WEBVTT - Daybreak Weekend: IMF Meetings, Scholz in China, China Data Dump 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio news. 0:00:09.720 --> 0:00:12.280 This is Bloomberg day Break Weekend, our global look at 0:00:12.280 --> 0:00:15.040 the top stories and becoming week from our Daybreak anchors 0:00:15.040 --> 0:00:17.599 all around the world. Straight Ahead on the program, we'll 0:00:17.600 --> 0:00:20.119 look at what to expect from the spring meetings of 0:00:20.200 --> 0:00:24.360 the International Monetary Fund and World Bank. I'm Tom Busby 0:00:24.400 --> 0:00:25.000 in New York. 0:00:25.360 --> 0:00:28.720 I'm Stephen Carolyn London. We're looking ahead to German Chancellor 0:00:28.760 --> 0:00:32.720 Olaf Schultz's trip to China amid trade tensions with the EU. 0:00:33.200 --> 0:00:35.440 I'm Brian Curtis in Hong Kong. We look ahead to 0:00:35.479 --> 0:00:38.320 a ton of eco data in China, and as usual, 0:00:38.400 --> 0:00:40.640 we hunt for a catalyst that might fire up the 0:00:40.720 --> 0:00:42.000 Chinese economic kitchen. 0:00:42.479 --> 0:00:46.440 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg, 0:00:46.479 --> 0:00:48.960 E Loove the three Own, New York, Bloomberg ninety nine 0:00:49.000 --> 0:00:52.400 to one, Washington, DC, Bloomberg one O six one, Boston, 0:00:52.479 --> 0:00:57.280 Bloomberg nine sixty, San Francisco, DAB Digital Radio, London, Sirius 0:00:57.400 --> 0:01:00.280 XM one nineteen and around the world on Blue Bomberg 0:01:00.400 --> 0:01:03.040 Radio dot com and via the Bloomberg Business App. 0:01:07.040 --> 0:01:09.000 Good day to you. I'm Tom Busby, and we begin 0:01:09.040 --> 0:01:13.040 today's program with the Spring meetings of the International Monetary Fund, 0:01:13.120 --> 0:01:16.959 the IMF and the World Bank. This coming week, central 0:01:17.000 --> 0:01:19.959 bank leaders and finance ministers from around the world gather 0:01:20.040 --> 0:01:24.120 in Washington, d C. To discuss interest rates, monetary policy, 0:01:24.240 --> 0:01:27.040 and other issues of global concern. For more on what 0:01:27.120 --> 0:01:31.080 to expect, we're joined by Michael McKee Bloomberg International Economics 0:01:31.160 --> 0:01:34.280 and Policy correspondent Well Michael. In a written statement to 0:01:34.319 --> 0:01:37.479 be delivered this week, the Managing director of the IMF 0:01:37.560 --> 0:01:42.600 says it'll push its global growth forecast slightly higher, up 0:01:42.680 --> 0:01:45.560 one notch to three point two percent in twenty twenty five. 0:01:45.880 --> 0:01:50.560 That's despite stubbornly high inflation massive debt loads. What's behind 0:01:50.600 --> 0:01:52.600 that rather upbeat assessment. 0:01:52.880 --> 0:01:56.560 The fact that the economy of the United States in particular, 0:01:56.640 --> 0:01:58.680 but other economies around the world have been able to 0:01:58.720 --> 0:02:02.680 grow faster than people anticipated coming out of the recession. Now, 0:02:02.760 --> 0:02:05.480 we've talked many, many times about the weirdness of this 0:02:06.400 --> 0:02:10.680 pandemic recession and how it has upended all kinds of 0:02:10.760 --> 0:02:15.359 economic ideas and forecasts, and the IMF is just reflecting 0:02:15.880 --> 0:02:20.040 what reality is that, whether we understand it or not, 0:02:20.240 --> 0:02:22.600 things are better than we had thought. 0:02:22.560 --> 0:02:25.360 Well, the IMF predicting US growth this year two point 0:02:25.360 --> 0:02:27.600 one percent. It's not going to blow anyone away, but 0:02:27.639 --> 0:02:30.680 it's pretty steady and actually a drop in twenty twenty 0:02:30.680 --> 0:02:32.200 five one point seven percent. 0:02:32.240 --> 0:02:34.920 Why is that there's a feeling that we can't sustain 0:02:35.040 --> 0:02:37.239 this growth level? But I don't think there's a whole 0:02:37.280 --> 0:02:40.679 lot of confidence behind that prediction. The other thing that's 0:02:40.680 --> 0:02:45.360 important to realize about the world economic outlook, which is 0:02:45.400 --> 0:02:48.440 what the IMF will be putting out next week with 0:02:48.600 --> 0:02:54.400 actual numbers. And basically nobody pays any attention to the 0:02:54.480 --> 0:02:58.760 numbers they generate for the US and the European Union 0:02:58.880 --> 0:03:04.600 and the United Kingdom, Japan, China, because there are people, 0:03:04.680 --> 0:03:06.919 thousands of people paid around the world to do that. 0:03:07.280 --> 0:03:11.160 Where the IMF does get some interest is especially people 0:03:11.200 --> 0:03:15.400 who trade in emerging markets because those aren't covered as well, 0:03:15.600 --> 0:03:19.760 and they really do have the depth of information about 0:03:19.800 --> 0:03:22.359 what's going on in those countries. Is not a lot 0:03:22.360 --> 0:03:23.919 of value add to say the US is going to 0:03:23.960 --> 0:03:26.040 grow two point one percent when the FED is already 0:03:26.040 --> 0:03:28.200 saying it's going to grow two point one percent, and 0:03:28.240 --> 0:03:30.960 everybody on Wall Street is weighing in how much it's 0:03:30.960 --> 0:03:31.480 going to grow. 0:03:31.919 --> 0:03:34.760 So it's those sleeper countries, like you said, not Japan, 0:03:34.840 --> 0:03:39.160 not the Eurozone, not China, but the ones maybe on 0:03:39.280 --> 0:03:40.320 the back burner. 0:03:40.240 --> 0:03:42.640 Right, yeah, frontier markets, emerging markets. 0:03:42.920 --> 0:03:47.280 Okay, now, China forecasting pretty solid growth. That's not exactly 0:03:47.320 --> 0:03:49.640 a sluggish economy, is it. It's just not what we're 0:03:49.760 --> 0:03:51.200 used to seeing in China. 0:03:51.680 --> 0:03:54.360 Right They've started to run into the law of large 0:03:54.440 --> 0:03:57.680 numbers that it's really hard to keep improving at the 0:03:57.760 --> 0:04:00.360 same rate when you start to get as large as 0:04:00.400 --> 0:04:04.680 their economy is right now. They're also going through something 0:04:04.720 --> 0:04:08.920 of a recession there and real credit issue problems, so 0:04:10.160 --> 0:04:13.160 we don't know. There isn't a lot of faith put 0:04:13.200 --> 0:04:16.680 it that way in Chinese economic data, so we don't 0:04:16.720 --> 0:04:20.160 know for sure how fast they're growing, And it is 0:04:20.240 --> 0:04:24.360 interesting to see what the IMF will say because there 0:04:24.400 --> 0:04:27.599 are a lot of private sector economists who think China's 0:04:27.600 --> 0:04:30.320 growing a lot more slowly than the numbers that China 0:04:30.400 --> 0:04:35.240 will put out. So the only odd thing about it, 0:04:35.360 --> 0:04:37.560 or not odd thing about it, but the only thing 0:04:37.640 --> 0:04:40.719 is it's really hard to invest in China, so it's 0:04:40.760 --> 0:04:43.839 not like you're going to be using a lot of 0:04:43.880 --> 0:04:47.680 these numbers just to readjust your portfolio. 0:04:48.040 --> 0:04:48.400 Got it. 0:04:48.720 --> 0:04:50.680 Well, one thing that we know is going to be 0:04:50.680 --> 0:04:54.200 talked about in that is interest rates. We saw Christine 0:04:54.240 --> 0:04:57.360 Legard from the ECB just this week holding steady. We 0:04:57.400 --> 0:04:59.640 know here we're in sort of a holding pattern in 0:04:59.680 --> 0:05:01.760 the USA US on interest rates at least maybe eve 0:05:01.800 --> 0:05:04.520 until later in the year. What's going to be the 0:05:04.520 --> 0:05:06.240 big discussion, Well. 0:05:06.120 --> 0:05:08.600 You know, when they were meeting last fall, there was 0:05:08.640 --> 0:05:11.559 a lot of talk about interest rates eventually coming down 0:05:11.680 --> 0:05:15.800 because we've sort of gotten through the recession and we've 0:05:15.920 --> 0:05:19.080 sort of gotten through inflation and things were getting better. 0:05:19.120 --> 0:05:22.320 And now the conversation is going to be different because 0:05:22.560 --> 0:05:27.760 the major central banks are all stepping back from the 0:05:27.800 --> 0:05:31.400 precipice of rate cuts, with the exception of the ECB, 0:05:31.600 --> 0:05:36.040 because they're at this point still worried about the possibility 0:05:36.040 --> 0:05:40.680 of inflation resurging. The conversations at the IMF meetings World 0:05:40.720 --> 0:05:45.680 bank meetings will be basically around the idea of synchronicity. 0:05:45.720 --> 0:05:49.800 Will everybody be moving at once or will somebody move 0:05:49.960 --> 0:05:54.000 much faster than everyone else? And in her news conference 0:05:54.120 --> 0:05:57.000 last week, Christin Laguard was asked about that because what 0:05:57.040 --> 0:06:00.480 happens is if you cut your interest rate and others don't, 0:06:00.960 --> 0:06:05.960 then your currency is going to fall and it's just 0:06:06.000 --> 0:06:09.160 more attractive to invest in the higher rate countries. She 0:06:09.240 --> 0:06:11.320 did not want to comment on that, but you can 0:06:11.360 --> 0:06:13.640 bet that's going to be one of the discussion points 0:06:13.680 --> 0:06:16.839 behind closed doors at the meetings. 0:06:16.960 --> 0:06:20.000 And another one because of all this geopolitical risk out 0:06:20.040 --> 0:06:22.839 there in the Middle East, Ukraine and Russia. I mean, 0:06:23.120 --> 0:06:25.480 that has got to be also forefront on the agenda. 0:06:25.720 --> 0:06:27.240 What to do and when to do it. 0:06:27.640 --> 0:06:30.719 Well, this is an opportunity for a lot of discussions 0:06:30.800 --> 0:06:34.760 because the finance and foreign ministers from all over the 0:06:34.839 --> 0:06:38.839 world come and attend along with central bankers these meetings, 0:06:38.839 --> 0:06:42.200 and they have a lot of meetings together, and so 0:06:42.480 --> 0:06:45.880 that sort of thing will get discussed. You just can't 0:06:45.920 --> 0:06:52.000 expect any kind of answers or conclusions about what should 0:06:52.000 --> 0:06:54.840 be done, because if they haven't got it right now, 0:06:55.040 --> 0:06:58.160 just a few more meetings in Washington next week are 0:06:58.320 --> 0:06:59.640 going to make a difference. 0:07:00.279 --> 0:07:03.599 And the meetings are here. What role does the US 0:07:03.720 --> 0:07:07.120 play in these meetings and in the World Bank, in 0:07:07.160 --> 0:07:08.239 the IMF. 0:07:08.040 --> 0:07:10.440 Well, the US is the host. We're the biggest economy 0:07:10.480 --> 0:07:14.840 in the world, and we have perhaps the best infrastructure 0:07:14.960 --> 0:07:17.760 for bringing all of these people together from the disparate 0:07:18.480 --> 0:07:23.040 countries of the world. And so twice a year they 0:07:23.040 --> 0:07:25.760 come to the US and they hold the IMF and 0:07:25.800 --> 0:07:28.840 World Bank meetings. We're the headquarters for the IMF and 0:07:28.920 --> 0:07:32.400 the World Bank, so this is the place where they 0:07:32.480 --> 0:07:33.600 can get things done. 0:07:34.000 --> 0:07:36.080 Well, it's a lot to look forward to our thanks 0:07:36.080 --> 0:07:40.960 to Michael McKee, Bloomberg International Economics and Policy Correspondent. Next 0:07:40.960 --> 0:07:43.120 week we get a sense of how cautious consumers are 0:07:43.160 --> 0:07:46.000 being with their money. We get US retail sales data 0:07:46.040 --> 0:07:49.400 for March that's out on Monday. Also, how could this 0:07:49.520 --> 0:07:52.680 possibly impact FED policy going forward? And for more we're 0:07:52.720 --> 0:07:57.440 joined by Anawong, Bloomberg Chief US Economists. So Anna, what 0:07:57.480 --> 0:08:00.520 are you expecting to see in the March retail sales number? 0:08:00.960 --> 0:08:04.880 Right, we are expecting to see tapped number. I think 0:08:04.880 --> 0:08:09.360 there are various signs pointing to consumers being exhausted by 0:08:09.400 --> 0:08:12.760 the price increases over the past two years. We saw 0:08:12.800 --> 0:08:17.960 that a March purchases of cars has fallen sharply, and 0:08:18.040 --> 0:08:22.640 that was following a rebound in February after another slump 0:08:22.720 --> 0:08:26.080 in January. But if you smooth over the first three 0:08:26.160 --> 0:08:29.600 months of the year. It is clearly showing a slowdown 0:08:30.000 --> 0:08:33.439 and that's consistent with what we're seeing and also auto 0:08:33.440 --> 0:08:38.720 loans rejections. It's harder to get financing to auto loans 0:08:39.000 --> 0:08:43.080 given that auto loan rates are still pretty high. And 0:08:43.200 --> 0:08:46.520 for the category of retail that directly go into Q 0:08:46.600 --> 0:08:51.800 one GDP, it's the control groups sales which excludes vehicles, gasoline, 0:08:51.840 --> 0:08:56.800 food service, and building materials. We are expecting a tappit 0:08:57.000 --> 0:09:01.160 zero point two percent gains that's versus zero percent in 0:09:01.200 --> 0:09:04.880 the previous month. I think that overall the US consumption 0:09:05.000 --> 0:09:07.880 will be growing at about the two percent pace in 0:09:08.000 --> 0:09:11.280 the first quarter, and that's a slow down from the 0:09:11.320 --> 0:09:14.120 more than three percent in the fourth quarter. And I 0:09:14.160 --> 0:09:17.040 think that as we go into the year, to slow 0:09:17.080 --> 0:09:19.080 down will further be more evident. And by the end 0:09:19.160 --> 0:09:21.880 of the year, we're only expecting a one percent quarterly 0:09:21.920 --> 0:09:24.439 growth in PCE spending, so. 0:09:24.480 --> 0:09:28.720 A steady decline in spending. Do you attribute this mostly 0:09:28.760 --> 0:09:32.520 to inflation? I mean everywhere you go everything costs more. 0:09:32.559 --> 0:09:34.600 Every time you go to the store, you go out 0:09:34.640 --> 0:09:38.000 to dinner, you look at a sticker on a car, everything. 0:09:38.320 --> 0:09:43.599 Yeah, it's both a combination of inflation and also increasing 0:09:43.920 --> 0:09:48.760 job in security layoffs announcements have risen in news headlines 0:09:49.000 --> 0:09:52.280 and that naturally could make people more cautious, and that 0:09:52.360 --> 0:09:56.160 would how that translate to spending behavior is that people 0:09:56.200 --> 0:09:57.960 would think, Okay, I don't know if I'm on the 0:09:58.000 --> 0:10:01.719 chopping block next, I better spend as much and so 0:10:01.920 --> 0:10:05.760 saving rates should overall increase as a result of this caution. 0:10:06.360 --> 0:10:10.880 So in the March CPI report that was released last week, 0:10:11.080 --> 0:10:16.199 we saw that a few consumer categories prices fall. So 0:10:16.240 --> 0:10:22.079 for example, recreational goods and consumer electronics, where two categories 0:10:22.160 --> 0:10:25.320 in the core goods category. That's a very sharp decline 0:10:25.360 --> 0:10:29.800 and prices, and I think that reflects that the discretionary 0:10:29.920 --> 0:10:34.240 component of consumer budget is being slimmed down because they 0:10:34.240 --> 0:10:37.880 have to pay you know, twenty percent higher for auto insurance, 0:10:37.920 --> 0:10:42.120 and auto insurance is non negotiable. It's a big part 0:10:42.240 --> 0:10:45.520 of consumer spending because everybody needs to drive a car. 0:10:45.960 --> 0:10:48.240 And as a result, what we are seeing is less 0:10:48.240 --> 0:10:51.440 spending on things that could be cut and that will 0:10:51.480 --> 0:10:53.600 show up in the retail as well. That I think 0:10:53.679 --> 0:10:59.239 the retail goods component discretionary good spending, we'll see a decline, 0:10:59.440 --> 0:11:03.280 whereas most of spending is coming from services and which 0:11:03.320 --> 0:11:07.880 is benefiting from the stock rally in the past couple months, 0:11:07.960 --> 0:11:12.200 and people who are primarily spending and services are they 0:11:12.559 --> 0:11:15.959 are the people who are benefiting from the market rally, 0:11:15.960 --> 0:11:19.959 which they tend to be older people baby boomers though 0:11:20.360 --> 0:11:22.240 that's a two track economy for you. 0:11:22.679 --> 0:11:24.600 Well, another thing I want to talk to you about, 0:11:24.640 --> 0:11:27.520 non discretionary is the price at the gas pump, which 0:11:27.559 --> 0:11:29.960 has been going up steadily since the start of the year, 0:11:30.080 --> 0:11:33.320 triple A predicting gas will average four bucks a gallon 0:11:33.559 --> 0:11:36.800 by the summer. How will that affect budgets and spending? 0:11:37.200 --> 0:11:41.040 So, gasoline and food, especially for the lower income household, 0:11:41.080 --> 0:11:44.320 account for more than a fifth of their budget, so 0:11:44.760 --> 0:11:47.960 it will definitely squeeze the budget. It's not a very 0:11:47.960 --> 0:11:51.800 comforting thing for a household. The only thing that could 0:11:51.880 --> 0:11:56.079 offset that somewhat is the hike and minimum wage across 0:11:56.120 --> 0:12:00.400 many states early in the year. So in California we 0:12:00.559 --> 0:12:04.240 just saw early this month in April that fast food 0:12:04.840 --> 0:12:09.360 workers minimum wage have been increased by by almost twenty percent. 0:12:09.800 --> 0:12:13.320 And in Florida, for example, early this year, the state 0:12:14.080 --> 0:12:17.800 hiked minimum wage by seventeen percent, So there's still hope 0:12:17.800 --> 0:12:21.520 for the lower income household who could see you know, 0:12:21.760 --> 0:12:24.360 ten to twenty percent jump in their wages. 0:12:24.960 --> 0:12:27.880 March retail sales data out on Monday, and our thanks 0:12:27.920 --> 0:12:32.320 to Anawong Bloomberg Chief US economist, coming up on Bloomberg 0:12:32.400 --> 0:12:35.800 day Break weekend. Why Germany's chancellor is heading to China. 0:12:36.200 --> 0:12:50.720 I'm Tom Busby and this is Bloomberg. This is Bloomberg 0:12:50.760 --> 0:12:52.880 day Break weekend, our global look ahead at the top 0:12:52.920 --> 0:12:55.959 stories for investors in the coming week. I'm Tom Busby 0:12:55.960 --> 0:12:58.480 in New York. Up later in our program a look 0:12:58.480 --> 0:13:01.720 at some key economic data come out of China. But first, 0:13:01.880 --> 0:13:06.400 as China's economy struggles to recover, diplomatic relations become more 0:13:06.400 --> 0:13:09.920 crucial on the heels of US Treasury Secretary Janet Yellen's 0:13:10.000 --> 0:13:14.000 visit to Beijing last week. German Chancellor Olaf Schultz set 0:13:14.000 --> 0:13:16.560 to visit the region in the coming days. For more, 0:13:16.640 --> 0:13:19.000 Let's go to London and bring in Bloomberg Daybreak Europe 0:13:19.000 --> 0:13:20.439 Banker Stephen. 0:13:20.120 --> 0:13:23.520 Carroll Tom Janet Yellen went to China with the message 0:13:23.559 --> 0:13:27.439 that Beijing's manufacturing drive is a threat to other economies. 0:13:27.679 --> 0:13:31.400 Her comments at times strongly worded, we're respectfully received by 0:13:31.400 --> 0:13:34.480 her hosts, but aren't likely to result in a policy shift. 0:13:34.880 --> 0:13:37.959 So as Germany's Chancellor Olaf Schultz makes the trip to Beijing, 0:13:38.040 --> 0:13:41.160 can he hope for any more? European countries have taken 0:13:41.200 --> 0:13:43.920 a different approach to their relationship with China versus what 0:13:43.960 --> 0:13:47.280 the United States is doing. EU commissioned President our Slavanderlin 0:13:47.320 --> 0:13:51.319 has described the strategy as de risking rather than decoupling. 0:13:51.840 --> 0:13:55.080 That hasn't stopped the EU launching a competition investigation into 0:13:55.160 --> 0:13:58.800 Chinese subsidies for green industries. Olaf Schultz will be conscious 0:13:58.800 --> 0:14:02.320 that German companies are a major exporter to China, so 0:14:02.400 --> 0:14:05.520 he must be cautious. A recent survey by the German 0:14:05.600 --> 0:14:08.760 Chamber of Commerce in China highlighted the challenges that many 0:14:08.760 --> 0:14:13.240 Western firms have mentioned before. Two thirds of those operating 0:14:13.280 --> 0:14:16.320 in the country say they face unfair competition in the market, 0:14:16.600 --> 0:14:19.160 a problem that threatens to push up their costs and 0:14:19.280 --> 0:14:22.640 a road profit margins. Schultz's discussions in China will also 0:14:22.680 --> 0:14:26.560 be set against a backdrop of geopolitical unrest. Continue. Tensions 0:14:26.560 --> 0:14:29.320 in the Middle East and Russia's invasion of Ukraine are 0:14:29.320 --> 0:14:32.680 set to feature heavily during the upcoming G seven Foreign 0:14:32.720 --> 0:14:35.880 Ministers meeting in Italy. I've been discussing the implication of 0:14:35.920 --> 0:14:39.160 Schultz's visit to China and that meeting with Bloomberg's EMEA 0:14:39.160 --> 0:14:42.560 and THES director Rosalind Matheson. I started by asking her 0:14:42.760 --> 0:14:46.320 how different Scholtz's time in China will be to that 0:14:46.560 --> 0:14:49.240 of the trip by US Treasury Secretary Janet Yellen. 0:14:49.720 --> 0:14:52.680 Well, it'll be similar, but also a bit different, as 0:14:52.720 --> 0:14:56.640 you say, because the relationship between China and Germany is 0:14:56.680 --> 0:14:59.920 a bit different to the relationship between China and the US, 0:15:00.360 --> 0:15:03.480 although there are similarities in terms of the challenges around 0:15:03.920 --> 0:15:06.240 the business environment, and so you can expect that the 0:15:06.280 --> 0:15:10.240 German Chancellor Olive Schultz will be echoing some of what 0:15:10.360 --> 0:15:14.520 Janet Yellen was saying on her recent trip, the challenges 0:15:14.680 --> 0:15:19.080 for German companies operating their clarity around that business environment, 0:15:19.560 --> 0:15:23.360 certain tier around supply chains specifically, though for him, the 0:15:23.440 --> 0:15:26.560 issue of electric vehicles will probably come up again, and 0:15:26.600 --> 0:15:31.000 the tensions over Chinese support for their companies and the 0:15:31.040 --> 0:15:35.000 broader EU probe that's going on into that support. So 0:15:35.080 --> 0:15:38.560 there'll be some similarities around the messaging that's going to 0:15:38.560 --> 0:15:42.600 come from Olive Schultz, but also Germany's tended to take 0:15:43.080 --> 0:15:46.760 a slightly more careful line about the overall relationship. The 0:15:46.840 --> 0:15:51.640 US has been willing to criticize China more overtly on 0:15:51.680 --> 0:15:55.680 the human rights front, for example, and over what they 0:15:55.680 --> 0:15:58.960 see is its militarization of areas like the South China 0:15:59.000 --> 0:16:03.160 Sea with Taiwan. That doesn't mean that Olave Schultz won't 0:16:03.480 --> 0:16:08.200 bring those things up, but Germany is traditionally has just 0:16:08.320 --> 0:16:11.240 been a bit more cautious about some of their rhetoric 0:16:11.320 --> 0:16:16.040 because they really need the economic relationship with China to work. 0:16:16.280 --> 0:16:18.120 Yeah, I mean, the President of the European Commissioners used 0:16:18.120 --> 0:16:20.880 this expression de risking, not decoupling when it comes to 0:16:20.920 --> 0:16:25.600 the relationship with China is I'll love Schultz likely to 0:16:25.640 --> 0:16:29.000 step outside of that in his comments as he's muting officials. 0:16:29.400 --> 0:16:32.400 Well, so far, he's really maintained by and large the 0:16:32.840 --> 0:16:35.960 sort of the tone taken by his predecessor, Angela Merkle, 0:16:36.680 --> 0:16:38.840 and she was very much about, you know, similarly with 0:16:38.880 --> 0:16:42.200 other countries like Russia, I would add, keeping the dialogue going, 0:16:42.400 --> 0:16:47.080 keeping the conversation going, preserving the economic and trade relationship 0:16:47.160 --> 0:16:50.480 out of the view that if you bind yourselves economically 0:16:50.960 --> 0:16:53.760 and through investment and trade, then you're more likely to 0:16:53.760 --> 0:16:55.640 be able to behave better with each. 0:16:55.480 --> 0:16:57.080 Other on the political side. 0:16:57.200 --> 0:16:59.280 And that's very much the sort of the tone and 0:16:59.320 --> 0:17:03.000 philosophy adopted by Olaf Schultz since he came to power, 0:17:03.040 --> 0:17:04.840 and of course as someone who is very much part 0:17:04.920 --> 0:17:08.640 of the Merkele era himself, he has gotten a bit harder, 0:17:08.680 --> 0:17:11.520 i would say, than Angelo Merkele did on the political front. 0:17:11.960 --> 0:17:15.199 But that's also because Germany is under pressure within Europe 0:17:15.240 --> 0:17:16.480 to take that harder ligne. 0:17:16.520 --> 0:17:19.520 You see France, you see the UK, you see the 0:17:19.560 --> 0:17:20.240 EU as a. 0:17:20.200 --> 0:17:24.639 Whole, pressing China quite heavily on its behavior over trade, 0:17:24.840 --> 0:17:29.120 over market access, over its tech companies, and over its 0:17:29.160 --> 0:17:31.800 behavior around things like human rights, and Germany has been 0:17:31.840 --> 0:17:34.200 seen as a bit of an outlier, so he's been 0:17:34.200 --> 0:17:37.159 pushed quite heavily by his French counterpart Emmanual Macron to 0:17:37.200 --> 0:17:37.520 do that. 0:17:37.600 --> 0:17:39.720 So you might see that slightly harder. 0:17:39.520 --> 0:17:43.600 Tone, but generally he's been consistent with his predecessor's policy. 0:17:43.680 --> 0:17:45.639 Because part of this trip will involve a love Schultz 0:17:45.680 --> 0:17:48.840 also visiting German companies that operate in China, survey from 0:17:48.840 --> 0:17:50.960 the German Chamber of Commerce and China found that two 0:17:51.119 --> 0:17:53.720 thirds of German companies that operate in the country, so 0:17:53.800 --> 0:17:57.120 they face unfair competition in the market. I mean, realistically, 0:17:57.119 --> 0:17:59.399 does Olof Schultz have any leverage attack or something like that, 0:17:59.560 --> 0:18:02.119 given the you know, even Janet Yellen seemed of difficulty 0:18:02.200 --> 0:18:03.800 in getting any actual movement. 0:18:04.440 --> 0:18:05.120 Very unlikely. 0:18:05.640 --> 0:18:08.080 If Johanet Yellen can't succeed, I wouldn't imagine that all 0:18:08.080 --> 0:18:13.040 Love Schultz will. I mean, those surveys that show that companies, 0:18:13.119 --> 0:18:16.360 you know, German companies or British companies or American companies 0:18:16.800 --> 0:18:20.520 are complaining about the environment in China are very very common, 0:18:21.119 --> 0:18:23.920 and that sort of figure is not surprising because those 0:18:24.000 --> 0:18:28.160 concerns are longstanding about the ability to have clarity around 0:18:28.240 --> 0:18:31.320 market access and Chinese support for their own industry and 0:18:31.400 --> 0:18:34.280 so on. So that's not going to I think affect 0:18:34.400 --> 0:18:36.800 ol Love Schultz on his trip, although it does sort 0:18:36.800 --> 0:18:40.000 of show again the need to really be showing that 0:18:40.080 --> 0:18:44.120 he's listening to those concerns. But as a Chinese leadership 0:18:44.240 --> 0:18:47.440 going to take their cues from Germany, probably not. What 0:18:47.600 --> 0:18:51.119 they are interested potentially doing is bifurcating a bit, because 0:18:51.600 --> 0:18:53.719 China's quite good at trying to play countries a bit 0:18:53.800 --> 0:18:56.080 against each other. And what they might do is, you know, 0:18:56.400 --> 0:18:58.600 they'll have a certain tone with Germany that they won't 0:18:58.640 --> 0:19:01.200 have with the US for exams. They'll be keen to 0:19:01.359 --> 0:19:04.919 keep Germany probably closer in the tent right now, because 0:19:05.359 --> 0:19:08.480 that's to their advantage to have that kind of sense 0:19:08.520 --> 0:19:11.639 of potential disunity in Europe over a China policy. So 0:19:11.840 --> 0:19:15.000 it's all about playing those kind of games really, and 0:19:15.200 --> 0:19:18.360 so they're not going to change their policy simply because 0:19:18.440 --> 0:19:21.359 Olave Scholtz asks them to. They certainly wouldn't do it 0:19:21.400 --> 0:19:24.200 even if Janet Yellen asks them to, because they're really 0:19:24.240 --> 0:19:28.120 playing their own game there. It'll be interesting to see, how, 0:19:28.440 --> 0:19:31.560 you know, whether they try and keep Germany peeled off 0:19:31.600 --> 0:19:33.240 from the rest of the pack, because. 0:19:32.960 --> 0:19:35.639 I mean, there is something in common that China and 0:19:35.760 --> 0:19:38.359 Germany have is weakness in their economies as well for 0:19:38.480 --> 0:19:41.399 slightly different reasons. Are there matters of common ground that 0:19:41.480 --> 0:19:45.640 we could see sort of flagship announcements or issues where 0:19:46.000 --> 0:19:47.800 they emerge at some positive cooperation. 0:19:48.480 --> 0:19:50.520 Well, certainly it's not just a one way street. 0:19:50.600 --> 0:19:53.159 And that's a really important point that you make I mean, 0:19:53.200 --> 0:19:58.200 obviously Germany in the US need China economically and for business, 0:19:58.280 --> 0:20:02.000 but China also needs them for business. The Chinese economy 0:20:02.119 --> 0:20:05.000 has been quite weak of late. It's showing a few 0:20:05.119 --> 0:20:08.000 green shoots at the moment, but certainly it's nowhere on 0:20:08.119 --> 0:20:11.000 the level that it was some years ago pre pandemic, 0:20:11.280 --> 0:20:14.320 and Cgping is very consciously aware of that. He does 0:20:14.480 --> 0:20:17.399 need his economy to be stable, and so there are 0:20:17.520 --> 0:20:20.440 some mutual interests there. You can imagine there'll be lots 0:20:20.480 --> 0:20:22.840 of positive rhetoric in a way like there was with 0:20:22.960 --> 0:20:27.320 Janet Yellen, also about the relationship about being open for business, 0:20:27.440 --> 0:20:32.360 about China being ready to engage with these companies that obviously, 0:20:32.600 --> 0:20:35.720 you know, doesn't necessarily reflect reality, but there'll be that 0:20:35.880 --> 0:20:38.680 rhetoric and that sense of mutual need. You can also 0:20:38.760 --> 0:20:42.520 imagine there'll be conversations around areas of mutual interest globally 0:20:42.800 --> 0:20:45.960 between Germany and China. And one key one there obviously 0:20:46.080 --> 0:20:49.520 is Russia's actions in Ukraine with the war there. You 0:20:49.560 --> 0:20:52.000 can imagine there big conversation around that. There'll beg conversation 0:20:52.600 --> 0:20:55.000 around the Middle East and the war in Gaza, There'll 0:20:55.000 --> 0:20:58.080 be conversations around disruptions to shipping and global supply chains. 0:20:58.400 --> 0:21:00.680 So some of those broader topics will definite they come up. 0:21:00.640 --> 0:21:02.560 Of course, and some of those issues are also going 0:21:02.600 --> 0:21:04.879 to feature with the other big geopolitical event in the 0:21:04.920 --> 0:21:07.680 coming days, which is the G seven Foreign Minister's meeting 0:21:07.760 --> 0:21:11.320 that's happening in Italy. What are we likely to hear 0:21:11.440 --> 0:21:13.960 on things like Russia Ukraine at that meeting. 0:21:14.800 --> 0:21:19.000 We'll certainly going to expect general expressions of support for Ukraine, 0:21:19.040 --> 0:21:21.880 of unity because the G seven has been very unified 0:21:21.920 --> 0:21:25.560 in general around the need to keep supporting Ukraine, and 0:21:25.640 --> 0:21:29.000 what you may see, of course is disagreements over in 0:21:29.119 --> 0:21:32.000 what way to keep supporting Ukraine, because of course the 0:21:32.119 --> 0:21:34.640 US is sitting on a very very big aid package 0:21:34.720 --> 0:21:37.920 for months that's unlikely to be unlocked anytime soon, in 0:21:38.000 --> 0:21:40.400 a sense that maybe Europe is left holding the can 0:21:41.440 --> 0:21:45.080 more than they did previously for military and financial support 0:21:45.560 --> 0:21:47.919 for Ukraine. So that's definitely going to be one topic 0:21:48.080 --> 0:21:51.080 for conversation, is that they all need to be pulling 0:21:51.119 --> 0:21:53.280 their weight when it comes to that. There'll probably be 0:21:53.400 --> 0:21:56.840 conversations with Ukraine on the table in terms of the 0:21:56.960 --> 0:21:59.159 future of the war. Is there a need at some 0:21:59.359 --> 0:22:02.959 point to crack open the door to negotiations with Russia. 0:22:03.160 --> 0:22:06.200 Does there have to be some sense of getting a 0:22:06.320 --> 0:22:10.000 deal as this war goes on and Ukraine certainly is 0:22:10.320 --> 0:22:11.920 on the back foot a bit at least on the 0:22:12.000 --> 0:22:15.760 ground inside Ukraine itself, So that will probably be the 0:22:15.840 --> 0:22:18.720 two major topics when it comes to Ukraine. And then 0:22:18.800 --> 0:22:21.240 that broord a conversation around how Europe can beef up 0:22:21.280 --> 0:22:23.359 its own defense and its own defense spending. 0:22:23.920 --> 0:22:27.040 That's our EMEA News director Roslind Mathieson knows Roz was 0:22:27.040 --> 0:22:29.320 telling us geopolitical tensions high on the agenda at the 0:22:29.400 --> 0:22:33.240 G seven meeting. The wars in Ukraine and Gaza led 0:22:33.240 --> 0:22:36.400 to calls for countries to increase defense spending, and Bloomberg 0:22:36.440 --> 0:22:39.840 Economics recently estimated that an increase to four percent of 0:22:39.960 --> 0:22:43.080