Good morning. Today we’re covering:

• The EU’s trade plan for Trump 2.0

• Larry Fink’s long succession at BlackRock

• The US solar giant seeking to cut China’s clean energy lead

But first: Chinese state-owned financial institutions are clawing back bonuses and cutting pay as Beijing broadens its scrutiny of the finance industry to include mutual funds and Hong Kong-based bankers.

Some leading state-owned mutual fund managers on the mainland have been told to return the portion of their annual salary that exceeded a cap of Rmb2.9mn ($400,000), according to two fund managers who received guidelines in the wake of an onsite audit in June. The payment of this year’s bonuses had been delayed, one said.

Hong Kong-based executives at units affiliated to state-owned Citic Group on mainland contracts have been told to return bonuses, two people briefed on the situation said. Executives at the investment unit of Hong Kong’s state-owned conglomerate Everbright Group have also been told to return bonuses received in recent years, two people familiar with the decision said.

The latest moves “show that Hong Kong, because of its close economic connections, will not be immune to mainland China’s financial and regulatory reform”, said Gary Ng, a senior economist at Natixis. Read the full story.

Here’s what I’m keeping tabs on today:

• Economic data: Japan reports unemployment data and trade statistics.

• Japan rate decision: Whether the Bank of Japan raises interest rates at this month’s monetary policy meeting is a “close call”, analysts said. (Reuters)

• Philippines: The country’s foreign and defence ministers hold a 2+2 dialogue with their US counterparts for the first time in Manila.

• Vietnam: EU foreign affairs chief Josep Borrell visits Hanoi, where he will meet Vietnamese authorities to discuss foreign affairs, security and climate policy.

• Results: Nomura, Japan Exchange Group, BP, Microsoft and Airbus are among the companies reporting.

Five more top stories

1. The EU is preparing a two-step trade strategy to deal with Donald Trump if he wins a second term as president. Brussels will offer a quick deal the Republican candidate returns to the White House, and targeted retaliation if he opts for punitive tariffs instead.

2. McDonald’s has suffered its first global drop in sales since 2020, as consumers around the world balk at the higher cost of burgers, fries and soft drinks. The fast-food chain’s chief executive said customers were “more discriminating” after years of price rises.

3. The US and Germany have urged their citizens to leave Lebanon amid fears of a full-blown war between Israel and Hizbollah. Israeli Prime Minister Benjamin Netanyahu vowed “severe” retaliation for a rocket attack blamed on the Lebanese militant group that killed 12 people on Saturday.

4. India needs to give more business to its private defence suppliers, according to the chief financial officer of industrial conglomerate Larsen & Toubro. CFO R Shankar Raman told the FT that the company’s production abilities far exceeded government orders and characterised the state-owned corporations that dominate defence procurement as “not very efficient”. Read the full interview.

• UK targets India trade deal: Britain’s Labour government set out its priorities for new trade deals yesterday, with a six-strong group of Gulf countries and India at the top of the list.

5. French authorities think far-left groups could have been behind a mass sabotage of the country’s high-speed rail lines on the day of the Paris Olympics opening ceremony. France remained on guard yesterday after a separate incident affected telecom lines, creating localised mobile and fixed line outages.

The Big Read

BlackRock’s Larry Fink has been grooming a new top team for more than a decade. But the recent departures of several second- and third-tier executives, as well as a substantial acquisition and a reorganisation in January that the 71-year-old head described as “transformational”, have increased anxiety internally and among investors about the future of the $10.6tn money manager.

We’re also reading . . . 

• Paris Olympics: Here’s how US star gymnast Simone Biles returned to a “good mental spot” three years after her shock withdrawal from most of her events at the Tokyo Games.

• Venezuela: Authoritarian leader Nicolás Maduro’s flawed victory in Sunday’s presidential election won’t solve his problems, writes Michael Stott.

• Who are the Druze?: A deadly rocket attack in the Israeli-occupied Golan Heights has thrust the religious minority into the centre of an escalating conflict between Israel and Hizbollah.

Chart of the day

This month, US panel-maker First Solar opened the country’s largest solar research facility on a soyabean farm in Ohio. The objective: to commercialise the next generation of technologies to harness power from the sun before Beijing does.

Take a break from the news

David Honigmann recounts the rich and enjoyable moments during the world music festival’s first two days. From Tanzanian grooves and Malian funk to Vietnamese ska, Womad brings music from less familiar parts of the world.

Additional contributions from Camille De Guzmán and Jonathan Moules