FirstFT: US lawmakers to vote on financing weapons exports to Taiwan


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Good morning. The US Senate foreign relations committee is poised to vote on a bill that would finance weapons exports to Taiwan for the first time and significantly alter relations with Taipei amid rising pressure from China.

The Taiwan Policy Act, which will come up for a vote on Wednesday in the US, would provide Taiwan with $4.5bn in weapons and security assistance over the next four years. It would also create a $2bn loan facility to help Taipei buy arms and make Taiwan eligible for a war reserve arms stockpile mechanism.

The bill would also punish China if it took military action against Taiwan by requiring the White House to impose sanctions on large Chinese financial institutions over “escalating hostile actions in or against Taiwan”.

Coming on the heels of China’s large-scale military exercises in response to House Speaker Nancy Pelosi’s trip to Taipei last month, the bill has sparked debate in the US about how to support Taiwan. Backers of the bill say the US must do more to help the country, while some worry that certain provisions will antagonise China while doing very little to secure Taiwan.

Thanks for reading FirstFT Asia. How do you think lawmakers should vote on the Taiwan Policy Act? Tell me what you think at firstft@ft.com — Emily

1. Wall Street suffers worst sell-off since June 2020 The benchmark S&P 500 stock index tumbled 4.3 per cent, its worst day since June 2020 with 99 per cent of its companies sliding in value after official data showed US inflation increased unexpectedly in August. The Nasdaq Composite fell 5.2 per cent as technology groups seen as most exposed to higher rates bore the brunt of the selling.

Line chart of Performance on September 13, 2022 (%) showing US stocks suffer biggest drawdown since June 2020

2. Evergrande vows to restart all stalled property projects The developer has pledged to resume the construction of 38 remaining projects by the end of September and accelerate 62 restarted projects to “normal level”, according to a company statement released late on Monday that cited its chair, Hui Ka Yan, in a weekly meeting.

  • Related read: Hong Kong’s property developers are having to construct more flexible leasing offers to attract businesses, as the city faces more than 246 football fields of excess supply of office space by 2025.

3. Vedanta and Foxconn to build chip plant in India’s Gujarat The two companies are to invest Rs1.54tn ($19.4bn) in prime minister Narendra Modi’s home state of Gujarat to build one of India’s first semiconductor manufacturing complexes — part of a high-stakes, government-backed push to build domestic chipmaking capacity.

  • More on the semiconductor industry: The US is struggling to mobilise its East Asian “Chip 4” alliance amid internal tensions and concerns over China undermining the proposed grouping with South Korea, Japan and Taiwan.

4. Ukraine steps up offensive with push east into Donbas Ukraine’s armed forces are battling for control of a string of towns in the Donbas region, as Kyiv’s counteroffensive pushes east against Russian troops. Serhiy Hayday, the exiled Ukrainian head of the Luhansk region, said fierce battles were under way in Lyman, a town east of Izyum, a big military command post from which Russian forces fled days earlier.

5. JPMorgan warns of up to 50% drop in investment banking fees
One of the bank’s most senior executives has said he expected third-quarter investment banking fees to be down 45-50 per cent on the $3.3bn achieved a year earlier, having fallen 44 per cent in the first six months of 2022. The bank will announce its results on October 14.

The day ahead

Xi Jinping’s first trip abroad since Covid pandemic The China president will be among friends and allies — including Russia president Vladimir Putin — when he travels to Kazakhstan today to attend a meeting of the Shanghai Cooperation Organisation in Samarkand, Uzbekistan, beginning tomorrow.

Japan economic data The Tankan business sentiment survey results will be released as well as monthly industrial production data.

Queen “lying-in-state” Queen Elizabeth II’s coffin will be placed on a platform in Westminster Hall, the oldest part of the Houses of Parliament, from today until her funeral on Monday.

What else we’re reading

Queen’s death sparks nostalgia for Hong Kong’s ‘golden era’ Beijing and the Hong Kong government have increasingly denied Britain’s role in the development of the financial hub. Still, thousands of mourners queued outside the British consulate in the territory to pay tribute to the Queen, with many lamenting the territory’s loss of freedoms since the 1997 handover.

Shareholders challenge India’s new crop of listed tech groups Last year’s new-age IPOs marked a historic moment for Indian tech. But the experience of Patym’s bungled listing should be a wake-up call for India’s listed tech companies. Investors are growing tired of inconsistent messages and struggles to turn a profit.

Globalisation is not dying, it’s changing Evidence suggests that natural economic forces have largely been responsible for past changes in the pattern of world trade. Growing concern over the security of supply chains will no doubt add to these changes, though whether the result will be “reshoring” or “friendshoring” is doubtful, writes Martin Wolf. More likely is a complex pattern of diversification.

Line chart of World trade in goods, as a % of GDP showing World trade in goods has stagnated relative to output since the financial crisis

Debt monsters in the downturn As central banks raise rates to tame inflation, debt-laden companies are facing the uncomfortable prospect of servicing higher interest bills with crimped cash flows. Which groups are flashing warning signals? The Financial Times has compiled a list of companies with debt trading more than 10 percentage points above government bonds.

‘Quiet quitting’ is worse than nonsense According to Gallup, about half of Americans are “quiet quitters”: people who are “not going above and beyond at work and just meeting their job description”. HR specialists have been quick to advise on how to fix this problem. But Sarah O’Connor argues that it’s not a problem at all — staff who turn up to do exactly what is asked of them are still working.

Wellness

The Theragun massage device, which promises to relax and tone facial muscles, apparently met with enthusiastic approval from footballer Cristiano Ronaldo, who signed a sponsorship deal with Therabody in 2021 and has long been a champion of the brand. Therabody is determined to own the sports recovery market. Can it hit the perfect pressure point?

© Amy Currell

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