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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The writer is founding partner of Gavekal Dragonomics

Chinese equity markets have had a wild ride. Major indices surged by more than 30 per cent in the two weeks following Beijing’s September 24 economic stimulus announcement. They then fell back on fears that the stimulus might fall short.

Most likely, the markets will regain momentum once the Ministry of Finance reveals details of new fiscal spending at a press briefing on Saturday. Which sentiment is closer to the truth: euphoria or despair?

The answer is, neither. Markets were right to see the stimulus announcement as an inflection point and an opportunity to venture back into oversold Chinese assets. But they misjudged the underlying intent, which is to stabilise the economy rather than generate a major reacceleration. And they underestimated the constraints on stimulus imposed by Xi Jinping’s long-run strategy and by policymakers’ desire not to repeat past errors.

Xi’s strategic aims have not changed. He wants to shift capital from the property sector into technology-intensive manufacturing, which he sees as the basis of China’s future prosperity and power. Long-term economic growth, he believes, is driven by investment in technology, which will eventually generate high-wage jobs and rising incomes. China’s core task is not to maximise GDP growth but to create a self-sufficient, technologically powerful economy immune to efforts by the US to stunt its rise.

This programme is cogent as a national strategy, but unfriendly to financial investors. The emphasis on investment means that supply will always run ahead of demand, leading to deflationary pressure, which is bad for corporate profits. Even the favoured high-tech sectors face intense competition that will erode margins.

Xi has not retreated from this vision, but has accepted a change of tactics. The stimulus decision was driven by poor economic data including a sharp deterioration in manufacturing sales and employment, a chorus of criticism from Chinese economists, and the rising risk of protectionism against China’s exports. Short-run stabilisation is needed in order for the long-run plan to succeed. But measures will be rolled out carefully to avoid what policymakers believe were damaging mistakes in previous stimulus episodes.

One such “mistake” was the big infrastructure programme of 2008-09, which helped China recover quickly from the global financial crisis, but also began the pile-up of local-government debt, which rose from almost nothing 15 years ago to nearly 80 per cent of GDP today, including the liabilities of off-balance sheet financing vehicles. Another was Beijing’s cheerleading of a stock market bubble in 2015, which saw the CSI 300 double in a little over six months and then give up almost all its gains in two months.

Xi’s government is now determined not to overstimulate the real economy, nor to inflate another stock market bubble. The economic aims are to stabilise growth and prevent deflation from tightening its grip. The market goal is to restore enough confidence so that equity prices post steady, moderate rises. This will reopen the window for new listings and enable the stock market to resume its assigned role of financing China’s industrial policy ambitions.

This could work: Chinese policymakers have many tools, and Xi is finally allowing them to be used. But there is no evidence of a shift from the key policies undergirding Xi’s long-term vision: central control of finance and capital allocation, a tight rein on the property market, and prioritisation of investment over consumption.

Direct fiscal stimulus through the issuance of ultra long-term government bonds, if large enough, should boost growth and ward off deflation. But this new debt will refinance some local debt and subsidise households and businesses to trade in old appliances and equipment for new. Its function is to make investment more effective, not to give consumer demand a bigger role.

Similarly, the recapitalisation of the six largest state-owned banks will let them take on more risk despite record-low net interest margins. Yet it will also further entrench central control over the financial system and the allocation of capital. Mortgage deregulation will make it easier for cash-strapped families to buy houses, but does not reverse the basic decision to reduce property’s economic role.

In sum, the economy and financial returns are likely to pick up in the coming months. In the long run, though, China’s vision is unchanged: technology and self-sufficiency matter more than growth and profits.

SHOPPERS are raving as Lidl brings back its USA week with beloved snacks from fried chicken to toaster tarts.

For one week only, the supermarket giant is stocking all things American.

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A keen-eyed shopper had spotted the German supermarket stocking the American foods and drinks on Thursday.

They shared the post on Facebook group Newfoodsuk in which hundreds of people commented their enthusiasm for the products.

The limited-time range includes items such as a 750g Fried Chicken Bucket (£5.99) as well as a range of cheap American chocolates and other sweet treats.

It comes as part of Lidl’s Flavour of the Week programme which features foods from a specific world region for just 7 days.

Previous editions have covered the Alps, Iberian Peninsula, and Germany.

For its USA week, the retail is stocking a range of American and American-inspired cuisine.

Shoppers were quick to comment their excitement under the Facebook post.

One said: “Oh wow that all looks amazing.

“Lidl here I come.”

Another added: “Some of the bits look really nice.”

Many also expressed their desire to visit their local store as soon as possible.

Users tagged their friends saying “we are going tomorrow” and “we need to go.”

Lidl has stocked an extensive range of products for the week.

For just £1.99, you can get your hands on a set of nine pizza bagels in either Margherita, Salami, or Cheeseburger Style.

A packet of Chocolate or Nougat American Cookies could be yours for even less at just £1.29.

If you’re feeling in a more breakfast food mood, you can grab Mcennedy’s Pancake Mix (£1.19) and Clarks’ Maple Syrup (£1.99).

The special week also covers drinks with a Chocolate or Cranberry & Cherry Mcennedy Milkshake selling for just 59p.

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Make employers pay more national insurance

Change the rules on inheriting pension savings

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Tax-free lump sum could be capped

Introducing a single rate of pension tax relief

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UNILEVER is finally calling quits on selling ice creams to Russia, two and a half years after Putin’s invasion of Ukraine.

The FTSE 100 giant has come under pressure for funding the Kremlin’s war by remaining in the country.

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Unilever had been branded an “international sponsor of war” by the Ukrainian government — puncturing the woke firm’s self-styled reputation for social purpose and values.

The backlash included protests outside its London HQ.

The invasion of Ukraine triggered an exodus of big Western firms, including BP, McDonald’s and Burberry.

However, Unilever stayed put. The company, which also makes Dove, has now made a reported £430million selling its Russian assets to billionaire Alexey Sagal, who bought Heineken’s Russian subsidiary for €1.

Unilever did not say what it would be doing with the sale ­proceeds or whether it would donate them to Ukraine.

Rival KitKat-maker Nestle justified staying in Russia with slimmed-down operations of “essential products” such as baby milk.

But Unilever was still making products such as Magnums, ­Cornettos and Ben & Jerry ice cream from four factories in the country.

By remaining in Russia, Unilever contributed millions of pounds in taxes to the Russian government.

The Moral Rating agency had estimated Unilever’s business propped up the Russian economy to the tune of $650million (£498million) a year, which it said was “enough to pay for an Iranian drone every 17 minutes”.

Nataliya Popovych, a co-founder of the B4Ukraine coalition, said: “We are pleased to see Unilever make the right move, even though such a decision comes two years too late.”

Hein Schumacher, Unilever’s boss, previously said remaining in Russia was the “least bad” option, which avoided handing over its workforce, factory and assets.

Yesterday Mr Schumacher said the sale to Mr Sagal’s Arnest Group “ends Unilever presence in the country”.

He said: “Over the past year, we have been carefully preparing the Unilever Russia business for a potential sale.

“This work has been very complex, and has involved separating IT platforms and supply chains.”

SELLING UP TO BEAT BUDGET

FEARS that the Chancellor will hike capital gains tax in the Budget have prompted many business owners to fast-track selling their firms over the past year, figures show.

A poll of 500 owners by wealth advisers Evelyn Partners found 23 per cent of those to accelerate selling up had done so because they feared a hit from CGT relief.

A fifth were driven by concerns over inheritance tax relief, making it more costly to pass family firms to the next generation.

Evelyn tax partner Laura Hayward said: “The PM’s statement that the upcoming Budget would be ‘painful’ has put owner-managed businesses on edge.”

Charles Hall, of broker Peel Hunt, said rumoured changes to business relief would “fatally undermine” London’s junior Aim stock market, destroying up to £21billion of shareholder value and risking jobs.

SHARES in GSK briefly rose by 7 per cent yesterday as it agreed to pay £1.7billion to settle a legal dispute with 80,000 Zantac users.

The heartburn drug was pulled in 2019 amid fears of carcinogens. GSK did not admit liability. Shares closed up 3 per cent.

IKEA IDEA ON PRICE

IKEA’S decision to cut prices has led to lower revenues at the Swedish furniture giant.

It posted a 6.8 per cent drop in UK sales to £2.3billion after investing £117million in lowering prices by around 20 per cent on 3,481 products.

More than half of its sales this year have been online, compared with 38 per cent two years ago. Ikea UK boss Peter Jelkeby said: “Continuing to lower prices remains our long-term priority.”

TSB FINED£10M FOR BAD HELP

TSB has been fined £10.9million for its unfair treatment of customers.

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The Financial Conduct Authority said the bank had “woeful systems and controls” and created unrealistic repayment plans.

A TSB staffer had suggested a borrower removed the £20 a month they had allocated for children’s clothes and made sandwiches instead of paying for school meals.

In another case the bank applied arrears to a dead customer’s mortgage payments.

It also applied arrears to a customer after an Alzheimer’s diagnosis and did not flag another as vulnerable despite them making repeated references to suicide in calls.

The failings took place between June 2014 and March 2020.

TSB agreed to resolve the issues identified, which meant the fine was cut by 30 per cent from £15.6million.

DAWN OF THE A.I. BOSS

WORKERS will soon be right when complaining that their boss is a robot — with video call firm Zoom creating artificial intelligence avatars for conference calls.

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Its latest AI software means that bosses can use a digital version of themselves, or a generic avatar, to deliver brief video messages to workers on calls.

Zoom’s boss Eric Yuan has previously talked about creating a “digital twin” of himself as a way to solve busy people’s problem of how to be in two places at the same time.

The rise of remote working has meant bosses are increasingly delivering news of lay-offs via video calls — meaning workers could find themselves being let go by a robot in the near future.

In today’s newsletter:

• Iran warns of potential change in its nuclear doctrine

• Lai’s Taiwan National Day speech

• South Korea’s Han Kang wins the Nobel literature prize

Good morning. A senior adviser to Iran’s supreme leader has warned Tehran could change its nuclear doctrine if Israel targets the Islamic republic’s atomic facilities.

As Iran and the wider Middle East brace for the Israeli response to last week’s Iranian missile attack on Israel, Brigadier General Rasoul Sanaei-Rad told Iranian news agency Fars: “Striking nuclear sites could certainly have an impact on the calculations during and after the war.”

Iran fired a barrage of missiles at Israel in retaliation for the assassination of Hizbollah leader Hassan Nasrallah and other militant leaders. Afterward, prominent right-wing Israelis called on Prime Minister Benjamin Netanyahu’s government to target Iran’s nuclear programme.

But western diplomats have warned that would be the most extreme retaliation. The US has urged Netanyahu against targeting Iran’s nuclear sites or its oil infrastructure.

Here’s what to know about Iran’s nuclear programme — long viewed by Israel as its most serious strategic threat.

• Middle East news: Israeli forces fired a tank shell at the UN peacekeepers’ headquarters in southern Lebanon yesterday, the UN said, injuring two international troops.

And here’s what else I’m keeping tabs on today and over the weekend:

• Economic data: Malaysia reports August manufacturing sales and the industrial production index. The US publishes September PPI inflation rate data for September.

• Monetary policy: South Korea announces its interest rate decision.

• Chinese economy: A press briefing on Saturday with China’s finance minister has fuelled investor expectations that the government will announce more stimulus measures.

How well did you keep up with the news this week? Take our quiz.

Five more top stories

1. Taiwan’s President Lai Ching-te has urged Beijing to co-operate with Taipei and the international community to maintain peace in his first National Day speech yesterday. Lai asserted that China had “no right to represent Taiwan” but said he was willing to work with Beijing to protect peace and prosperity for people on both sides of the Taiwan Strait.

2. South Korean writer Han Kang has won the 2024 Nobel Prize for literature. Han — the first Asian woman and South Korean writer to win the award — was recognised for her “intense, poetic prose that confronts historical traumas and exposes the fragility of human life”, the Nobel committee said.

3. Seven & i Holdings plans to split its convenience store operations from non-core businesses as the Japanese retail conglomerate faces an unsolicited $47bn buyout proposal from Alimentation Couche-Tard. The 7-Eleven owner said it would separate 31 subsidiary businesses — including supermarkets such as Ito-Yokado — and put them in a new holding company. Here’s more on the reorganisation.

4. US inflation fell to 2.4 per cent in September but still exceeded economists’ expectations, cementing the belief that the Federal Reserve will cut interest rates by a quarter point at its next meeting in November.

• Hurricane Milton: Rescue operations were under way in Florida yesterday as officials sought to assess the damage inflicted by the storm, which triggered widespread flooding and left millions without power.

5. Exclusive HSBC’s new chief executive plans to target the lender’s expensive layer of senior bankers in a cost-cutting move aimed at saving as much as $300mn. Georges Elhedery is drawing up plans to merge HSBC’s commercial banking unit with its global banking and markets unit. Here’s what else we know.

The Big Read

Russia has created a “shadow fleet” of more than 400 vessels moving about 4mn barrels of oil a day, circumventing western sanctions to create billions of dollars a year in additional revenue for its war in Ukraine. The FT’s latest investigation shows how complex arrangements involving a British accountant, a London-listed broker and Dubai-based companies helped one of Russia’s biggest oil producers buy ships while hiding its involvement.

We’re also reading . . . 

• Activist battle: A seemingly misfired email has embroiled Pfizer chief executive Albert Bourla and his company in a high-stakes activist campaign.

• Trump biopic: The Apprentice has been hit with legal threats that scared off Hollywood studios. Screenwriter Gabriel Sherman reveals the wild inside story of his new film.

• 80-hour weeks: Wall Street’s moves to cap weekly hours for entry-level bankers are butting against the reality of a competitive industry.

Chart of the day

A scramble for Chinese equities united the global investment industry last month, just as attitudes towards European and Japanese stock markets became heavily bifurcated along geographical lines. Despite strong domestic enthusiasm, foreign exchange traded fund investors turned their backs on European and Japanese stock markets in September.

Take a break from the news

Before he was Japan’s prime minister, Shigeru Ishiba was a Dragon Ball cosplayer. In 2018, he donned a purple cape and a hooded pink bodysuit at an event in his native Tottori, dressed as Majin Buu from the popular Japanese anime series. Ishiba is a serious politician, and his wardrobe decision is only weird if you (incorrectly) believe his anime fandom is niche, writes Leo Lewis.

Additional contributions from Gordon Smith and Tee Zhuo