FirstFT: Yellen warns US-China decoupling would be ‘disastrous’

Good morning. US Treasury secretary Janet Yellen warned yesterday that any effort to decouple from China would be “disastrous” and “destabilising for the rest of the world”.

In a major speech, Yellen said that Washington’s national security measures targeted at Beijing were not designed to “stifle” the Chinese economy, and called for a “constructive and fair” economic relationship between the two nations.

“The US will assert ourselves when our vital interests are at stake,” the Treasury secretary said. “But we do not seek to ‘decouple’ our economy from China’s.”

While Yellen called for a “healthy economic relationship” and co-operation on macroeconomics and climate change, she said the US would continue to work with allies to resist Beijing’s “unfair” economic policies. Further, she signalled that the US was preparing more measures likely to anger Beijing. Read more from Yellen’s remarks.

Here’s what else is happening today:

• UK foreign secretary tour: James Cleverly’s four-day trip visit is focused on promoting a “free and open Indo-Pacific”. Cleverly will visit New Zealand today.

• Earnings: Results are expected from China XD Electric, ZTE Corp, SAP SE and Woodside Energy today.

• Eid: The Muslim festival marks the end of Ramadan. Financial markets are closed in several countries in the Middle East including Saudi Arabia, Egypt and Jordan.

Five more top stories

1. Russian paramilitary group Wagner was unsuccessful in asking China for supplies of weapons earlier this year, according to a leaked US intelligence report. Representatives from Wagner “sought munitions and equipment” from China in “early 2023”, according to the previously unreported document — a request that indicated the group had some confidence Beijing would be open to arming Moscow.

2. US regional banks have largely stopped the massive outflow of deposits that threatened their stability after the collapse of Silicon Valley Bank, but their profit margins are shrinking unexpectedly quickly. Here’s what we learnt from the midsized banks that reported earnings this week.

3. SpaceX’s giant Starship rocket exploded after its first launch yesterday in a setback for Elon Musk’s company and its effort to build a spacecraft capable of flying to Mars. The near-400ft-tall rocket, the most powerful ever launched, reached an altitude of nearly 40km before tumbling back towards Earth.

4. Credit Suisse investors in Singapore are in talks to sue the Swiss government over its decision to write down $17bn of Credit Suisse bonds on the grounds it violates a free trade agreement. The potential lawsuit in Singapore would open a new legal front.

5. Google has plans to introduce generative artificial intelligence into its advertising business as big tech groups rush to incorporate the groundbreaking technology into their products. Read the full story.

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The Big Read

With India set to surpass China as the world’s most populous country, its public digital infrastructure has become a core part of Prime Minister Narendra Modi’s efforts to present India as a nascent economic superpower and alternative investment destination to its neighbour. But the “India Stack”, its novel approach to integrate private and public digital services, has sparked worries over privacy and data protection.

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If data is the oil of the 21st century, then Michael Bloomberg is today’s John D Rockefeller. Bloomberg, the company, has made Bloomberg, the man, vastly wealthy. Looking at Bloomberg’s $12bn annual revenue, the vast majority of profits come from “the terminal”, its clunky-but-powerful data and analytics portal. But as the finance industry continues to transform, there’s an urgent question to consider: what comes next?

Take a break from the news

Invisible cake sounds like something you read about gracing the tables of Hogwarts, but it’s a real thing. The craze may have started in Japan — or it could be French. As with so many internet phenomena, it’s hard to trace. Try out this recipe for invisible apple and poppy seed cakes.

Additional contributions by Gordon Smith and Tee Zhuo