Five Eyes partners say China is ‘aggressively recruiting’ their fighter pilots

Good morning. In today’s newsletter we’re covering:

• China’s plan to sell cheap EVs to the world

• What HSBC needs from its new CEO

• How Modi’s BJP lost its parliamentary majority

But our top story is on a new bulletin from the “Five Eyes” allies warning that China’s People’s Liberation Army is “aggressively recruiting” western fighter pilots in an effort to train its own military aviators.

The US and its Five Eyes intelligence-sharing network partners — the UK, Canada, Australia and New Zealand — issued the warning amid concerns that China is continuing to recruit current and former pilots from the US and Nato countries despite efforts to block the practice.

The bulletin said recruiters for the PLA used “nefarious recruitment” methods that hid the involvement of China’s military — and offered lucrative pay.

“For some former military pilots, the opportunity to fly exotic fighter jets again can be a draw, and even more so when accompanied by a fat salary,” said one US official. Read the full story.

Here’s what else I’m keeping tabs on today:

• Economic data: Taiwan publishes the consumer price index for May while Australia reports April trade figures.

• Monetary policy: The Eurozone is set for a much-needed economic boost when the European Central Bank is expected to start cutting interest rates for the first time in almost five years.

• South Korea: Financial markets are closed for the Memorial Day holiday.

Five more top stories

1. Narendra Modi has won the formal backing of allies of his Bharatiya Janata party to form a government after the BJP lost its outright majority in India’s general election. Leaders of the National Democratic Alliance unanimously elected Modi as their leader yesterday afternoon ahead of the swearing in of a new BJP-led government, expected on Saturday.

2. Nvidia’s market value rose past $3tn to briefly overtake Apple yesterday as the world’s second-most valuable company, following a year of incredible growth driven by demand for its artificial intelligence chips. Investors have flocked to Nvidia’s stock as its rivals spend billions of dollars on its chips, with no indication that their spending spree will slow.

3. Exclusive: Elliott Management has rebuilt a substantial stake in SoftBank and is pushing the Japanese tech conglomerate founded by Masayoshi Son to launch a $15bn share buyback. The activist fund wants the share price to reflect the $180bn value of SoftBank’s investments and believes the buyback will deliver an immediate boost.

4. Gazprom is unlikely to recover gas sales lost as a result of Vladimir Putin’s invasion of Ukraine for at least a decade, according to a report commissioned for the Russian energy group’s leaders. Russia is also struggling to conclude a gas pipeline deal with China, which Gazprom hopes would help make up for lost European export volumes.

5. Canada’s central bank has cut its main interest rate, making it the first G7 nation to loosen monetary policy in the current cycle. The Bank of Canada governor said “it is reasonable to expect further cuts” if inflation continued to ease, but there were risks to moving too quickly.

The Big Read

The series of new tariffs issued by the US and Europe against Chinese electric vehicles is forcing China’s leading carmakers to sharpen their focus elsewhere. But the inadvertent result of this rising protectionism could be Chinese dominance in not just the remaining western economies that are less protectionist, but across the world’s most important emerging markets such as south-east Asia, Latin America and the Middle East.

We’re also reading . . . 

• HSBC: With US-China tensions on the rise, the bank’s next chief executive will need to have diplomatic skills, writes Kaye Wiggins.

• Science: A new genome discovery in the south Pacific illustrates the mystery surrounding the code of life, writes Anjana Ahuja.

• The final casualties of Brexit: The referendum uncorked an insatiable populist politics that Tories hoped to co-opt. Instead, it has consumed them, writes Robert Shrimsley.

Chart of the day

Economic pain, regional grievances and an apparent misreading of the public mood contributed to an upset in India’s general election for Narendra Modi’s Bharatiya Janata party. Here’s how the BJP lost its parliamentary majority — in charts.

Take a break from the news

When it comes to clothes, what is truly worth the money? For men, the consensus answer is shoes. “You can tell a lot about a man by his shoes”, the saying goes. But Robert Armstrong argues that a killer jacket is what really makes a man look and feel his best.

Additional contributions from Tee Zhuo and Gordon Smith