FirstFT: US sanctions China-based network accused of fentanyl production

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Good morning. The US Treasury has put sanctions on 25 Chinese individuals and entities for their alleged involvement in drug manufacturing and smuggling, as Washington steps up efforts to crack down on the proliferation of fentanyl.

The Treasury said it was disrupting a China-based network that is responsible for making and distributing fentanyl, methamphetamine and ingredients to make ecstasy. It also put sanctions on one person and two groups in Canada that had allegedly imported drugmaking chemicals from China.

In a related action, the justice department unsealed eight indictments against Chinese groups and 12 executives for allegedly making and supplying methamphetamine, fentanyl and other synthetic opioids.

“The global fentanyl supply chain, which ends with the deaths of Americans, often starts with chemical companies in China,” said US attorney-general Merrick Garland, who added it was “critical that the PRC government stops the unchecked flow of precursor chemicals that are coming from China”. Here’s more on Washington’s move — and the response from Beijing.

• More news from Washington: Kevin McCarthy has been ousted as speaker of the House of Representatives, becoming the first leader in the history of the lower chamber of Congress to be removed from the position.

• More on US-China relations: The US has expressed concern to Peru that China is gaining control over critical parts of the South American nation’s infrastructure.

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

• Economic data: S&P Global/Cips services purchasing managers’ index data is published for Canada, EU, France, Germany, Japan, UK and the US.

• Tech: TikTok has said it will halt transactions today on its platform in Indonesia, one of its largest markets, to comply with a new rule banning transactions on social media platforms.

• Severe weather: Typhoon Koinu is expected to make landfall on Taiwan’s far south-east coast late on Wednesday as a category two storm. (Reuters)

Five more top stories

1. Exclusive: India has demanded Canada withdraw roughly 40 diplomats by October 10, according to people familiar with the matter, in an escalation of the crisis that erupted when Prime Minister Justin Trudeau said New Delhi may have been linked to the murder of a Canadian Sikh. Demetri Sevastopulo has more details from Ottawa.

• More India news: Police in New Delhi have raided the homes of more than 40 journalists and contributors of NewsClick, in a crackdown on a news website that Indian officials have described as an outlet for Chinese propaganda.

2. The search for 12 jurors who will decide the fate of FTX founder Sam Bankman-Fried began in New York on Tuesday, as dozens of candidates were quizzed over their attitudes to cryptocurrencies and their abilities to remain fair and impartial in the blockbuster criminal case. The 31-year-old faces charges of fraud and money laundering related to the multibillion-dollar collapse of his exchange last year. Joe Miller reports from the first day of trial.

3. Singapore may subject luxury assets, including cars, watches and handbags, to anti-money laundering controls and increase scrutiny of single family offices as the Asian financial hub reels from a S$2.8bn (US$2bn) money-laundering scandal. But the government cautioned against “knee-jerk” reactions, saying they could make the city-state a harder place to do business. Here’s more on the new rules under consideration.

4. India and its neighbours are expected to grow more quickly than any other region this year, the World Bank said, defying gloomy outlooks for China and much of east Asia. The bank on Tuesday raised its 2023 forecast for growth in south Asia, which also includes the likes of Pakistan, Bangladesh and Sri Lanka, from 5.6 per cent to 5.8 per cent. However, the bank said the region still has “a long way to go” to hit development targets.

5. The EU is to examine bloc-wide export controls in sensitive technology as part of its attempt to “de-risk” its relationship with China and other authoritarian regimes. The bloc will consider limiting sales of some semiconductors, AI, quantum computing and biotechnology. “Technology is currently at the heart of geopolitical competition and the EU wants to be a player, and not a playground,” Věra Jourová, the EU’s digital chief, told the FT.

The Big Read

ESG ratings influence, and in some cases dictate, which stocks and bonds make it into the $2.8tn of investment funds that are marketed as sustainable, lending legitimacy to companies and investors that claim to be green. Yet that power is now coming under intense formal scrutiny. Regulators and politicians around the world are asking questions about how the ratings are derived — and whose interests they really serve.

We’re also reading . . . 

• Covid vaccine market: The fall in coronavirus infections has meant a reversal in fortunes for the investors who clamoured to buy vaccine makers at the height of the pandemic.

• How to look rich: “Quiet luxury” is a kabuki performance of moneyed ease and indifference. But it can be done right.

• Training AI: Many authors are discovering that their writing has been lifted to train generative-AI systems. The FT’s Nilanjana Roy is among them.

Chart of the day

Can China overcome its demographic deficit? UN data suggests that by 2100, the share of the over-65s will be an astonishing 41 per cent of the population. This would be a country just full of old men and women, writes Martin Wolf in his latest column.

Take a break from the news 

As outposts of the former British empire, Vancouver and Hong Kong have long been connected, from opposite sides of the Pacific Ocean. The 1997 handover led to a surge of emigration from Hong Kong to Vancouver, ushering in a golden age of Cantonese dining in Canada’s west coast metropolis. Here are Vancouver’s most mouthwatering Cantonese restaurants.

Additional contributions from Tee Zhuo and Gordon Smith