Antony Blinken’s meeting with Xi Jinping capped a two-day visit to the country.Credit…Greg Baker/Agence France-Presse — Getty Images
What does Blinken’s visit to China mean for business?
Worries about China’s economic recovery sent stocks and U.S. futures lower on Tuesday morning, despite a promising meeting on Monday between the country’s top leader, Xi Jinping, and Secretary of State Antony Blinken in Beijing.
The discussions raised hopes that the world’s two biggest economies might stabilize relations, but the market reaction points at the deeper challenges for policymakers and business.
The mood music was positive. Xi said the two sides had “made progress” and President Biden told reporters in California that Blinken had done “a hell of a job.” But that just talking generated such excitement is a sign of how tense relations have become. There was no agreement or detail on the most contentious issues: restrictions on Chinese access to advanced technologies; accusations that the U.S. and its allies want to contain Beijing’s ambitions; Taiwan; the war in Ukraine.
“Distrust remains high,” said Noah Barkin, a specialist on China relations at the research firm Rhodium Group. “For international investors, this is not enough to trigger any sort of rethink with regard to the Chinese market.”The Biden administration, he said, would continue screening strategic investments into China and Beijing showed no signs of easing pressure on foreign firms operating in the country.
Business is de-risking rather than decoupling. Raytheon’s C.E.O., Greg Hayes, said it was “impossible” to break away entirely from China because of the complexity of supply chains and the level of U.S. trade with the country, while the pharmaceutical giant AstraZeneca is reportedly looking to spin off its China unit, according to The Financial Times.
China has big domestic concerns, too. The country’s central bank cut its prime lending rate today and Goldman Sachs lowered its growth outlook for the country over the weekend. “For business, the issue is not so much China-U.S. relations per se, but the very worrying state of the Chinese economy at present. Awareness of how challenged that is was probably one of the main issues that created a more communicative China, one that is willing to show just a bit of compromise at the moment,” said Kerry Brown, a professor of Chinese studies at King’s College London and a former British diplomat in Beijing.
Yu Jie, a China expert at Chatham House, a British think-tank, added that Xi still hoped “that Western business could be part of his plan to generate much-needed growth and employment.”
What to watch next? China’s premier, Li Qiang, landed in Germany this week to start a European trip, his first overseas since becoming his country’s second most senior leader earlier this year. China is Germany’s biggest trading partner and, along with France, where Mr. Li will travel later this week, a U.S. ally that is trying to find a different path for its relations with Beijing and Washington.
And for a view of how the Biden administration is trying to woo allies, in part to counter China: India’s prime minister, Narendra Modi, will travel to Washington on a state visit this week.
In other China news:
Alibaba’s Hong Kong-listed shares closed 1.5 percent lower after the e-commerce giant announced that Daniel Zhang would step down as C.E.O. and chairman. Earlier this year, the company said it would split into six divisions.
Beijing is reportedly planning to build a military training facility in Cuba, according to The Wall Street Journal, sparking alarm in Washington that Chinese troops could be stationed 100 miles off the coast of Florida.
HERE’S WHAT’S HAPPENING
More light is shed on Jeffrey Epstein’s ties to Jes Staley and JPMorgan Chase. A 22-page document summarized emails between the convicted sex offender and Mr. Staley, the former JPMorgan executive who was his primary contact at the bank, showing how Mr. Epstein advised Staley on a number of issues, including meetings with Chinese officials and deals. JPMorgan has held Mr. Staley responsible for maintaining the firm’s ties to Mr. Epstein.
Adobe’s $20 billion takeover bid for Figma reportedly faces E.U. scrutiny. European antitrust regulators are preparing to begin a formal investigation into the deal, according to The Financial Times. (Figma is a rival to Adobe in cloud-based design software.) The transaction has already drawn skepticism from American and British regulators.
Lazard is said to have discussed a sale with an Abu Dhabi sovereign wealth fund. The investment bank held talks earlier this year with ADQ, a state-funded vehicle, The Financial Times reports. The talks, which are no longer active, reflect the ambitions of deep-pocketed Middle Eastern investors seeking to diversify their countries’ economies beyond oil.
Berkshire Hathaway doubles down on Japan. The conglomerate run by Warren Buffett disclosed on Monday that it has bought more shares in Japan’s five biggest trading firms, and suggested that it may go further. Nikkei-listed stocks have outperformed the S&P 500 and most other large indexes this year, thanks to investor enthusiasm over Japan’s economic recovery.
The stakes of the submersible rescue effort
Rescuers are still searching for a submersible that disappeared near the wreckage of the Titanic on Sunday, racing against time to find the vessel in the vastness of the sea.
The submersible’s disappearance is a reminder of the risks associated with the extreme tourism business — especially as space exploration companies like Virgin Galactic and Jeff Bezos’s Blue Origin take flight.
Time is ticking. Coast Guard officials estimated that the Titan submersible, which disappeared Sunday morning, theoretically had between 70 to 96 hours of air as of late yesterday afternoon. (That is, if its hull is intact.) Among the five people on board are Hamish Harding, a wealthy British adventurer and aviation executive, and Paul Henry Nargeolet, a French expert on the Titanic.
American and Canadian aircraft, as well as commercial vessels, were looking for the Titan, while sonar buoys had been deployed. But here’s a good explainer about how difficult it may be to find the vehicle and rescue its occupants.
The business of exploring the extremes is booming. OceanGate Expeditions, which operates the Titan, has been charging up to $250,000 a seat since 2021 to tour the undersea remains of the Titanic.
While well-heeled vacationers have long paid to take glamorous risks — hiking up Mount Everest or swimming with great whites — the most wealthy have increasingly flocked to the frontiers offered by space travel. Richard Branson’s Virgin Galactic (not to be confused with the failed Virgin Orbit) is selling tickets for suborbital flight for $450,000 apiece, while one ticket on a Blue Origin flight last year reportedly went for $1.25 million. (Mr. Harding had previously flown on a Blue Origin rocket.)
UTA makes an even bigger sports bet
United Talent Agency, whose A-list clients range from the actor Timothée Chalamet to the singers Post Malone and Lizzo, is expanding further into media and sports by acquiring James & Co., an executive search firm specializing in the sector, for an undisclosed amount, DealBook’s Lauren Hirsch is first to report.
Talent agencies have been diving into sports,echoing moves by technology giants to throw cash at one of the few sectors still driving eyeballs to live television. Last year, Creative Artists Agency, which represents Dwyane Wade, Steven Spielberg and Zendaya, bought its rival ICM, in part to push further into sports. CAA’s clients include the football star Aaron Rodgers, basketball’s Chris Paul and the Portuguese soccer player Cristiano Ronaldo.
UTA acquired a majority stake in 2019 in Klutch Sports Group, which represents the NBA’s LeBron James. This year UTA named Andrew Thau, its chief operating officer, as its head of sports, alongside Klutch’s founder, Rich Paul.
UTA and its rivals are seeking scale to strengthen their negotiating power with streaming powerhouses like Amazon, Netflix, and Apple. UTA bought the literary agency Fletcher & Company in January after acquiring the London-based Curtis Brown last year. Those deals strengthened its roster of contemporary novelists and nonfiction writers, giving it more intellectual property that could be turned into films or TV series.
James & Co. was founded in 2002 by Michele James, a former chief talent scout at Time Warner, and Roysi Erbes, a partner at the executive search firm Korn Ferry. They will co-lead the company as a division within UTA.
“We see lots of people driving Porsches, Mercedes and BMWs in the parking lot. No matter how much you make, you don’t want to spend $4 on an avocado when you can get one for 59 cents.”
— Bob Gillman, an executive transition consultant, on why wealthy Americans are shopping for bargains at Dollar General and other discount chains.
The week ahead
The calendar on this holiday-shortened week is looking light, but there’s plenty on the agenda starting with the weeklong Paris Air Show, which began on Monday.
Tuesday: The U.S. housing market will be in focus with the release of data on building permits and housing starts.FedEx reports quarterly results after the closing bell.
Wednesday: Jay Powell, the Fed chair, will be on the Hill for two days of testimony, starting with the House Financial Services Committee. Britain, where food prices have hit a decades-long high, is scheduled to release inflation data for May.
Thursday: Powell will testify before the Senate Banking Committee. Other Fed officials, including the governors Christopher Waller and Michelle Bowman, Loretta Mester of the Cleveland Fed and Thomas Barkin of the Richmond Fed, will speak at various events.
Elsewhere, it’s decision day on interest rates for the Bank of England. And in France, President Emmanuel Macron and world leaders including Mohammed bin Salman of Saudi Arabia will convene in Paris for a two-day summit on global debt, climate policy and the role of the World Bank and I.M.F.
THE SPEED READ
Investors including a firm with ties to Bill Gates and the venture capital giant Andreessen Horowitz have bet on KoBold, a start-up focused on mining metals like lithium. (WSJ)
UBS reportedly stands to inherit hundreds of millions in regulatory fines tied to Credit Suisse’s role in the collapse of Archegos. (FT)
Silver Lake reached a truce with Bain Capital over their dueling takeover bids for the German software maker Software AG. (Silver Lake)
Gov. Ron DeSantis of Florida held a $3,300-a-plate fundraiser in Sacramento, taking potshots at California’s Democratic governor, Gavin Newsom. (NYT)
A court in Montenegro sentenced the disgraced crypto mogul Do Kwon to four months in prison for passport fraud. (WSJ)
“Facebook Helped Bring Free Speech to Vietnam. Now It’s Helping Stifle It.” (WaPo)
Best of the rest
Inflation just passed 100 percent in Argentina — but the restaurant scene is booming. (NYT)
There’s a glut of summer vacation rentals on Cape Cod, Massachusetts, a market reversal that has stunned real estate agents. (Boston Globe)
Brands like Nike wanted to sell directly to consumers, cutting out stores, but have reversed course. (WSJ)
“He Went After Crypto Companies. Then Someone Came After Him.” (NYT)
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