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Good morning. Today we’re covering:
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China’s growing military activity near Taiwan
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A novel treatment for schizophrenia
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Australia’s successful approach to economic security
But first: the audit that Volkswagen claimed cleared it of allegations of forced labour in Xinjiang failed to meet international standards, according to a review of the leaked report on its findings.
The carmaker said in December that an audit had found “no indications of any use of forced labour” at its plant in the western Chinese region, where human rights groups have documented widespread abuse against the mainly Muslim Uyghur ethnic group.
Löning, the Berlin consultancy founded by former German human rights commissioner Markus Löning, had applied the “internationally renowned” social auditing standard SA8000, VW said in a press release then. This prompted global index provider MSCI to remove a “red flag”, which since 2022 had barred ESG-focused investors from buying VW shares because of the Xinjiang allegations.
But the audit report, seen by the FT, shows that the Chinese firm involved in the work with Löning, Guangdong Liangma Law, did not adhere to critical aspects of the SA8000 auditing standard.
VW’s audit “departs” from the SA8000 standard “in several important ways”, chief among them the way interviews with staff were conducted, said Judy Gearhart, a professor at American University who helped develop the SA8000 rules.
The carmaker said that the SA8000 standard had only been used by the auditors as a “basis” but that “full examination of all points mentioned in the standard were [not] necessary”.
Here’s what the review of the audit found.
Here’s what else I’m keeping tabs on today and over the weekend:
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Economic data: Hong Kong, Japan and India report inflation data for August.
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Monetary policy: Traders expect the Bank of Japan to hold rates at a policy meeting concluding today. Meanwhile, China is expected to slash its lending rate, according to a Reuters poll.
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Summit: US President Joe Biden hosts the leaders of India, Japan and Australia on Saturday for a gathering of the Quad nations in his home state of Delaware.
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Sri Lanka: The country holds its presidential election on Saturday.
What lies ahead for India after the first 100 days of Prime Minister Narendra Modi’s third term? Join FT, Nikkei Asia and Asia Society experts for a webinar on October 10 and put your questions to our panel now. Register for free.
Five more top stories
1. Taiwan’s defence minister has warned that China’s growing military activity will make it more difficult to spot harbingers of an attack on his country. “We have to think about how we differentiate between peacetime and wartime,” Wellington Koo told reporters earlier today. The remarks came a day after a Chinese aircraft carrier group passed through waters near Taiwan’s northern tip.
2. The S&P 500 closed at a record high yesterday as investors bet the Federal Reserve’s jumbo half-point interest rate cut would help deliver a soft landing for the US economy. The US gains capped a global rally that also featured strong gains in European and Asian markets. Japan’s Topix 2 closed per cent higher yesterday, led by tech stocks and exporters.
3. Israel struck targets along Lebanon’s southern border yesterday as the leader of the Hizbollah militant group said the Jewish state had crossed “all red lines” with this week’s mass detonations of communication devices. Hizbollah leader Hassan Nasrallah said the attacks, which killed 32 people and injured thousands, were a “major security and military blow”.
4. Nike chief executive John Donahoe will step down next month in an abrupt leadership change at the world’s largest sportswear maker. The move punctuates a period of dour financial performance, including a dramatic stock sell-off after the company lowered its guidance in June. Here’s who will replace him.
5. Brazil’s Supreme Court will impose a fine of about $1mn per day on Elon Musk’s X and his satellite internet provider Starlink after service to the social media platform was temporarily restored in spite of a court-ordered ban. Users were able to access the service after X switched its third-party cloud provider.
How well did you keep up with the news this week? Take our quiz.
The Big Read
Schizophrenia sufferers are frequently pushed to the fringes of society, haunted by the delusions and hallucinations that define the worst flare-ups of the illness, while poorly served by a choice of old and imperfect treatments. Now hope is at hand. If approved by US regulators this month, a twice-daily pill will arguably be the first truly novel treatment for the “cancer of psychiatry” in more than seven decades.
We’re also reading . . .
Chart of the day
A frantic hunt by chocolate manufacturers for high-grade cocoa has left a backlog of old, poor-quality beans lying in London’s warehouses, leading to a rare divergence in prices between the UK and the US.
Take a break from the news
Thanks to a wave of nostalgia, demand for classic football kits is soaring. But so are the prices. HTSI’s Alexander Tyndall looks at the rise of the football shirt — and why a Holland ’88 kit might cost you £900.
Additional contributions from Gordon Smith and Tee Zhuo
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