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Good evening.
Whether it’s spy balloons, US export controls or security concerns over a video app, tech tensions between the US and China show no sign of letting up.
We report today that China has released a top chip investor from detention to help it navigate its way through a semiconductor battle with the US. Chen Datong, head of Yuanhe Puhua (Suzhou) Investment Management, also known as Hua Capital, had been detained last August as part of a crackdown against the country’s chip industry, which despite spending billions of dollars, had failed to come up with any big breakthroughs to end its reliance on foreign semiconductors.
US restrictions on chip-related exports, first announced last October, are part of wider efforts to build up its domestic capacity and prevent China from developing technologies with military uses. The latest stipulation says US chipmakers operating in China will have to halt their operations for at least a decade if they want access to federal funds earmarked in the $280bn Chips and Science Act.
The moves have prompted a rethink of semiconductor strategy in China, with chipmakers given easier access to subsidies and more control over state-backed research.
In the meantime, some Chinese AI groups are getting round the restrictions by accessing high-end US chips through intermediaries, while companies such as the Netherlands’ ASML, the chip toolmaker that is Europe’s biggest tech company, have expressed concerns about potential intellectual property theft.
Tensions are also ratcheting up over TikTok, the viral video app that has become a flashpoint in relations between the US and China as politicians express fears that it could be used to steal sensitive data.
A US congressional committee yesterday battered chief executive Shou Zi Chew, threatening to ban the app, calling it a “cancer” and a tool of surveillance, while the UK parliament became the latest public organisation to ban it from its devices and networks. It has already been banned from UK government devices, following similar moves in the EU, the US and Canada.
Chew vowed to keep the app “free from government manipulation” but was rather undermined by China denouncing Washington’s demand that it should be sold by its owner ByteDance to cut ties with its home country.
All of which might go some way to explain why US businesses are rather shy about their attendance at the China Development Forum — “China’s Davos” — which opens tomorrow.
This year’s event, billed as an opening-up party after three years of pandemic restrictions, could offer some clues as to whether political concerns are still being trumped by the lure of what Deloitte calls “the most attractive growth market in the world”.
Need to know: UK and Europe economy
The UK enjoyed some positive economic news to end the week with S&P Global’s PMI survey showing business activity expanding again in March to hit a score of 52.2, where 50 marks the difference between expansion and shrinking. Separate official data showed UK retail sales jumped by a more-than-expected 1.2 per cent in February, while a survey showed consumer confidence improving in March (although still in negative territory).
Today’s data follows yesterday’s decision by the Bank of England to raise its key interest rate for the 11th consecutive month, this time by a quarter of a percentage point to 4.25 per cent. It left future options open but raised its GDP prediction for the second quarter to slight growth, rather than its previous estimate of a 0.4 per cent decline.
The eurozone also had a good PMI result, hitting a better than expected 10-month high of 54.1, driven by growth in the services sector. The individual result for Germany, the bloc’s biggest economy, although overall positive, showed a decline in manufacturing activity.
Germany’s energy regulator said the country risked running out of gas next winter. A new Big Read delves into Europe’s attempts to ramp up solar power, a sector reliant on China for raw materials and technology.
Need to know: Global economy
The US PMI result also showed a decent expansion in business activity, hitting a score of 53.3, up from 50.1 in February. US investors are betting that the Federal Reserve’s interest rate rise this week will be the last for a while as bank failures help the fight against inflation by turning the screws on borrowers. Fed officials today defended their decision.
Russia and Iran, both targets of western sanctions, have stepped up economic relations. Moscow has become the Islamic republic’s biggest source of overseas direct investment.
Copper prices will hit a record high this year as demand from China risks depleting low stockpiles, according to Trafigura, the world’s largest private metals trader.
China’s Covid-19 crackdown and property collapse was bad news for the country’s super-rich, with the country’s total wealth falling 15 per cent, according to the M3M Hurun Global Rich List. It still remains the world’s “absolute No. 1” for billionaires.
Need to know: business
FT analysis showed executive pay at Silicon Valley Bank soared after it embarked on a new strategy to buy riskier assets. US business editor Andrew Edgecliffe-Johnson says it’s time to ask directors at failed banks what they were up to.
Commercial property loans are the latest risk worry for bank investors. Strains have increased in tandem with rising borrowing costs and analysts fear any further reductions in lending could make the situation worse.
Coffee chain Starbucks is braced for a price war in China as it plans a burst of openings to hit 9,000 locations by 2025 as well as a $130mn roasting plant in Kunshan, its first in Asia.
Ford said it expected to lose $3bn making electric vehicles this year. Columnist Simon Kuper says it’s about time SUVs — whether fuelled by petrol or electricity — are regulated out of existence.
Join us at the Future of the Car summit on May 9-11 for analysis of the industry’s toughest challenges. Register today here.
Science round-up
The world’s top scientists said global warming was “more likely than not” to result in a 1.5C rise in temperatures in an update from the UN Intergovernmental Panel on Climate Change. Here’s our round-up of recent books on climate and the environment.
A report from the UK’s “hydrogen champion” said ministers should go ahead with the blending of hydrogen into the UK gas network as long as it was proved safe.
The debate about the origins of Covid-19 rumbles on. The World Health Organization said data from China pointing to animals in Wuhan’s wet market as the virus source should have been shared with the world three years ago and that the findings “do not provide a definitive answer”.
The WHO urged African health authorities to step up monitoring after Tanzania reported its first outbreak of Marburg virus. Marburg spreads to humans from fruit bats and is passed on through direct contact with the bodily fluids of infected patients.
The scrapping of a major drug trial from Novartis has dented the UK government’s ambitions for its life sciences sector. The collaboration with the NHS on Inclisiran, a twice-yearly injectable drug for lowering cholesterol, had previously been announced to great fanfare.
Our latest Tech Tonic podcast discusses the weird science at the heart of quantum computing.
Another Big Read examines how new technology is enhancing soil’s ability to store carbon and help mitigate the environmental effects of industrialised farming.
Some good news
Sticking with the environmental theme, researchers at the Massachusetts Institute of Technology have come up with an open-source version of a mobile pollution detector that can be made by 3D printing, enabling much easier and cheaper tracking of air quality.
Something for the weekend
The FT Weekend interactive crossword will be published here on Saturday, but in the meantime why not try today’s cryptic crossword?
Interactive crosswords on the FT app
Subscribers can now solve the FT’s Daily Cryptic, Polymath and FT Weekend crosswords on the iOS and Android apps
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