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Good morning and welcome back to FirstFT Asia. In today’s newsletter:
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The latest on US-China trade talks
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Pakistan’s military spending spree
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What Nintendo teaches us about the modern world
We start in London, where the US and China have been holding high-stakes talks to end the trade war between the world’s largest economies. Here’s what you need to know.
The latest: Washington said the talks were “going well” as the delegations arrived at Lancaster House, a UK government building in the centre of the city, on Tuesday morning local time. “We’ve been [talking] all day yesterday and we expect to go all day today,” US commerce secretary Howard Lutnick told reporters. The negotiations are an effort to ensure that two contentious issues — Chinese exports of rare earths to the US and American technology export controls on China — do not derail the broader trade talks. Read more about the trade talks.
Huawei founder weighs in: Ren Zhengfei, the founder of the Chinese tech giant, has played down its chipmaking capabilities amid the US-China discussions about export controls. In a rare interview yesterday with China’s state-run People’s Daily, Ren said Huawei’s Ascend chip, the main rival to Nvidia’s products in China, “still lags behind the US by one generation”. He added that the “US has exaggerated Huawei’s capabilities — we’re not that strong yet”.
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Chinese tech exports: Foreign buyers of Chinese drone parts are paying sharply higher prices as Beijing tightens exports of critical components.
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EU-China trade: Brussels has imposed anti-dumping duties on Chinese plywood imports, just a few days after Beijing tried to ease trade tensions between the two.
Here’s what else we’re keeping tabs on today:
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Economic data: The US reports May inflation data. Malaysia publishes monthly job figures and the industrial production index.
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Monetary policy: European Central Bank president Christine Lagarde is in Beijing, where she will deliver a presentation at the People’s Bank of China.
Five more top stories
1. Cash-strapped Pakistan has announced plans to raise defence spending by 17 per cent in the fiscal year ending June 2026 while cutting overall government spending by seven per cent to Rs17.57tn ($62bn). The military spending spree comes after last month’s clashes with India.
2. Donald Trump has defended his decision to deploy troops to Los Angeles, saying the city “would be on fire” if he had not intervened to deal with the protests triggered by his immigration crackdown. The president’s comments came after US defence secretary Pete Hegseth was grilled by lawmakers over the decision to dispatch marines to Los Angeles.
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‘Dangerous precedent’: A growing number of military veterans and serving officers have spoken out against Trump’s decision to deploy troops to Los Angeles.
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Go deeper: Stephen Miller, the architect of Trump’s hardline immigration policy, has a blueprint for implementing the president’s signature pledge.
3. Toyota and Germany’s Daimler Truck have finalised a roughly $6.4bn merger of their heavy goods vehicle businesses in Japan in response to growing competition from Chinese rivals racing ahead on electrification and autonomous driving technology. The deal creates a Japanese commercial vehicle powerhouse that has greater scale to invest in hydrogen trucks and buses.
4. US oil production will fall next year for the first time since the Covid-19 pandemic, according to a government forecast that will cast new doubt on Trump’s “energy dominance” agenda. The report underscores the stresses facing the oil sector as rising supply from the Opec+ cartel and anxiety about the impact of Trump’s trade wars on the global economy push down crude prices.
5. The head of the Panama Canal’s operator has warned that a $23bn global ports deal between CK Hutchison and MSC, that includes two facilities in the Central American country, could put the waterway’s neutrality mandate at risk, adding that the concentration of ownership could disadvantage some shipping companies.
Hot Money podcast
In 2020, the Financial Times exposed a €2bn fraud at Wirecard, a high-flying German fintech. Many thought that was the end of the story. But for FT reporter Sam Jones, it was just the beginning. Hot Money, the award-winning podcast series from the Financial Times and Pushkin Industries, returns for a third season.
We’re also reading . . .
Chart of the day
From recapitalising rural banks to propping up the stock market, Central Huijin, an arm of China’s sovereign wealth fund, has supported the country’s financial system since its launch two decades ago. But over the past year, the scale of its interventions has thrust it into the spotlight.
Take a break from the news
Gochujang, a fermented chilli paste, has been a staple of Korean food since the 16th century. In recent years sales of the spicy condiment have rocketed outside Korea, inspiring a new wave of innovative fusion dishes. Learn more from HTSI’s guide to gochujang.
