Biden courts India at G20

This is an audio transcript of the FT News Briefing podcast episode: ‘Biden courts India at G20’

Marc Filippino
Good morning from the Financial Times. Today is Friday, September 8th, and this is your FT News Briefing.

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India hosts the world’s largest bloc party this weekend. Germany has the UK’s back when it comes to taxing electric vehicles. And Apple stock is taking a hit because of worries in China. Plus, Huawei has released a pretty popular phone. So why are some US lawmakers mad about it? I’m Marc Filippino and here’s the news you need to start your day.

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The G20 summit kicks off tomorrow in New Delhi. It will have two noticeable absences: Chinese president Xi Jinping and Russian president Vladimir Putin. Because of that, US president Joe Biden sees an opportunity. He’ll be focusing on improving relationships with low- and middle-income countries while he’s there. I’m joined now by the FT’s Washington bureau chief James Politi, who’s in New Delhi. Hi, James.

James Politi
Hi, Marc.

Marc Filippino
So, James, India’s prime minister Narendra Modi is in an interesting position. His country is both hosting the G20 summit this year, and he just got back from this Brics summit — this group that tries to get certain countries, including China and South Africa, on the same economic page. What does it mean that Chinese president Xi Jinping had such a crucial role in Brics but isn’t coming to the G20 summit in India?

James Politi
Well, it’s hard to know exactly, you know, what the reasons are for his absence. Clearly, it shows that he puts more weight on the Brics grouping and it sort of highlights how, you know, Xi Jinping is sort of becoming increasingly sceptical of western-led institutions or even in a way, western-created institutions. But it’s also actually a stop to Modi and to India, from China. And despite the fact that they came together at this Brics summit last month in August, the relations between China and India have some tension. And clearly, I think it will be noticed here in India that Xi Jinping chose not to attend.

Marc Filippino
How does Xi’s absence create an opening for Joe Biden?

James Politi
Well, Joe Biden has really sought to sort of bring India to, in a way, the American orbit. I think it was very important for Biden to show up at the G20 here in New Delhi as opposed to leaders such as Xi Jinping of China and Vladimir Putin of Russia who are not expected to attend. So while Biden is here, I think he’ll try to take advantage of that gap in leadership and really sort of bolster those ties with India and with Modi and try to offer sort of a new economic vision for the world.

Marc Filippino
Yeah, and that economic vision is important because China has gained a lot of influence in low- and middle-income countries through its lending programs. What does Biden’s plan offer?

James Politi
Well, Biden is coming to India with what sort of US officials have described as a new value proposition for the global south. The US has put forth its own plan to bolster the World Bank’s lending capacity by $25bn or so, in a way that could be spent to help middle-income countries, but also low-income countries tackle global challenges, from climate change to budgetary problems. And by putting this new proposal on the table, he’s hoping to get other countries to join in and sort of offer a western economic model that can be sort of, in a way, an alternative to what the Chinese are offering on the other side.

Marc Filippino
James Politi is the FT’s Washington bureau chief. He’s in India for the G20 summit. Thanks, James.

James Politi
Thanks, Marc.

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Marc Filippino
Germany wants to postpone tariffs on electric vehicle sales between the UK and the European Union. Germany’s push is a win for the UK. Britain has been advocating for a three-year delay here, but the EU is adamant on starting these tariffs in January. The taxes are part of a post-Brexit trade deal and since Germany is the EU’s largest member, it could have a lot of sway. European carmakers say that if the tariffs start early next year, it will cost them billions of euros and they’ll have to cut production. It would be an especially bad time for that, considering the industry is trying to compete with Chinese EV manufacturers. The UK and the EU plan to talk about the tariffs more during the G20 this weekend.

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Chinese telecoms company Huawei recently came out with a new smartphone. This has Chinese consumers excited. The phone was a huge hit, but Michael McCaul isn’t happy about it. He’s the Republican chairman of the US House foreign affairs committee, and he says that Huawei could not have gotten the advanced chips needed for the phone without violating US sanctions. Washington wants to stop China from getting a hold of the kind of high-tech chips and chipmaking equipment that could help bolster China’s military. And the US — you might remember — has been cracking down on Huawei for a while.

Eleanor Olcott
Just to take you back to 2019, US sanctions totally gutted Huawei’s smartphone business, and the release of this new phone will be an important step in Huawei slowly rebuilding that smartphone business.

Marc Filippino
That’s Eleanor Olcott, the FT’s China technology correspondent. SMIC makes the advanced chip Huawei uses for the phone, and McCaul isn’t the only one who thinks SMIC could not have made these chips without violating sanctions.

Eleanor Olcott
This looks like part of an effort from a group of legislators in the US who are lobbying for more sanctions on Chinese technology. Whether or not SMIC is using US technology to manufacture the chips is unclear. We do know from previous reporting that there are lots of loopholes in US sanctions on semiconductors and ways that sanctioned Chinese tech companies can get access to US technology.

Marc Filippino
The semiconductors used in Huawei’s new phone are not as powerful as the most advanced chips used in Apple smartphones, but they represent a significant step forward for Huawei. SMIC says they found a way to make the chips themselves.

Eleanor Olcott
I think people are taking SMIC’s claims at face value and assessing whether or not the technology can develop from here using SMIC’s manufacturing methods. They have managed to create a method that cuts out use of these EUV lithography machines.

Marc Filippino
These Dutch-made machines are crucial to advanced chipmaking and China has been banned from importing them. So McCaul, the Republican congressman, sees this as getting around US sanctions. But how does the Biden administration see it?

Eleanor Olcott
I think it’s certainly a development that they will be looking at. The US is very interested to see whether or not Chinese companies have been circumventing sanctions to get access to certain equipment that they shouldn’t be buying. The reality is they’re using these current methods that analysts presume SMIC is using to develop these chips. There is a certain limit with how much they can progress from here. And the experts have a big question over that.

Marc Filippino
Eleanor Olcott is the FT’s China technology correspondent.

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Before we go, the launch of Huawei’s latest smartphone isn’t just making some folks in the US jittery. Apple is starting to squirm, too. Shares in the tech company have fallen roughly 6 per cent in the past few days and knocked $200bn off Apple’s market value. Huawei’s recent success has something to do with it. But also, there are reports that Beijing ordered government officials to stop using iPhones. It’s all putting a bit of a damper on the launch of Apple’s new iPhone 15, which is out on Tuesday.

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You can read more on all these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back next week for the latest business news.

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The FT News Briefing is produced by Kasia Broussalian, Sonja Hutson, Fiona Symon and me, Marc Filippino. Our engineer is Monica Lopez. We’ve help this week from Manuela Saragosa, Breen Turner, Josh Gabert-Doyon, Monique Mulima, David da Silva, Michael Lello, Derek Brower, and Gavin Kallmann. Our executive producer is Topher Forhecz. Cheryl Brumley is the FT’s global head of audio, and our theme song is by Metaphor Music.

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