China’s president has proclaimed that the Sino-Russia relationship is “stronger than an alliance”. Presidents Xi Jinping and Vladimir Putin at the Kremlin in 2019. China’s economy is deeply exposed to the market turmoil Putin’s war in Ukraine and subsequent sanctions have unleashed © Alexei Druzhinin/Sputnik/Pool/EPA-EFEBut that close relationship is coming with a much bigger cost than China ever imagined, as Putin conducts a bloody and poorly executed invasion of Ukraine that has tainted Beijing by association. Some politicians and government officials in the US, Europe, Australia and Japan now describe Beijing as the eastern anchor of an authoritarian axis stretching across the Eurasian continent. Although China has discussed the idea of playing a mediating role in the war, western officials see little sign that Beijing is yet reconsidering its close relationship with Russia. But they believe that pressure on the Chinese leader is increasing. Bill Burns, CIA director, says that Xi and China’s leaders have been caught off guard by the Ukraine conflict. “They’re unsettled by the reputational damage that can come by their close association with President Putin [and] second by the economic consequences,” Burns told Congress this week. He added that they were also surprised “by the way in which Vladimir Putin has driven Europeans and Americans much closer together”.The worst wheat crop in historyAt a time when the Chinese government is already facing stiff economic headwinds and will struggle this year to meet its lowest annual economic growth target in three decades, Putin’s war has suddenly thrust even greater economic challenges upon Xi.Russia’s decision to invade the entire country has outraged the western world, triggering both a far more unified response on sanctions and sharp increases in the prices of a wide range of energy and agricultural commodities — many of which China is a large importer of. Taiwanese military personnel gather in Taitung. Some analysts say US policy under Donald Trump and Joe Biden brought China and Russia together — especially the US’s strengthening of ties with Taiwan © Ritchis B Tongo/EPA-EFEChina’s growing economic discomfort was noticeable in the video conference Xi held on Tuesday with his French and German counterparts Emmanuel Macron and Olaf Scholz. The Chinese leader appealed for “maximum restraint” in Ukraine and said the three countries should “jointly support peace talks” between Moscow and Kyiv. But he also criticised western sanctions that are exacerbating commodity price rises.“Sanctions will affect global finance, energy, transportation and stability of supply chains, and dampen the global economy that is already ravaged by the pandemic,” Xi said. “This is in the interest of no one.”Among the large economies, China is one of the most exposed to the fallout from the war. As the world’s biggest importer of oil, it has watched crude prices — which were already high — surge 27 per cent since the war began, while Chinese iron ore contracts surged 25 per cent over the first 10 days of the conflict.The scale of China’s energy and resource demands are striking: last year its imports of crude oil and natural gas reached Rmb2tn ($316bn), and it spent another Rmb1.2tn on iron ore imports. The world’s second-largest economy imports about 70 per cent of its oil and 40 per cent of its gas. The impact could be even more pronounced on food. Chinese wheat prices and corn futures are also at record highs, perhaps prompting a lecture on Sunday by Xi about the importance of food security to a group of delegates attending the annual session of China’s parliament.“We should not slacken our efforts on food security,” the president said. “Nor should we rely on the international market to solve the problem. We need to be prepared for a rainy day [and] keep food security as our priority.” “Chinese bowls,” he added, should be “mainly filled with Chinese food.”Shipping containers are stacked at a port in Lianyungang, China. Beijing’s trade with Russia reached $147bn last year, compared with $828bn and $756bn, respectively, with the EU and US © AFP/Getty Xi’s agriculture minister said this week that because of heavy rains, the conditions for this year’s winter wheat crop “could be the worst in history”. Tang Renjian added: “This year’s grain production faces huge difficulties.” Partly as a result, China’s wheat imports for the 2021-22 season are expected to increase at least 50 per cent above its previous three-year average, to 9.5m tonnes, according to the US Department of Agriculture. The potential inflationary impact of sharply higher commodity prices would be another drag on an economy already struggling to revive sluggish consumption and weather its worst property downturn in years.Xu Poling, a researcher at the Chinese Academy of Social Sciences who studies Russia’s economy, says the conflict in Ukraine is not in Beijing’s interest. “China won’t benefit from the Russia-Ukraine war,” Xu said. “The conflict has disrupted global supply chains on which the Chinese economy depends. China’s trade with Russia is far smaller than developed economies like the US and EU.”China’s trade with Russia reached $147bn last year, according to Chinese figures, compared with $828bn and $756bn, respectively, with the EU and US. “Oil prices are above $100 and who is the biggest oil importer in the world — Beijing,” says one China-based industry executive, who asked not to be identified. “Gas prices are very high and who has a lot of shale gas — the US. Wheat prices [are surging] and that also hurts the Chinese. I can assure you the Russians are going to ask for market prices.”What did Xi know?The fallout will not just be limited to the economy. Xi also risks a significant geopolitical setback just months before he is expected to begin an unprecedented third term when the Chinese Communist party convenes in October or November.French president Emmanuel Macron holds a video conference with Germany’s Olaf Scholz and China’s Xi Jinping. Some western leaders describe Beijing as the eastern anchor of an authoritarian axis stretching across the Eurasian continent © EPN/Newscom/AvalonTwo years ago, Xi faced difficult questions about what he knew about the early stages of the coronavirus pandemic. Now the world wants to know if Putin told Xi about his Ukraine invasion plans when the two men met in Beijing on February 4 to sign their wide-ranging joint statement.For Beijing, there is no good answer to the questions about Ukraine. Jude Blanchette, a China expert at the Center for Strategic and International Studies in Washington, notes that if Xi did not know about Putin’s invasion plans before signing the joint agreement, then he “was played, shows less sophistication in his view of Russia and potentially [oversaw] a catastrophic failure of Chinese intelligence”.That, Blanchette adds, is “not a particularly good look for a leader who is trying to position himself as all-knowing, all-seeing and in command”. And if Xi did know of Putin’s plans, then the Chinese president is complicit in the bloodiest conflict on the European continent in 80 years.The outrage in Europe over the war is potentially dangerous for Beijing. While China has escalated its own geopolitical contest with the US in recent years, it has worked energetically to prevent Europe joining forces with Washington. It has done this partly through using the allure of its market for German and other countries’ companies and partly by playing divide and rule. But the Russian invasion has united the US and EU in ways that seemed impossible during the presidency of Donald Trump. “They’ve valued their relationship with Europe and . . . what they believe to be their capacity to try to drive wedges between us and the Europeans,” Burns said, in describing why China was privately uneasy about Ukraine.An antiwar protester in the US holds a poster accusing Xi and Putin of being war criminals over the invasion of Ukraine © Etienne Laurent/EPA-EFE/ShutterstockThis dynamic is not limited to Europe. When Scott Morrison, Australian prime minister, announced plans on Monday for a new A$10bn ($7.4bn) submarine base intended to counter China’s growing military might, he also tied it to the war in Ukraine. “A new arc of autocracy is instinctively aligning to challenge and reset the world order in their own image,” he said. “Events are now lifting the veil. Perhaps the scales are beginning to fall from the world’s eyes also.”‘The tsar and the emperor’Even amid the mounting pressure and the signals about acting as a mediator, there are few signs yet that China is distancing itself from Russia. Chinese officials continue to insist, as Chinese foreign minister Wang Yi did on Monday, that Russia is China’s “most important strategic partner”. “China wants to have its cake and eat it,” says a US official. “Privately they remain aligned with Russia, but publicly they don’t want to be tainted because of guilt by association.”Sheena Greitens, a China expert at the University of Texas in Austin, says the situation in Ukraine has forced China “on to its back foot”. But while China says it supports a diplomatic solution, she says it is engaging in “platitudes”. A woman shops for food in China. President Xi said that with food security, China ‘should [not] rely on the international market to solve the problem. We need to be prepared for a rainy day’ © AFP/Getty “They are invoking language about sovereignty and territorial integrity, which are being blatantly violated in front of the world,” says Greitens. But she adds that even if some Chinese officials did want to recalibrate relations with Russia, they would struggle precisely because Xi has put a “very personal stamp” on Sino-Russian relations.Alexander Gabuev, a Moscow-based senior fellow for the Carnegie Endowment, says that there are strong reasons for what he calls the “personal chemistry” between Xi and Putin.“For the first time we have two leaders who are similar,” he says, pointing to their similar age, their “tough childhoods” and the fact that “they want to make their countries great again”. He adds: “What’s also important is that both Russia under Putin and China under Xi have become much more leader centric . . . the tsar and the emperor.”Ryan Hass, a China expert at the Brookings Institution, adds that so far there was no indication that China was reorienting its posture. “Beijing has continued to tilt towards Moscow even as they rhetorically seek to present themselves as neutral,” says Hass. “The Chinese are telling themselves that Ukraine is a faraway problem and that they can avoid entanglement in it. It will be important to disabuse Beijing of any notion that China’s interests will not be harmed by Russia’s invasion.”From Beijing’s perspective, the close relationship it has built up with Russia is the direct result of the US taking a more confrontational approach to China over the past decade. Farmers spray crops in Jiangsu province, China. Chinese wheat prices and corn futures are running at record highs © Costfoto/Future Publishing/GettyIn the view of Chinese officials, this started with Barack Obama’s “pivot” to Asia and accelerated in 2018 when Donald Trump, after a year of halfhearted trade talks, started a bitter trade war with China that began with the unilateral imposition of punitive tariffs and later broadened to include restrictions on Chinese companies’ access to cutting-edge American technologies. Since taking office, Joe Biden has ignored demands from Beijing to unwind Trump’s tariffs and technology restrictions. He has continued to take a tough stance on China while at the same time rebuilding western alliances and coming up with a new security architecture, such as the Aukus pact that will give Australia submarine nuclear propulsion technology.“The real goal of the US . . . is to establish an Indo-Pacific version of Nato,” Wang, China’s foreign minister, said on Monday. “It seeks to maintain the US-led system of hegemony, undermine . . . regional co-operation [in south-east Asia] and compromise the overall and long-term interests of countries in the region. The[se] perverse actions . . . are doomed to fail.”Ni Lexiong, an independent military analyst in Shanghai, says that while “it’s not good [for China] to be too close to Russia at the moment, China cannot make a 180-degree [course] change”.CIA director Bill Burns says that China has been caught off guard by the Ukraine conflict © Jim Lo Scalzo/EPA-EFETrump and Biden’s policies, he argues, have brought China and Russia together — especially the US’s strengthening of ties with Taiwan, the self-governing island which Beijing claims as part of its territory.“In terms of its broader geopolitical strategy, China needs Russia. It’s impossible for China to condemn Russia,” he says. “The US does not want China to [unify with Taiwan] out of its desire to control Asia. On Taiwan, China and the US have irreconcilable contradictions. Intentionally or unintentionally, the US has pushed China into the pro-Russia camp.”Sima Nan, an influential nationalist commentator in Beijing, argues that China’s de facto alliance with Russia is ultimately about self-preservation. “We cannot say we support Russia, but we have some sympathy towards Russia,” he said. “If the west cripples Russia, China could be next.”Additional reporting by Emma Zhou in Beijing More

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 4.09% from 4.15% for loans with a 20% down payment.
Demand for refinances jumped 9% last week compared with the previous week.
Applications for a mortgage to purchase a home increased 9% from the previous week but were 7% lower than the same week one year ago.

A single family home is shown for sale in Encinitas, California.
Mike Blake | Reuters

After rising steadily for months, mortgage rates made a U-turn last week, and borrowers jumped to take advantage. The crisis in Ukraine rattled financial markets and caused a run on the relatively safer bond market. Yields fell and mortgage rates followed.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 4.09% from 4.15%, with points remaining unchanged at 0.44 (including the origination fee) for loans with a 20% down payment, according to the Mortgage Bankers Association. The rate was 83 basis points lower one year ago.

As a result, demand for refinances jumped 9% last week compared with the previous week, but application volume was still half of what it was the same week one year ago, when rates were lower.
“Mortgage rates dropped for the first time in 12 weeks, as the war in Ukraine spurred an investor flight to quality, which pushed U.S. Treasury yields lower,” said Joel Kan, an MBA economist. “Looking ahead, the potential for higher inflation amidst disruptions in oil and other commodity flows will likely lead to a period of volatility in rates as these effects work against each other.”
Applications for a mortgage to purchase a home increased 9% from the previous week but were 7% lower than the same week one year ago. Homebuyers are less sensitive to weekly rate moves, and the jump in demand was likely due more to increased supply hitting the market for the spring season. Slightly lower mortgage rates didn’t hurt of course, especially given how high home prices are now.
“The average loan size remained close to record highs, with higher-balance loan applications continuing to dominate growth,” added Kan.
Mortgage rates surged back sharply to start this week, jumping more than 25 basis points in just two days, according to Mortgage News Daily. Investors are moving away from bonds, causing yields to rise, despite the ongoing crisis in Ukraine, which caused rates to drop at the outset.
“While the Ukraine situation does indeed drive demand for bonds, the associated inflation implications are simultaneously pushing demand away,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “The net effect was a move back up to the highest mortgage rates since early 2019.” 

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FRANKFURT (Reuters) – The European Central Bank is likely to make as few policy commitments as possible on Thursday as the shock of Russia’s invasion of Ukraine up-ends its expectations for the economy and leaves policymakers grappling with new realities. With inflation in the euro zone at a record high even before Moscow began its assault on Feb. 24, policymakers had been expected to announce an end to years of money-printing stimulus, opening the way for an interest rate hike late this year. But the war has shattered that consensus and the 25-member ECB Governing Council will go into the meeting divided, raising the chances of a policy surprise — and the risk of an error. “No one can seriously expect the ECB to start normalising monetary policy at such a moment of high uncertainty,” ING economist Carsten Brzeski said.The safest route would appear to be for the bank to confirm an earlier decision to continue reducing bond purchases next quarter while leaving all other commitments, including an end-date for the buys and the timing of a rate hike, up in the air. “We believe the ECB will aim to buy some time by proceeding with the previously planned gradual tapering in April … while increasing flexibility in the forward guidance to allow more room to act once the immediate fog lifts,” Societe Generale (OTC:SCGLY) economist Anatoli Annenkov said.”As long as we avoid recession, which is our current baseline, we expect the ECB to conclude later this spring that the policy stance will need to tighten faster to stabilise inflation expectations.”Inflation across the 19 countries that use the euro could be three times the ECB’s 2% target this year and is likely to remain elevated next year, too. A rebound in economic growth and the tightest labour market in decades should also be pushing the ECB to abandon its ultra-easy policy stance and end a nearly decade-long experiment with unconventional stimulus.The Federal Reserve is sticking to its plans to raise U.S. interest rates next week, heralding a string of increases to borrowing costs as inflation rises.But the conflict in Ukraine, the unprecedented sanctions slapped by Western countries on Russia and soaring commodity prices will all raise uncertainty, dampen growth, and sap households’ purchasing power, adding to the case for caution.Some policy hawks are nevertheless likely to push the ECB to curb stimulus and return policy at least to a “neutral” setting, so the bank could signal the end of bond buys in the coming months, a decision that would raise the chances of — but not cement — a 2022 rate hike.The bank is also expected to drop any reference to a rate cut in its guidance, and may remove a stipulation that a rate hike would come “shortly” after bond purchases end. STRUCTURAL WORRIESEven if Thursday sees the can kicked down the road, high inflation makes the removal of stimulus almost unavoidable, but the real issue is how a changed world order will impact prices further out, a time horizon more relevant for the ECB. High energy prices will lower growth and could be a drag on inflation in the longer term as families have less to spend on other items and firms postpone investments.This is why the ECB’s inflation projection for 2024 is unlikely to be wildly different from the 1.8% it predicted three months ago.These forecasts have been so unreliable in recent months that policymakers are now openly questioning them, making them less relevant in decision-making. War in Ukraine is also likely to set in motion economic forces that could boost prices further out.Increased defence spending, as outlined by several euro zone members, and a quicker green transition to wean the bloc off Russian gas are both likely to boost government spending and inflation.These may also be backed by joint European Union debt issuance, and the bloc would be likely look to the ECB to keep its cost of borrowing down. It is next to impossible to quantify the inflation costs of these long term decisions, however, so ECB projections will not reflect them, even if policymakers are likely to raise them in the debate. More

Employees at three more Buffalo-area Starbucks have voted to unionize, bringing the total number of company-owned stores with a union to six, out of roughly 9,000 nationwide.The results, announced Wednesday by the National Labor Relations Board, were the latest development in one of the most formidable challenges to a major corporation by organized labor in years. Workers at two Buffalo-area stores voted to unionize in December, while a third store voted to unionize in Mesa, Ariz., last month, dealing a blow to the union-free model that prevailed at the coffee-retailing giant for decades.Since the December votes, workers at more than 100 Starbucks stores in more than 25 states have filed for union elections, in which they are seeking to join Workers United, an affiliate of the Service Employees International Union.Workers in cities including Seattle, Boston, Rochester, N.Y., and Knoxville, Tenn., have begun voting or will do so this month.“These workers fought so hard for their union,” Gary Bonadonna Jr., the leader of Workers United in upstate New York, said in a statement. “We had their backs during this campaign and we’ll continue to have their backs at the bargaining table.”Reggie Borges, a Starbucks spokesman, said in a statement: “We will respect the process and will bargain in good faith guided by our principles. We hope that the union does the same.”The vote counts — 8 to 7, 15 to 12, and 15 to 12 — came as tension between the union and the company has been escalating.The union contends that Starbucks has been systematically cutting hours across the country to prompt the departure of longtime employees so it can replace them with workers who are unsympathetic to unionizing. It also has said Starbucks recently retaliated against pro-union employees in Buffalo by pressuring them to leave the company because they had limited their work availability, and by firing one over time and attendance infractions.In early February, the company fired seven Memphis employees who had sought to unionize, citing safety and security policies.“Starbucks is also using policies that have not previously been enforced, and policies that would not have resulted in termination, as a pretext for firing union leaders,” the union said in a statement, adding that it was confident that the fired workers would be reinstated.Last week, the union filed about 20 unfair labor practice charges, many of which accused Starbucks of singling out union supporters for harsher treatment.Mr. Borges said in an email that “any claims of anti-union activity are categorically false.” He said the company was not systematically cutting hours, which typically fall in the slow winter months of January and February. Starbucks generally tries to honor workers’ preferences for lower availability, he added, but it was unable to at a Buffalo store where several employees had sought to cut their availability at once. He said a worker fired because of time and attendance issues had previously been cited for instances of tardiness.Amy Zdravecky, a management-side lawyer at Barnes & Thornburg, said it was hard to imagine the union losing momentum at this point except as a result of developments at the bargaining table — for example, if the union negotiated a contract that workers considered disappointing.“Until employees see what, if anything, they’re going to get or not get in negotiations, the union has the advantage — they can go out and tell employees that we’ll do all these things for you,” Ms. Zdravecky said.Starbucks workers in Buffalo filed in an initial round of petitions to hold union elections in late August, citing concerns like understaffing and workplace safety amid the pandemic, as well as a desire to have a greater say in how their stores are run.The company soon dispatched out-of-town managers and officials to the city, including Starbucks’s president of retail for North America, whose presence union supporters have said they found intimidating and at times surreal.Starbucks has said the officials were trying to resolve operational issues like poor training and inefficient store layouts. Some emphasized the potential downsides of unionizing in meetings and discussions with workers.The company also substantially increased the number of workers in at least one of the first three stores voting, a move that the company said was to help with understaffing but that the union said was intended to dilute its support. The union later successfully challenged the ballots of some of these workers on the grounds that they weren’t actually based at the store, helping to secure its victory there.Workers at one of the locations where the union won on Wednesday, known as Walden & Anderson, said the company’s approach to their store was even more disruptive than its actions in the Buffalo-area stores that voted in the fall.Starbucks closed the Walden & Anderson store for roughly two months beginning in early September and turned it into a training facility, sending workers to other locations during that time.Colin Cochran was among the pro-union workers at the Starbucks store that was turned into a training facility.Libby March for The New York TimesLeaders of the union campaign at the store said this made it harder for them to communicate with co-workers and maintain support for the union, which had initially been high. “We just didn’t see people for the entire two months we were closed,” said one of the workers seeking to unionize, Colin Cochran. Union supporters did not have access to many of their colleagues’ phone numbers during this time.The store also added workers — from roughly 25 in early September to roughly 40 once the voting began in January. “It felt like every time we got someone on board, two new people would be hired,” Mr. Cochran said of the period after the store reopened in November. “It was like a hydra.” Mr. Cochran and a second worker, Jenna Black, said that the store held workers’ hours fairly steady in the fall and most of the winter, even as the company hired more workers, but that many employees had their hours reduced as the voting came to an end in late February and that some were now considering leaving as a result.“I was holding at 25 hours and then for the past couple of weeks I’ve been down to 16, 18 hours,” Ms. Black said. She added that while she loved her co-workers, “there is no reason to keep devoting my time and making this job a priority when I can’t live off it.”Mr. Cochran said the pattern created the impression that the store wanted the additional workers only in the run-up to the vote, to dilute union support.The union said that workers in several states, including Oregon, Virginia, Ohio, New York, Texas and Colorado, had also reported having their hours cut more than usual for the winter.Michaela Sellaro, a shift supervisor at a Denver store that is seeking to unionize, said she had been scheduled for an average of about 31 hours for the past four weeks after working an average of about 36 hours over the same weeks last year. “It feels like they are threatening our job security,” Ms. Sellaro said.Mr. Borges said that hours had been higher than normal in the fall at Walden & Anderson to provide additional training, but that hours there now reflected customer demand and that the same was true nationally. He cited the Omicron variant of the coronavirus as an additional factor in scheduling nationwide.“We always schedule to what we believe the store needs based on customer behaviors,” he said. “That may mean a change in the hours available, but to say we are cutting hours wouldn’t be accurate.” More

Colombia’s consumer prices rose 1.63% in February, taking the 12-month inflation figure to 8.01%, far from the central bank’s annual target of 3%.”The inflation figure…in February took practically everyone by surprise and it certainly took me by surprise,” Steiner said during a virtual conference. “It is a figure worse than we expected, and we were expecting a high figure.”The spike in inflation follows international supply-chain pressures as well as the crisis caused by Russia’s invasion of Ukraine, added to local impacts including protests in Colombia in 2021 and a 10% hike in the minimum wage. “Forecasts (for inflation) are rising, it is cause for concern,” Steiner said, adding that sharply rising oil prices “will have repercussions that aren’t favorable for the Colombian economy.”Analysts forecast that Colombia’s inflationary pressures will push the central bank to step on the gas in raising its benchmark interest rate, with forecasts pointing to a 125 basis-point hike, which would take the rate to 5.25%, from a current 4%. More

A note to readers: Due to a technical issue, we inadvertently sent an extra edition of FirstFT Asia last night. Apologies for the error.Good morning. US intelligence chiefs on Tuesday said they were monitoring how China was interpreting the war in Ukraine and said the swift western reaction would probably influence Beijing’s calculus over its goal of securing control of Taiwan.Avril Haines, the director of national intelligence, said China had noted the sanctions the US and its allies have imposed on Russia and understood the implications for how Washington might respond to an attack on Taiwan.“It is likely to reinforce China’s perspective on the seriousness with which we would approach an infringement on Taiwan and in the unity that they’ve seen between Europe and the US,” Haines told the House Intelligence Committee when asked if the western response to Russia’s invasion would make Beijing more reluctant to take military action. Bill Burns, director of the CIA, said he agreed that the US response to the Russian invasion had created “an impact on the Chinese calculus” over Taiwan. But he said it was important not to assume that President Xi Jinping had less resolve as a result.More on UkraineThe latest: Ukraine has accused Russia of breaching a ceasefire and destroying a hospital in Mariupol, as aid agencies warned of a humanitarian disaster. Track Russia’s invasion using our maps. Business news: Huawei and Xiaomi, China’s biggest smartphone makers, are slashing Russian shipments because of sanctions and the rouble’s collapse.Nuclear threat: Ukraine has raised the alarm over the impact of Russia’s invasion on nuclear facilities after fighting near Chernobyl.Sanctions: The EU has added 14 more Russian business people with close links to the Kremlin and 146 lawmakers to its sanctions list.Energy explainer: What does banning Russian oil mean for global energy markets? Our energy team breaks it down. Sign up here for our Energy Source newsletter. Opinion: China has modelled part of its military structure on the Russian example, and the performance of Russian troops in Ukraine may come to as an unwelcome surprise to China’s People’s Liberation Army, writes Kathrin Hille. Follow our live blog for the latest developments.Five more stories in the news1. Conservative Yoon Suk-yeol elected as South Korean president Opposition candidate Yoon Suk-yeol has narrowly won South Korea’s presidential election, marking a turning point for the world’s tenth-largest economy after a bitter and closely-fought campaign marred by allegations of corruption and sleaze.2. US probes Diller and Geffen over Activision trades US media tycoon Barry Diller and music mogul David Geffen are under investigation for potential insider trading connected to the purchase of Activision Blizzard options days before the video game maker agreed to be acquired by Microsoft, said people briefed about the matter.3. Binance plots M&A spree The company is planning an acquisition spree to push in to new markets as its massive digital assets trading unit comes under sustained regulatory scrutiny. Binance, one of the biggest companies in the digital asset industry, is looking to scoop up businesses that operate in traditional markets, chief executive Changpeng Zhao told the FT.4. SMBC Nikko complained to regulators over trader’s death Japan’s third largest brokerage lodged a complaint with financial regulators last year after a senior trader died following intensive questioning during a probe into alleged market manipulation. SMBC Nikko’s complaint has come to light after four of its senior executives were arrested last Friday.5. Shackleton’s ‘Endurance’ shipwreck found Sir Ernest Shackleton’s ship Endurance has been discovered in deep water off the Antarctic coast more than a century after it was abandoned on his doomed expedition to traverse the continent via the South Pole.

The stern of the Endurance shipwreck. The vessel has been discovered more than 100 years after it sank during an expedition to traverse Antarctica via the South Pole © Falklands Maritime Heritage Trust/PA

Coronavirus digest Prudential has warned that Hong Kong’s Covid-19 measures continue to make trading “difficult” in its core market, but the life insurer still plans to increase the share of head office staff.Cathay Pacific’s chief executive said the airline expected to burn up to HK$1.5bn ($192mn) a month for as long as Hong Kong upheld severe pandemic restrictions in response to its worst coronavirus outbreak.The day aheadTurkey hosts Russia officials Russia’s Sergei Lavrov, Ukraine’s Dmytro Kuleba and Mevlut Cavusoglu, Turkish foreign minister, will meet in the southern Turkish city of Antalya on the sidelines of an international diplomatic forum.Indian assembly election results Votes are set to be tallied in the five states of Punjab, Uttar Pradesh, Uttarakhand, Goa and Manipur. Results will be available online. According to exit polls, Narendra Modi’s BJP is expected to hold on to power in the country’s most populous state, Uttar Pradesh. (Indian Express, The Quint) European Council summit French president Emmanuel Macron will host a gathering of EU leaders in Versailles for an informal summit. On the agenda is a wave of applications from former Soviet states to be fast-tracked into EU membership, a complex move that is unlikely to be fulfilled.Join us at 1pm GMT/9pm HKT for an hour of empowering talk about money with a panel of female experts convened by the FT and its new charity, the Financial Literacy and Inclusion Campaign (FT FLIC). We will share practical tips and answer your questions about the money issues that matter most to women. Register for free.What else we’re readingWill the Baltics become the ‘new West Berlin’? Estonia, Latvia and Lithuania could potentially be encircled by Russian expansion, but their leaders insist they have never been so secure. Richard Milne, the FT’s Nordic and Baltic bureau chief, reports from the region for today’s big read. Why gamers are sceptical of Zuckerberg’s metaverse Every company is trying to shape the metaverse according to their strengths and strategies, each using the same word to articulate different visions. As it stands, “metaverse” is little more than a lure for investors.

Horizon Worlds, a new metaverse launched by Meta © Meta

What Google knows about the future of war The world’s attention is focused on the bloody tragedy of the physical war in Ukraine. But, as the Alphabet team has noted, a second fight has long taken place in cyber space. And there the Ukrainians appear to have triumphed in a way that has astonished many outsiders Related read: Last year, the US led a secret mission to bolster Ukraine’s cyber defences ahead of a potential Russian invasion.Jean Arnault on watchmaking’s Gen Z appeal Last summer, 23-year-old Jean Arnault joined Louis Vuitton’s watchmaking division as director of marketing and development. His smartphone-addicted, potentially post-wristwatch generation has been of concern to the traditional watch industry, but if Arnault is to be believed, the industry can relax a little.My phone was controlling me, so I went on a digital diet For two weeks I tried to build a new healthier relationship with technology, writes technology correspondent Madhumita Murgia, with mixed results.Thanks to readers who took our poll. Thirty-seven per cent of respondents changed their career during the pandemic.Property From a solar-powered villa on the edge of Lake Como to a Nassau beach house with its own rainwater treatment system, here are five exclusive homes for sale with sustainable features. More

At the same time the government is mulling cutting the tax levied on shipping freight, two of the officials said.The moves are prompted by the surge in commodity prices and higher shipping costs caused by the war in Ukraine.The expense of unloading containers and moving goods within port areas is part of the base for calculating import and other taxes such as the IPI industrial tax, the ICMS state taxand the PIS/Cofins sales tax.The three sources, who took part in drafting the measures, did not detail their fiscal cost to the Treasury, but said it was very low. The Economy Ministry said it would not comment on the planned changes that are ready to be applied in a few days.The National Confederation of Industry (CNI), Brazil’s top industry lobby, said in a 2020 study that ending the inclusion of port expenses in taxation on importers could add 134.5 billion reais to the economy over 20 years by expanding the flow of trade and direct investment in the country. More

The aide did not provide details on when that vote would take place. More