FirstFT: Pentagon accuses China of rapidly expanding nuclear arsenal

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Good morning. China appears to be accelerating the expansion of its nuclear arsenal, according to an annual Pentagon report on Chinese military capabilities.

Beijing’s stockpile of operational nuclear warheads had reached 500 by May 2023, putting it on track to exceed previous projections, according to the report. It forecast that China would probably have more than 1,000 operational nuclear warheads by 2030.

The report added that China may be exploring the development of non-nuclear intercontinental ballistic missiles capable of striking the US.

Despite the wars in Ukraine and Gaza, China remains the pre-eminent security threat in the minds of many American policymakers. The rapid expansion of its nuclear arsenal in recent years suggests that Beijing is moving away from its decades-old policy of having only a “lean and effective” nuclear deterrent. Read the full story.

Israel-Hamas war updates:

• Intercepted missiles: A US warship in the Red Sea shot down three cruise missiles and several drones fired by Iranian-backed rebels in Yemen that may have been aimed at Israel, the Pentagon has said.

• Fears of wider conflict: As the US, Britain and Germany urged their citizens to leave Lebanon amid growing fears of a regional conflict, Israel’s defence minister suggested a ground invasion of Gaza could be imminent.

• Buffer zone: Israel will enforce a buffer zone within the Gaza Strip once the war with Hamas is over, Israel’s agriculture minister Avi Dichter has said.

• The war in maps: The Palestinian state-run Wafa news agency reported that “dozens” of people had been killed in Israeli air strikes early on Thursday. An analysis of satellite imagery revealed extensive damage across Gaza

Here’s what else I’m keeping tabs on today and over the weekend:

• US-EU summit: President Joe Biden hosts European Commission president Ursula von der Leyen and European Council president Charles Michel in Washington. They are expected to project unity over the Israel-Hamas and Ukraine conflicts; the EU also plans to announce anti-subsidy investigations against Chinese steelmakers.

• Pakistan: Former prime minister Nawaz Sharif is expected to return to the country on Saturday after a four-year self-imposed exile in the UK. (Reuters)

• Elections: Argentines will vote in a general election on Sunday. Amid a deep economic crisis, will the South American country elect this self-styled anarcho-capitalist?

How well did you keep up with the news this week? Take our quiz.

Five more top stories

1. Canada has withdrawn dozens of diplomats from India after the countries failed to resolve a dispute related to Ottawa’s claims that New Delhi may have been involved in the murder of a Canadian citizen. Ottawa repatriated 41 of its 62 diplomats in the country, Canada’s foreign minister Mélanie Joly said. Here’s the latest on the India-Canada spat.

2. Country Garden missed its final deadline for the coupon payment on a dollar bond, making what was once China’s biggest developer by sales the latest casualty of the country’s property sector crisis. The developer was due to make a $15.4mn coupon repayment this week, but bondholders told the FT that they had not received it.

3. OpenAI is in talks with investors about selling shares at a valuation of $86bn, roughly three times what it was worth six months ago. A stock sale at the level OpenAI is targeting would make the ChatGPT maker one of the world’s most highly valued private companies.

4. US Republicans in the House of Representatives have rejected a plan to empower a temporary Speaker to lead the lower chamber. The latest roadblock threatens to extend weeks of chaos that have paralysed Congress, leaving the chamber unable to pass crucial legislation including funding for Israel and Ukraine.

5. Chinese investors dumped the most US stocks and bonds in four years in August. The surge in sales of US securities adds to speculation that Beijing moved to give itself greater firepower in its defence of the renminbi, which has come under pressure from slowing economic growth and capital outflows. Here’s what analysts said about the sell-off.

News in-depth

Ripple effects from the war between Israel and Hamas are being felt by Europe’s Muslim and Arab populations, who fear an Islamophobic backlash. They worry that the conflict and recent Islamist attacks in France and Belgium are emboldening far right voices who cast Muslims and Arabs as a fifth column posing a danger from within.

We’re also reading . . . 

Chart of the day

China Renaissance was once at the centre of the country’s tech boom. But the investment bank is struggling to win business nine months after the disappearance of its founder Bao Fan, part of a crackdown by Beijing. By June 30, committed capital to China Renaissance fell for the first time, as investors react negatively to the uncertainty.

Take a break from the news

. . . and pick up a book! Digital reading (ie skimming this newsletter) appears to be destroying habits of “deep reading”. Today, stunning numbers of people with years of schooling are effectively illiterate, writes Simon Kuper. Here’s why Kuper says that’s ominous for civilisation.

Additional contributions from Tee Zhuo and David Hindley