WEBVTT - Daybreak Weekend: US Tech, UK PM Visits China, Apple Earnings 0:00:00.240 --> 0:00:07.680 Bloomberg Audio Studios, Podcasts, radio news. 0:00:10.680 --> 0:00:14.000 This is Bloomberg Daybreak Weekend, our global look at the 0:00:14.000 --> 0:00:16.640 top stories in the coming week from our Daybreak anchors 0:00:16.760 --> 0:00:19.400 all around the world. Straight Ahead on the program, we'll 0:00:19.400 --> 0:00:22.600 look ahead to earnings from some of tech's magnificent seven. 0:00:22.760 --> 0:00:24.680 I'm Nathan Hager in Washington. 0:00:24.760 --> 0:00:27.880 I'm Caroline Hedkit in London, where we're asking whether UK 0:00:27.920 --> 0:00:31.840 five Minister Kastarma can throw frosty relations with China. 0:00:32.000 --> 0:00:35.159 I'm Doug Chrisner looking at what Apple earnings will indicate 0:00:35.159 --> 0:00:35.879 about Asia. 0:00:38.159 --> 0:00:42.200 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:42.240 --> 0:00:45.920 eleven three year, New York, Bloomberg ninety nine to one, Washington, DC, 0:00:46.440 --> 0:00:51.559 Bloomberg ninety two nine, Boston, DAB Digital Radio, London, Syrias, 0:00:51.720 --> 0:00:55.240 XM one twenty one, and around the world on Bloomberg Radio, 0:00:55.280 --> 0:00:57.520 dot Com and the Bloomberg Business app. 0:01:02.600 --> 0:01:05.399 Good day to you. I'm Nathan Hager. We begin today's 0:01:05.440 --> 0:01:08.920 program with the Federal Reserve. Jay Powell and company begin 0:01:09.000 --> 0:01:13.040 their first monetary policy meeting of twenty twenty six on Tuesday, 0:01:13.360 --> 0:01:16.160 with the first rate decision of the year to come Wednesday. 0:01:16.280 --> 0:01:19.000 So what should we expect as we map out policy 0:01:19.360 --> 0:01:21.160 for the rest of the year. Let's bring in Michael 0:01:21.200 --> 0:01:24.200 McKee for more on this, our international economics and policy 0:01:24.200 --> 0:01:27.920 correspondent for Bloomberg Radio and Television. Mike, I guess, as 0:01:27.920 --> 0:01:30.200 far as the January decision goes, would probably be a 0:01:30.200 --> 0:01:33.880 big shock if we got another rate cut this week, right, 0:01:33.959 --> 0:01:35.480 So what should we be looking for. 0:01:36.000 --> 0:01:38.440 I think this is gonna be another one where the 0:01:38.440 --> 0:01:40.840 FED is sort of going to be anxious to make 0:01:40.840 --> 0:01:43.720 as little news as possible, which I don't think they're 0:01:43.760 --> 0:01:46.720 going to be able to avoid, but there is no 0:01:47.760 --> 0:01:51.480 rate cut in train, so they're unlikely to do that. 0:01:51.480 --> 0:01:53.960 That would be a shock. There's been no news that 0:01:54.040 --> 0:01:58.120 would justify that at this point, and all the speakers 0:01:58.160 --> 0:02:00.800 going into the blackout period, we're saying, you know, we 0:02:00.840 --> 0:02:03.320 don't think we need to kind anything. So I think 0:02:03.360 --> 0:02:05.800 you'll get a unanimous decision no to sense this time 0:02:06.600 --> 0:02:10.320 for a hold, and then the question always, as always, 0:02:10.360 --> 0:02:13.000 moves on to what do they do at the next meeting, 0:02:13.000 --> 0:02:16.919 which is in March. I think they're going to avoid 0:02:17.880 --> 0:02:23.639 making any kind of specific forecast because they don't know 0:02:24.320 --> 0:02:26.280 what the data are going to show. We're still coming 0:02:26.320 --> 0:02:30.440 out of this as the government shutdown, data shortage, so 0:02:30.960 --> 0:02:33.080 they won't have a lot of information. 0:02:33.600 --> 0:02:36.480 Well, let's talk about the information that they have gotten 0:02:36.560 --> 0:02:39.840 thus far. I mean, we have seen some more labor 0:02:39.880 --> 0:02:42.880 market reports, we've gotten non farm payrolls, you've gotten the 0:02:42.880 --> 0:02:46.079 Fed's preferred gage of inflation as well. What does that 0:02:46.160 --> 0:02:49.480 tell you about what the economy looks like going into 0:02:49.480 --> 0:02:50.320 twenty twenty six. 0:02:50.639 --> 0:02:52.560 Well, if you're looking at it in terms of the 0:02:52.560 --> 0:02:56.600 Fed's dual mandate, you do have inflation. The PCEE numbers 0:02:56.639 --> 0:03:03.600 came out last week at looking at two point eight percent, 0:03:03.800 --> 0:03:07.200 which is up from the month prior. But now these 0:03:07.200 --> 0:03:11.120 are November numbers. The December numbers won't come out yet 0:03:11.520 --> 0:03:14.480 for a couple of weeks, and in the December numbers, 0:03:15.040 --> 0:03:18.280 the expectation is inflation will rise again to three percent. 0:03:19.160 --> 0:03:20.839 And then when you look at the jobs numbers, it's 0:03:21.160 --> 0:03:25.040 the unemployment rate went down last month and Java's claims 0:03:25.200 --> 0:03:29.519 have stayed extremely low. So at worst, maybe you say 0:03:29.560 --> 0:03:33.800 for the moment, the labor market has stabilized, and so 0:03:34.040 --> 0:03:38.160 there's not really an economic argument for cutting rates. There's 0:03:38.200 --> 0:03:43.240 also a feeling that given the tax cut bill, we're 0:03:43.240 --> 0:03:47.480 going into tax season now, people will get higher refunds 0:03:47.520 --> 0:03:50.560 than they have in prior years and that will feed 0:03:50.600 --> 0:03:53.400 some spending into the economy and keep it a little 0:03:53.400 --> 0:03:57.720 bit stronger. So there's no real need to cut rates 0:03:57.760 --> 0:03:58.520 at the moment now. 0:03:58.680 --> 0:04:01.240 It's interesting because at the of last year, there was 0:04:01.280 --> 0:04:04.600 so much focus on the idea of cracks in the 0:04:04.680 --> 0:04:07.240 labor market. Now, as you say, we are seeing this 0:04:07.320 --> 0:04:10.600 sort of sign of stabilization. While it seems like this 0:04:10.800 --> 0:04:13.840 last mile of getting inflation back down to the Fed's 0:04:13.880 --> 0:04:18.360 two percent target just seems to look like an uphill climb. 0:04:18.520 --> 0:04:22.760 Could we be seeing the Fed's focus shift now from 0:04:22.920 --> 0:04:25.360 the job market to inflation once again. 0:04:25.880 --> 0:04:28.839 I think they will move back they were emphasizing the 0:04:28.880 --> 0:04:30.760 labor market. I think they'll move back to the middle 0:04:31.200 --> 0:04:33.720 at this point and waiting for more data. Next week 0:04:33.760 --> 0:04:37.239 we won't have the December PCE numbers, so they'll still 0:04:37.279 --> 0:04:42.560 be looking to guess at what the numbers are going 0:04:42.640 --> 0:04:47.000 to be, and even if it's going up to three percent, 0:04:47.080 --> 0:04:49.599 that's going to concern them. So I think they try 0:04:49.640 --> 0:04:52.480 to keep their options open with that and not emphasize 0:04:52.480 --> 0:04:54.839 the labor market just as much. But the problem with 0:04:55.480 --> 0:04:58.760 both sides of the man data and the data are 0:04:58.520 --> 0:05:02.320 the uncertainty that the Trump administration has caused has not 0:05:02.400 --> 0:05:05.960 gone away. We just went through a week of We're 0:05:05.960 --> 0:05:08.640 going to put big tariffs on Europe. Oh, no, we're not, 0:05:09.839 --> 0:05:14.560 And so companies don't know what to do. They're kind 0:05:14.560 --> 0:05:16.960 of hunkered down at the moment. They don't want to 0:05:16.960 --> 0:05:18.680 fire a lot of people if the economy is going 0:05:18.720 --> 0:05:21.000 to pick up. But if the economy is going to 0:05:21.040 --> 0:05:24.040 slow down or we're going to have inflation issues, then 0:05:24.080 --> 0:05:26.680 they're going to try to control costs and you might 0:05:26.720 --> 0:05:30.120 see some layoffs. So at this point we're kind of 0:05:30.120 --> 0:05:31.880 in this no man's land that we've been in for 0:05:31.920 --> 0:05:32.360 a year. 0:05:33.120 --> 0:05:35.680 You talked about the Fed maybe not wanting to make 0:05:35.800 --> 0:05:39.239 much news at this meeting. Of course, this is coming 0:05:39.279 --> 0:05:43.000 at a time where the Central Bank is facing continued 0:05:43.080 --> 0:05:46.080 pressures outside the committee room. This is going to be 0:05:46.320 --> 0:05:50.040 Chair Powell's first policy meeting since he announced that he's 0:05:50.120 --> 0:05:53.960 under a Justice Department investigation. How much could that weigh 0:05:54.000 --> 0:05:55.200 on this decision? Will it? 0:05:56.240 --> 0:05:58.240 I don't think it weighs on the decision at all, 0:05:58.920 --> 0:06:04.960 because the of Powell is sort of vengeance by the 0:06:05.000 --> 0:06:08.000 President and the rest of the members of the Open 0:06:08.000 --> 0:06:11.760 Market Committee aren't going to think it means anything, and 0:06:11.800 --> 0:06:14.920 they will ignore it. But what will be interesting is, 0:06:15.200 --> 0:06:17.560 since the FED is not expected to do anything exciting 0:06:17.640 --> 0:06:20.760 or surprise anybody with monetary policy, is the first question 0:06:20.920 --> 0:06:23.240 going to be about the decision or is it going 0:06:23.279 --> 0:06:27.200 to be about the president's efforts to atara and feather 0:06:27.320 --> 0:06:30.440 the FED chair. There probably will be a lot of 0:06:30.480 --> 0:06:35.280 focus on that, and my guess is that Powell will 0:06:35.320 --> 0:06:40.359 try to shut that down, maybe say I've already spoken 0:06:40.440 --> 0:06:45.000 my piece on this, maybe something about the importance of 0:06:45.040 --> 0:06:47.760 FED independence, But I don't think he wants to spend 0:06:47.800 --> 0:06:52.440 the entire news conference in a shouting match with the President. 0:06:52.839 --> 0:06:54.559 We know you're going to be there for that news 0:06:54.600 --> 0:06:58.080 conference and for the decision as well, with the January 0:06:58.080 --> 0:07:02.440 policy decision of the Federal resis coming up later on Wednesday. 0:07:02.440 --> 0:07:05.280 Thank you for this, Mike. As always, it's Michael McKee, 0:07:05.279 --> 0:07:09.600 international economics and policy correspondent from Bloomberg Radio and Television. 0:07:09.920 --> 0:07:12.600 We move next to a slew of corporate earnings. The 0:07:12.640 --> 0:07:15.080 focus this week turns to some of the biggest names 0:07:15.120 --> 0:07:17.880 in tech. We're going to hear from Tesla, Microsoft, meta 0:07:17.920 --> 0:07:22.040 platforms all on Wednesday. We'll also hear from Apple after 0:07:22.080 --> 0:07:25.080 the closed Thursday, let's bring in Bloomberg Tech co anchor 0:07:25.240 --> 0:07:28.040 Ed Ludlow to get a set for the Magnificent seven 0:07:28.240 --> 0:07:30.840 earnings kickoff. Great to have you here. 0:07:31.000 --> 0:07:31.080 Ed. 0:07:31.360 --> 0:07:33.840 Let's start with Tesla because we heard from the CEO 0:07:34.120 --> 0:07:36.440 Elon Musk at the World Economic Forum this past week. 0:07:36.480 --> 0:07:39.440 He was talking about the optimist robots. Is that where 0:07:39.440 --> 0:07:41.280 the focus is going to be for investors when it 0:07:41.320 --> 0:07:42.760 comes to the earnings. 0:07:43.080 --> 0:07:45.040 Yeah, when it comes to earnings, like you have to 0:07:45.120 --> 0:07:47.160 kind of unpick all of the noise that comes from 0:07:47.160 --> 0:07:49.360 Elon Musk in the interim. So what happened at the 0:07:49.440 --> 0:07:52.360 end of twenty twenty five is Tesla had its second 0:07:52.400 --> 0:07:56.320 consecutive sales decline on an annual basis. Basically, they're not 0:07:56.320 --> 0:07:59.000 selling as many evs and there's lots of evidence that 0:07:59.440 --> 0:08:02.960 musks medical activities last year impacted that we had the 0:08:03.080 --> 0:08:06.040 end of federal credits in the United States and other 0:08:06.120 --> 0:08:09.480 factors you know about the economy and competition. So when 0:08:09.480 --> 0:08:11.840 it comes to earnings, you kind of look for, well, 0:08:12.160 --> 0:08:14.880 was that story true. What is Tesla's explanation for it? 0:08:14.920 --> 0:08:17.840 Because it's the first chance that they really talk about it. 0:08:18.160 --> 0:08:20.360 Then there's all the big picture stuff, and you know, 0:08:20.400 --> 0:08:23.280 we say on Bloomberg Tech all the time, Must's greatest 0:08:23.320 --> 0:08:26.320 skill is keeping all the investors looking to the horizon 0:08:26.600 --> 0:08:30.400 on those future projects, which are robotaxi and humanoid robots. 0:08:30.640 --> 0:08:33.000 So when it comes to the core business, though, what's 0:08:33.120 --> 0:08:36.679 the show me story for Elon Musk and for Tesla 0:08:36.840 --> 0:08:40.000 when it comes to EV demand the fact that we 0:08:40.080 --> 0:08:43.640 don't have those incentives and we're seeing that draw down 0:08:43.800 --> 0:08:46.360 in demand across the EV sector. What's that going to 0:08:46.440 --> 0:08:48.160 mean for Tesla when it comes to the earnings. 0:08:48.480 --> 0:08:51.079 Yeah, again, it's a cutting through the noise kind of thing, 0:08:51.160 --> 0:08:53.960 especially when we're reporting the news on it. But what 0:08:54.160 --> 0:08:58.400 Tesla has done more recently inconsistently is in their earnings 0:08:58.440 --> 0:09:01.720 deck a growth target. They will either say or they 0:09:01.760 --> 0:09:05.720 won't say, we expect fifty percent compound annual growth rates. 0:09:05.960 --> 0:09:09.080 And that's the only indication that we get to tell 0:09:09.160 --> 0:09:11.600 us that they have firm data and firm belief that 0:09:11.640 --> 0:09:14.920 they will or won't grow. Historically, that's been the story 0:09:14.960 --> 0:09:17.920 for many years. Grew at fifty percent a year, and 0:09:17.960 --> 0:09:20.199 then it stopped and as I just said two straight 0:09:20.280 --> 0:09:24.439 years of declining growth, declining sales growth, so you look 0:09:24.480 --> 0:09:27.679 into the deck. But again, you know, it depends on 0:09:27.720 --> 0:09:30.760 the questions the analysts asked. It depends on what tests does. 0:09:30.800 --> 0:09:33.280 A bit differently, the retail investors get to ask questions 0:09:33.320 --> 0:09:35.880 that they submit through an online portal, and lots of 0:09:35.880 --> 0:09:38.560 those often don't even worry about the day to day 0:09:38.600 --> 0:09:41.480 business of selling evs. They just care about those shiny things. 0:09:41.679 --> 0:09:44.680 Yeah, speaking of shiny things, let's move on to some 0:09:44.720 --> 0:09:48.160 of the other companies reporting earnings this week, including Meta Platforms. 0:09:48.200 --> 0:09:52.040 Of course, they've gone all in on AI spending right now. 0:09:52.760 --> 0:09:55.840 Is there such a thing as too much AI capex 0:09:55.880 --> 0:09:58.120 When it comes to Meta. 0:09:57.440 --> 0:10:01.640 Quite the opposite. The expectation is that capital expenditures across 0:10:01.760 --> 0:10:04.920 Meta and then the hyperscalers. So Meta, as you know, 0:10:05.160 --> 0:10:07.800 is a social media company that's also very interested in 0:10:07.880 --> 0:10:11.800 artificial intelligence, but it does not operate in the business 0:10:11.880 --> 0:10:16.000 of renting computer capacity to others. Those are cloud providers 0:10:16.320 --> 0:10:19.680 in other words, Amazon, Microsoft, Google, and to a lesser extent, Oracle. 0:10:20.120 --> 0:10:23.760 But metas spending on its own data centers is so 0:10:23.840 --> 0:10:27.000 significant that we put it in that bucket, and the 0:10:27.040 --> 0:10:30.440 story's not changed from last quarter or last year. We 0:10:30.520 --> 0:10:34.400 track capital expenditures across all those names, and the market 0:10:34.440 --> 0:10:38.040 wants to see confidence of spending. The basic logic is 0:10:38.320 --> 0:10:41.200 if capital expenditures are in the range that investors forecast, 0:10:41.240 --> 0:10:43.880 they're higher than they were last year, then that shows 0:10:43.880 --> 0:10:46.800 a commitment to spending, because the companies believe on the 0:10:46.840 --> 0:10:50.040 other side of building more data centers comes revenue growth, 0:10:50.040 --> 0:10:52.520 comes profit from all their work, particularly in AI. 0:10:52.920 --> 0:10:55.280 And we're going to hear from one of those hyperscalers. 0:10:55.360 --> 0:10:58.920 You just mentioned Microsoft. Of course there as your cloud business. 0:10:58.960 --> 0:11:02.319 It seems like that's been going gangbusters for several quarters now. 0:11:02.320 --> 0:11:04.640 So what's the expectation when it comes to Microsoft. 0:11:05.200 --> 0:11:08.360 Yeah, Microsoft can be a pretty straightforward story. Again, we 0:11:08.360 --> 0:11:10.880 look at its capital expenditures because as one of the 0:11:10.880 --> 0:11:13.760 biggest data center operators and owners, you want to see 0:11:13.760 --> 0:11:16.880 their commitment to doing it. But then in terms of segments, 0:11:16.920 --> 0:11:21.280 it's just about the top line growth of that as 0:11:21.320 --> 0:11:24.120 your cloud computing business, and you know it's in the 0:11:24.160 --> 0:11:28.000 thirties and plus or minus a few percent against street consensus, 0:11:28.040 --> 0:11:33.280 makes a really big impression on how AI. The investment 0:11:33.320 --> 0:11:35.319 starts with the chips that go in data centers, you 0:11:35.360 --> 0:11:37.000 have to spend a lot of money on that. But 0:11:37.040 --> 0:11:39.600 when you start to show sales growth in cloud, it's 0:11:39.679 --> 0:11:41.400 evidence that that payoff is happening. 0:11:41.720 --> 0:11:44.120 So when we start to look at these earnings, Z, 0:11:44.600 --> 0:11:47.000 what are you expecting when it comes to this ongoing 0:11:47.000 --> 0:11:50.960 debate about AI valuations and you know circular spending in 0:11:51.000 --> 0:11:52.000 the space as well. 0:11:52.840 --> 0:11:55.439 Yeah, but the issue then takes us back to growth. 0:11:55.559 --> 0:11:59.719 The valuations are being justified by that growth narrative. And 0:12:00.120 --> 0:12:02.080 you know, if you read on the Bloomberg terminal, the 0:12:02.120 --> 0:12:05.680 team on equities in particular point out that actually that 0:12:05.880 --> 0:12:08.000 growth if we take the MAGS seven as a bucket, 0:12:08.080 --> 0:12:10.120 or we take the higher growth tech stock s and 0:12:10.120 --> 0:12:13.400 P five hundred, it isn't expected to be where it 0:12:13.520 --> 0:12:16.160 was in more recent quarters. So that gives you the 0:12:16.160 --> 0:12:19.040 potential for upside, of course, but it also means that 0:12:19.880 --> 0:12:22.080 they're going to have to tell a pretty good story 0:12:22.240 --> 0:12:25.960 to convince investors that where valuations are currently, these are 0:12:26.000 --> 0:12:27.679 stocks worth putting money into. 0:12:27.920 --> 0:12:30.280 You're going to see that story play out later on 0:12:30.320 --> 0:12:32.160 this week. Thank you for this and again great have 0:12:32.280 --> 0:12:35.280 you on with us. That's Bloomberg Tech co anchor Ed 0:12:35.360 --> 0:12:38.600 Ludlow and coming up on Bloomberg Daybreak weekend, we'll look 0:12:38.600 --> 0:12:41.839 at whether the UK's Prime Minister Keir Starmer can thought 0:12:42.000 --> 0:12:46.920 frosty relations with China. I'm Nathan Hager and this is Bloomberg. 0:12:58.000 --> 0:13:01.000 This is Bloomberg Daybreak Weekende will book ahead at the 0:13:01.000 --> 0:13:03.760 top stories for investors in the coming week, and Nathan 0:13:03.760 --> 0:13:06.439 Hager in Washington up later in the program will look 0:13:06.440 --> 0:13:09.120 ahead to how earnings from Apple may have been affected 0:13:09.160 --> 0:13:12.880 by business in Asia. But first in the coming days, 0:13:13.040 --> 0:13:16.439 UK Prime Minister Keir Starmer will become his nation's first 0:13:16.520 --> 0:13:19.320 leader to travel to China in more than seven years. 0:13:19.640 --> 0:13:24.559 Starmer seeking to improve diplomatic ties as several geopolitical points 0:13:24.600 --> 0:13:27.680 of tension remained between the two countries. So how will 0:13:27.720 --> 0:13:31.520 Starmer's planned visits to Shanghai and Beijing play out? For 0:13:31.640 --> 0:13:33.960 more Let's go to London and bring in Bloomberg Daybreak 0:13:33.960 --> 0:13:36.320 Europe anker Caroline Hepger Nathan. 0:13:36.360 --> 0:13:39.240 The last British premier to visit China was Treisa May 0:13:39.360 --> 0:13:42.640 back in twenty eighteen. Since then, relations between the two 0:13:42.679 --> 0:13:47.199 countries have worsened. After the crackdown on pro democracy protests 0:13:47.200 --> 0:13:51.400 in Hong Kong, a spate of espionage and cyber attack allegations, 0:13:51.760 --> 0:13:55.960 and Beijing's support for Russia's war in Ukraine. Despite the 0:13:56.000 --> 0:13:59.800 frosty state of affairs, Starmer is seeking something of a thaw. 0:14:00.240 --> 0:14:03.920 His optimistic approach is one he defended during a recent 0:14:04.000 --> 0:14:06.400 speech in which he called for the UK to take 0:14:06.480 --> 0:14:10.920 a pro business approach to China, whilst recognizing that it 0:14:11.040 --> 0:14:13.280 poses a threat to national security. 0:14:14.840 --> 0:14:20.280 I am clear that no transformation today carries greater consequence 0:14:21.640 --> 0:14:26.320 than the rise of China. It is a nation of 0:14:26.960 --> 0:14:34.200 immense scale, ambition and ingenuity, a defining force in technology, 0:14:34.440 --> 0:14:40.680 in trade and global governance. So our response will not 0:14:40.720 --> 0:14:46.480 be driven by fear nor softened by illusion. It will 0:14:46.480 --> 0:14:52.840 be grounded in strength, clarity and sober realism, in line 0:14:52.880 --> 0:14:57.560 with our wider international approach, and guided by our conviction. 0:14:58.480 --> 0:15:01.640 That was the UK Prime Minister Kirs Starmer speaking there. 0:15:02.000 --> 0:15:05.360 So can the British government draw a line under what 0:15:05.440 --> 0:15:09.480 has been a turbulent period for UK China relations or 0:15:09.800 --> 0:15:14.600 could you o political tensions and US influence maybe change things? 0:15:14.880 --> 0:15:18.080 To think about this, I'm joined by Bloomberg's UK political correspondent, 0:15:18.120 --> 0:15:21.880 Ellen Milligan and our chief Asia correspondent was in Matheson. 0:15:22.000 --> 0:15:24.440 Welcome to both of you, and then can I start 0:15:24.480 --> 0:15:28.320 with you. There was a time when under the previous government, 0:15:28.360 --> 0:15:31.720 the Conservatives, we were talking about the Golden Age in 0:15:31.880 --> 0:15:34.880 UK China relations. I remember that, but it does seem 0:15:34.920 --> 0:15:36.680 like a long time ago, doesn't it. 0:15:36.920 --> 0:15:40.200 Yes, So do you remember when David Cameron and Gguping 0:15:40.360 --> 0:15:44.800 went to that kind of village pub and pulled pints chips. 0:15:45.080 --> 0:15:47.760 I mean, we just really haven't seen that in the 0:15:47.840 --> 0:15:50.560 last ten years, and you were saying that, I mean 0:15:50.880 --> 0:15:54.160 really kind of that short lived Golden age. You know, 0:15:54.800 --> 0:15:59.600 billions promised in Chinese investment, much closer ties break down 0:15:59.640 --> 0:16:05.280 and sad over initially over that crackdown on activists in 0:16:05.320 --> 0:16:10.760 Hong Kong, a former British colony, but also over espionage 0:16:10.840 --> 0:16:14.040 and cyber attack allegations, and then more recently in the 0:16:14.120 --> 0:16:18.320 last few years China support for Russia. So what Kiss 0:16:18.320 --> 0:16:22.320 Starmer's administration has long complained of is that under the 0:16:22.400 --> 0:16:25.560 Tories there was this kind of back and forth between 0:16:25.760 --> 0:16:28.640 the Golden era and then a complete almost freeze of 0:16:28.680 --> 0:16:32.520 ties under particularly Boris Johnson, and that they wanted to 0:16:32.560 --> 0:16:36.840 get back to a more cooperative approach, but where they 0:16:36.880 --> 0:16:40.440 would still challenge China where they needed to in. 0:16:40.480 --> 0:16:44.000 Terms of Kiirs Stalma's recent foreign policy ideas. Then the 0:16:44.040 --> 0:16:47.320 effort to try to set the record straight on Labour's 0:16:47.440 --> 0:16:52.120 China strategy. What is their view, because there does seem 0:16:52.160 --> 0:16:55.760 to be still a push pull, a strong push pull 0:16:55.840 --> 0:16:59.520 in the UK about what attitude to adopt to Beijing. 0:17:00.080 --> 0:17:00.240 Yeah. 0:17:00.280 --> 0:17:03.440 I mean kir Starmer came in promising clarity over their 0:17:03.520 --> 0:17:06.000 China policy and I think we've had anything but that. 0:17:06.880 --> 0:17:09.560 I mean when he entered office in twenty twenty four, 0:17:09.600 --> 0:17:13.280 there was quite a quick succession in terms of high 0:17:13.320 --> 0:17:16.920 profile visits to China. David Lammi, who was the Foreign 0:17:16.920 --> 0:17:20.159 Secretary at the time now Deputy Prime Minister, the Chancellor 0:17:20.240 --> 0:17:23.359 Rachel Reeves both went over there and that pretty much 0:17:23.560 --> 0:17:27.200 stopped when Donald Trump and re entered the White House 0:17:27.840 --> 0:17:34.400 in January last year. I think Kirstarmer's foreign policy priorities 0:17:34.440 --> 0:17:37.520 were very much about establishing of relationships with the US, 0:17:38.520 --> 0:17:43.920 avoiding of the most harsh trade tariffs Ukraine, and also 0:17:44.040 --> 0:17:47.080 the reset that he has been pursuing with the European Union. 0:17:47.640 --> 0:17:52.000 And Donald Trump is of of famous China hawk and 0:17:52.119 --> 0:17:56.000 so no visits really happened, and if they did happen, 0:17:56.000 --> 0:17:58.160 they were very much under the radar and Britain didn't 0:17:58.160 --> 0:18:02.000 shout about them. And I think what has happened in 0:18:02.040 --> 0:18:05.240 the last few months, Macron did a hyper file visit 0:18:05.320 --> 0:18:09.399 to Bishi, Mattz, the German Chancellor, has one planned, and 0:18:09.440 --> 0:18:12.680 crucially Trump had his own bilateral meeting with Uguping and 0:18:13.000 --> 0:18:16.080 has also planned a state visit, and I think Starmer 0:18:16.200 --> 0:18:18.560 felt as though that paved the way for him to 0:18:18.600 --> 0:18:21.000 be able to kind of soften relations with China. 0:18:21.080 --> 0:18:26.280 Now to Okay Rozu in Asia, how does China see 0:18:26.359 --> 0:18:29.639 its relationship with the UK? Maybe sort of historically and 0:18:29.720 --> 0:18:31.000 also now, Well. 0:18:30.920 --> 0:18:33.080 It depends how far back you want to go, because 0:18:33.119 --> 0:18:37.320 there is a lot of history there. In more recent history, 0:18:37.320 --> 0:18:40.240 it's probably been more down than up obviously from that 0:18:40.400 --> 0:18:42.639 moment of the beer and the beer and the pub 0:18:43.800 --> 0:18:46.639 after that, but it's never been easy in the past 0:18:46.680 --> 0:18:49.320 in a ways, just to find this relationship from the 0:18:49.440 --> 0:18:53.400 China side. You know, they now see themselves, no doubt 0:18:53.480 --> 0:18:57.240 as the senior partner, shifting from one hundred years ago, 0:18:57.320 --> 0:19:03.320 the aftermath of the Opium Wars, which very wounding to China, 0:19:03.400 --> 0:19:06.040 you know, they manage an arrangement to get the return 0:19:06.800 --> 0:19:10.600 of Hong Kong. But China probably sees the UK still 0:19:10.640 --> 0:19:13.480 having a sense of a proprietary air, you know, weighing 0:19:13.560 --> 0:19:16.760 in particularly on Hong Kong issues, protests there, the rule 0:19:16.800 --> 0:19:20.439 of law. We've seen Kiss Starmer criticize the conviction of 0:19:20.480 --> 0:19:23.480 the former Hong Kong media mogul jimmy Li. So a 0:19:23.560 --> 0:19:25.879 sense in China's eyes that the UK is still willing 0:19:25.920 --> 0:19:29.440 to interfere in its business in a different way perhaps 0:19:29.520 --> 0:19:33.560 than during the Opium Wars, but it's still there. And 0:19:33.880 --> 0:19:35.880 for China, what they want to do is put this 0:19:36.080 --> 0:19:39.960 relationship to focus really on business and investment and trade 0:19:39.960 --> 0:19:43.640 because that's where China wants to benefit. And for them, 0:19:43.680 --> 0:19:47.360 the UK is a useful market as they also want 0:19:47.400 --> 0:19:50.600 to diversify in trade. So for them now they probably 0:19:50.600 --> 0:19:54.440 see this relationship as very transactional, but probably themselves is 0:19:54.480 --> 0:19:56.960 a bit more of the senior partner. Yeah. 0:19:57.200 --> 0:20:00.760 Is the UK seen as a strategic who by China 0:20:00.880 --> 0:20:03.439 or is it simply as a kind of trading partner? 0:20:03.480 --> 0:20:07.200 Do you think was my dut of China sees many, 0:20:07.400 --> 0:20:11.400 if any Western nations as strategic allies. It might see 0:20:11.400 --> 0:20:15.000 them as useful, but not as allies, perhaps since of 0:20:15.000 --> 0:20:17.840 dividing and conquering in the West a bit so splitting 0:20:17.880 --> 0:20:21.960 Europe and the UK off somewhat from the US, maximizing 0:20:22.000 --> 0:20:25.399 the tensions that the US has right now with Europe 0:20:25.440 --> 0:20:29.200 and the UK on different matters. So probably as a 0:20:29.600 --> 0:20:34.359 useful partner, not strategic ally, a transactional partner. Definitely a 0:20:34.400 --> 0:20:38.320 trading partner as long as the totality of that relationship 0:20:38.359 --> 0:20:41.600 is still to China's advantage. So net net, are its 0:20:41.600 --> 0:20:44.080 companies better off? Is it selling the sorts of things 0:20:44.080 --> 0:20:46.359 it wants to? Does it have a foothold in the 0:20:46.400 --> 0:20:49.960 industry as it wants? But that's probably how China would 0:20:50.000 --> 0:20:52.760 see it as less a strategic ally because it're not 0:20:52.800 --> 0:20:55.720 partnering on security matters. On defense, I mean, the UK 0:20:55.840 --> 0:20:59.080 has actually been quite critical of China for its tacit 0:20:59.119 --> 0:21:02.960 support of Russia for example in Ukraine was economic support 0:21:03.040 --> 0:21:06.520 for Russia. But certainly China would see them as a 0:21:06.640 --> 0:21:07.840 useful partner. Potentially. 0:21:08.920 --> 0:21:13.280 We have seen the likes of Rachel Reeves and David 0:21:13.359 --> 0:21:17.960 Lammy visiting China. Have they managed to make any progress? 0:21:18.280 --> 0:21:21.840 There was no substantial outcome from either of those visits. 0:21:22.000 --> 0:21:25.439 I think those initial visits were more about no one's 0:21:25.480 --> 0:21:28.760 been in years, so let's go and make sure that 0:21:28.800 --> 0:21:32.840 we get diplomacy back on track. More progress has been 0:21:32.840 --> 0:21:35.840 made recently. Peter Karl, the Tech Secretary when he's now 0:21:35.880 --> 0:21:41.080 Business Secretary, went out late last year and they've resumed 0:21:41.080 --> 0:21:44.679 this economic trade dialogue which had not taken place I 0:21:44.680 --> 0:21:48.440 think since before Boris Johnson. But you know, it means 0:21:48.440 --> 0:21:51.320 that Kisdom has almost put more pressure on himself with 0:21:51.400 --> 0:21:53.880 this state visit coming up. I mean the way he 0:21:54.119 --> 0:21:57.400 describes China as this is like the most consequential global 0:21:57.440 --> 0:22:02.960 shift to the UK of them, and so the stakes 0:22:03.000 --> 0:22:04.080 are really high for him. 0:22:05.119 --> 0:22:10.040 Roz does China want the UK to pick between the 0:22:10.160 --> 0:22:13.320 US and China? What is their perspective? I mean America 0:22:13.400 --> 0:22:15.200 has a view or mat doesn't. 0:22:14.880 --> 0:22:18.120 It They do, And for China they probably realize it's 0:22:18.119 --> 0:22:21.359 not realistic to try and say the UK has to 0:22:21.440 --> 0:22:23.960 pick a side there, but they can take advantage because 0:22:24.000 --> 0:22:26.800 that's what they like to do, is to spot an 0:22:26.840 --> 0:22:31.439 opportunity and to maximize ruptures and tensions. You know, and 0:22:31.480 --> 0:22:34.520 that sense just said the US led global order is 0:22:34.640 --> 0:22:38.879 changing into something more fractured into spheres of influence Trump 0:22:38.880 --> 0:22:42.159 in the Americas, China in Asia and so on, and 0:22:42.240 --> 0:22:45.639 exploiting that when it comes to trade, because it's clear 0:22:46.720 --> 0:22:48.719 Europe and the UK are acknowledging they need to do 0:22:48.800 --> 0:22:52.360 business with China. As Ellen was saying, there's a lot 0:22:52.400 --> 0:22:55.399 at stake for STARMA in this visit, you know, to 0:22:55.560 --> 0:22:58.760 manage the relationship and to walk those lines. And they'll 0:22:58.800 --> 0:23:02.199 be aware of that too him coming in, and they 0:23:02.320 --> 0:23:05.520