FirstFT: US lawmaker accuses Beijing of infiltrating Federal Reserve

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A prominent Republican lawmaker has accused China of establishing a network of informants within the Federal Reserve intended to give Beijing access to sensitive US economic data.

Ohio senator Rob Portman published a report on Tuesday alleging that China has for more than a decade targeted economists working for the US central bank to access insider information, using offers of lucrative contracts with Chinese talent programmes and in one case forcibly detaining a Fed employee during a trip to Shanghai.

The accusations come as US officials have raised concerns about the growing threat of Chinese espionage and infiltration against western groups, including companies, universities and hospitals.

At the beginning of the month, the heads of the FBI and MI5 gathered for an unprecedented press conference to warn about the threat of China’s industrial espionage against western commercial life.

Beijing has repeatedly denied accusations of targeting western institutions through espionage campaigns.

Thanks to those who took yesterday’s poll: 56 per cent of respondents said Nancy Pelosi should make her planned visit to Taiwan. Here’s the rest of today’s news — Emily

Five more stories in the news

1. Alibaba to apply for Hong Kong dual-primary listing The New York-listed Chinese ecommerce group, which has a secondary listing in Hong Kong, said its board had authorised management to apply for a primary listing on the Hong Kong Stock Exchange and that the process was expected to be completed by the end of 2022. Analysts say the move lays the groundwork to grant mainland Chinese investors access to its shares.

2. European gas prices soar after Russia deepens supply cuts European gas prices have surged 30 per cent in two days after Russia deepened supply cuts to the continent in Moscow’s latest attempt to weaponise energy supplies.

3. World’s largest consumer goods groups reveal soaring price rises Unilever, Coca-Cola and McDonald’s laid bare the impact of global inflation on Tuesday, responding to higher costs with price increases that will heap more pressure on households.

4. Beijing detains ex-Tsinghua semiconductor boss, report says Zhao Weiguo, the former head of an expansive Chinese conglomerate with state backing and deep investments in the global technology sector, has been placed under investigation by officials in Beijing, according to local media. The 54-year-old has been out of contact after being taken from his home by authorities in mid-July, reported Caixin, a Chinese business publication.

5. South Korea posts strong growth South Korea’s economy grew faster than expected in the second quarter as strong consumption and government spending cushioned the adverse impact from higher inflation, China’s Covid-19 lockdowns and Russia’s war on Ukraine.

The day ahead

US interest rate decision Expectations are for a tightening of the monetary policy machinery with a 75 basis point increase. At least one senior Fed governor would like the Federal Open Market Committee to go even further.

Earnings On another big day for corporate earnings, those reporting results include: Airbus, Credit Suisse, Danone, Lloyds Banking Group, Meta, Mitsubishi Motors, Rio Tinto and more. See our Week Ahead newsletter for which other corporate earnings we’ll have an eye on.

What else we’re reading

SoftBank’s succession turmoil raises risks Management of health risks has become a priority for any chief executive during the pandemic. But deepening succession turmoil has cranked up the risk of a figure as irreplaceable as Masayoshi Son from getting ill, writes Kana Inagaki.

Concerns rise over China’s rural banking sector Bank deposits should be the safest assets in any financial system. But after depositors lost funds to fraud in Henan and Anhui provinces, concerns have been raised over lax regulation in China’s massive rural banking sector and gaps in the country’s system of deposit insurance exposed.

Josep Borrell: It is decision time on the Iran nuclear deal The EU high representative for foreign affairs and security policy has put forth a text that lays how the best possible deal that he seems feasible as facilitator of the negotiations. In the FT, he explains why this is the best path forward.

Total’s Patrick Pouyanné is not backing down The French energy giant has become a stark exemplar of an energy industry in flux and beset by the paradox of continuing demand for fossil fuel products, even as governments and the public clamour for their elimination. Pouyanné seems determined to play both sides of this paradox.

Exploitation of migrants rises as care homes struggle to fill jobs Why is this happening? The story begins with the UK’s struggle to recruit enough care workers to look after its ageing population, exacerbated by Brexit and the pandemic, writes Sarah O’Connor.

What to watch

In our round-up of the best of TV and streaming this week, Dan Einav reviews three-part series Big Oil v the World, which seeks out climate change’s culprits; the new detective drama Under the Banner of Heaven; and Australian series The Newsreader, featuring an outstanding performance from Anna Torv.

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