China’s President Xi visits North Korea to talk nuclear programme

0:03Good morning from the Financial Times. Today is Monday, June 8th, and this is your FT News Briefing. Israel and Iran trade fire in fresh escalation of the Middle East war, and China's president heads to North Korea today as Pyongyang ramps up its nuclear rhetoric. Plus, the head of the OECD is warning countries about implementing their own taxes on big multinationals. If you start to see kind of fractured, fragmented approach, it could create more trade tensions. And so it could end up being bad for business and bad for trade and bad for everyone. I'm Victoria Craig, and here's the news you need to start your day.

0:55In the early hours of this morning, Israel said that its air force struck military targets in western and central Iran. The attack came hours after Iran launched multiple rounds of ballistic missiles at Israel. The exchange of fire is the most serious test so far of a fragile truce that went into effect between the two adversaries in April. The escalation began after Israel carried out a strike in Beirut on Sunday that it said targeted Iranian-aligned militant group Hezbollah. Iran's Revolutionary Guard earlier warned that if Israel retaliated, the country and its supporters will face more forceful and devastating attacks.

1:35U.S. President Donald Trump told the FT negotiations are still on track between the U.S. and Iran to extend a ceasefire between those two countries and reopen the Strait of Hormuz. He also said Israel's Prime Minister Benjamin Netanyahu will have no choice but to accept whatever deal is hammered out.

1:59China's President Xi Jinping is landing in North Korea today. It's his first visit to the country in almost seven years and comes just days after North Korea's leader Kim Jong-un reiterated a commitment to a, quote, exponential expansion of his nation's nuclear arsenal. China says the purpose of the trip is to advance ties and strengthen regional peace and stability. I'm joined now by our Beijing Bureau Chief Joe Lei to find out what we can expect from this visit. Hi, Joe. Hi, Victoria. So how are North Korea's nuclear ambitions likely to feature in discussions between these two leaders. Yeah, I think they'll be an important part.

2:37Denuclearization of North Korea has long been an ambition of China and of course of the US and other partners. But it hasn't gone that far, as we know, because Kim Jong-un has actually managed to develop a very impressive arsenal of weapons. But we think this will be discussed and we think this will be sort of a point of contention between them. Now, the UN has sanctioned North Korea for its nuclear program. I'm wondering, could China be in sort of a position to offer some kind of economic relief if it gets some assurances during this visit on that nuclear program? Yeah, it's funny. I mean, ahead of the talks, as you mentioned, Kim has been really rattling the saver, saying there's no way I'm going to give up these weapons.

3:21So we wouldn't really expect perhaps much movement on this. But, you know, what he might agree to do is just to ease things a little bit, maybe make a little less noise, maybe talk to his neighbours a little bit more, engage a bit more. And in return for that, China could offer some benefits, such as perhaps sending Chinese tourists to North Korea. That's something that it's a little bit unclear under the sanctions regime if that's allowed or not. So that's something that China could do for North Korea. And of course, you know, China already does do quite a lot for North Korea in terms of helping with its economy.

3:55Now, this meeting comes just weeks after President Xi hosted both U.S. President Donald Trump and Russia's leader Vladimir Putin for individual talks in China. You write that Kim Jong-un is skilled at playing its neighbors off of each other. What exactly does that mean? And what is it that North Korea is really angling for with this visit? Yeah, I think with President Xi, he's probably looking for economic benefits. They have announced a new economic plan and a blueprint. And for that, they need resources. And really, China is the only one who can help them with that. But on the other hand, they don't want to fall too much into the hands of China.

4:34and that's why they've become very good at playing Russia off against China and even the US off against the other two. So, for instance, Kim sent Korean troops in 2024 to fight against the Ukrainians on the side of the Russians and this was a gesture that won him a lot of credit with Vladimir Putin. Of course, we think China didn't really like this very much but it sort of stood by and watched. But that's the kind of way that he creates leverage for himself. There's also this idea that this meeting isn't just about North Korea's relationship with Russia or China, but that Kim could be using it as a way to send a message to the U.S.

5:13too. What might he be looking to do on that front? Yeah, you remember some years ago, Trump had these negotiations with Kim. And after, I think, three sessions or so, the talks collapsed. Trump has been continuously expressing his willingness to talk to Kim. and the idea might be from Kim's side to try to attract the US in some way and try to get some sort of engagement going with the US because, of course, that then creates leverage with Russia and China. So again, he can play this kind of this tripartite game with the great powers. How he would attract the US this time, it's not clear. I spoke to one Chinese scholar who said that North Korea's recent decision to drop reunification with South Korea from its constitution could be one way, because that would mean that, you know, they have no intention anymore of invading South Korea.

6:04But he also identified South Korea as an extremely hostile nation at the same time. So it's not really clear, but that's the kind of game that North Korea plays. Clearly, no shortage of topics on the agenda for the next couple of days. Joe Lei, our Beijing bureau chief. Thank you so much for your time. Thanks, Victoria.

6:28Software buyout deals have collapsed to their lowest level since the COVID-19 pandemic. The sector was one of the hottest targets for private equity firms last year. But that started to change in early 2026. That's because Anthropic launched a range of productivity tools that are challenging existing software programs. The value of software deals was almost$40 billion less in the first five months of 2026 than in the same period last year. That is according to pitch book data analyzed by the FT. Doubts over the durability of the sector have dogged both private equity groups and private credit funds.

7:04Private equity executives say firms are starting to draw clearer lines between the types of software companies when assessing their vulnerability to AI.

7:20The head of the OECD told the FT he's urging countries not to go it alone when it comes to taxing multinational corporations, including U.S. tech titans. Matthias Korman, the head of the Organization for Economic Cooperation and Development, wants governments to stick to a global plan that they made back in 2021. But some leaders are growing restless and pushing for their own tax systems. Sam Fleming is the FT's economics editor, and he's here to break down all of this. Hi, Sam. Hi there. All right. So before we get to what's wrong, let's just walk through what the current agreement is. So the current agreement involves a landmark deal which was struck by over 100 countries to find a better way of taxing big corporations around the world.

8:06And there were two key elements to that deal. The first was about taxing the digital giants and other big multinationals that had activities in countries but weren't paying much tax there, would pay more tax in those countries around the world. And the second was the agreement to implement a minimum corporation tax of 15 percent around the world. And so Pillar 1 and Pillar 2, that's what they were called. Pillar 2 has progressed more smoothly than Pillar 1. Pillar 1 has basically founded and not really gone anywhere. So like you say, it's that pillar one, that tax on 100 of the biggest global companies that's really causing this headache now.

8:46Why is the head of the OECD issuing this warning for countries not to tax these companies on their own? Well, the OECD has been the key organization trying to draw up compromises in this area. The concern here is that if no global deal can be agreed, then more countries might seek to implement local taxes to get a share of the revenue generated by big multinationals. We've already seen some countries implement digital services taxes in their jurisdictions. An obvious one is the UK, France. Canada has also looked at this. So the risk here is that if you start to see a kind of fractured, fragmented approach, it could create more trade tensions.

9:30And so it could end up, as in his view, being bad for business and bad for trade and bad for everyone. So what does the U.S. have to say about all this? Because they seem to be the ones really throwing up the biggest objection to this effort. Yeah. So the U.S. has signed up under the G20, G27 frameworks to language saying they want to continue to explore ways of cooperating better when it comes to the digital economy around the world. But I think everyone accepts that Pillar 1 in its original form negotiated a few years ago is dead. The issue here is that this would need to be done via treaty and you need to get Congress on board and that this isn't really any realistic prospect of that happening.

10:15But it's also very clear that the administration would take a very dim view of countries going it alone when it comes to imposing their own digital services taxes. We saw in the example of Canada when there was a proposal to introduce a tech tax last year. Ultimately, there was a threat of retaliatory tariffs and it was revoked. So you've seen the administration willing to throw its weight around when it comes to countries that look at this area on a unilateral basis. Sam, I think another aspect of all of this is just the way that technology has proliferated, especially over the last 10 years or so.

10:54It really works across borders, no matter where a company is headquartered. Is that complicating matters? Does that change the way that governments think about how to tax companies? I think it has to, yeah. If you think about the nature of the digital economy, it operates everywhere and often without a physical presence. Traditionally, you tax a company's income if it's actually physically present in your country, but that doesn't necessarily work in the age of digitalization. You can imagine that if, for example, the AI sector is being dominated by massive US corporations as well, their services will be used all over the world.

11:31That also will begin to raise questions about how that activity is taxed. We're also seeing another part of the OECD agenda is this idea of so-called digital nomads, people who will basically go and live where they want and then offer their digital services to all over the world. as life becomes more electronic and more disconnected from physical bricks and mortar. I guess there is this question about how tax systems need to evolve to catch up with that. Sam Fleming, our economics editor, thanks so much for your time. Thank you. As a reminder, you can read more on all of the stories in today's podcast for free when you click the links in our show notes.

12:11This has been your daily FT News Briefing. Check back tomorrow for the latest business news.

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