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What business has learned from Blinken’s trip to China

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Concerns about China’s economic recovery sent stocks and US futures lower Tuesday morning, despite a promising Monday meeting between the country’s top leader Xi Jinping and Secretary of State Antony Blinken in Beijing.

The discussions raised hopes that the world’s two largest economies would stabilize relations, but the market reaction points to deeper challenges for policymakers and business.

The mood music was positive. Xi said the two sides had “made progress” and President Biden told reporters in California that Blinken had done a “damn job”. But that just talking caused such excitement is a sign of how strained relationships have become. There was no agreement or detail on the most contentious issues: restrictions on Chinese access to advanced technologies; allegations that the US and its allies want to rein in Beijing’s ambitions; Taiwan; the war in Ukraine.

‘Distrust remains high’ said Noah Barkin, a China relations specialist at the research firm Rhodium Group. “For international investors, this is not enough to trigger any kind of rethinking regarding the Chinese market.” The Biden administration, he said, would continue to screen strategic investments in China and Beijing showed no signs of easing pressure on foreign companies operating in the country.

Entrepreneurship is more about disconnecting than disconnecting. Raytheon‘s CEO, Greg Hayes, said it was “impossible” to completely break away from China due to the complexity of supply chains and the size of US trade with the country, while the pharmaceutical giant AstraZeneca is reportedly seeking a spin-off from its China arm, according to The Financial Times.

China also has major domestic concerns. The country’s central bank cut key lending rates today and Goldman Sachs cut its growth forecast for the country this weekend. “For business, the issue is not so much about China-US relations as such, but about the very worrying state of the Chinese economy at the moment. Awareness of how challenging that is was probably one of the key issues leading to a more communicative China, a country that is currently willing to show a little compromise,” said Kerry Brown, professor of Chinese studies at King’s College London and a former British diplomat in Beijing.

Yu Jie, a China expert at Chatham House, a British think tank, added that Xi still hoped “that Western business could be part of his plan to generate much-needed growth and jobs.”

What should you watch next? China’s premier Li Qiang landed in Germany this week to begin a European tour, his first trip abroad since becoming his country’s second supreme leader earlier this year. China is Germany’s largest trading partner and, along with France, where Mr. Li will travel later this week, a US ally trying to reroute its relations with Beijing and Washington.

And to see the Biden administration trying to bring in allies, partly to counter China, India’s Prime Minister Narendra Modi is traveling to Washington this week for a state visit.

In other China news:

  • Alibaba’s Hong Kong-listed shares closed 1.5 percent lower after the e-commerce giant announced that Daniel Zhang would step down as CEO and chairman. Earlier this year, the company announced it would split into six divisions.

  • Beijing is reportedly planning to build a military training facility in Cuba, according to The Wall Street Journal, alarming Washington that Chinese troops could be stationed 100 miles off the coast of Florida.

More light is being shed on Jeffrey Epstein’s ties to Jes Staley and JPMorgan Chase. A 22-page document summarizes emails between the convicted sex offender and Mr. Staley, the former JPMorgan executive who was his primary contact at the bank, and shows how Mr. Epstein advised Staley on a number of issues, including meetings with Chinese officials and deals. JPMorgan has Mr. Staley responsible for maintaining the company’s ties with Mr. Epstein.

Adobe’s $20 billion takeover bid for Figma is reportedly under investigation by the EU. European antitrust regulators are preparing launch a formal investigation in the deal, according to The Financial Times. (Figma is a rival to Adobe in cloud-based design software.) The transaction has already sparked skepticism from US and UK regulators.

Lazard is said to have discussed a sale with a sovereign wealth fund in Abu Dhabi. The investment bank held talks with ADQ earlier this year, a state-funded vehicle, reports The Financial Times. The talks, which are no longer active, reflect the aspirations of big-pocketed Middle Eastern investors looking to diversify their country’s economies away from oil.

Berkshire Hathaway doubles Japan. Warren Buffett’s conglomerate announced Monday that it has bought more shares in Japan’s five largest trading firms, and suggested it could go further. Stocks listed on the Nikkei have outperformed the S&P 500 and most other major indices this year on investor enthusiasm for Japan’s economic recovery.

Rescuers are still searching for a submarine that disappeared near the wreckage of the Titanic on Sunday, in a race against time to find the ship in the vastness of the sea.

The submarine’s disappearance is a reminder of the risks associated with the extreme tourism industry — especially as space exploration companies such as Virgin Galactic and Jeff Bezos’ Blue Origin take flight.

The clock is ticking. Coast Guard officials estimate that the Titan submarine, which disappeared Sunday morning, theoretically had between 70 and 96 hours of air as of late yesterday afternoon. (That is, if the hull is intact.) Among the five people on board are Hamish Harding, a wealthy British adventurer and aviation director, and Paul Henry Nargeolet, a French expert on the Titanic.

American and Canadian aircraft, as well as commercial ships, were searching for the Titan, while sonar buoys were deployed. But here’s a good explanation of how difficult it can be to find the vehicle and rescue its occupants.

The business of exploring the extremes is booming. OceanGate Expeditions, which operates the Titan, has been asking for up to $250,000 per seat since 2021 to explore the submarine remains of the Titanic.

While well-to-do vacationers have long paid to take glamorous risks — hiking Mount Everest or swimming with great whites — the wealthiest are increasingly flocking to the frontiers offered by space travel. Richard Branson’s Virgin Galactic (not to be confused with the failed Virgin Orbit) sells tickets for suborbital flights for $450,000 eachwhile reportedly one ticket on a Blue Origin flight last year went for $1.25 million. (Mr. Harding had previously flown on a Blue Origin rocket.)

United Talent Agency, whose A-list clients range from actor Timothée Chalamet to singers Post Malone and Lizzo, continues to expand into media and sports through James & Co. to acquire, an executive search firm specializing in the sector, for an undisclosed sum, DealBook’s Lauren Hirsch is the first to report.

Talent agencies are diving into the sport, following moves by technology giants to throw money at one of the few industries still driving eyeballs to live television. Last year, Creative Artists Agency, which represents Dwyane Wade, Steven Spielberg and Zendaya, bought its rival ICM in part to continue in the sport. CAA’s clients include football star Aaron Rodgers, basketball player Chris Paul and Portuguese football player Cristiano Ronaldo.

UTA acquired a majority stake in Klutch Sports Group in 2019, representing the NBA’s LeBron James. This year UT called Andrew Thau, the chief operating officer, as head of sports, alongside Klutch founder Rich Paul.

UTA and its rivals are looking for scale to bolster their bargaining power with streaming powerhouses like Amazon, Netflix and Apple. UTA bought literary agency Fletcher & Company in January after acquiring London-based Curtis Brown last year. Those deals bolstered its roster of contemporary novelists and non-fiction writers, giving it more intellectual property that could be made into movies or TV series.

James & Co was founded in 2002 by Michele James, a former chief talent scout at Time Warner, and Roysi Erbes, a partner at executive search firm Korn Ferry. Together they will lead the company as a division within UTA.

— Bob Gillmanan executive transition consultant, on why wealthy Americans look for bargains at Dollar General and other discount chains.

This holiday-shortened week’s calendar looks light, but there’s plenty on the agenda, starting with the week-long Paris Air Show, which began on Monday.

Tuesday: The US housing market will take center stage with the release of data on building permits and home starts. FedEx reports quarterly results after the closing bell.

Wednesday: Jay Powell, the Fed Chairman, will be on the Hill for two days to testify, starting with the House Financial Services Committee. Britain, where food prices have reached their highest point for decades, is expected to release inflation figures for May.

Thursday: Powell will testify before the Senate banking committee. Other Fed officials, including Governors Christopher Waller and Michelle Bowman, Cleveland Fed’s Loretta Mester and Richmond Fed’s Thomas Barkin, will speak at various events.

Elsewhere, it is decision day on interest rates for the Bank of England. And in France, President Emmanuel Macron and world leaders, including Mohammed bin Salman of Saudi Arabia, will gather in Paris for a two-day summit about global debt, climate policy and the role of the World Bank and the IMF

Offers

  • Investors, including a company associated with Bill Gates and the venture capital giant Andreessen Horowitz have betting on KoBold, a start-up focused on mining metals such as lithium. (WSJ)

  • UBS is reportedly about to inherit hundreds of millions in regulatory fines connected to Credit Suisse’s role in the collapse of Archegos. (FT)

  • Silver more reached a truce with Bain Capital about their dueling takeover bids for German software maker Software AG. (Silver Lake)

Policy

The best of the rest

  • In Argentina, inflation has just passed 100 percent, but the restaurant scene is booming. (NYT)

  • There is a plethora of summer vacation rentals on Cape Cod, Massachusetts, a turnaround in the market bewildered brokers. (Boston sphere)

  • Brands like Nike wanted to sell directly to consumers and close stores, but have done so reverse course. (WSJ)

  • “He went after crypto companies. Then someone came after him.” (NYT)

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