FirstFT: UK-China ‘golden era’ of relations over, says Sunak

Rishi Sunak warned yesterday that the “golden era” of UK relations with China was over, but he signalled his determination to engage with Beijing as he stopped short of describing the superpower as a “threat”.

The new prime minister, in an implicit criticism of the pro-China policies of former premier David Cameron, said there had been a “naive idea that trade would lead to social and political reform”.

He also criticised China’s handling of protests against Beijing’s zero-Covid policy — including “assaulting” BBC journalist Ed Lawrence — and said the country posed “a systemic challenge to our values and interests”.

Sunak said the west would “manage this sharpening competition, including with diplomacy and engagement”. He added this would be accompanied by steps to reduce Britain’s economic dependency on China. The UK has banned the use of 5G mobile phone networks made by Huawei.

His words come as Xi Jinping faces one of his greatest challenges as leader of China after tens of thousands of people took to the streets against Beijing’s strict coronavirus controls and suppression of freedom of speech.

The Biden administration is also pushing European allies to harden their stance towards China and provide greater support for the US in the Asia-Pacific region, according to people briefed on the discussions.

Five more stories in the news

1. BlockFi files for bankruptcy The cryptocurrency lender backed by Peter Thiel’s venture capital firm has filed for Chapter 11 bankruptcy, making it the latest casualty of the fallout from the collapse of Sam Bankman-Fried’s FTX exchange. Hours later, BlockFi sued Bankman-Fried to seize Robinhood shares that he allegedly pledged as collateral before FTX collapsed.

2. ASMI warns of escalating trade tensions The head of the Dutch chip equipment maker, Europe’s second largest, has warned that the US is piling pressure on its allies to ensure global semiconductor companies fall in line with Washington’s tough export controls on China.

“The US government is hoping that this is going to be a multilateral thing going forward because they need to stop everybody [selling high-end tools to China]” — Benjamin Loh, chief executive of ASM International

3. Europe’s imports of Russian seaborne gas hit record high Imports of liquefied natural gas from Russia rose more than 40 per cent between January and October this year, compared with the same period in 2021, highlighting the continent’s difficulty in weaning itself off supply from Moscow.

4. Leon Black accused of raping woman at Epstein’s home A woman who says she was raped by Leon Black at convicted sex offender Jeffrey Epstein’s New York home has sued the Apollo co-founder in a Manhattan court. A lawyer for Black said the latest allegations against him “are categorically false”.

5. Oleg Deripaska trial delayed An attempt to imprison or fine the Russian tycoon for alleged contempt of court has been delayed after London’s High Court heard that lawyers set to represent him had raised the prospect of his legal fees exceeding the £500,000 limit imposed by the UK sanctions regime.

The day ahead

Nato foreign ministers meet Military alliance officials begin the two-day gathering in Bucharest, Romania, to discuss increasing support for Ukraine and other partners, including Bosnia and Herzegovina, Georgia and Moldova, facing Russian pressure. Secretary-general Jens Stoltenberg will lead the meeting; US secretary of state Antony Blinken is due to attend.

Inflation data Germany publishes its preliminary November consumer price index (CPI) and harmonised index of consumer prices, while Spain releases its flash CPI inflation rate estimate for the same month. Switzerland’s third-quarter gross domestic product data are expected to remain steady at 0.3 per cent, while the euro area has its monthly economic sentiment survey due. In the US, the Conference Board releases its November consumer-confidence index, which measures attitudes towards the economy and jobs. S&P Global publishes its index showing September home-price trends. (FT, WSJ)

Norway case on Russian flying drones ban Andrey Yakunin, the son of Vladimir Yakunin, the former head of Russian Railways who was known as an influential member of President Vladimir Putin’s inner circle, will argue in court that the Scandinavian country’s rules — based on EU sanctions — are harsher than any other European country and are discriminatory.

FT Global Banking summit The leading conference begins in London. Speakers include Santander chair Ana Botin, HSBC chief executive Noel Quinn and economic secretary to the Treasury Andrew Griffith. Register to attend or watch the event here.

Fifa World Cup matches Today’s four matches are Senegal vs Ecuador, Netherlands vs Qatar, US vs Iran and England vs Wales. With four points from two games, England will reach the knockout rounds even if they lose to Wales by three goals.

What else we’re reading

Is it ethical to make — and play — war games? For years, the UK gaming industry has complained that its economic, cultural and commercial heft has not brought with it greater respect. But things are changing, and now customers should be prepared to put up with greater moral scrutiny. Stephen Bush asks, is it ethical to spend one’s time pretending to shoot people?

The EV boom in a quiet Hungarian town In only a few years, Debrecen in the east of the country is becoming a surprise hub of the continent’s new electric vehicle industry. By 2030, battery production in this town of 200,000 people alone will rival every European country other than Germany. But critics fear that it is becoming too dependent on China.

Inside London’s ‘zero waste’ restaurant The FT’s Daniel Garrahan and food critic Tim Hayward visit Silo, a “zero waste” restaurant in Hackney, which rejects the bin, makes ice cream from waste bread, turns seaweed into pendant lighting and “upcycles” used wine bottles.

Britain is two countries when it comes to energy The first is a country in which people pay smoothed out bills, usually via direct debit, and there is the other in which people have to pay for what they use in advance. In the latter, the combination of prepayment meters, vulnerable customers and a cost of living crisis is a bad one, argues Sarah O’Connor.

Iran’s World Cup journey divides society Despite being a football-loving nation, the team’s participation in the tournament in Qatar has accentuated splits in society, as large anti-government protests continue across the country for more than two months. Protesters are now hoping for defeat in a crucial match against US after the regime exploited its win against Wales.

Take a break

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PS today was my last day writing FirstFT Europe/Africa. It has been a pleasure and I wish my colleagues as well as the readers all the best! — Jennifer