FirstFT: Taking stock of US-China relations

A flurry of diplomatic activity over the coming days will aim to improve relations between the US and China following the shooting down of a suspected Chinese spy balloon by an American fighter jet.

Yesterday, President Joe Biden said he planned to talk to his Chinese counterpart, Xi Jinping, to “get to the bottom” of the situation involving the balloon that was shot down off the coast of South Carolina two weeks ago.

US officials are also trying to arrange a meeting between secretary of state Antony Blinken and his Chinese counterpart Wang Yi at a security conference in Munich this weekend.

Three weeks ago, Blinken cancelled a planned trip to China at short notice because of the balloon incident. He had been scheduled to meet Xi.

But alongside the diplomacy, the Financial Times reports today that Michael Chase, the deputy assistant secretary of defence, has arrived in Taiwan. The visit is likely to aggravate already strained relations between Washington and Beijing over the island, following last year’s visit to Taipei by then Speaker of the House of Representatives Nancy Pelosi.

Chase’s visit is the first by a senior US defence official since the 2019 trip of Heino Klinck, deputy assistant secretary for east Asia, who in turn was the most senior Pentagon official to visit Taiwan in four decades.

Concerns about China’s intentions towards Taiwan have grown in the west since Russia’s invasion of Ukraine. China has refused to condemn Russia’s military action while economic and military contacts between the two countries have increased in the past year.

China has long claimed sovereignty over Taiwan. Under the US “one China” policy Washington recognises Beijing as the sole government of China and acknowledges, without endorsing, the Chinese view that Taiwan is part of China.

The Pentagon declined to comment on Chase’s trip to Taiwan. But it stressed that US “support for, and defence relationship with, Taiwan remains aligned against the current threat posed by the People’s Republic of China”.

Five more stories in the news

1. US energy groups queue to go public Energy companies are making plans to go public in the US at the fastest rate in six years, as a sector that has long been out of favour benefits from renewed investor appetite for businesses that generate steady cash flows rather than prioritising long-term growth.

• More IPO news: Online fashion group Shein has predicted its revenues will almost double to $60bn over the next few years, as it prepares for one of the largest ever listings by a Chinese company in the US.

2. Britain and the EU near deal on Northern Ireland UK prime minister Rishi Sunak has made a surprise visit to Belfast, fuelling speculation Britain and the EU are nearing a deal to settle the contentious trading arrangements involving Northern Ireland and the rest of the UK and EU. A deal would pave the way for closer relations between the UK and the EU, its biggest trading partner, but Sunak must first win over Eurosceptic MPs in his own party as well as unionist politicians in Northern Ireland.

3. China’s top tech dealmaker goes missing Bao Fan, the founder of China’s leading investment bank, has disappeared. Shares in China Renaissance fell 50 per cent this morning in Hong Kong as investors reacted to the announcement made by the company after the market closed yesterday. Bao, a former Morgan Stanley and Credit Suisse banker, turned Renaissance into one of China’s most influential financial institutions.

4. Tesla to recall 363,000 cars over self-driving tech flaw Tesla is recalling nearly 363,000 of its electric cars because flaws in a version of its full self-driving software could “allow the vehicle to act unsafe” at crossroads, according to a filing yesterday by a US regulator. The recall covers certain Model S and Model X vehicles manufactured between 2016 and 2023, as well as Model Ys made since 2020.

5. Jes Staley’s emails with Jeffrey Epstein revealed A cache of 1,200 emails exchanged by former Barclays chief executive Jes Staley and the late convicted sex offender Jeffrey Epstein — including pictures of young women — have been revealed in a lawsuit. Newly unredacted portions of a complaint brought by the government of the Virgin Islands, where Epstein had a home, reveals the email exchanges between the men from 2008 to 2012, when Staley was Epstein’s private banker at JPMorgan.

• Other legal news: Rupert Murdoch described allegations that the 2020 US election was stolen from Donald Trump as “damaging” and “crazy”, according to filings from a defamation lawsuit against Fox News. Meanwhile, a special grand jury investigating alleged interference by former president Trump in the 2020 US presidential election in the state of Georgia has said some witnesses may have lied under oath.

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The days ahead

Munich Security Conference German chancellor Olaf Scholz and French president Emmanuel Macron are due to appear at the Munich Security Conference today. Rishi Sunak is due to travel to the conference where he plans to hold talks with EU leaders, following his trip to Belfast.

Markets US stock markets are expected to open lower after recording their worst day in a month yesterday. Robust economic data and hawkish comments from Federal Reserve officials fanned fears that the US central bank would keep interest rates high to combat inflation.

Monetary policy Federal Reserve governor Michelle Bowman is set to participate in a conference hosted by the Tennessee Bankers Association in Nashville. Richmond Fed president Thomas Barkin is scheduled to speak about the labour market before the Rosslyn Business Improvement District in Arlington, Virginia.

Economic data Canada will report its producer price index for January, which tracks prices paid to businesses for their goods and services.

Corporate results The maker of the iconic green John Deere tractors reports quarterly earnings before the opening bell. Investors will be expecting Deere & Co to provide an update on the outlook for commodity prices which have been pushed higher by the war in Ukraine.

What else we’re reading

Demand for morning-after pill rises in the US Use of Plan B emergency contraception has soared over the past five years in the US while demand for other forms of contraception such as birth control pills and condoms has fallen, according to Financial Times analysis. Health experts said the figures — which are estimates based on commercial insurance claims, retail sales and other data — highlight a big shift in how Americans access reproductive health services.

The financial system is alarmingly vulnerable to cyber attack The financial sector has quietly slid in recent years into a state of high dependence on third-party tech vendors, as a recent failure at the US Commodity Futures Trading Commission caused by a ransomware attack shows. But if regulators do not step up scrutiny of tech vendors and other digital companies, the next attack could be much worse, warns Gillian Tett.

Wanted: World Bank chief with climate at heart The US, the World Bank’s largest shareholder by far, is racing to assemble a list of contenders with strong credentials in climate finance to lead an overhaul of the institution, following the early exit of Trump appointee David Malpass. Here are the potential candidates.

How did Hindenburg short Adani stock? When US short seller Nathan Anderson decided to take on Indian conglomerate Adani Group, he faced the ultimate challenge for someone in his line of business: India’s anti-short selling rules. Those who have looked at the trade say he may have used single stock futures and the help of western banks in Singapore.

Nigeria’s ‘democracy generation’ makes its voice heard Next weekend, Nigeria will vote in an election analysts say is the hardest to predict since the country returned to democracy in 1999. The largest cohort of eligible voters consists of 37mn Nigerians aged 18 to 34. Their endorsement will go a long way to deciding who triumphs in the presidential and parliamentary polls.

Take a break from the news

On this week’s FT Weekend podcast visual artist Nick Cave, best known for his vibrant, whimsical costumes that entirely cover the face and body, discusses his current exhibition at the Guggenheim in New York. And FT columnist Nilanjana Roy talks about what makes a great book club.