US and Japan announce ‘most significant’ upgrade to alliance

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Good morning. The US and Japan plan to modernise their military command and control structures in what President Joe Biden said was the “most significant” upgrade to their alliance since it was created decades ago.

Speaking alongside Japanese Prime Minister Fumio Kishida at a news conference yesterday, Biden said the allies were taking significant steps to ensure their militaries could “work together in a seamless and effective way”.

Kishida is visiting Washington for a historic summit that is designed to bolster the robust US-Japan alliance as the nations become increasingly concerned about what they view as threats from China.

It comes amid a dramatic shift in Japan’s security policy, driven by aggressive Chinese activity and Russia’s full-scale invasion of Ukraine.

“Tokyo no longer watches quietly from the sidelines as North Korea, China and now Russia attempt to change the status quo. Japan’s leaders now recognise the danger of inaction. Their aim is to ensure no one will discount Japan’s strength,” said Sheila Smith of the Council on Foreign Relations.

Kishida will address the US Congress today and meet President Ferdinand Marcos Jr for the first US-Japan-Philippines trilateral summit — where a rusting vessel stranded on a reef in the South China Sea will be among the geopolitical flashpoints under scrutiny.

And here’s what else I’m keeping tabs on today:

• China inflation data: China releases March consumer and produce price indices.

• Diplomacy: The Chinese Communist party’s third-ranked official Zhao Leji leads a delegation to North Korea. (Reuters) Belarus President Alexander Lukashenko visits Russia and Suriname’s President Chandrikapersad Santokhi visits Beijing.

• Monetary policy: The European Central Bank makes its interest rate announcement.

• Reports: The Asian Development Bank publishes its annual Asian Development Outlook, while Opec releases its Monthly Oil Market Report.

Five more top stories

1. Fitch Ratings has cut its outlook on China’s long-term credit rating to negative, citing uncertain prospects for the economy as the country transitions from its property-led growth model. The move, which maintains the country’s A-plus credit rating, follows an outlook downgrade from rival Moody’s Ratings at the end of last year. Here’s more from the Fitch forecast.

• Xi meets Taiwan ex-president: Chinese leader Xi Jinping has held talks in Beijing with former Taiwanese president Ma Ying-jeou, in a rare encounter just weeks before the next transfer of power in the democratic country.

2. A Republican megadonor considered to be a potential Treasury secretary if Donald Trump wins the presidential election has warned that the US must not “decouple” from China. Hedge fund billionaire John Paulson struck a more measured tone than Trump on trade in an interview with the FT: “China is the second-largest economy in the world. We need to have a good economic and political relationship with them.”

• More US-China trade: Janet Yellen has vowed to “keep at it” and carry on building closer ties between the world’s two economic superpowers, despite the US Treasury secretary’s nearly week-long trip to China yielding little progress on disagreements over how Beijing should counter its slowdown.

3. Traders slashed bets on Federal Reserve interest rate cuts yesterday after US inflation surpassed expectations and Joe Biden acknowledged there was “more to do” on fighting price rises. Official data showed a 3.5 per cent increase in consumer prices for the year to March compared with forecasts of a 3.4 per cent rise. Here’s more on the market reaction.

4. Hamas said yesterday that three sons of Ismail Haniyeh, the Palestinian militant group’s political leader, had been killed in an Israeli air strike in Gaza. The attack, which took place on the Muslim holiday of Eid al Fitr, also killed three of Haniyeh’s grandchildren.

5. Volkswagen reported unexpectedly strong growth in its deliveries of electric and combustion engine cars in China in the first quarter, while deliveries of EVs in Europe fell sharply. Analysts said VW had slashed prices to retain market share in China amid fierce competition between legacy carmakers and newer rivals such as BYD and Tesla.

Visual story

The Darién Gap, the jungle frontier between Colombia and Panama, has become a key migration route for many trying to get to the US. Most of those crossing the dense rainforest are from Latin America, but increasing numbers are from Asian countries, including China. The journey is filled with danger while a nefarious economy has sprung up on the route to service the needs of the desperate travellers. The FT spoke to some of those making the treacherous journey for this visual story.

We’re also reading . . . 

• Putin’s central Asian dilemma: Tajiks are among those blamed for the Moscow terror attack but Russia’s war economy depends on immigrant Muslim workers, writes Tony Barber.

• America’s moment of truth on Ukraine: Republicans have a stark choice, writes Edward Luce — help Zelenskyy or pay fealty to Trump.

• Climate change: What will happen once greenhouse gas emissions start going down instead of up? The historic turning point and its profound consequences could be closer than you think, writes Pilita Clark.

Chart of the day

Tianqi Lithium’s $4bn bet on Chile is in jeopardy as the Chilean government works to exert more control over its vast salt flats. The Chinese lithium producer’s troubles come as countries around the world are taking back control of commodities critical for the green transition — with prices set to rebound from depressed levels as demand soars.

Take a break from the news

The Unseen has launched a thermoreactive eye shadow that will look different on each person, writes Divya Bala in her interview with Lauren Bowker, founder of the London-based company. It’s a world first but not the most significant on her agenda. The brand’s black algae colourant has already won an IFSCC sustainability challenge award.

Additional contributions from Tee Zhuo and Nora Redmond