Risky business

The Russian mutiny is exposing uncomfortable truths for Xi [View in browser]( [Bloomberg]( The Wagner Group mutiny in Russia — however fleeting — is exposing some uncomfortable truths for China. Beijing has been quick to restate its support for Moscow, stressing the strong relationship between the countries’ two leaders. But there’s no denying that President Xi Jinping’s bet on a “no limits” friendship with Vladimir Putin is looking increasingly risky. Key Reading: [Xi’s Bet on Putin Looks Even More Risky After Russian Mutiny]( [China Backs Russian ‘National Stability’ as Diplomats Meet]( [Yellen Plans July China Trip, While US Preps Investment Curbs]( [China Premier Warns Economic Barriers Will Lead to Confrontation]( Russia’s war in Ukraine cast doubt over Xi’s decision to place his faith in an unpredictable partner. Putin’s chaotic and prolonged offensive has offered a cautionary tale for those in Beijing eyeing the possibility of a military move against of Taiwan, however distant that may be. Yet the warning signs are clear: While China doesn’t have mercenary units similar to the Wagner Group, it’s not evident that Xi has total command of the military despite efforts to tighten his grip on the nation’s armed forces. The invasion of Ukraine also is a reminder that expansionist wars can boomerang quickly into domestic political strife — that’s pertinent to the democratically run island of Taiwan whose population increasingly identify as Taiwanese, not Chinese. And with the US and its allies showing little signs of softening their stance on curbing investment in China, Premier Li Qiang’s cautioning against the dangers of a fragmented world will likely fall on deaf ears. China has been putting some distance between itself and Moscow in recent months by warning against the use of nuclear weapons, calling for the protection of civilians and sending an envoy to Kyiv. The latest events in Russia raise the prospect, however remote, that Putin could be forced out. That’s something that is deeply distasteful for a leader like Xi, for whom preserving power remains paramount. — [Rebecca Choong Wilkins]( Xi and Putin in Moscow in 2019. Photographer: Maxim Shipenkov/Getty Images Check out the latest [Washington Edition newsletter](. You can [sign up]( to get it in your inbox every weekday. And if you are enjoying this newsletter, sign up [here](. Global Headlines Russia closed a criminal investigation today into mercenary leader Yevgeny Prigozhin and his Wagner forces for armed mutiny after Putin pledged to [respect]( a deal ending the biggest threat to his 24-year-rule. Putin had offered to end the case and allow rebels to go to Belarus if they chose. In a speech last night, he said, “The promise I made will be fulfilled.” - [Read]( about Defense Minister Sergei Shoigu, the Putin ally and hunting buddy who’s the focus of Prigozhin’s rebellion. - Click [here]( for our rolling coverage of developments in Russia. - Wagner has played a central role in a campaign of [killings](, torture and rape in the Central African Republic, according to a report by US nonprofit the Sentry. As AI development blazes ahead, Big Tech says it wants more regulation, but the reality is [more complicated](. In the US, Google, Microsoft, IBM and OpenAI have asked lawmakers to oversee artificial intelligence to guarantee safety and competitiveness with China. But in the European Union, where politicians have approved draft legislation to put guardrails on generative AI, lobbyists for those same companies are fighting measures they say would needlessly constrict their activity. - US President Joe Biden unveiled plans to allocate nearly [$42.5 billion]( to build high-speed internet networks, touting it as a way his administration aimed to help all Americans — even those who did not vote for him — ahead of his 2024 reelection bid. Texas is once again bracing for a record spike in electricity demand as [110F heat]( (43C) spurs air-conditioning usage. An early heat wave has gripped the second most-populous US state, buckling highways, stressing oil refineries and pushing up natural gas prices. At least two deaths have been attributed to the searing temperatures and it’s only expected to get hotter as the week wears on. Donald Trump is heard discussing what he calls [military secrets]( in a recording of a 2021 meeting in New Jersey, obtained by CNN and outlets including the New York Times, that seems to indicate the former US president was holding a document regarding possible military action against Iran. Trump, who was indicted this month on federal charges of mishandling sensitive national security information, said on his Truth Social platform that the tape had been “illegally leaked” and exonerated him of wrongdoing. Best of Bloomberg Opinion - [The Russian Mutiny Through a Chinese Lens: Howard Chua-Eoan]( - [Higher Teacher Salaries Won’t Solve US Schools Crisis: Editorial]( - [This One Industry Is Desperate for Regulation: Lara Williams]( An attacker threw a hand grenade at a municipal building in northern Kosovo, [escalating tensions]( as the US and EU implore the country and Serbia to end a crisis that has triggered the worst violence in the last decade. The blast damaged two official cars in the northern part of Mitrovica overnight, the Koha news service reported. The Serb community, which has called for more autonomy and rejected oversight from Kosovar officials, is staging further rallies today. Explainers You Can Use - [Canada Wildfires Burn Carbon Offset Project, Raise ESG Concerns]( - [China’s Electric Vehicle Bubble Is Starting to Deflate]( - [Why Belarus Is Helping Russia in Its War in Ukraine: QuickTake]( India’s sweltering June temperatures, with reports of a spike in deaths among the most vulnerable, may be just a foretaste of what is to come. Scientists estimate climate change has made extreme heat 30 times more likely in the country and the World Bank has flagged it as likely to be one of the first places in the world where [heat waves]( breach the human survivability threshold. Along with the human cost, failure to truly tackle the heat also puts India’s powerhouse economy at risk. Tune in to Bloomberg TV’s Balance of Power at 5pm to 6pm ET weekdays with Washington correspondents [Annmarie Hordern]( and [Joe Mathieu](. You can watch and listen on Bloomberg channels and online [here](. News to Note - Israeli Prime Minister Benjamin Netanyahu plans to travel to China to meet Xi for [the first time]( in six years, according to the Times of Israel. - Japan’s ruling coalition parties are set to issue a statement reaffirming they will [cooperate in elections]( across most of the country, after a damaging fight in Tokyo ended their pact in the capital. - Australian Prime Minister Anthony Albanese’s [approval ratings have fallen]( to their lowest level since he won office in May 2022, amid mounting concerns over cost-of-living pressures. - Sierra Leone’s president, Julius Maada Bio, was heading for a [second five-year term](, according to partial returns from Saturday’s election, weathering an economic crisis that’s sparked violent protests. - South Koreans will become at least [a year younger]( tomorrow as the nation, which traditionally counts newborns as one year old, joins international standards. And finally ... Coffee chain Starbucks is planning to issue “clearer centralized guidelines” for displays after baristas kicked off a 150-store “[Strike With Pride](” event following union allegations that managers banned Pride-themed decor. The controversy has brought uncomfortable attention to Starbucks, which has worked to cultivate a progressive and inclusive brand. The union has frequently turned to tactics like coordinated walkouts and raising high-profile issues like LGBTQ rights as it tries to heighten public pressure on the company to curb alleged efforts to stifle labor organizers. People picket in front of a Starbucks store in Chicago on Friday. Photographer: Scott Olson/Getty Images Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. [Unsubscribe]( [Bloomberg.com]( [Contact Us]( Bloomberg L.P. 731 Lexington Avenue, New York, NY 10022 [Ads Powered By Liveintent]( [Ad Choices](