Deadly protests in Kashmir test Pakistan’s government

0:00Hey, everyone. Happy Monday. It's Victoria here. If you're listening to today's episode of The universities subscribe to the FT for their employees. You can check if you are eligible for free access to FT.com by using our subscription finder. We'll pop a link to that in our show notes. Now on to today's show.

0:34Good morning from the Financial Times. Today is Monday, August 10th, and this is your FT News Briefing. China is drawing on lessons from its ancient Silk Road to try to maneuver around global shipping chaos. And anger is boiling over into deadly clashes in Pakistan-administered Kashmir. Plus, we'll introduce you to the bank behind China's AI listings bonanza. I'm Victoria Craig, and here's the news you need to start your day.

1:13An unexpected alternative to the world's traditional shipping routes is taking a step forward this week. It's dubbed the Ice Silk Road, and it goes through the Arctic. Melting polar ice shortens the journey between Europe and Asia, and ships are trying to avoid choke points in places like the Bab al-Mendeb Strait into the Red Sea. An Iran-backed military group called the Houthis renewed threats there last month. Chinese shipping company Sea Legend is taking the lead on establishing the route. On Wednesday, it'll launch the first regular container shipping service that will connect China's east coast to the UK via Russia's north coast.

1:51And depending on the conditions in the Arctic Circle, that route will cut the typically 40-day voyage in half. European companies have stayed away from the route due to relations with Russia, climate change, and worries over disturbing the Arctic ecosystems.

2:12Pakistan's government is facing a serious test of its authority. That's after dozens of people were killed in clashes in part of the disputed Kashmir region controlled by Islamabad. The death toll has reached the highest level in decades, as protests erupted over allegations of election interference by Pakistani authorities and longstanding economic grievances. Our correspondent Hamza Jelani joins me now from the capital to talk through what's happening. Hi, Hamza. Hi, Victoria. So just walk us through this. What is the anger centering on? So these protests started around two very specific grievances.

2:48One is just the general sense of economic deprivation that the region faces. Although the region does enjoy special subsidies with regards to energy prices and favorable tax rates, it's still among one of Pakistan's more poorer regions with the used unemployment rate double that of the national average. And secondly, the other issue that they faced was they have been accusing the central government of essentially meddling in the affairs of the region, which is, you know, one that is technically autonomous with its own president and prime minister. So a set of protest marches were planned in June.

3:22And in response to one of those marches, the government declared the main protesting group, the Joint Awami Action Committee, an umbrella group of civil society activists, lawyers, shopkeepers, as a, quote, terrorist organization. and they have since, after banning the group, seen the protests actually explode into a much more serious and violent fashion. So all of this is disrupting an election process that was due to wrap up today. That has now been delayed. So what's likely to happen from here? So far, we haven't been given a final date, but I think in terms of what's going to happen, it's unlikely that the conclusion of this election is going to lead to the protests abating.

4:02It seems like the core grievances are not being solved And in conversations I've had with people on the ground, there's a pretty widespread sense that this election is, to put it frankly, they believe that it's rigged, that the intelligence and security services are installing a favorable government against the wishes of the people in the region. These are accusations coming from protesters, from activists and from regular people that we've been able to get in touch with. And I think that as a result, they're likely going to see further protests. And I think along with that, a further crackdown.

4:33And is there a concern that now some of these protests and this anger could spill over into other parts of Pakistan? There definitely is. And it's important to take a step back and remember Pakistan as a whole is facing multiple different types of instability. There is, at the basic level, widespread anger in every pocket of the country against the government, which many people believe was wrongfully installed in 2024 in an election that many observers see as having been rigged. And we've seen this manifest in different ways, whether it is protest marches in the Punjab province or the much more violent manifestations of insurgency in places like Balochistan and Kheber Pakdunhua in northwest Pakistan.

5:15So the set of serious challenges that the government is facing and many of the connective tissue is that people really feel like the government does not represent their interests. And that as the economy is straining under the pressures of the Iran war and a kind of multi-year long cost of living crisis, the Kashmir protests many see as one localized example of a national crisis that Islamabad faces. So how does this end, Hamza? What would it take to quell this anger? And does it seem like the government has an appetite to take those actions? So far, there's been some demands from civil society activists or lawyers who are trying to intermediate between both sides for some kind of political dialogue.

5:54And it's unclear what will happen next because many of the core demands of the civil society opposition have not been met. In fact, the government has responded by not just labeling them terrorist groups, but claiming that they take funding from neighboring India and that they're part of a larger agenda to destabilize Pakistan. And the government essentially denies that there's any serious issues that these groups are tapping into, and rather that they're simply part of some foreign agenda to weaken Pakistan at a time when its international clout had been rising due to its role in helping mediate a ceasefire between the U.S.

6:29and Iran. Hamza Jelani is the FT's Islamabad correspondent. Thanks so much for your time, Hamza. Thank you.

6:39Germany's economy minister told the FT rising support among voters for the far-right Alternative for Germany party could undermine government efforts to woo foreign investors. Germany is due to host its first investment summer this October in Berlin. The government wants to secure big commitments from international investors, all part of a push to revive a stagnant economy that's facing a number of challenges. Those include stiff competition from China, higher energy prices from the war in the Middle East, and a rapidly aging workforce. But if the AFD picks up historic wins in two former East German states just weeks before that conference, there are worries that it could put potential investors off.

7:22Still, the country's economy minister said many investors that she's spoken to could look beyond that. She said investors from the U.S., Canada, the Gulf, Singapore, and Japan have already expressed interest in backing projects in the country.

7:41China has seen a few high-profile, multi-billion-dollar AI-related listings this year, including chipmaker CXMT, which was the country's biggest IPO in 16 years. And behind several of those IPOs is the China International Capital Corporation. It's a state-owned investment bank that's emerged from a years-long government crackdown to become the dominant financier of Beijing's effort to compete with U.S. in AI. Here to tell me more about that is the FT's Asia Markets correspondent, William Sandlin. Hi, William. Hi, Victoria. So this seems like quite the turnaround for CICC over the last couple of years.

8:19But the thing is, it was caught up in a crackdown against the financial sector several years ago by the government. Just walk me through what happened and how the company has started to bounce back from that. Sure. So there were two big things that have happened in China in the last couple of years. The first was there was a prolonged downturn in IPOs that came when the stock market had a prolonged bear period. Basically, the real estate bubble in China burst in 2021. As housing prices fell, the stock market fell, consumer sentiment turned. And at the same time that all of these factors were affecting sentiment, the government had intensified a campaign.

8:59They called it the Common Prosperity Campaign. It's almost like a populist movement. They essentially cut the pay of senior bankers. They investigated bankers for corruption. And there was a broader kind of crackdown on businesses. And so CICC was one of many firms that was caught up in this at a time when overall business sentiment had become significantly worse and Chinese regulators had basically made it much more difficult for companies to list. So CICC seems to have overcome a lot of these challenges, and it's been backing a lot of Chinese companies. Can it keep this streak of IPOs going?

9:37The bankers we spoke to for the story all sounded confident that this would continue. There's a lot of innovative Chinese companies that want to come to market. I think most importantly, this has a lot of government support. The government wants to show the world that China can compete with the U.S. in things like AI. CICC is one of China's leading investment banks. It has been for a long time. It's been building the groundwork for these sorts of deals for years, and they have deep expertise kind of across industries and within finance. So this is a well-respected company that has kind of turned things around with the support of the central government.

10:18William, despite CICC's successes, especially with IPOs this year as we've been talking, investors seem less ready to embrace the new norm in China's banking sector. The bank's Hong Kong shares are down almost 12 percent below their peak, while those in Shanghai are down more than half. CICC is a company that you can use sort of as a lens to look at China. In the 90s and the early 2000s, it was helping state-owned enterprises go public. You can think of that as almost a metaphor for China's attempts to liberalize its markets. As the state has become more involved in the financial sector and other industries, they want it to follow strategic priorities, meet government objectives.

11:02There's also been these clear directives around things like pay and profitability that can become political issues. So you can use this to sort of understand how finance has become more political in China. These firms are still serious at deal-making and can do a great job, but the environment that they're doing it in has changed drastically. Really fascinating stuff. William Sandlin is the FT's Asia Markets correspondent. Thanks so much for your time, William. Thanks, Victoria.

11:37Before we go, the U.S. and the United Arab Emirates have had a rocky relationship for the past couple of decades. But the UAE has now become one of America's most important allies in the Middle East. We have an interesting story today about how the Gulf state has used both cash and charm to win over the Americans. We'll include a free link to that story and all of the others in today's podcast in our show notes. This has been your daily FT News briefing. Check back tomorrow for the latest business news.

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