BitGou: Tuesday Morning Briefing: How Poland became a front in the U.S.-China cold war

Highlights

The arrest of an alleged Chinese spy in Warsaw in January opened another front in America’s new Cold War. It is a struggle in which Huawei figures prominently, as the United States wages a global campaign to dissuade allies from using the company’s equipment in the next generation of mobile-phone technology, known as 5G. Read the full Reuters investigation.

Rich get richer, everyone else not so much in record U.S. expansion. Big-money deals are getting bigger, from corporate mergers and acquisitions, to individuals buying luxury penthouses, sports teams, yachts and all-frills pilgrimages to the ends of the earth. And while these deals grab headlines, there is a deeper trend at work. The number of billionaires in the United States has more than doubled in the last decade, from 267 in 2008 to 607 last year, according to UBS. Welcome to the longest U.S. economic expansion in history, one perhaps best characterized by the excesses of extreme wealth and an ever-widening chasm between the unfathomably rich and everyone else.

Iran rejected a White House accusation that Tehran was long violating the terms of its nuclear deal with world powers, after the Islamic Republic said it had amassed more low-enriched uranium than permitted under the accord. “Seriously?” Foreign Minister Mohammad Javad Zarif said in a message on social network Twitter, after a statement by White House press secretary Stephanie Grisham that said, “There is little doubt that even before the deal’s existence, Iran was violating its terms.” France warned Iran against carrying out any further measures that would put into question the 2015 nuclear deal, after Iran exceeded the limits of low enriched uranium under the terms of the agreement.

Hong Kong

China condemned violent protests in Hong Kong as an “undisguised challenge” to the formula under which the city is ruled, hours after police fired tear gas to disperse hundreds of protesters who stormed and trashed the legislature. A representative of China’s Hong Kong affairs office denounced the demonstrators, who are furious about proposed legislation allowing extraditions to China, and said Beijing supports holding criminals responsible, state media said. Debris including umbrellas, hard hats and water bottles were among the few signs left of the mayhem that had engulfed parts of the city after protesters stormed and ransacked the Legislative Council, or mini-parliament. Britain warned China that there would be serious consequences if the Sino-British declaration on Hong Kong was not honored, saying Britain stood behind the people in the former British colony.

Katrina Hamlin from Reuters Breakingviews writes: Amid another march against a controversial extradition plan, a furious faction broke into the empty building on Monday night and trashed it, deepening a crisis for Chief Executive Carrie Lam. The violence will weaken some of the movement’s support, spook big business and could give Beijing a pretext to dig in. On the 22nd anniversary of Britain handing Hong Kong back to China, graffiti covered the central chamber of the Legislative Council and a colonial-era flag was draped across the podium. The shocking images broadcast around the world were a stark contrast to earlier more peaceful demonstrations, where massive crowds parted politely to allow buses and ambulances to pass.

Europe

EU leaders enter third day of summit to carve up top posts. The European Union’s leaders gathered on Tuesday for a third consecutive day of arm-wrestling over the 28-nation bloc’s key posts, with little sign that fundamental differences had narrowed. Spanish Prime Minister Pedro Sanchez stuck firm to a proposed deal to install Dutchman Frans Timmermans as head of the European Union’s executive on arrival for talks with other EU leaders on the bloc’s top jobs. Whilst Czech Prime Minister Andrej Babis said that Frans Timmermans was absolutely unacceptable as the new president of the European Commission. Italy’s Prime Minister Giuseppe Conte added that he would prefer a woman as president of the next European Commission.

“Everyone has to understand that they have to shift a little,” Angela Merkel told reporters. “I say that to everyone. Then there will be a chance of reaching a deal. And that is the spirit in which I am going to work - cheerful and determined,” the German Chancellor added. Luxembourg’s liberal Prime Minister Xavier Bettel said he was convinced that there would be a breakthrough in talks among EU leaders on the bloc’s top jobs, saying he hoped for the largest consensus possible.

Part-time TV presenter, miracle cure salesman and budding politician Kyriakos Velopoulos wants to build a wall to keep migrants out of Greece. Lace it with mines, he says. He would also call a referendum on the death penalty for drug dealers and pedophiles. With the country holding a general election on July 7, Velopoulos attracts a small level of support but is hoping for a repeat of the success of a May 24 election, where he won a ticket to the European Parliament, fronting a party called “Elliniki Lysi”. Velopoulos, decried by opponents as a right-wing fanatic, is finding a receptive audience among a small segment of voters.

British opposition Labour Party leader Jeremy Corbyn called on the head of the civil service to investigate a Times newspaper report which cited unidentified senior officials as saying they were concerned he was too frail to be prime minister. “This matter has inevitably undermined confidence in the principle of civil service neutrality, which is integral to the healthy functioning of our democracy,” Jeremy Corbyn wrote to Cabinet Secretary Mark Sedwill.

Business

China to scrap ownership limits in financial sector in 2020, earlier than planned

China will end ownership limits for foreign investors in its financial sector in 2020, a year earlier than scheduled, Premier Li Keqiang said. Beijing’s signal that it is quickening the pace of opening up came after the presidents of China and the United States agreed over the weekend to restart trade talks in another attempt to strike a deal and end a bruising tariff war.

6 min read

USTR proposes $4 billion in potential additional tariffs over EU aircraft subsidies

Just days after reaching a truce in the U.S.-China trade war, the U.S. government ratcheted up pressure on Europe in a long-running dispute over aircraft subsidies, threatening tariffs on $4 billion of additional EU goods.

4 min read

OPEC and allies set to extend oil supply cuts, prop up prices

OPEC and its allies led by Russia are set to extend oil output cuts until March 2020 to try to prop up the price of crude as the global economy weakens and U.S. production soars. The alliance, known as OPEC+, has been reducing oil supply since 2017 to prevent prices from sliding amid increasing competition from the United States, which has overtaken Russia and Saudi Arabia to become the world’s top producer.

3 Min Read

Trump talk of easing Huawei ban lifts suppliers' shares despite doubts

Donald Trump’s decision to allow U.S. firms to sell “high tech” products to Huawei led Asian investors to snap up shares in suppliers to the Chinese smartphone maker, even as some experts wondered what had changed. Trump said on Saturday the ban was unfair to U.S. suppliers, who were upset that they could not sell parts and components to Huawei without U.S. government approval. However, he did not say which U.S. firms could resume supplying Huawei.

5 min read