China investigating its defence minister for alleged corruption

In today’s newsletter:

• Another PLA corruption scandal

• BYD squeezes suppliers amid price war

• An AI prediction from Infosys chair Nandan Nilekani

Good morning. We begin with the latest corruption-related scandal to hit China’s military amid President Xi Jinping’s crackdown on graft.

Defence minister Dong Jun is under investigation as part of a broader probe into corruption in the People’s Liberation Army, according to current and former US officials familiar with the situation.

Dong was named to the position in December 2023 after his predecessor was fired for corruption. He is the third consecutive serving or former defence minister to be investigated for alleged graft.

China’s foreign ministry spokesperson Mao Ning yesterday dismissed this report of Dong’s investigation as “catching wind and shadows”, suggesting that the claims were unfounded.

The news comes a week after Dong attended an Asian defence meeting in Laos, where he refused to meet US defence secretary Lloyd Austin. China’s defence ministry blamed the US for the rebuff, saying Washington was “solely responsible” because it had recently approved a package of weapons for Taiwan.

Christopher Johnson, a former top CIA China analyst who now heads risk consultancy China Strategies Group, said the development raised concerns about how Xi was picking defence ministers.

With the investigation of Dong, said Johnson, “Xi is left to wonder, what corner of the PLA is not corrupt?” Read the full story. 

Here’s what else we’re keeping tabs on today:

• Economic data: Trade statistics are due from Japan.

• Monetary policy: South Korea announces its interest rate decision.

• US: Financial markets are closed for Thanksgiving Day.

Premium subscribers can sign up here for Trade Secrets, Alan Beattie’s must-read newsletter on the rapidly changing nature of international trade and globalisation.

Five more top stories

1. BYD, Tesla’s biggest rival in China, has demanded its suppliers slash prices by 10 per cent, as the Chinese auto market braces for a fresh salvo in a cut-throat price war. “In 2025, the EV market . . . will go into a grand final battle and a knockout tournament,” executive vice-president He Zhiqi wrote in an email, urging suppliers to mark down prices starting next year.

2. A former senior Chinese financial regulator has said top Beijing leaders set “psychological” targets for the nation’s stock markets and currency exchange rate that are not based on fundamentals. The comments by Xiao Gang offer a rare insight into the often murky world of elite financial policymaking.

3. SoftBank is planning to up its stake in OpenAI by $1.5bn, which would make the Japanese group one of the largest investors in the $150bn company. The investment comes as chief executive Masayoshi Son pursues an ambitious plan to position SoftBank as a leader in AI.

• More AI news: Investors in Elon Musk’s takeover of Twitter are set to make a huge windfall from a surge in the valuation of his AI start-up, reaping rewards from being loyal backers of the billionaire’s business empire.

4. France has suggested it would not necessarily detain Israeli Prime Minister Benjamin Netanyahu if he entered the country despite an outstanding arrest warrant issued by the International Criminal Court over alleged war crimes in Gaza. Here’s the French statement, which came a day after Paris helped the US broker a ceasefire between Israel and Lebanon.

• Israel-Hizbollah ceasefire: The deal appeared to hold on its first day as the Israeli military warned displaced Lebanese civilians not to try to return to homes near the border.

• US arms sale: President Joe Biden has provisionally approved a $680mn weapons sale to Israel, a fresh shipment of precision weapons that Netanyahu cited as one reason for backing the ceasefire with Hizbollah.

5. The EU has threatened to open a probe into TikTok over its alleged failure to prevent the spread of disinformation and unauthorised campaigning on the platform in the run-up to Romania’s election last week. Romania’s national media watchdog lodged a complaint with Brussels after a far-right candidate who went viral on the Chinese platform unexpectedly topped the first round of the presidential vote. 

Interview: Infosys chair Nandan Nilekani

Indian technology grandee Nandan Nilekani expects companies around the world will build their own AI models, a prediction that raises questions about the revenue model for start-ups that have invested in large language models. The chair of IT services major Infosys told the FT he was “not so sure” companies would want to shoulder the high costs and the potential “black box” of data and copyright liabilities associated with LLMs behind popular applications, such as OpenAI’s ChatGPT.

We’re also reading . . . 

• ‘Adios Adani!’: The reversal of Kenya’s support for the Indian group’s $1.85bn airport project shows how US bribery charges are threatening its ambitions in Africa.

• Chinese economy: Jianguang Shen, chief economist of JD Group, explains five things the market got wrong about China’s latest fiscal stimulus package.

• Artful banana? What’s crazier, asks Jonathan Guthrie: a crypto millionaire spending $6.2mn on a banana stuck to a wall or regarding art as a sound investment?

Chart of the day

French sovereign bonds and stocks fell yesterday as concerns intensified among investors that a dispute over a belt-tightening draft budget could bring down the government.

Take a break from the news

On your marks. Get set. Glow? Leading female athletes, including Serena Williams, explain why their beauty regimes have become core to game-day preparations.