Xi Jinping and Joe Biden set to meet in effort to repair US-China ties

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US President Joe Biden and Chinese President Xi Jinping meet on Wednesday in a new effort to stabilise relations against a backdrop of what a top oil executive has called the most delicate geopolitical climate in 50 years.

The Biden-Xi talks in San Francisco aim to repair ties between the countries, which have been in a bad way since a suspected Chinese spy balloon flew over the US in February. On the agenda will be China’s intentions towards Taiwan, Beijing’s anger at US tech export controls, artificial intelligence and other issues such as China’s exports of ingredients for fentanyl, responsible for a deadly overdose crisis in the US. 

The summit, said former White House official Evan Medeiros, marked the acceptance by both sides that they were in the opening phase of long-term geopolitical competition. “They are now beginning the complex process of negotiating the terms of this competition — where and how to compete, what risks to run and what costs to pay”.

China expert Bonnie Glaser said the country’s economic situation had raised incentives to ease tensions. “Beijing wants to buy time to cope with China’s economic problems and boost innovation in technologies hampered by American restrictions. The US wants to demonstrate the efficacy of its proposed model for managed competition with China, which the administration hopes will last at least through the 2024 US presidential election.”

Others, such as FT columnist Rana Foroohar, are less optimistic about the outcome, while economics commentator Martin Wolf believes all bets are off if Donald Trump gets back in the White House.

The crisis in the Middle East and Russia’s war in Ukraine leave the world facing its most significant geopolitical risks since the 1973 oil embargo, according to Lorenzo Simonelli, head of oil services business Baker Hughes.

Concerns about surging oil prices if the conflict in Gaza widens have, however, eased a little as bearish economic data damps anticipated demand. In addition, Chevron today said it had restored production at the Tamar offshore gasfield in Israel, ending the disruption caused by the start of the war on October 7. 

Geopolitics are still, however, having a damaging effect on the semiconductor industry. SMIC, China’s biggest chipmaker, warned last week that tensions were creating a global glut. SMIC and others have been struggling to navigate the tightening of US export controls on advanced chips and the equipment used to make them. Meanwhile, Washington has been supporting an expansion of production in the US and among its allies, as well as a reworking of the semiconductor supply chain.

China’s beefed-up anti-espionage and data laws are also fuelling a decoupling with Europe by making it difficult for foreign companies to invest, according to lobby group BusinessEurope. 

Within Europe, the crisis over Ukraine shows no sign of ending. As our Europe Express newsletter (for Premium subscribers) reports today, the EU appears to be dragging its feet over the next package of sanctions against Russia. The need is pressing, reports Brussels bureau chief Henry Foy. The price cap on Russian crude oil is leaking, and as the FT reported this weekend, a covert operation has found ways to evade EU export controls on importing microchips into Russia.

Need to know: UK and Europe economy

The UK’s investment screening powers are to be pared back to make them more “business friendly” less than two years after they were introduced. Separately, plans to overhaul the supervision of anti-money laundering rules would be counter-productive and damaging to the fight against dirty money, accounting bodies have warned.

A lack of deals means the UK’s Takeover Panel, the regulator funded by fees charged on transactions and filings, has recorded its first loss since 2014.

UK Prime Minister Rishi Sunak is set to reach his target of halving inflation, one of his “five priorities”, when new figures are published on Wednesday, contributing to a more positive backdrop to the Autumn Statement next week.

A carbon border tax is being planned for the UK. Chancellor Jeremy Hunt is proposing to introduce levies on imported carbon-intensive goods from countries with weaker climate regulations, mirroring measures being introduced by the EU.

Portugal’s central bank chief Mário Centeno is facing an independent ethics review after he was proposed as the next prime minister by Socialist premier António Costa, who quit last week over a corruption scandal.

Iceland declared a state of emergency after earthquakes raised fears that a volcanic eruption would damage residential areas in the Nordic country for the first time in 50 years.

Need to know: global economy

UN proposals on global tax are being “rubbished” by the EU and the UK, according to critics. The plans seek to give more voice to developing countries in international tax negotiations.

Libertarian economist, former sex coach and cosplay enthusiast Javier Milei is struggling to rebrand himself as a “normal guy” ahead of his run-off vote against economy minister Sergio Massa in Argentina’s presidential election.

Need to know: business

Carmakers are stepping up discounts on electrical vehicles as global demand starts to slow. Continental, one of the world’s largest suppliers to the car industry, announced thousands of job cuts as an “initial” step at improving competitiveness in the EV era. India is considering slashing EV tariffs to lure Tesla into building a plant in the country.

A Big Read examines the choice facing the crypto industry following the trial of Sam Bankman-Fried: become mainstream or retreat to the fringes.

The food industry said it was running out of time to prepare for new EU rules to cut carbon emissions from the supply chains of commodities such as palm oil, coffee and beef. The rules will oblige companies to prove their goods have not been produced on recently deforested land.

Small packages are causing big problems in the US, where ecommerce has become a route for drugs, banned products and counterfeit goods, writes global business columnist Rana Foroohar.

OpenAI chief Sam Altman said in an FT interview that the company was seeking new funds from its biggest investor, Microsoft, to build “superintelligence”. Analysts are turning to artificial intelligence to glean the truth behind executives’ soothing words on earnings calls.

Join the FT Future of AI summit on November 15-16 in London and online to get the big picture and details from early adopters on how best to explain, apply, govern, integrate, scale and commercialise AI.

The world of work

The dearth of decent, affordable childcare has long been identified as a leading factor driving women from the US workforce, notes the Lex column (for Premium subscribers). And although subsidised care might play badly with US conservatives, there is a good business case for it: about $122bn of economic output is lost every year because of the lack of affordable provision.

The WeWork implosion is a salutary warning to investors that working practices, like other elements of culture, are never fixed in stone, says columnist Gillian Tett.

The UK government is seeking to recruit more external staff to the civil service in an attempt to help boost the public sector’s longstanding productivity problem.

John Burn-Murdoch delves into the data around generative AI and the use of tools such as ChatGPT and what it means for white-collar workers.

Chart showing that in high-skilled white-collar occupations, generative AI levels the playing field, boosting performance the most for less-skilled workers

Technology is transforming the age-old tradition of colleagues chipping in for a farewell gift, writes columnist Pilita Clark. The online whipround, however, brings with it the risks of jealousy (“Why did she get so much more money than me?”) and insecurity (“Did I give enough for my boss’s baby shower?”).

Some good news

New trial data suggests weight-loss drug Wegovy could also address aspects of heart disease.

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