Good morning and welcome to FirstFT. In today’s newsletter:
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Pressure mounts on China’s economy
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Oil traders warn market is close to drying up
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The new era of resource nationalism
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Is the US or Europe better off?
We begin with the Chinese economy, which grew at one of its lowest quarterly growth rates in decades amid signs of weak consumer demand and falling investment.
Signs of mounting pressure: Data released by the National Bureau of Statistics on Wednesday showed GDP expanded 4.3 per cent in the second quarter on a year earlier. It was the lowest reading since the formal introduction of GDP reporting in the early 1990s, apart from the three-year period of Covid-19 restrictions.
The growth figure is below Beijing’s official 2026 full-year growth target of 4.5—5 per cent and lags the expansion of 5 per cent year-on-year reported in the first quarter.
Monthly data released alongside the headline figure also reflected signs of economic pressure. Retail sales added just 1 per cent in June from a year earlier, while fixed-asset investment was down 5.7 per cent -on- on year for the first half of the year, compared with 4.1 per cent in the first five months.
Industrial production, one sign of strength, grew 5.3 per cent last month on a year earlier.
‘Bleak picture all around’: The reading underscored the deepening challenge for policymakers in China as they grapple with a drawn-out property slowdown that has weighed on consumer confidence as well as mounting tensions with trading partners as exports soar.
Lynn Song, chief greater China economist at ING, said the GDP data showed a “significant deceleration” from the first quarter and suggested a “bleak picture all around.” Read the full story.
Here’s what else I’m keeping tabs on today:
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Monetary policy: South Korea’s central bank is expected to raise interest rates for the first time in more than three years, according to a Reuters poll of economists.
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Ukraine: President Volodymyr Zelenskyy is expected to unveil his new government, the third cabinet overhaul since the start of Russia’s full-scale invasion of Ukraine in 2022.
Five more top stories
1. Oil traders have warned the latest flare-up of tensions in the Strait of Hormuz threatens a fresh crude supply crunch without the stockpiles that helped avert a wider economic crisis earlier in the US-Iran war. “We’ve burned through all of the buffers we had. Everything,” said one trader.
2. BYD can unseat Toyota as the world’s biggest carmaker by sales without access to the US market, according to the executive spearheading the Chinese group’s global ambitions, suggesting it will intensify an aggressive European expansion.
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EU-China trade tensions: The EU is setting up an emergency task force to deal with crises including a possible trade conflict with China, as a truce over export controls on crucial rare earths nears expiry.
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More Europe-China news: Ukraine will be allowed to spend funds from an EU defence loan on Chinese drone components, exposing Europe’s reliance on Beijing for critical parts.
3. Oracle is winning the race to sell top-secret cloud services to Japan that the US says are critical to secure intelligence sharing between Tokyo and allies as they face growing threats from China. The Texas-based company is leading Amazon Web Services, Microsoft and Google to provide the “air-gapped” cloud to Tokyo.
4. Liquidators of property developer China Evergrande have told PwC partners in Hong Kong that they could pursue them personally for any damages over audit failures and warned them not to use methods such as divorce to shield assets.
5. The Pentagon will offer testosterone treatment for US soldiers, in a programme announced by defence secretary Pete Hegseth to create a “High-T” fighting force. The initiative is the latest step in Hegseth’s campaign to reshape the military around a “warrior ethos”. Read the full story.
The new era of resource nationalism
Yttrium, discovered in Sweden in the late 18th century, has huge strategic value in the production of the computer chips that are the backbone of AI. It is also one of the niche metals at the centre of a raging geopolitical storm.
The vast majority of yttrium, along with many other minerals used in global manufacturing processes, is produced in China. But as its tit-for-tat trade war with the US escalates, Beijing has increasingly restricted access to its supplies of critical metals. Now, western countries are feeling the effects of losing a metals-processing industry they allowed to move to China. Camilla Hodgson writes on the new era of resource nationalism.
We’re also reading . . .
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‘Spitting upwards’: SoftBank founder Masayoshi Son ridiculed opponents of AI as he predicted the technology would account for 20 per cent of global output by 2040.
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IBM’s share plunge: Big Blue’s profit warning points to a shift in IT spending, argues Richard Waters.
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Rich list obsession: Wealth rankings have caught the attention of everyone from tax authorities to activists, but how reliable are they?
Chart of the day
Is the US or Europe better off? If one compares the US with the Eurozone on growth since 2000, its performance is hugely superior. But if one compares relative GDP per head, this is not true, writes Martin Wolf.
Take a break from the news . . .
Christopher Nolan’s $250mn retelling of The Odyssey is both crazy and conventional, writes film critic Danny Leigh. Read the review.
