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The World
U.S. and China Poised to Drift Further Apart After Investment Ban: After years of blacklisting Chinese companies and scrutinizing their investments in the U.S., the Biden administration is sending an unmistakable signal to American business to steer investment away from China. An executive order President Biden issued Wednesday—while narrowly targeted at critical leading-edge technologies with military, surveillance and cyber capabilities—more broadly aims to reorder the flow of American capital and expertise away from its biggest global rival. The order prohibits U.S. investment in advanced semiconductors and quantum computing, and requires American investors to notify Washington about investments in other types of semiconductors and artificial intelligence. It also bars U.S. citizens and permanent residents from taking part in prohibited deals. In doing so, White House officials said, the order intends to deny China the know-how, market access and other benefits U.S. firms bring with their investments. That is likely to further rattle American companies doing business in China, coming on top of weakening Chinese growth, Covid lockdowns that made travel to China difficult and a recent pressure campaign against U.S. and other foreign companies amid rising tensions between Washington and Beijing. (Wall Street Journal)
‘Blatant economic coercion’: China slams Biden’s order limiting U.S. overseas tech investment. China sharply rebuked President Joe Biden’s long-awaited executive order that limits U.S. investment in technology — but stopped short of issuing immediate counter measures. The Chinese commerce and foreign affairs ministries issued strong responses on Thursday, just hours after Biden signed off on the measure targeting “countries of concern” on the basis of national security. “China is strongly dissatisfied with and resolutely opposed to the U.S.’s insistence on introducing restrictions on investment in China,” the foreign ministry said in a statement, according to a CNBC translation. “This is blatant economic coercion and technological bullying.” The Chinese Commerce Ministry called upon the U.S. to “respect the market economy and the principles of fair competition” and to “refrain from artificially hindering global trade and creating obstacles that impede the recovery in the global economy.” (CNBC)
Slain Ecuador candidate fearlessly took on drug cartels and corruption. The Ecuadorian presidential candidate who was fatally shot at a political rally was unafraid to take on criminal networks and a political elite he accused of corruption at the hands of organized crime. Fernando Villavicencio, who was a journalist before entering politics, waged a yearslong battle against the forces that he saw transforming Ecuador, including crime that had seeped into nearly every aspect of life, from street robbery to cocaine trafficking and corrupt government contracting. Among the 59-year-old’s biggest scoops as a journalist was reporting on a trove of documents that pointed to inflated prices, shoddy workmanship and extravagant kickbacks that were involved in some of the country’s largest infrastructure projects, including some built by Brazilian construction giant Odebrecht. The evidence he uncovered was later used to help convict former Vice President Jorge Glas on bribery charges. (Associated Press)
Hong Kongers are bracing for an even wider clampdown on dissent. An explosion of anti-government discontent in Hong Kong in 2019 prompted China to impose a draconian national-security law on the territory to prevent further protests. Officials say this has helped: Hong Kong has achieved a “major transition from chaos to order”, they insist. But even after thousands of arrests and numerous trials, both under the new law and dredged-up statutes from the colonial era, the authorities are twitchy. Increasingly, they warn of “soft resistance” that could trigger fresh unrest. A new phase may be unfolding in Hong Kong’s war on dissent. For more than three years, fear instilled by the national-security law and other signs of China’s tightening grip on the territory has deterred most people with political grievances from attempting to stage demonstrations. Until they were scrapped in December, covid-related restrictions on public gatherings may also have helped to keep protesters off the streets. Some of those who were at the forefront of the months-long upheaval in 2019 have fled. Since then, Hong Kong has seen its biggest wave of emigration in decades and the labour force has shrunk by over 5%. (The Economist)
Poland to station 10,000 troops on Belarus border: Warsaw is planning a big military build-up along its border with Belarus to counter what the government sees as an increasing security threat from Russia’s ally and host of Wagner paramilitary fighters. Poland’s defence minister Mariusz Błaszczak said on Thursday that about 10,000 soldiers would eventually be stationed on the Belarus border or nearby. The goal was to move troops “closer to the border with Belarus to scare the aggressor so that they do not dare to attack us”, the minister told Polish national radio. (Financial Times)
Ukraine announces 'humanitarian corridor' for ships stuck in Black Sea ports. Ukraine announced a "humanitarian corridor" in the Black Sea on Thursday to release cargo ships trapped in its ports since the outbreak of war, a new test of Russia's de facto blockade since Moscow abandoned a deal last month to let Kyiv export grain.At least initially, the corridor would apply to vessels such as container ships that have been stuck in Ukrainian ports since the February 2022 invasion, and were not covered by the deal that opened the ports for grain shipments last year. But it could be a major test of Ukraine's ability to reopen sea lanes at a time when Russia is trying to reimpose its de-facto blockade, having abandoned the grain deal last month. Shipping and insurance sources expressed concerns about safety. In a statement, the Ukrainian navy said the routes had already been proposed by Ukraine directly to the International Maritime Organization (IMO). The routes would "primarily be used for civilian ships which have been in the Ukrainian ports of Chornomorsk, Odesa, and Pivdenny since the beginning of the full-scale invasion by Russia on February 24, 2022." (Reuters)
The US Supreme Court agreed to consider scuttling Purdue Pharma LP’s $6 billion opioid settlement, taking up a Biden administration appeal that contends the accord improperly shields the Sackler family members who own the company. High court review threatens Purdue Pharma’s bankruptcy reorganization plan, which would end a mountain of litigation against the OxyContin maker and funnel billions of dollars toward efforts to abate the opioid crisis. As part of the accord, family members have agreed to give up ownership of the company and pay as much as $6 billion. (Bloomberg)
Maui wildfires kill 53 as Hawaii foresees years-long recovery: Maui's wildfires have killed at least 53 people and turned the resort town of Lahaina into smoldering ruins that will take many years and billions of dollars to rebuild, Hawaiian officials said on Thursday. Thousands of people will need immediate housing, Hawaii Governor Josh Green told a news conference, and he estimated as many as 1,000 buildings were damaged or destroyed, "It's going to take many years to rebuild Lahaina," Green said, as officials began to map out a plan to shelter the newly homeless in hotels and tourist rental properties. (Reuters)
Destruction From Maui Fires Looks Like ‘a Bomb Went Off,’ Governor Says. (New York Times)
Economy
U.S. inflation rises for the first time in a year to 3.2% rate, but underlying measures remain mild. Inflation in the United States rose in July after 12 straight months of declines, boosted by costlier housing. But excluding volatile food and energy prices, so-called core inflation matched the smallest monthly increase in nearly two years. The inflation figure the government reported Thursday showed that consumer prices increased 3.2% percent from a year earlier. That was up from a 3 percent annual rise in June, which was the lowest rate in more than two years. The July inflation figure remained far below last year’s peak of 9.1 percent, though still above the Federal Reserve’s 2 percent target. The Fed, economists and investors, though, pay particular attention to the core inflation figures for signs of where inflationary pressures might be headed. From June to July, core inflation remained a tame 0.2 percent. Thursday’s price data will be among the key barometers the Fed will weigh in deciding whether to continue raising interest rates. In its drive to tame inflation, the Fed has raised its benchmark rate 11 times since March 2022 to a 22-year high. (Politico)
Cooler July Inflation Opens Door to Fed Pause on Rates: Price pressures continued cooling last month, with the CPI rising a mild 0.2% from June, likely deterring the Federal Reserve from raising interest rates at its September meeting. (Wall Street Journal)
Here’s the inflation breakdown for July, in one chart. (CNBC)
Singapore lowers 2023 growth forecast on weaker than expected GDP data: Singapore lowered its estimates for growth this year after posting weaker-than-expected second-quarter gross domestic product figures. The Ministry of Trade and Industry on Friday said the economy grew 0.5 per cent year-on-year, lower than earlier estimates of 0.7 per cent. GDP rose 0.1 per cent on a month-on-month basis. (Financial Times)
Biden's ban on Chinese AI investments will change venture capital. President Biden on Wednesday proposed an effective ban on U.S. venture capital and private equity investments into Chinese tech companies, via an executive order aimed at bolstering national security. Why it matters: This is the end of unfettered globalization in venture capital and private equity. Details: This is the so-called "reverse CFIUS" rule that's been expected since last year, and its implementation is subject to a comment period and rulemaking by the U.S. Treasury Department. It would prevent U.S. individuals and institutions from making equity investments in Chinese companies involved in the development or production of artificial intelligence, quantum information technologies and semiconductors/microelectronics. Also blocked would be related M&A, greenfield and joint venture transactions. There would be carveouts for passive public equity investments, including in exchange-traded funds, and for debt investments that aren't structured as convertible notes. Also exempted would be limited partner commitments into venture capital or private equity funds. The rule would not be retroactive, although Treasury would want notification of deals agreed to since yesterday's announcement. (Axios)
Technology
Amazon is jettisoning dozens of its in-house brands as part of a significant reduction of its private-label operation as it works to fend off antitrust scrutiny and shore up profit. The Seattle-based company in the past year has decided to eliminate 27 of its 30 clothing brands, such as Lark & Ro, Daily Ritual and Goodthreads, according to people familiar with the matter. Some of the brands remain on Amazon’s site for now as the company sells off remaining inventory, but when completed its house-label clothing division will have just three brands: Amazon Essentials, Amazon Collection and Amazon Aware. Amazon also is dropping private-label furniture brands, phasing out Rivet and Stone & Beam once its stock of those items is gone, some of the people said. (Wall Street Journal)
Uber, Nvidia-backed delivery robot startup Serve Robotics to go public. Serve Robotics, the autonomous sidewalk delivery robot startup that spun out of Uber’s acquisition of Postmates, is going public via a reverse merger with a blank check company. The reverse merger with Patricia Acquisition Corp was completed this month, according to regulatory filings. Ahead of the merger, Serve raised $30 million in a round led by existing investors Uber, Nvidia and Wavemaker Partners. New investors Mark Tompkins and Republic Deal Room also participated. The startup-soon-to-be-public-company has raised a total of $56 million.Upon the closing of the merger, Uber held a 16.2% stake and Nvidia an 11% stake in Serve, according to regulatory filings. Sarfraz Maredia, Uber’s vice president of delivery and head of its Americas region, has joined Serve’s board. Serve Robotics started its life as Postmates X, the robotics division of on-demand delivery company Postmates. The autonomous sidewalk robots started delivering to Postmates customers in multiple Los Angeles neighborhoods in 2018. It started a commercial service in 2020. (TechCrunch)
HR Tech Funding Falls To 3-Year Low After Flurry Of VC Interest. Just as the way people work has continued to evolve, the way investors look at tech to manage that workforce has changed in the past year. Venture funding to the plethora of startups providing tools and platforms in the human resources space exploded in 2021 — as it did in most sectors — with innovative startups locking up more than $10.5 billion in over 800 deals globally, per Crunchbase data. Last year, such startups had similar luck, raising more than $8 billion in nearly 700 deals even as the venture market cooled. However, venture funding in HR has been called into the office (so to speak) through the last four quarters, taking in less than $3.3 billion as deal flow also slowed. (Crunchbase)
A bioengineered enzyme-based scissors cuts off cancer cells’ defenses: Sugar-coated proteins called mucins are implicated in many diseases, including cancer. A Stanford-led team has bioengineered an enzyme-based scissors that selectively cuts mucins off cancer cells, removing their “cloak of protection” from the body’s immune system. (Stanford News)
Smart Links
Hollywood Studios Preparing New Offer for Striking Writers. (Bloomberg)
AI Mania Triggers Dot-Com Bubble Flashbacks. (Wall Street Journal)
‘Nature needs money’: Lula tells rich countries to pay up and protect world’s rainforests. (The Guardian)
At one of the world’s largest secondhand textile markets, discarded clothes are getting a new lease on life. (CNN)
Russia is to launch its first mission to the moon in almost 50 years. (Associated Press)