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Qin Gang remains under investigation for possible national security violations, according to people familiar with the matter

NEW YORK—Senior Chinese officials were told that an internal Communist Party investigation found ex-Foreign Minister Qin Gang to have engaged in an extramarital affair that lasted throughout his tenure as Beijing’s top envoy to Washington, according to people familiar with the matter.

Qin, once considered a trusted aide to leader Xi Jinping, was stripped of his foreign minister title in July—without explanation—after he disappeared from public view a month earlier. At one point leading up to his ouster, the Foreign Ministry said the absence of 57-year-old Qin was due to health reasons.

Senior Chinese officials—including ministers and provincial leaders—were briefed last month on the party’s investigation into Qin, who served as the Chinese ambassador to the U.S. from July 2021 until January this year, the people said. The senior officials were told the formal reason for Qin’s dismissal was “lifestyle issues,” a common party euphemism for sexual misconduct, according to the people.

The officials were further told that the probe found that Qin had engaged in an extramarital affair that led to the birth of a child in the U.S., two of the people said.

Names of the woman and the child weren’t disclosed to the party officials when they were informed about Qin’s investigation, the people said, and the Journal couldn’t confirm their identities. The investigation is continuing with Qin’s cooperation, the people added, and it is now focusing on whether the affair or other conduct by Qin might have compromised China’s national security.

The State Council, China’s cabinet, still lists Qin as one of the five state councilors. China’s Foreign Ministry and the State Council Information Office didn’t respond to questions.

The downfall of Qin, who was in the foreign minister post for just seven months, comes as China’s leadership seeks to cut off any security vulnerabilities amid the the country’s intensifying competition with the U.S. and its allies.

Scrutiny of the party’s senior ranks, insiders say, is zeroing in on officials involved in dealing with foreigners and the top brass in the Chinese military in charge of ensuring the armed forces’ capacity to fight.

Earlier this month, Chinese Defense Minister Li Shangfu, who is mainly responsible for military relations with other countries, was taken away by authorities for questioning, The Wall Street Journal reported. In July, the commander and political commissar of the People’s Liberation Army Rocket Force, which controls the country’s strategic missiles, were both dismissed with no reason given publicly.

Some economic officials, who have traditionally been granted more leeway to interact with their Western counterparts and foreign business executives, have also increasingly found themselves having to report greater details than before on their dealings as scrutiny deepens, party insiders said.

The high-profile troubles involving the senior diplomatic and military officials, whose appointments were all approved by Xi, are dealing a blow to the leader’s efforts to uphold the Chinese-style governance as a more stable and effective alternative to the Western model, political analysts say. China’s economy, meanwhile, is suffering a crisis of confidence not seen since the country’s opening to the world in the late 1970s.

Turmoil at such high levels in the government and military “would suggest political instability in China at a time when stability is desired due to the economic slowdown,” said Yun Sun, director of the China program at the Stimson Center, a Washington think tank. “It also calls into question whether Xi is truly in control of the overall situation.”

The sudden dismissal of Qin also comes as Beijing and Washington have been working for months to pave the way for Xi’s expected attendance at a summit of Asia-Pacific leaders to be held in San Francisco in November—and a possible summit there with President Biden. Officials on both sides see that meeting as a potential boost to months of tentative efforts to stabilize ties.

Xi replaced Qin as foreign minister with Wang Yi, a member of the party’s elite Politburo and China’s top foreign-affairs official. Wang, who met in Malta over the weekend with U.S. national security adviser Jake Sullivan, has assured Washington the recent thaws in high-level contacts will continue.

With a polished demeanor, Qin was seen as a measured diplomat in his time serving as the Chinese ambassador to the U.S. Xi picked Qin to be China’s foreign minister less than two years after he was named Beijing’s top envoy to Washington—an unusually fast promotion in a system that traditionally has valued experience in addition to political connections.

Before being named U.S. ambassador, Qin served as a vice minister responsible for planning events for Xi and accompanied the Chinese leader on many of his overseas trips. Qin’s close association with Xi has made his fall from grace more intriguing. An information void has fed furious speculation on social media for months, including around the possibility of an extramarital affair.

In China’s opaque system, sexual misconduct is often used as a way to discredit fallen officials considered to be disloyal to the party leadership. In Qin’s case, according to the people familiar with the matter, the affair disclosed by the party’s investigation triggered his downfall partly because Qin’s U.S.-born child could potentially compromise his ability to represent China’s interests in dealing with the Americans.

In recent years, Xi has tightened restrictions on high-ranking officials having significant financial or other connections overseas, such as owning large amounts of assets abroad.

The rules are intended to minimize geopolitical risks for Beijing amid growing concerns that officials with significant overseas exposure could become a liability if the U.S. and other Western powers impose sanctions against them, similar to what was done against Moscow following Russia’s invasion of Ukraine.

In addition, in his more than a decade of rule of China, Xi has time and again directed his ire at corruption in the party and the tales of senior members’ lavish lifestyles and harems of mistresses that fed public cynicism about the party’s leadership.

“You people, you either eat and drink yourselves into the grave, or die between the sheets,” Xi said at a meeting with senior officials earlier in his tenure, according to people briefed on the remarks.

UAW union says pay talks are being dragged out as spectre of Ford walkout in Canada looms

Members of the United Auto Workers union are planning to expand their strike against Detroit carmakers on Friday unless there is “serious progress” at the bargaining table in the dispute over pay, its leader said.

UAW president Shawn Fain said on Monday that carmakers were to blame for delays in negotiations and the union would not stand by “while they drag this out”.

“We’re not waiting around, and we’re not messing around,” he said.

The move would broaden industrial action beyond the 13,000 workers at three plants — run by Ford, General Motors and Stellantis — who went on strike last Friday. It marked the first time in its history that UAW workers walked out of factories at all three automakers at once.

The UAW is demanding higher wages for nearly 150,000 members who work at the three companies. Its campaign is part of a broader battle to protect workers through the transition to clean energy and electric vehicles, which the union estimates could cost 35,000 jobs.

The threat of a US escalation came as Ford faced the possibility of a strike in Canada as well, with 5,700 workers threatening to walk out of the company’s Canadian plants when their contract expired at midnight on Monday.

Lana Payne, president of Unifor, the union that represents about 18,000 workers at the three big carmakers in Canada, said talks with Ford had been “constructive”, but not enough progress had been made on priorities such as pensions and wage increases.

The union said negotiations had been extended for another 24 hours, adding it had “received a substantive offer from the employer minutes before the [midnight] deadline and bargaining is continuing throughout the night”. It advised members to “maintain strike readiness”.

Unifor’s members are spread among parts facilities, a Ford Ontario assembly plant that makes the crossover Edge and luxury sport utility vehicle Lincoln Nautilus, and two plants located just beyond the Detroit River, which divides the US and Canada, that make engines for the Mustang and the company’s bestselling F-series trucks.

“This is as serious as it gets,” Payne added. “Ours is a small but highly consequential footprint in Ford North America, and this is our leverage, and we will use it.”

Ford did not immediately respond to a request for comment.

Unlike the UAW, which has taken on all three carmakers at once, Unifor has taken a more traditional approach to bargaining in the North American auto industry. Unifor picked Ford as the company to target first and, after reaching a contract with it, intends to try to secure similar contracts with GM and Stellantis.

Payne said last month when the union kicked off bargaining with Ford that members’ expectations were “high”. The union wants to protect pensions, land “substantial” wage increases and secure more investment in Canadian plants.

“Profits are up and so is the cost of living,” she told reporters last month. “Workers have shown time and time again that they are prepared to fight — and to strike, if necessary — to have their demands met. This is the moment we are in. And no one, no one, should underestimate it.”

The union is also demanding company support for workers as the industry transitions to electric vehicles, a concern the UAW shares.

Tesla, the leader in EV sales, has fired workers who have attempted to organise in its US plants. EV batteries that the Detroit carmakers are set to make come from joint ventures with South Korean manufacturers that employ non-union labour.

“We are insisting that every EV and EV-related job is a good union job, with the same rights and employment terms as auto workers enjoy today,” Payne said.

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Resentment is brewing that Brussels’ subsidies probe against Beijing benefits French rivals

Prior to last week’s announcement of an anti-subsidy probe into Chinese electric vehicles from Brussels, German car industry executives had been hearing that a move was afoot.

“We knew something was coming, but not that it would be announced in such a political way,” said one industry insider. The EU’s move was placing German carmakers, which command a fifth of the Chinese market, in a precarious position, the person added.

There is now widespread concern in Germany that Beijing, which has become embroiled in a tit-for-tat trade war with the US, might unleash its own punitive measures against European carmakers.

The move by Brussels comes as investors already question the German carmakers’ reliance on China.

BMW and Mercedes-Benz have both had great success in China with their premium brands, loved by wealthier Chinese customers, as has Volkswagen, which sells more cars in the world’s biggest car market than any other company. A third of BMW’s car sales last year were in China, while the equivalent figure at Mercedes-Benz was 37 per cent and nearly 40 per cent at Volkswagen.

For German carmakers, the main worry is a retaliatory increase in tariffs on European cars imported into China. The companies also have large local manufacturing operations, which could provide Beijing with another front to turn the screws.

Gregor Sebastian, an analyst at Mercator Institute for China Studies, said Germany’s top-end brands were the most likely to suffer from any new Chinese import tariffs, as most cheaper cars are already produced in China. “A lot of the foreign automotive production or foreign automotive industry in China is actually heavily localised, but the exception is really the top premium segments,” he said.

The German company most exposed to higher Chinese import tariffs would be Mercedes-Benz, according to Stifel analyst Daniel Schwarz, who noted that the company imports roughly 20 per cent of its cars sold in China, compared with a figure closer to 10 per cent for VW and BMW.

However, German carmakers with large local operations are also feeling uneasy.

The rising tensions between Brussels and Beijing come as VW fights to remain relevant in the country whose automotive industry it helped to build up in the late 1970s. Its flagship VW car was recently dethroned by BYD as the best-selling brand in China. New electric models by Audi and Porsche — the group’s main profit makers — have also been delayed by troubles at VW’s software arm Cariad.

Despite calls from Berlin that its car industry reduce its reliance on China, VW has announced investments in the country worth nearly €5bn in the past year. In 2022 it moved Ralf Brandstätter, its board member responsible for China, to Beijing to work in “close collaboration” with its three main joint venture partners.

With France among the vocal proponents for action against Chinese carmakers in Europe, there is brewing resentment within German car companies’ board rooms that the planned EU probe is a win for Paris.

“The Germans will be far worse off from this than the French,” said one executive at a German automotive supplier. “[Ursula] von der Leyen clearly listened more to [Emmanuel] Macron than [Olaf] Scholz on this one,” the person added, referring to the president of the European Commission, the president of France and the chancellor of Germany.

Both Carlos Tavares, the boss of Peugeot owner Stellantis, and Renault’s chief executive Luca de Meo have warned that European manufacturers face a tough challenge as Chinese rivals show up on their turf with cheaper models, forcing them either to seek more cost cutting or improve their own supply chains.

The two companies have had a rougher ride in China than their German rivals. Renault ended some of its joint ventures in China in 2020, and halted sales of its main passenger vehicle in the country.

The French government has more actively sought measures against Chinese carmakers and is planning to introduce a decree that will effectively disqualify Chinese-made vehicles from its electric car subsidies.

Berlin-based analyst Matthias Schmidt said that given German carmakers’ exposure to China compared with their French rivals, “the French can say what others are thinking, but the Germans have to keep their mouths shut”.

One potential risk faced by European carmakers could be a decision by Beijing to restrict access in the supply chains of important battery raw materials such as lithium. The Chinese government has built large stakes in battery material processors and battery producers since its decision to invest heavily in building a domestic EV industry more than a decade ago.

However, executives and analysts are cautious about prejudging Beijing’s reaction at this stage. “We must not forget that China needs Europe just as much as Europe needs China, because both economies are so interlinked,” Schmidt said.

One German car industry insider hangs his hope on Chinese comments made in a meeting between a group of Germany’s most senior business leaders and China’s premier Li Qiang in June. Li’s message had been that German business presence was still very much needed in the country. “Their message was: ‘please don’t stop investing in China — our economy is struggling a bit’.”

Deal with McWin values French-owned Italian restaurant company at €270mn

Big Mamma, the French-owned Italian restaurant group known for serving Instagram-worthy dishes and drinks to diners in Paris and London, has been valued at €270mn after selling a majority stake to the private equity firm behind the Gail’s bakery chain.

The investment from London-based private equity group McWin will be used to fund an expansion push in the US and the Middle East, building on Big Mamma’s existing portfolio of 23 restaurants across five European countries, including its original trattoria East Mamma in Paris and London’s Circolo Popolare.

Big Mamma’s co-founders Victor Lugger and Tigrane Seydoux will continue to run the business and retain a minority stake. A clutch of 17 early investors in the restaurant group, including French telecoms billionaire Xavier Niel and media tycoon Stéphane Courbit, will exit their investments.

Lugger, who along with his partner Seydoux have netted millions of euros from offloading some of their personal shareholdings as part of the deal, told the Financial Times that the investment would help Big Mamma “go big . . . and build a global brand in affordable, experiential luxury dining”.

Big Mamma’s mix of punchily named, colourful dishes — including the “naughty garlic bread” and the “nice buns” beef ragu brioche bun — as well as its extravagantly designed restaurants and affordable prices has proved a draw for diners, with the group now serving 15,000 customers a day across its 23 sites.

“If you want to build a global brand, if you want to always go bigger in terms of design, authenticity, HR, recruitment, food, and if you want to do it beyond your frontiers . . . it takes a strong backbone and it takes partners that can help you,” said Lugger.

But Lugger, who also runs restaurant payment app Sunday, said he was aware of the risks for restaurant brands of taking on a private equity partner given their chequered history in the sector.

Restaurateur Jeremy King’s relationship with private equity investor Graphite Capital soured and their partnership ended in 2017 after just a few years. Recently, private equity-backed chains such as Prezzo have had to undergo restructurings to stay afloat.

“It’s questionable the impact that some private equity had on quite a number of brands . . . in this country,” said Lugger. “It’s like when you get married — if you don’t look at the fact that 50 per cent of marriages end up in divorce you’re stupid . . . all you need to do is just walk the high streets in the UK.”

But McWin pitches itself as a specialist in the restaurant and food technology sector, having invested about €1bn across nine brands since the private equity group was established two years ago. McWin also backs pasta restaurant Vapiano and White Rabbit Projects, the venture behind Indian restaurant Kricket and Italian delicatessen Lina Stores.

“We are painfully aware about the shortfalls that private equity has had in the sector,” said Harry Goss, a partner at McWin. “What makes a good restaurant investment is that the growth opportunity when you look to exit is just as good . . . as when you enter. If you get that wrong, then it doesn’t really matter how many restaurants you’ve opened, if the restaurant has lost its way.”

As an indication of his commitment to the business, Lugger said last week he had tasted 70 dishes over two days during a visit to Mamma East.

Big Mamma is set to launch its fourth new site this year in Milan over winter, attempting to outcompete Italian trattorias and pizzerias on their home turf, with a third restaurant in Spain also planned for next year. The majority of Big Mamma’s 2,400 staff are Italian and almost all of its ingredients are sourced directly from Italy.

Lugger estimated it would take at least two years to launch Big Mamma’s first US venture, saying that he was considering locations in Chicago, Miami and Atlanta. In recognition of the brand’s ambition, he added that it was “probable” he would move to the US within the next two years.

Henry McGovern, one of McWin’s founding partners, said Lugger and his partner had “pioneered a new type of restaurant experience, providing customers with a truly unique and memorable visit at every site”. The deal is set to close by year-end.