FirstFT: US, Japan and South Korea deepen security co-operation to deter China

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Good morning. The US, Japan and South Korea are to create a leader-level hotline and hold annual joint military exercises as part of a historic trilateral agreement that will help Washington and its Asian allies boost deterrence against North Korea and China. 

President Joe Biden will unveil the move with Japanese prime minister Fumio Kishida and South Korean president Yoon Suk Yeol at Camp David on Friday, according to Kurt Campbell, the top White House official for the Indo-Pacific region. 

“We’re going to invest in technology to have a three-way hotline for the leaders and others inside their governments to communicate,” Campbell said in a preview of the summit at the Brookings Institution. 

The trilateral summit represents a significant victory for the White House, which has been urging Tokyo and Seoul to move beyond a longstanding dispute over Japan’s wartime behaviour to enable Washington to work more closely with its two allies.

Campbell said Kishida and Yoon had engaged in “breathtaking” diplomacy, sometimes against the advice of their aides, that had elevated the Japan-South Korea relationship to “a new plane”. Read the full story.

More China news: Retail investors with exposure to Chinese conglomerate Zhongzhi sought to lodge formal complaints with authorities in Beijing on Wednesday in a sign of growing alarm over a liquidity crisis across the group’s many businesses.

China sinks Intel-Tower merger: Intel said on Wednesday that it was abandoning an attempt to purchase Israeli chipmaker Tower Semiconductor, after failing to secure regulatory approval in China for the $5.4bn deal.

Here’s what else I’m keeping tabs on today:

Results: ASX, Telstra, Origin Energy Bilibili and Lenovo report earnings.

North Korea: The UN Security Council is due to hold its first session to discuss North Korean human rights abuses since 2017, a day after Pyongyang claimed that a US soldier who crossed over the border into its territory a month ago was escaping “inhumane abuse and racism in the US military”.

Indonesia: Financial markets will be closed for independence day. President Joko Widodo is set to deliver the annual state of the nation address.

Five more top stories

1. Vietnamese electric vehicle start-up VinFast’s valuation has overtaken those of Detroit’s “big three” carmakers after shares of the lossmaking company soared on their first trading day in New York. VinFast, controlled by billionaire founder Pham Nhat Vuong, merged with a special purpose acquisition company to secure the US listing. Here’s more on the company touted as Vietnam’s answer to Tesla.

Lex: Carmaker’s share price jump should not be taken as proof of widespread investor confidence. Here’s why.

More EV news: Tesla rolled out price cuts of its China models this week, accelerating a price war in the world’s largest EV market.

2. Exclusive: The US is pushing Iran to stop selling armed drones to Russia as part of discussions on a broader “unwritten understanding” between Washington and Tehran to de-escalate tensions and contain a long-simmering nuclear crisis. Here’s what we know about the discussions.

3. The Federal Reserve has signalled more scepticism over the need to keep raising interest rates despite fearing the US central bank has not won its battle against inflation. Minutes from the Fed’s July meeting point to growing concerns about the impact of tighter policy on the US economy.

4. EY has rejected a proposal from US private equity group TPG to break up the Big Four firm and take a stake in its consulting business. The FT on Tuesday revealed the details of TPG’s pitch, which came just months after the collapse of EY’s own attempt to spin off the consulting business and seek a $100bn enterprise value for it in a stock market listing. Read the full story.

5. President Vladimir Putin was set to discuss ramping up currency controls with Russian policymakers on Wednesday after an extraordinary 3.5 percentage point rate rise failed to halt the rouble’s slide. Putin planned to hear proposals from Russia’s finance ministry to require exporters to convert some of their foreign currency earnings, most of which are currently held abroad, into roubles. Here are more details on the proposals.

Visual story

About 3bn cups of coffee are drunk around the world every day — a number expected to double by 2050 if current trends continue. But warming temperatures mean up to half of current coffee farmland could soon be unusable. Can the world produce enough beans to meet growing demand? Find out more in this FT visual story.

We’re also reading . . . 

Climate doomism: The truth about global warming is bad enough, writes Pilita Clark. We don’t need harmful hyperbole.

Holding Trump to account: Prosecutors Jack Smith and Fani Willis are pursuing parallel cases against the former US president connected to his efforts to overturn the 2020 election. Here’s how their approaches differ.

Interview: Former Goldman Sachs managing director Maeve DuVally’s coming out as trans in 2019 was a watershed moment for Wall Street. Corporate America needs to “step up” for trans staff, she told the FT.

Chart of the day

Chinese pharmaceutical companies are developing domestic versions of “miracle” weight-loss drugs as they take on western drugmakers selling anti-obesity medication in one of the world’s biggest markets. China has the world’s largest overweight and diabetic population, and health officials have said tackling diabetes and obesity is a top policy priority.

Take a break from the news

HTSI’s creative director Rasha Kahil visits family in Lebanon, finding peace in a beachside guesthouse started by her mother a decade ago in the once-sleepy town of Batroun, along the country’s northern coast.

Additional contributions by Tee Zhuo and Gordon Smith