FirstFT: Goldman Sachs used Chinese state funds to buy UK and US companies

Receive free Global Economy updates

We’ll send you a myFT Daily Digest email rounding up the latest Global Economy news every morning.

Good morning. We have a scoop today on Goldman Sachs, which has used a fund set up with Chinese state money to buy a series of US and UK companies, including one with a cyber security business that provides services to the British government, even as tensions rise between Beijing and the west.

The Wall Street bank has struck seven deals using cash from a $2.5bn private equity “partnership fund” it set up in 2017 with the sovereign wealth fund China Investment Corporation, according to multiple people with direct knowledge of the fund and its operations.

The deals include a start-up that tracks global supply chains, a consultancy that advises on cloud computing, a drug testing company and a manufacturer of systems used for artificial intelligence, drones and electric vehicle batteries.

Although the bank announced it had invested in the companies, it did not say the deals were financed at least partly from the China fund. Read the full story for more on Goldman’s partnership fund with China.

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

• Results: Industrial and Commercial Bank of China reports first-half earnings. Expectations have been trending lower for the bank, China’s biggest by assets, owing to its exposure to the struggling property sector.

• Economic data: The US publishes revised second-quarter GDP figures, and Germany releases monthly import prices data.

• UK-China ties: UK foreign secretary James Cleverly visits Beijing. Ahead of the trip, Cleverly told the FT he would tell his hosts that Britain welcomed Chinese investment provided it did not create national security concerns, declaring: “The UK is open for business.”

Five more top stories

1. US commerce secretary Gina Raimondo has warned that American companies are beginning to see China as “uninvestable”, calling on Beijing to act to reduce the risk of doing business in the country. Speaking on the third day of a four-day visit to China, Raimondo told reporters: “Actions speak louder than words . . . but I hope that this becomes a moment where we start to see action.” Here’s our report from Beijing.

2. Country Garden, one of China’s largest property developers, has asked for a grace period on a renminbi bond maturing next week. The request came a day after shares in Evergrande, the world’s most indebted developer, plunged 90 per cent after a year and a half suspension. Country Garden’s proposal is another sign of stress in China’s ailing property sector.

3. The organisation responsible for Japan’s national defences against cyber attacks has itself been infiltrated by hackers, who may have gained access to sensitive data for as much as nine months. Chinese state-backed hackers were believed to be behind the attack, which began last autumn and was not detected until June. The discovery of the incident comes at a time of unprecedented scrutiny of Japan’s vulnerability to cyber attack.

4. Vladimir Putin did not attend a private funeral held in St Petersburg for the Russian warlord Yevgeny Prigozhin who died in a plane crash last week. “The president’s presence is not envisaged,” spokesman Dmitry Peskov said in response to a reporter’s question. Here are more details on the Wagner leader’s funeral.

5. Asset management firm Grayscale has won a landmark court ruling against US regulators as it seeks to launch a US-listed exchange traded fund tracking the price of cryptocurrency token bitcoin. A federal appeals court ruled that the Securities and Exchange Commission was wrong to reject Grayscale’s application to convert its flagship vehicle — Grayscale Bitcoin Trust — into an ETF. Read more on the ruling’s implications for bitcoin.

News in-depth

As China slides into deflation, people are thinking carefully about how they spend their money. Young spenders in particular are under pressure to cut back amid soaring youth unemployment. “I don’t have a desire for non-essential stuff anymore,” said a 26-year-old office worker in Beijing, who pointed to an online trend in China referred to as “consumption downgrade”, popular among young people keen to conserve cash.

Are you cutting back spending? Take our poll.

We’re also reading . . . 

• El Niño: The weather event is forecast to bring months of extreme heat to parts of south Asia and Central America, further straining global food output and stoking inflation.

• Nvidia’s weak point: The risks from the chipmaker’s exposure to Taiwan is a fact that investors should keep in mind when trying to predict its stock moves, writes June Yoon.

• Falling renminbi: China’s currency is flirting with its lowest level against the dollar since the 2008 financial crisis. Can Beijing halt the renminbi’s slide?

Chart of the day

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

Although China’s economy is more than twice the size of India’s, its underlying growth rate is slowing rapidly. You don’t have to predict that China is about to suffer a property meltdown to think that India will soon rival its neighbour, not only in population, but in its contribution to global growth. Read Chris Giles on the five global economic shifts happening now.

Take a break from the news

What sakes are sommeliers pouring at the world’s hot new omakases? For Kenji Gyoten, the three Michelin-starred chef at Tokyo’s Sushi Hōseki, it’s the sakes of Aramasa, a “cutting-edge” maker in the Akita prefecture. See more in HTSI’s expert guide to great rice wines.

Additional contributions from Tee Zhuo and Gordon Smith