UK-China relations, US dollar strength and the great unwinding

The UK has come under fire from the Obama administration, which has accused it of ‘constant accommodation’ of China, after Britain decided to join a new China-led financial institution that could rival the World Bank.

Britain is preparing to announce that it will become a founding member of the $50bn Asian Infrastructure Investment Bank, which was launched by China last October. It will be the first country in the G7 group of leading economies to join. You can read more about the AIIB here.

The relationship between Britain’s Conservative-led government and China has been bumpy since David Cameron became prime minister five years ago. But it is now being driven by economic pragmatism: the desire to attract Chinese investment and tourists to a country still grappling with austerity.

In the news

The dollar: from strength to strength? The US currency’s seemingly relentless climb isproblematic for policy makers. It has hit foreign earnings at major multinationals including Apple and Procter & Gamble and is driving up the cost of the country’s exports, worsening America’s trade balance. Moves to devalue by foreign states aren’t helping, either. But the problem is emblematic of the country’s recovering economy. (FT)

Commerzbank makes $1.45bn settlement with the US The German lender turned a “blind eye” to money laundering and sanctions-busting violations, while employees who tried to flag concerns were viewed as “crying wolf,” US authorities said on Thursday. The agreement with five US agencies has resulted in five senior employees leaving the bank, dealing an embarrassing blow to a lender that is partially owned by the German government. Authorities including the US Department of Justice and New York’s Department of Financial Services have been investigating Commerzbank for business dealings with Iran, Sudan and several other countries on the US sanctions list. (FT)

Ferguson manhunt under way Police in the troubled Missouri city are conducting a manhuntfor the person who shot two police officers working at a protest earlier this week. The shooting, hours after the city’s police chief resigned in the wake of a scathing US justice department report finding that the city routinely violates the constitutional rights of African-Americans, has added to the tension in Ferguson. (NYT$)

Discworld author Sir Terry Pratchett dies The writer has passed away at the age of 66, eight years after he was diagnosed with Alzheimer’s disease. His Discworld series of whimsical fantasy novels made him a best-selling author with millions of fans. You can read an obituaryhere. (FT)

It’s a big day for

Brazil could be in for a bumpy couple of days. Trade unions take to the streets today to defend oil giant Petrobras which is under fire for a bribery scandal. They are also expected to be against the government’s recent austerity measures. (FT)

In the US the preliminary University of Michigan consumer confidence survey which will be published on Friday. The previous index showed an improving level of consumer confidence in January, on the back of declining energy prices and lower borrowing costs.

Food for thought

From Japanification to Europification Over the past decade, eurozone interest rates have traded well above those in Japan, reflecting the fact that Japan has been mired in deflation and economic stagnation. But the picture has suddenly – and dramatically – reversed as the yield on eurozone bonds has fallen below that of yen bonds. To put it another way, as a demonstration of Alice-in-Wonderland economics, Japan is no longer the only (or best) example. (FT)

A job half-done After five years as prime minister and with less than three months to the general election, David Cameron talks to the FT about his record on the economy, Scottish nationalism and Britain’s international role. You can see more in the video published below. (FT)

Hope for a new Syrian generation A generation of children are growing up in refugee camps or temporary housing in Turkey, Iraq, Lebanon and Jordan following the 2011 uprising in Syria.Young professionals in the Syrian diaspora are now trying to help these child survivors of war by promoting respect for diversity and non-violence. (BBC)

The great unwinding Following the decline of the Pax Americana, the world is a moreunstable place. How should businesses respond? Many still choose to ignore it: they worry instead about competitors’ pricing, economic growth and regulation. But they need to understand that the world has changed: there is money to be saved in understanding geopolitical risk. (FT)

Artists of earth and sky Some of the earliest surviving art by native North Americans was taken by travellers to Europe to end up in private collections. A major new exhibition at the Metropolitan Museum of Art welcomes 130 of these materially rich masterpieces back, on loan from more than 50 international collections. (NYT$)

Video of the day

FT editor Lionel Barber discusses David Cameron and the forthcoming UK general election with columnist and managing editor of FT.com, Robert Shrimsley.

This article is published in collaboration with The Financial Times. Publication does not imply endorsement of views by the World Economic Forum.

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Author: FirstFT is the Financial Times’ editors curated free daily email of the top global stories from the FT and the best of the rest of the web.

Image: A man rides an escalator near Shanghai Tower. REUTERS/Carlos Barria.