Charlotte Street Partners

DAILY BRIEFING

DAILY BRIEFING

The backbone of the nation

Written by Javier Maquieira, senior associate 
Edited by Kevin Pringle, partner
2 July 2021

Good morning,

Very few political parties have stood the test of time quite like the Chinese Communist Party (CCP). Although its authority has ebbed and flowed over its 100 years of history, the party’s Leninist determination to be the only power in China has stood still, with its role and scope only becoming more visible under Xi Jinping.
 
Widely regarded as the most powerful Chinese leader since Mao Zedong, Xi marked the CCP’s centenary yesterday with a deeply nationalistic address that culminated in a bellicose warning to the country’s foreign rivals.
 
In his defiant speech on the top of the Tiananmen Gate in Beijing, the Chinese president said that “anyone who dares to [bully, oppress or subjugate China] will have their heads bashed bloody against the great wall made of the blood and flesh of the 1.4 billion Chinese people”.
 
The address, which came as the US and Japan were carrying out joint military exercises amid fears of a possible conflict with China over Taiwan, was also a reminder of Beijing’s plans to “eventually unify” the self-governed island and exercise full governance over Hong Kong and Macau. “A historic mission and unshakeable commitment of the Chinese Communist Party”, as Xi put it.
 
Meanwhile, in the UK, the chancellor of the exchequer used his annual Mansion House speech on Thursday to insist Britain needs to bolster its ties with China in what he called “a mature and balanced relationship”. Faced with fading hopes of a regulatory deal with the EU, Rishi Sunak said that the City of London is well placed to serve a fast-growing Chinese “financial services market with total assets worth £40tn”.
 
He did so not without addressing the debate on values led by former Conservative party leader Sir Iain Duncan Smith, who has warned governments against being “asleep to dangers posed by China”. According to the chancellor, who has long favoured a hard-headed, transactional approach towards Beijing, deepening economic ties with China should not prevent the UK from speaking out against human rights abuses in Hong Kong and Xinjiang.
 
This approach puts Britain somehow at odds with the US and the EU. President Biden’s number one foreign policy goal continues to be working with allies to restrain Beijing, and EU member states remain likewise sceptical about the Asian country, despite some voices opposing the idea of a binary choice between the US and China.
 
One hundred years on since its creation, the modern incarnation of the CCP is determined to use its role as the backbone of the nation to turn China into the world’s largest economy. As foreign countries are drawn closer into Beijing’s orbit looking for trading opportunities, however, they would be remiss to ignore the party’s ethnonationalist nature.

News

The Labour party has narrowly won the Batley and Spen by-election after candidate Kim Leadbeater defeated her Conservative rival by just 323 votes. Leadbeater, who will now represent the seat previously held by her sister Jo Cox, who was murdered in 2016, said that constituents had “rejected division” and “voted for hope”. Labour leader Sir Keir Starmer, who has been facing pressure after recent election defeats, has welcomed Leadbeater’s election as a “fantastic result”.
 
UK ministers plan to press ahead with the lifting of all social distancing restrictions in England on 19 July, although the wearing of masks may still be advised in high-risk areas such as public transport. A number of key scientific advisers have cautioned that the NHS might come under pressure in the winter, and hospital bosses have warned that the reopening date could lead to a new spike in hospitalisations due to Covid-19.
 
Prince Harry and Prince William reunited for the first time since April to unveil a statue of their mother, Princess Diana, at Kensington Palace on what would have been her 60th birthday yesterday. In a statement, the two brothers said they hoped the memorial would be “seen forever as a symbol of her life and her legacy”.
 
Australia is to halve the number of international arrivals from 14 July to reduce pressure on the country’s quarantine system following new coronavirus outbreaks. The strict border policies and arrival caps, which have only allowed Australians and exempted people to enter, are likely to last until next year. The move has highlighted the nation’s slow vaccine rollout, with less than eight per cent of adults fully vaccinated.

Business and economy

The Trump Organization and its chief financial officer, Allen Weisselberg, have been charged with tax crimes following a years-long investigation into a scheme that helped executives evade taxes by giving benefits such as rent and school fees. The senior executive, who turned himself in to New York authorities on Thursday before pleading not guilty to tax fraud, was charged with concealing $1.7m worth of income. Although Donald Trump has not been charged personally, prosecutors said the former president had signed some of the cheques at the centre of the case.
 
Nissan has unveiled plans to invest in what would become the largest battery “gigafactory” in the UK. The Japanese manufacturer said the £1bn investment, built in partnership with Chinese manufacturer Envision, would enable its Sunderland car plant to massively increase production of electric vehicles, creating 900 jobs at Nissan plus 750 at Envision, and an overall 6,200 when the impact on suppliers is included.
 
Haribo has reported problems in its supply chain in the UK as a result of the nationwide lorry driver shortage. The German confectionery manufacturer said it has had to cancel planned promotions on its share bags of jelly babies, gummy bears, and mini-fried eggs as it tries to maintain availability and get its products to customers in Britain.

Columns of note

Writing in The Guardian, Daniel Trilling draws attention to the dangers of the UK government’s EU settlement scheme, to which EU citizens resident in the UK were meant to have applied by yesterday in order to continue to enjoy the rights they had before Brexit. He argues that, even when the government has promised a “flexible” and “pragmatic” approach to latecomers still resolving their cases, many people are at risk of losing their right to work or rent a home. Worryingly, by outsourcing a large part of immigration control to wider society, Trilling warns, there’s a risk that landlords and employers are unable to keep up with the proliferation of new rules and categories, and many neighbours living and working in the UK end up becoming outsiders.
 
Joyce McMillan writes in The Scotsman that football is the principal reason for the frightening surge of Covid-19 cases in Scotland and remains an excuse for sectarianism, domestic violence, and racism. At a time when so many other forms of entertainment are still struggling to operate under strict distancing measures, McMillan is left wondering why so much indulgence has been extended to football. She concludes her piece by calling on football leaders to take structural responsibility for reducing each of those harms and challenging the attitudes among fans that lead to them.

Cartoon source: The Telegraph

Markets

What happened yesterday?

London stocks closed higher on Thursday as investors mulled the latest US jobless claims and UK manufacturing data. The FTSE 100 ended the session up 1.25% at 7,125.16, while sterling was weaker both against the dollar by 0.38% at $1.38 and versus the euro by 0.4% at €1.16.
 
In the US, Wall Street rose to further highs ahead of crucial jobs data today. The S&P 500 gained 0.5% while the technology-focused Nasdaq Composite index rose 0.1%, having traded lower earlier in the day.
 
In company news:
 
Aveva advanced 2.72% after the industrial software firm said it had a good start to the 2022 financial year, achieving 10% revenue growth in the first two months.
 
Associated British Foods gained 4.83% as the food, ingredients and retail group said it expected annual profit to be in line with the year before, as sales at Primark outstripped forecasts in the third quarter.
 
JD Sports Fashion rallied 5.44% after saying it was on track to deliver annual profits of at least £550m. The retailer also pledged to split the roles of chief executive and chairman and said it would consider paying back government furlough cash.
 
Micro Focus plunged 14.79% even as the software and information technology business said its first-half revenue performance was ahead of expectations.
 
AO World was down 4.03% despite the electricals retailer reporting a jump in full-year profits and revenue, as it continued to benefit from a shift to online shopping since the pandemic.

What’s happening today?

Interims
Reach Plc

AGMs
Mining Minera.

Int. economic announcements
(07:00) Retail Sales (GER)
(10:00) Producer Price Index (GER)
(13:30) Non-Farm Payrolls (US)
(13:30) Unemployment Rate (US)
(15:00) Factory Orders (US)

Source: Financial Times

did you know

Tennis players are not allowed to swear when they are playing in Wimbledon. Because of this, line judges have to learn curse words in every language so they know when a player has violated the rules. (source: @8fact)

Parliamentary highlights

House of Commons

No business scheduled.

House of Lords 

No business scheduled.

Scottish parliament 

In recess until 30 August.

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