FirstFT: US-China surveillance balloon allegations mount

Good morning. Today we start with more on balloon surveillance as China has accused the US of repeatedly flying surveillance balloons into its airspace. Washington immediately denied the allegations, as tensions between the two nations reached a new high.

Beijing’s accusations came after the US shot down what it said was a Chinese spy balloon off the coast of South Carolina this month and subsequently downed three other objects, most recently at the weekend.

“Just last year, more than 10 American high-altitude balloons illegally flew through Chinese airspace without permission from the relevant Chinese authorities,” Chinese foreign ministry spokesperson Wang Wenbin said yesterday.

Within hours the White House rejected the claims as “false”, saying it had never operated “surveillance balloons” over China. “This is the latest example of China scrambling to do damage control,” said Adrienne Watson, the US National Security Council spokesperson.

Meanwhile, Taiwan has observed dozens of Chinese military balloon flights in its airspace in recent years, far more than previously known, adding to concerns that Beijing could be preparing an attack on the country. “They come very frequently, the last one just a few weeks ago,” said a senior Taiwanese official.

• Opinion: Recent global events, including the worsening of US-China relations, can be viewed through a psychological lens, argues Rana Foroohar. She offers guidance on how both sides can tiptoe away from a disastrous outcome.

Five more stories in the news

1. Philippines accuses China of using military-grade laser The Philippines has accused China of targeting one of its coast guard vessels with a military-grade laser in the South China Sea. The Chinese ship directed the laser at the BRP Malapascua twice on February 6, “causing temporary blindness to [the] crew at the bridge”, the Philippine Coast Guard said.

2. FIS to spin off Worldpay payments business US-based financial technology group FIS said it will spin off Worldpay, the payments business it acquired for $43bn just four years ago, after it failed to successfully integrate the two companies. The 2019 acquisition created one of the largest providers of financial infrastructure that underlie the bank payments sector.

3. Israelis stage protest over planned judicial overhaul Tens of thousands of Israelis rallied outside parliament yesterday to protest against the hardline new government’s controversial plan to curb the powers of the judiciary. The demonstration outside the Knesset came as lawmakers from Benjamin Netanyahu’s new government voted to put the first batch of reforms to parliament.

4. Ford to license electric vehicle battery tech from China’s CATL Ford plans to license the technology to use in a $3.5bn factory it plans to build in Michigan as it accelerates a push into electric vehicles. The carmaker’s deal with the world’s biggest battery producer comes as new US tax credits for EVs take effect under the Inflation Reduction Act climate law that passed last year.

5. Amazon chief plans to ‘go big’ on physical stores Andy Jassy has vowed to back the company’s struggling grocery store business, despite recently announcing that its growth plans were on hold. Jassy told the Financial Times that the ecommerce giant was ready to “go big” on bricks-and-mortar stores, blaming a lack of “normalcy” during the pandemic for a series of stumbles.

The day ahead

Bank of Japan nomination Japan’s prime minister Fumio Kishida is expected to nominate Kazuo Ueda as the next central bank governor. Ueda is a supporter of the country’s ultra-loose monetary policy,

Japan growth figures Preliminary gross domestic product figures for the fourth quarter of 2022 are set to be released today. Revised figures will be published next month.

US inflation data A crucial set of US inflation figures will be released today. Although inflation has been trending lower, economists have forecast that in January the decline will have moderated.

Earnings Results are expected from Airbnb, Avis Budget, Carrefour, Coca-Cola Company, Kirin Holdings, Marriott International and Toshiba.

What else we’re reading

Global MBA Ranking 2023: change at the top The 25th anniversary edition of the FT’s annual MBA rankings brings a new number one school and updated methodology. Andrew Jack, the FT’s global education editor, explains why after a quarter of a century it was time to take a new approach to the ranking.

China shows suppressing strikes only fuels discontent Making striking more difficult does not remove the underlying conditions that drive workers to strike. Instead, it pushes discontent underground. And without negotiation conflict is hard to avoid, writes Yuan Yang.

Mariana Mazzucato on the ‘McKinseys and the Deloittes’ of the world
What do the “Big Three” — McKinsey, Bain and Boston Consulting Group — really know? Supposedly brought in for short projects, consultants never seem to leave. Economist Mariana Mazzucato argues that consultants are hobbling the state’s ability to perform the role of economic motor.

Is there such a thing as too much pay? As the UK entered a cost of living crisis, private equity headhunter Sita Kolossa had a surreal conversation with a client about his salary. “He told me £1mn was not enough,” she said, sounding aghast, noting that this figure excluded his bonus. “I mean, what do I even do with that?”.

Quake tests ties between Syrian refugees and Turkish hosts The earthquake struck at a time of worsening public hostility towards Syrians in Turkey, exacerbated by a cost of living crisis. It also comes ahead of a general election set for May that experts say will further politicise their plight. The refugees now fear they will lose out in the allocation of resources as Ankara faces the massive task of reconstruction.

Take a break from the news

What is the name of the fantasy world that is the setting for Tolkien’s The Lord of the Rings? Have a go at 15-across in our latest crossword puzzle.