Chinese inflation moderates as the impact of zero-Covid weighs on the economy.

The United Kingdom, Japan, and Italy have agreed to co-develop one of the world's most powerful fighter jets by 2035 as part of their first-ever trilateral military initiative aimed at bolstering their defense capabilities in the face of growing security threats from China and Russia.

Parallel to the development of the Global Combat Air Programme is a rival Franco-German-Spanish initiative, which has been hampered by political and industrial disputes amongst the parties.

Under the agreement reached on Friday, the United Kingdom and Italy will combine their existing Future Combat Air programme, known as Tempest, with Japan's F-X initiative. The three nations will split the development costs, which are projected to be in the tens of billions of dollars, although the precise contributions will be determined based on a combined evaluation of costs and national budgets.

The leaders of the three nations said in a joint statement, "By working together in a spirit of equitable cooperation, we are sharing the expenses and rewards of this investment in our people and technologies." Importantly, the program will support the sovereign ability of all three nations to design, produce, and upgrade cutting-edge air combat capabilities for the foreseeable future.

The agreement, which required years of negotiation, represents a first for Japan. Historically, it has cooperated exclusively with US partners for large-scale military equipment, but to prepare for the prospect of war with China over Taiwan, it has sought closer security connections with a variety of friends.

Prime Minister Fumio Kishida stated this week that the government aims to allocate 43tn ($315bn) for its five-year defense budget, a 57 percent increase over the previous time.