Good morning. China passed a significant milestone last fall: For the first time since its economic opening more than four decades ago, it traded more with developing countries than the U.S., Europe and Japan combined. It was one of the clearest signs yet that China and the West are going in different directions as tensions increase over trade, technology, security and other thorny issues.

For decades, the U.S. and other Western countries sought to make China both a partner and a customer in a single global economy led by the richest nations. Now trade and investment flows are settling into new patterns built around the two competing power centers.

• Pullback: Major Western companies including Apple, Stellantis and HP are looking to shift production from China. More than one-third of U.S. companies surveyed by the U.S. China Business Council, which represents American companies in China, said they’ve reduced or paused planned investment in China over the past year, a record high.
   
• Economic drag: A more severe break between U.S.- and China-led blocs could cost the global economy as much as 7% of gross domestic product, worth trillions of dollars, IMF research suggests. From China’s standpoint, an economic sphere of influence with Beijing at the center might not offer enough growth to keep the country from slipping into long-term stagnation as it faces collapsing birthrates and excessive debts.
   
• Friendshoring: Some Western money is returning to the U.S., or going to places like Mexico and India, which attracted four times as much investment in new factories and offices as China last year.

U.S. targets Russian businesswoman, saying she helped oligarchs evade sanctions.

The U.S. Treasury Department sanctioned a Russian businesswoman Friday who it said helped Russian oligarchs and cybercriminals use cryptocurrencies to evade U.S. sanctions.

Ekaterina Zhdanova, 37, used digital currencies to facilitate large cross-border transactions, taking advantage of platforms with weak compliance controls such as a Russian crypto exchange called Garantex that the U.S. sanctioned last year, Treasury said in a statement.

Regulators’ rule change makes it easier to oversee nonbanks.

Federal regulators revamped how they approach hedge funds, money-market funds and other nonbanks, easing the process for potentially applying bank-like oversight to them.

The Financial Stability Oversight Council, an interagency panel of financial regulators, voted to adopt new rules on Friday that streamline the council's ability to designate nonbanks as systemically important. That designation, which currently applies only to the nation's largest banks, allows for additional oversight from the Federal Reserve.

• Disgraced crypto star Sam Bankman-Fried is staring down a lengthy prison sentence after being convicted of fraud in the collapse of FTX, and he faces long odds of making any inroads on appeal. Meanwhile, the ambitions of cryptocurrency advocates to remake the traditional financial system remain a distant dream.
   
• Members of both houses of Congress have in recent weeks introduced bills that would create a national standard prohibiting unauthorized deepfakes in a commercial context. If passed into law, these bills could help celebrities and ordinary citizens alike take action against scam marketers using their likenesses, their sponsors say.
   
• The U.K. competition regulator said Meta Platforms has pledged to allow its Facebook Marketplace customers to opt out of having their data used by the company, and for it to limit how it uses advertising data for its own product development.
   
• Passengers on an Alaska Airlines flight during which an off-duty pilot attempted to shut off the engines sued the airline, claiming that the pilots weren’t carefully screened.
   
• In recent months, China has unleashed its most aggressive effort to crack down on the proliferation of the scam mills, reaching beyond its territory and netting thousands of people in mass arrests.

Hezbollah chief Hassan Nasrallah warns Israel of regional war.

Hezbollah’s leader warned that a regional war with Israel was a realistic possibility, as fears grew that the conflict in Gaza could spill into a second battlefront with the Lebanese militant group.

Hassan Nasrallah, Hezbollah’s secretary-general, spoke on Friday for the first time since a series of attacks by Hamas killed 1,400 people in southern Israel and sparked a devastating bombing campaign and ground invasion. He said Hezbollah would step up military pressure on Israel, with which it has been engaging in tit-for-tat exchanges of fire, but said the time isn’t right for all-out war.

Israeli Prime Minister Benjamin Netanyahu on Friday rejected pressure for a pause in Israeli strikes on Hamas.

• Blinken Rushes to Reassure Anxious Arab Allies in Surprise Trips to West Bank, Iraq
• Escalating Militia Attacks on U.S. Troops Risk Washington, Tehran Confrontation

Sharp U.S. hiring slowdown signals cooling economy ahead.

Job growth slowed sharply last month, a sign the U.S. economy is cooling this fall after a torrid summer. The unemployment rate rose to 3.9%, up a half-point since April, and wage growth slowed.

The figures are likely to bring the Federal Reserve’s historic interest-rate increases to an end by providing stronger evidence that higher borrowing costs have slowed the economy. The report could also mollify concerns that brisk consumer spending this summer would lead hiring or wages to reaccelerate.

• Add Global Conflict to the Forces Keeping Interest Rates High

• Shipping and logistics giant A.P. Moller-Maersk, a bellwether for global trade, saw its third-quarter profit plummet to $521 million from $8.88 billion last year. The company expects the market to remain volatile and will cut its workforce.
   
• Violent winds battered much of Western Europe, leaving at least 11 people dead, dozens injured and millions without power.
   
• A Western price cap on Russian oil meant to curb Moscow’s war spending is increasingly losing its punch.
   
• For years, foreign companies plowed the profits they made in China back into China, using the cash to finance new hiring and investment as its giant economy expanded rapidly. Now, as growth slows and tensions between Beijing and Washington rise, they are pulling those profits out.

• Jeff Bezos says he is moving from Seattle to Miami, where he’ll be near his parents, closer to some operations of his space company—and where he also could end up paying less in taxes.
   
• Netflix is considering stepping into the boxing ring with its first livestreamed match.
   
• The NYC Marathon, which took place Sunday, was harder to get into than Ivy League schools.
   
• Leading Western brands in China are feeling the pinch from the country’s consumer slump.
   
• The 2024 election rematch Americans are dreading looks likely.

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