FirstFT: Western companies sound alarm over China’s sluggish recovery

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Western companies are raising alarm over the global repercussions from China’s gloomy business outlook.

As its economy struggles to recover from Beijing’s strict Covid-era restrictions, corporate reports from a disparate array of global companies have documented their worries about a country that has for decades provided a booming market for everything from chemicals to cars, healthcare and travel.

“Demand in China is sluggish,” lamented Joel Smejkal, chief executive of US semiconductor manufacturer Vishay Intertechnology. “The recovery is not as explosive as everyone thought it would be,” said José Ferreira Neves, chief of UK ecommerce fashion group Farfetch.

The world’s second-largest economy lost momentum in the second quarter this year, data published last month showed, as falling exports, weak retail sales and a moribund property sector weighed on growth. Here’s more from the executives fretting over China’s faltering economy.

For more of the FT’s best features and analysis on China, visit our China Focus hub. Here’s what else I’m keeping tabs on today:

• London markets closed: The UK, excluding Scotland, has a summer bank holiday.

• Economic data: Norway reports core retail sales figures.

• Donald Trump: A judge is expected to set a trial date at a status conference in the federal case against the former president on alleged 2020 election interference.

Five more top stories

1. A fighter jet project involving the UK, Italy and Japan will stick to its timetable despite Saudi Arabia’s overtures, one of the project’s industrial partners said. Riyadh’s request to join has created tensions in the alliance, which seeks to develop a next-generation aircraft by 2035 to counter China and Russia. Read the full story.

2. DNA testing has confirmed the death of Yevgeny Prigozhin, Russian authorities said yesterday. Western officials assume the Wagner warlord was killed as retribution for a mutiny he led against President Vladimir Putin in June, but the Kremlin has denied any involvement. Here’s more on the mounting speculation about the group’s future.

3. Shipping groups are clashing with traders over who should pay for losses from new climate rules that could downgrade vessels based on their carbon intensity. Oil and commodities traders who lease the ships have criticised shipowners’ attempts to “exempt [themselves] from responsibility”, deepening a longstanding struggle to decarbonise a highly polluting sector.

• More shipping: Fuelled by cash reserves from the pandemic, freight groups are rushing to buy facilities in Asia to help their customers expand supply chains beyond China.

4. France is paying farmers €200mn to destroy a surplus of wine by converting it into ethanol that can be sold for industrial uses under an EU-supported programme. The so-called crisis distillation aid will go mostly to the Bordeaux and Languedoc regions. Here’s why wine producers are facing an estimated glut of 3mn hectolitres.

5. Corporate sponsors are distancing themselves from Spain’s football chief Luis Rubiales, who has been suspended from his job after he forcibly kissed a female player, Jenni Hermoso, during last weekend’s World Cup medal ceremony. Rubiales has resisted stepping down despite public outrage and has instead threatened legal action against Hermoso. Here’s what the companies are saying.

The Big Read

Pathogens that are resistant to antibiotics killed 1.26mn people in 2019, according to an analysis published in the medical journal The Lancet — and the problem is expected to get worse. But with governments accustomed to buying cheap generic drugs and cautious use lowering sales of new antibiotics, there is little incentive for Big Pharma to tackle this “silent pandemic”.

We’re also reading . . . 

• London’s decline: The UK equity market is in a “very sorry state”, said Jupiter Asset Management’s Richard Buxton, who is retiring after 40 years as one of the City’s best-known fund managers.

• ‘Lefty lawyers’ abuse: UK legal associations have accused Conservative politicians of fostering a threatening climate for the profession after immigration lawyers received death threats, hate mail and racist abuse.

• Breakaway bishops: A schism in Ethiopia’s Orthodox church risks inflaming tensions following a peace deal that ended a brutal two-year conflict in Tigray.

• Electric-car batteries: China’s CATL and BYD currently dominate the global industry. Can anyone develop cheaper or better technology to loosen their grip?

Chart of the day

In recent months, there have been more mothers in the US workforce than at any time since the government began tracking them in 1948, as a post-pandemic labour shortage has pushed employers to embrace policies that are drawing American women back to work.

Take a break from the news

Can AI crack comedy? British scientist Alan Turing once warned that it would be fiendishly hard for machines to display a human’s sense of humour. But robots are getting better at making us laugh — and challenging our notion of human exceptionalism.

Additional contributions from Benjamin Wilhelm