Silicon Valley steps up security practices over Chinese spy threat

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

• Putin and Kim’s new pact

• How Biden’s China tariffs complicate his EV ambitions

• The EU’s chicken feet problem with China

But we start with an exclusive story from Silicon Valley, where companies are escalating their security vetting of staff and potential recruits as US officials voice greater concern about the threat of Chinese espionage.

Technology giants such as Google and high-profile start-ups like OpenAI have stepped up their screening of personnel, according to several people working directly with the groups.

Venture capital firms such as Sequoia Capital — which split off its own Chinese business last year owing to geopolitical pressure — have also encouraged some portfolio companies to tighten staff vetting after warnings that spy agencies are targeting US tech developers, the people said.

There are also concerns about a rise in xenophobia at US tech companies given the prevalence of skilled workers of Asian descent.

But former US national security adviser HR McMaster said the threat from Chinese intelligence agencies was “absolutely real and they are persistent”. Read the full story.

• TikTok: The Federal Trade Commission said it had “uncovered reason to believe” that the video app and its Chinese parent company ByteDance “are violating or are about to violate the law” in a complaint referred to the US justice department for further action.

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

• Monetary policy: Bank Indonesia’s rate decision will be closely watched after the central bank surprised markets with a hike in April. Meanwhile China publishes its loan prime rate.

• Economic data: New Zealand publishes first-quarter GDP and Hong Kong reports May jobs figures.

• Vladimir Putin: The Russian president visits Vietnam. While the two countries have historical close ties, Vietnam has deepened relations with the EU and US, which has already condemned Hanoi’s hosting of Putin. (Reuters)

Five more top stories

1. Vladimir Putin and Kim Jong Un have signed a strategic partnership to deepen trade and military ties between Russia and North Korea. The Russian president said the new pact included an unspecified mutual assistance clause that would apply in the case of “aggression” against one of the signatories.

2. China’s central bank chief has warned markets to expect weaker credit growth, in a speech that highlighted the impact of a prolonged property slowdown on the country’s economy. “Many loans in China are not efficient,” Pan Gongsheng told a major financial forum in Shanghai.

3. Hizbollah leader Hassan Nasrallah has warned that the Lebanese militant group would fight “without rules and without limits” if its conflict with Israel widens. In a televised address, Nasrallah also threatened neighbouring Cyprus for the first time. Here’s why.

4. Ecuador is to suspend a visa waiver agreement with China, citing a “worrying increase” in arrivals. The South American country has become a popular starting point for Chinese people and other global migrants heading to the US.

5. Rishi Sunak is on track to become the first sitting prime minister ever to lose their seat at a general election, according to a new poll released yesterday that predicted a catastrophic result for the Tories. The survey forecast Labour could win 516 MPs, which would hand Sir Keir Starmer a colossal 382-seat majority.

The Big Read

Millions of Americans are opting to continue buying combustion-engine cars over electric vehicles. Concerns over affordability, driving range and charging infrastructure have chilled buyers’ enthusiasm — even among those who consider themselves green. President Joe Biden wants to increase adoption, but his tariffs on Chinese imports could reduce competition and further increase costs.

We’re also reading . . . 

• The EU’s chicken feet problem: After opening a probe into EU pork imports, China’s next target could be poultry and beef — especially the parts Europeans tend not to eat, writes Andy Bounds.

• Will Modi 3.0 be good for business?: Businesspeople are trying to assess what a weakened Narendra Modi might mean for investment, jobs and growth, writes John Reed. 

• Bank heists in Gaza: Armed gangs have plundered at least $120mn from banks in the war-ravaged strip in just the past two months, according to UN estimates.

Chart of the day

The biggest glut of copper in four years has built up in Chinese warehouses, after a price spike and tepid consumer demand prompted manufacturers in the country to pull back on buying the world’s most important industrial metal.

Take a break from the news

Why is there a fashion boutique on the Tibetan Plateau? Cattle herders and farmers are the main passers-by in the rural village of Ritoma, where Norlha opened its flagship store. But there’s a reason for the far-flung location — and Norlha’s yak down collections are worth the trek.

Additional contributions from Tee Zhuo and Gordon Smith