FirstFT: Sunak faces Tory dissent over ‘shameful’ China policy

Good morning. Rishi Sunak is facing criticism from the rightwing of his party over his “shameful” China policy as he tries to limit the fallout of last week’s dire Tory local election results in England.

Former Tory leader Sir Iain Duncan Smith yesterday launched a scathing attack on Sunak’s decision to send his investment minister, Lord Dominic Johnson, to Hong Kong. Johnson’s visit to “renew the UK’s investment ties with the city” was the first visit in five years by a British minister to the territory.

Duncan Smith said the visit was part of “project kowtow”, a reference to Sunak’s efforts to engage economically with China despite Beijing’s repressive actions in Xinjiang and crackdown on civil liberties in Hong Kong.

Domestically, divisions reappeared between Tory MPs over how to deal with Britain’s housing crisis, exposing a growing north-south split in the party ahead of an expected general election next year.

Sunak will meet his cabinet later today to urge his colleagues to pull together after the loss of about 1,000 Tory council seats last week.

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

• Australia Budget: Treasurer Jim Chalmers will present the annual federal Budget.

• Asean summit: The 42nd summit for Association of Southeast Asian Nations member states will kick off in Indonesia.

• US debt: Joe Biden will meet congressional leaders on Tuesday to discuss the threat of the US defaulting on its debt.

Five more top stories

1. Russian forces launched a barrage of air strikes on Kyiv ahead of an expected Ukrainian counteroffensive, in what the city’s mayor said was the largest drone attack on the capital since Moscow’s full-scale invasion last year.

2. Beijing yesterday said state security services had raided multiple offices of international consultancy Capvision, accusing advisory groups of ignoring national security risks and sharing sensitive information abroad. The Capvision raids were the just the latest in a string of Chinese actions against consulting groups.

3. US banks expect to tighten lending standards because of worries about rising losses in their loan portfolios and concerns that customers will continue to withdraw deposits, according to a survey from the Federal Reserve. The results of the US central bank’s quarterly Senior Loan Officer Opinion Survey will add to fears the US economy could face a credit crunch this year.

4. The EU’s delegation to Israel has cancelled a diplomatic event in Tel Aviv, after the Israeli government decided to send the extreme-right national security minister, Itamar Ben-Gvir, as its representative. The spat shows just how much relations between Israel and the EU have soured since Benjamin Netanyahu’s hardline new government took office last year.

5. The head of PwC in Australia has resigned as chief executive three days after admitting that he had received emails regarding confidential government information on changes to tax avoidance laws. Tom Seymour, chief executive of PwC Australia since March 2020, had used the information to win new business.

The Big Read

ExxonMobil, the energy major most dedicated to oil production, seems to be turning over a green new leaf by making new commitments to clean energy. But few outside Exxon believe it is really transforming its business, and its feints towards a green transition illustrate the range of pressures that American oil companies are under.

We’re also reading . . . 

Chart of the day

Back in January, the explosive potential of the China reopening trade had the big banks licking their chops. But a few months on, Chinese equities have not so much put in a bad showing as a forgettable one, writes Ethan Wu in today’s Unhedged newsletter. If you’re already an FT Premium subscriber, you can sign up here to get Unhedged every week day. If not, take out a 90-day free trial.

Take a break from the news

Take a tour of four grand hotels that have benefited from a “glow up” and much-appreciated makeovers. From Santa Monica in California to Portofino on the Italian Riviera, what’s old is new again.

Additional contributions by Jonathan Moules and Gary Jones