Plus: Power couple of the day
IN TODAY’S EDITION
1️⃣ The EU-China trade spat expands |
2️⃣ A newsreader’s mistake in Japan |
3️⃣ Power couple of the day |
Hi Intriguer. We saw a tweet a few days ago that captures the times we’re living through.
It was about Y Combinator’s first investment in a weapons startup, with the famed Silicon Valley accelerator backing a new firm that aims to build cheaper anti-ship cruise missiles ahead of any future conflict in the Taiwan Strait.
That’s quite the contrast to a decade ago, when YC’s portfolio was a little more focused on ride share apps and food delivery services.
Speaking of changes, the major EU-China trade relationship is facing yet more problems, as we'll see in today's top story.
PwC braces for 6-month China ban.
The China arm of the Big Four accounting firm has told local clients it’s expecting a six-month business ban as punishment for its role in the collapse of disgraced property developer Evergrande. Authorities have accused PwC of approving Evergrande’s accounts despite the developer inflating its revenue by $80B in the two years prior to its default.
Major Canadian rail operators shut down amid strikes.
The two biggest freight rail operators have shut down their networks and locked out nearly 10,000 workers after wage negotiations failed. The stoppage is expected to have knock-on effects across the Canadian economy, as well as its cross-border trade with the US and beyond.
Australia approves ‘world’s largest solar precinct’.
Canberra has approved an ambitious $19B solar project to export electricity from remote northern Australia to Singapore via subsea cables. The project collapsed last year after its two original billionaire backers disagreed over the commercial viability of exporting the electricity. With one of those billionaires now back in charge, SunCable is hoping to start operating in the early 2030s.
Oil tanker ablaze in Red Sea.
A Greek-owned and flagged oil tanker is reportedly ablaze and adrift in the Red Sea following several presumed attacks by Yemen’s Houthis. The tanker initially came under fire by two small boats and was later hit by projectiles.
Iranian parliament approves full cabinet.
For the first time since 2001, an Iranian president has been able to confirm all his cabinet members through Iran’s hard-line parliament. It’s an early win for President Pezeshkian, and suggests he picked a cabinet of consensus to keep Iran’s various factions happy.
TOP STORY
The businesses caught in the EU-China trade spat
It’s hard to pinpoint exactly which export makes Europeans most proud, but if we had to choose, we’d say cheese is pretty high on that list. So for the EU, that must make China’s recent announcement all the more irritating.
On Wednesday, China’s commerce ministry announced a new anti-dumping probe into certain dairy imports from the EU. And while Beijing claims it was just responding to local complaints about EU subsidies, this kind of timing is rarely coincidental. Word of the new probe dropped the very day after the EU confirmed it was hitting China-made EVs with new tariffs.
Now, long-time Intriguers will know this is just the latest tat in an ongoing tit-for-tat, but as it edges closer to another trade war, it’s worth an update.
Pinpointing the opening shot is tricky in our interconnected world, but here are two big trends that arguably made this inevitable, regardless of who fired first:
-
As China’s economic woes mount, it’s leaning even more on exports to sustain growth (and therefore the Communist Party’s legitimacy), but
-
Those cheap exports are putting pressure on jobs in the West, where leaders were already starting to see a more assertive China as a worry.
So against that backdrop, the EU and China started firing trade investigations at one another. On EVs, the EU claims China’s manufacturers benefit “heavily from unfair subsidies”, posing an existential threat to Europe’s storied carmakers. And for its part, China is hardly the first to object to the EU’s agricultural subsidies.
But just taking a quick sample of some of the firms now caught in the cross-fire is like strolling through your local farmers market or Home Depot:
-
Take vanillin, which is the key flavour component in vanilla – the EU is now investigating a complaint by its own top vanillin producer that China is putting the Belgian-French-led industry in “significant decline”.
-
Meanwhile, China’s probe back into EU pork seems aimed at the Spanish, Danish, and Dutch farmers who produce most of the $3B in products the EU sells to China each year.
-
Beijing’s investigation into brandy – a favourite among fictional spies and real-life folks in China – is also spooking the French, Italian, and Spanish distillers who export 20% of their good stuff to China each year.
-
Plus, the EU’s probe into China’s steel pipes came after China’s low-cost offerings saw its market share in the EU quadruple in two years, reportedly forcing the closure of several plants in Germany.
-
And finally, the EU’s (withdrawn) investigation into two Chinese solar-makers came just as Germany’s own top player ceased local production, after years of struggling to compete with China’s ultra-low cost offering.
Now, all this is just a snapshot of how the game is already playing out, but it leads to a bigger question: where’s it all heading?
And the EU’s outgoing top diplomat Josep Borrell is giving us a blunt answer, telling folks in Spain just on Tuesday, “we mustn’t be naïve, we have no interest to get into a trade war … but maybe it’s unavoidable, it’s also in the logic of things.”
INTRIGUE’S TAKE
That story of the EU’s recent aborted investigation into the two Chinese solar manufacturers is so illuminating: it started after two of China’s firms submitted amazingly low-cost bids for a big solar park in Romania.
But sure enough, any EU amazement quickly turned to unease: from the EU’s perspective, such low bids must’ve had help from Beijing, and the costs of that help were already starting to hit home – at that very moment, the EU’s own struggling solar sector was shutting down a fifth of its production lines.
So, why’s this illuminating? It kinda encapsulates the West’s broader China journey: from amazement at the opportunity, to unease at the trade-offs.
In the end, the EU withdrew its solar investigation, not because of a lack of evidence, but because China’s two manufacturers quietly withdrew their bids.
But that’s where this analogy seems to end: we’re not seeing any signs that China plans to withdraw from markets where the EU is feeling pain.
A MESSAGE FROM ELECTION INTRIGUE
Wish you could be a fly on the wall at the DNC?
Wish no longer, we’re there for you. Intrigue co-founder John and Washington Editor Kristen are getting their elbows dirty in Chicago this week for the Democratic National Convention.
Don’t miss out on their breakdown tomorrow (Friday).
MEANWHILE, ELSEWHERE…
-
🇯🇵 Japan: A news presenter at Japan’s NHK network has made the ultimate mistake this week, referring to the disputed but Japanese-controlled Senkaku Islands as ‘Chinese territory’ during unscripted remarks on a Chinese-language program. The sorry fellow, a citizen of China, is expected to lose his job and the network has had to apologise.
-
🇺🇦 Ukraine: Kyiv’s parliament, or Verkhovna Rada if you really want to flex, has ratified the founding treaty of the International Criminal Court (ICC). Ukraine signed the Rome Statute back in 2000, but is now ratifying it in the hopes it’ll help prosecute Russian war crimes (and boost its bid for EU membership).
-
🇸🇧 Solomon Islands: Workers digging a hole have discovered a stockpile of US munitions from WWII, leading to the suspension of nearby school classes. Imperial Japan and the US fought bitter battles to control strategic Pacific Islands in WWII, littering the region with unexploded munitions that still cost lives today.
-
🇵🇦 Panama: Panama has deported 29 north-bound Colombians who entered the country through the infamous and inhospitable Darien Gap region on their shared border. The US covered the flight costs under an immigration agreement Washington and Panama City signed last month.
-
🇮🇱 Israel: The Israeli military says it’s recovered the bodies of six hostages held by Hamas in an "underground tunnel route" near Gaza’s southern city of Khan Younis. Israel had already announced five of the hostage deaths in June / July following an Israeli military operation.
EXTRA INTRIGUE
Meanwhile, in other worlds
-
Science: Many of you will have had the opportunity to observe the blue supermoon this week, a phenomenon that won’t be returning until 2037. For everyone else, here are some cool pics.
-
Tech: A security researcher has found that typing “”:: will cause some iPhones and iPads to crash briefly. You’ve been warned.
-
Business: Ford has abandoned plans to make a large all-electric SUV for the US, opting for a hybrid model instead.
POWER COUPLE OF THE DAY
X/Twitter: @GerAmbCanada
Marriage, ey? It’s not always easy, and a diplomatic career can add a whole other layer of complexity. But what about two diplomatic careers? Germany’s new designated ambassador – or ambassadors – to Canada might have the answer. Married couple Tjorven Bellmann and Matthias Lüttenberg have just started their latest tour as a two-for-one deal, sharing the role as Germany’s envoy to Canada in eight month rotations.
Don’t like your predecessor’s handover notes, ambassador? You know who to call.
DAILY POLL
Do you think we're headed towards an EU-China trade war? |
Extra poll: Do you work in cybersecurity or IT?October is Cybersecurity Month, and we're working on some special editions and programmes.
|
Yesterday’s poll: What do you think this proposed buyout of 7-Eleven means?
🟩🟩🟩🟩🟩🟩 🤷 Nothing, it faces too many hurdles (49%)
🟨🟨🟨🟨🟨⬜️ 💪 It's another sign that Japan is back (43%)
🟨⬜️⬜️⬜️⬜️⬜️ ✍️ Other (write in!) (8%)
Your two cents:
-
💪 M.G: “It's a sign that Japan may truly enter the global marketplace, selling as well as buying, and could become more integrated in global economic activities. As a G-7 major economy, this could be stabilizing for the world's economy.”
-
🤷 S.B: “Delivery services have been attacking the business model of convenience stores, and consolidation is one way they are fighting back.”
-
✍️ M.B: “Think it means more that Canada is back 💪”
-
✍️ C.M: “If Couche-Tard snaps up Seven and i Holdings, we might be looking at a new era of 'Sushi Poutine' — because nothing says global convenience like blending Japanese precision with Canadian cravings!”
Was this forwarded to you? We're a team of ex-diplomats producing a concise and engaging geopolitical briefing for 100k+ leaders each day. It’s free to subscribe.