1 00:00:02,840 --> 00:00:05,400 Speaker 1: This is Bloomberg day Break Weekend, our global look at 2 00:00:05,440 --> 00:00:07,640 Speaker 1: the top stories in the coming week from our day 3 00:00:07,640 --> 00:00:10,360 Speaker 1: Break anchors all around the world. It's straight ahead on 4 00:00:10,400 --> 00:00:13,000 Speaker 1: the program, a look at the US labor market with 5 00:00:13,119 --> 00:00:14,880 Speaker 1: the February jobs report. 6 00:00:15,120 --> 00:00:16,840 Speaker 2: I'm Tom Busby in New York. 7 00:00:16,960 --> 00:00:19,040 Speaker 3: I'm Stephen Carol in London, where we're looking ahead to 8 00:00:19,079 --> 00:00:22,400 Speaker 3: the UK government's budget announcement and a key political moment 9 00:00:22,560 --> 00:00:23,360 Speaker 3: ahead of the elections. 10 00:00:23,360 --> 00:00:24,360 Speaker 2: To you later this year. 11 00:00:24,480 --> 00:00:26,840 Speaker 4: I'm Brian Curtis in Hong Kong. We look ahead to 12 00:00:26,920 --> 00:00:30,479 Speaker 4: the National People's Congress meetings in Beijing next week. What 13 00:00:30,600 --> 00:00:34,240 Speaker 4: sort of prescriptions will they have to fix the Chinese ECONORESS. 14 00:00:37,200 --> 00:00:40,320 Speaker 5: That's all straight ahead on Bloomberg Daybreak Weekend. 15 00:00:40,600 --> 00:00:42,800 Speaker 2: The business news you need to wrap up. 16 00:00:42,680 --> 00:00:46,800 Speaker 1: Your week, Available on Apple, Spotify, the Bloomberg Business Happen 17 00:00:47,000 --> 00:00:48,760 Speaker 1: everywhere you get your podcasts. 18 00:00:53,560 --> 00:00:54,960 Speaker 2: Good day to you. I'm Tom Busby. 19 00:00:55,040 --> 00:00:57,080 Speaker 1: We begin today's program with a look ahead to the 20 00:00:57,160 --> 00:01:00,600 Speaker 1: February jobs report here in the US and the state 21 00:01:00,760 --> 00:01:02,240 Speaker 1: of the US labor market. 22 00:01:02,280 --> 00:01:03,640 Speaker 2: For a preview, We're joined by. 23 00:01:03,480 --> 00:01:08,280 Speaker 1: Michael McKee, Bloomberg International Economics and Policy Correspondence. All Right, 24 00:01:08,280 --> 00:01:11,960 Speaker 1: well after a big upside surprise in January, three hundred 25 00:01:12,000 --> 00:01:14,880 Speaker 1: and fifty three thousand jobs added. What are you expecting 26 00:01:14,920 --> 00:01:16,800 Speaker 1: to see for February. 27 00:01:16,680 --> 00:01:19,800 Speaker 6: Sort of a return to what was considered somewhat normal. 28 00:01:20,640 --> 00:01:23,880 Speaker 6: The forecast at this point is for one hundred and 29 00:01:23,920 --> 00:01:27,399 Speaker 6: eighty thousand jobs. That may change ten twenty thousand either 30 00:01:27,440 --> 00:01:30,959 Speaker 6: way as we get more data in between now and 31 00:01:31,120 --> 00:01:35,080 Speaker 6: next Friday, but basically that's roughly where we have been 32 00:01:35,280 --> 00:01:38,800 Speaker 6: for the past year two years. The revisions hired to 33 00:01:38,880 --> 00:01:43,839 Speaker 6: December and January were quite a surprise, and nobody thinks 34 00:01:43,880 --> 00:01:47,600 Speaker 6: that that can be sustained. But if it can, you 35 00:01:47,800 --> 00:01:49,800 Speaker 6: watch the bond markets move. 36 00:01:50,520 --> 00:01:53,240 Speaker 1: But the unemployment rate expected to hold steady three point 37 00:01:53,240 --> 00:01:56,880 Speaker 1: seven percent. That would be about two years under four percent. 38 00:01:57,120 --> 00:01:59,080 Speaker 6: It would be one month over two years. Yes, two 39 00:01:59,120 --> 00:02:03,680 Speaker 6: hours a month, and that is probably well, it's close 40 00:02:03,760 --> 00:02:06,840 Speaker 6: to a record nineteen sixty eight. I think when half 41 00:02:06,880 --> 00:02:10,200 Speaker 6: of American men were serving in Vietnam, so there weren't 42 00:02:10,200 --> 00:02:13,720 Speaker 6: as many people to work. That was the last time 43 00:02:13,760 --> 00:02:17,160 Speaker 6: we saw anything like this. The question is is if 44 00:02:17,200 --> 00:02:21,400 Speaker 6: the unemployment rate stays that low, do we see any 45 00:02:21,480 --> 00:02:25,280 Speaker 6: inflationary impact from that? So we'll be looking at average 46 00:02:25,280 --> 00:02:28,720 Speaker 6: hourly earnings very closely. They were up six tenths of 47 00:02:28,800 --> 00:02:31,560 Speaker 6: a percent in January. Now that there may have been 48 00:02:31,600 --> 00:02:35,040 Speaker 6: some distortions in the data that led to that, but 49 00:02:35,080 --> 00:02:37,560 Speaker 6: they're only expected to be up two tenths of a percent. 50 00:02:37,919 --> 00:02:40,760 Speaker 6: So if that's the case for February, then we can 51 00:02:40,880 --> 00:02:43,440 Speaker 6: have big job gains and the FED isn't going to 52 00:02:43,480 --> 00:02:44,120 Speaker 6: worry about it. 53 00:02:44,840 --> 00:02:47,760 Speaker 1: And I mean, let's face it, there are challenges right 54 00:02:47,800 --> 00:02:50,840 Speaker 1: now to the labor market, not just AI jobs and 55 00:02:50,880 --> 00:02:54,480 Speaker 1: automation jobs, but we've seen a lot of corporate layoffs 56 00:02:54,520 --> 00:02:58,040 Speaker 1: being announced. Big ones Cisco Systems that's four thousand jobs, 57 00:02:58,080 --> 00:03:01,840 Speaker 1: as to Lord three, one hundred, Nike, Expedia. I mean, 58 00:03:02,280 --> 00:03:05,399 Speaker 1: none of these or most of them are not tech companies. 59 00:03:05,880 --> 00:03:07,760 Speaker 1: So there is a change going on. 60 00:03:08,320 --> 00:03:10,960 Speaker 6: Well, there's a change going on, but it is not 61 00:03:11,240 --> 00:03:13,960 Speaker 6: going to be as bad as it appears. If we 62 00:03:14,000 --> 00:03:17,760 Speaker 6: see a huge wave of layoffs, that would be one thing. 63 00:03:17,800 --> 00:03:20,880 Speaker 6: But what we're seeing is a lot of companies sort 64 00:03:20,880 --> 00:03:24,560 Speaker 6: of right sizing what they think they need for the 65 00:03:25,000 --> 00:03:30,079 Speaker 6: months going forward. And what happens is that companies always 66 00:03:30,200 --> 00:03:35,760 Speaker 6: announce layoffs either in a press release or they do 67 00:03:35,800 --> 00:03:38,960 Speaker 6: it as part of their earnings, but they don't announce hirings. 68 00:03:39,680 --> 00:03:44,080 Speaker 6: And so when you look at what happens, there are 69 00:03:44,160 --> 00:03:47,320 Speaker 6: millions of jobs lost every month and there are millions 70 00:03:47,360 --> 00:03:50,960 Speaker 6: of jobs gained every month, and the number that we 71 00:03:51,080 --> 00:03:56,400 Speaker 6: report is the net difference between the two. So, yes, 72 00:03:56,560 --> 00:04:00,160 Speaker 6: there will be a lot of layoffs going in to 73 00:04:00,400 --> 00:04:03,760 Speaker 6: the data. But is it significantly more than usually happens. 74 00:04:04,080 --> 00:04:06,520 Speaker 6: That's going to be the question going forward. 75 00:04:06,560 --> 00:04:07,480 Speaker 2: Well, it's sort of like Apple. 76 00:04:07,480 --> 00:04:10,920 Speaker 1: They're going to eliminate their EV unit, no electric cars, 77 00:04:11,040 --> 00:04:13,320 Speaker 1: but two thousand workers will just work on AI. 78 00:04:13,720 --> 00:04:14,680 Speaker 2: We're going to shift right over. 79 00:04:14,800 --> 00:04:18,000 Speaker 6: And a lot of the jobs that companies cut are 80 00:04:18,720 --> 00:04:22,920 Speaker 6: cut through attrition anyway, so they're not affecting the unemployment 81 00:04:23,000 --> 00:04:26,960 Speaker 6: rate because people are not all of a sudden unemployed. 82 00:04:27,320 --> 00:04:27,680 Speaker 2: Gotcha. 83 00:04:28,680 --> 00:04:31,080 Speaker 1: Another big event this week you want to talk about, 84 00:04:31,120 --> 00:04:34,240 Speaker 1: and that is FED Chairman Jerome Powell is going to 85 00:04:34,240 --> 00:04:35,039 Speaker 1: be on Capitol Hill. 86 00:04:35,520 --> 00:04:38,880 Speaker 6: That's always a big deal for Wall Street. The chairman 87 00:04:39,040 --> 00:04:43,359 Speaker 6: is the one who sets the agenda. Powell basically says 88 00:04:43,400 --> 00:04:48,040 Speaker 6: he's not driving the agenda the way that Alan Greenspan 89 00:04:48,200 --> 00:04:51,960 Speaker 6: did say or Ben bernanke. He's much more collaborative, but 90 00:04:52,400 --> 00:04:55,800 Speaker 6: it is still the Chairman to whom everybody defers, And 91 00:04:55,880 --> 00:04:58,080 Speaker 6: so what Powell says about the economy is going to 92 00:04:58,120 --> 00:04:59,760 Speaker 6: be worth a lot more than what any of these 93 00:04:59,760 --> 00:05:03,280 Speaker 6: other Fed officials, as important and as smart as they are, 94 00:05:03,400 --> 00:05:07,880 Speaker 6: have to say. So you're going to have everybody tuning in, 95 00:05:07,960 --> 00:05:11,400 Speaker 6: particularly to his opening statement, to see if he makes 96 00:05:11,520 --> 00:05:14,200 Speaker 6: any kind of reference to when or by how much 97 00:05:14,480 --> 00:05:18,680 Speaker 6: they might cut And then they'll be listening for Q 98 00:05:18,839 --> 00:05:21,599 Speaker 6: and A for his reaction to things like layoffs and 99 00:05:22,400 --> 00:05:25,520 Speaker 6: how strong the labor market is, and whether they think 100 00:05:26,200 --> 00:05:32,320 Speaker 6: the January inflation numbers, whether CPIPPI or the PCE really 101 00:05:32,360 --> 00:05:35,279 Speaker 6: reflect what's going on with the strength that they showed. 102 00:05:35,960 --> 00:05:38,760 Speaker 1: Well, I know you'll be listening and you can hear 103 00:05:38,960 --> 00:05:43,560 Speaker 1: Chairman Palace testimony Wednesday and Thursday live right here on 104 00:05:43,600 --> 00:05:47,280 Speaker 1: Bloomberg Radio. Well, our thanks to Michael McKee, Bloomberg International 105 00:05:47,320 --> 00:05:51,240 Speaker 1: Economics and Policy Correspondent. And now we moved to the 106 00:05:51,360 --> 00:05:54,479 Speaker 1: US retail sector and a closely watched fourth quarter earnings 107 00:05:54,480 --> 00:05:57,960 Speaker 1: report out on Tuesday from Target, whether it may give 108 00:05:58,000 --> 00:05:59,680 Speaker 1: us a more clear picture on the health of the 109 00:05:59,760 --> 00:06:04,160 Speaker 1: US consumer and how stubbornly high inflation may be affecting spending. 110 00:06:04,240 --> 00:06:06,680 Speaker 1: Now for a preview. We're joined by John Edwards. He's 111 00:06:06,720 --> 00:06:09,160 Speaker 1: Bloomberg News US Consumer team leader. 112 00:06:09,240 --> 00:06:10,320 Speaker 2: John. Thank you for joining us. 113 00:06:10,440 --> 00:06:11,120 Speaker 7: Great to be here. 114 00:06:11,480 --> 00:06:14,000 Speaker 1: Well, let's start with what you expect the headline numbers 115 00:06:14,000 --> 00:06:16,720 Speaker 1: to be from Target in this what's the holiday quarter 116 00:06:16,800 --> 00:06:18,000 Speaker 1: an all important one? 117 00:06:18,279 --> 00:06:21,640 Speaker 7: Yeah, Well, what we're looking for is continued decline in 118 00:06:21,880 --> 00:06:26,680 Speaker 7: same story sales from Target, and they have, you know, 119 00:06:27,240 --> 00:06:32,000 Speaker 7: had that figure going down for some time now. The 120 00:06:32,040 --> 00:06:37,360 Speaker 7: previous quarters report did excite the market, largely because of 121 00:06:37,480 --> 00:06:40,880 Speaker 7: improvements in inventory management. So we'll be watching to see 122 00:06:40,880 --> 00:06:44,000 Speaker 7: if that continues. But you know, the stock is up 123 00:06:44,040 --> 00:06:49,800 Speaker 7: pretty significantly since that report, so expectations are fairly high, 124 00:06:49,920 --> 00:06:53,719 Speaker 7: even though the business continues in some areas to struggle, 125 00:06:53,760 --> 00:06:56,880 Speaker 7: you know, So we do expect those same store sales 126 00:06:56,880 --> 00:06:59,720 Speaker 7: to be down once again, but you know, we'll be 127 00:06:59,720 --> 00:07:01,920 Speaker 7: looking for the trend what they say about, you know, 128 00:07:02,000 --> 00:07:05,560 Speaker 7: what they're seeing in terms of continued consumer strength. That 129 00:07:05,680 --> 00:07:07,880 Speaker 7: was you know, certainly something that Walmart pointed to in 130 00:07:07,920 --> 00:07:09,320 Speaker 7: their results recently. 131 00:07:09,560 --> 00:07:12,200 Speaker 1: Yeah, the same source sales drop, not just Target, not 132 00:07:12,320 --> 00:07:14,440 Speaker 1: just discounters, it's across the board. 133 00:07:14,280 --> 00:07:16,320 Speaker 7: Is yeah, yeah, I mean, yeah, we're you know, we're 134 00:07:16,400 --> 00:07:20,240 Speaker 7: we're seeing some some retailers managed to uh to bring 135 00:07:20,240 --> 00:07:23,080 Speaker 7: those sales up a little bit. But but yeah, it's uh, 136 00:07:23,200 --> 00:07:27,360 Speaker 7: you know, the consumer is resilient. But but picky is 137 00:07:27,360 --> 00:07:30,040 Speaker 7: is what we're seeing. You know, people are being very 138 00:07:30,200 --> 00:07:33,320 Speaker 7: uh the way Walmart put it was you know, choiceful 139 00:07:33,840 --> 00:07:34,440 Speaker 7: in Uh. 140 00:07:34,840 --> 00:07:36,840 Speaker 2: That's that's a new one. Choiceful wow. 141 00:07:36,960 --> 00:07:40,680 Speaker 7: Yeah, in in how they approach their their spending. So 142 00:07:41,080 --> 00:07:44,520 Speaker 7: you know they uh, you know, employment remains robust, so 143 00:07:44,600 --> 00:07:48,600 Speaker 7: that's that's a support. But uh, you know, inflation, even 144 00:07:48,600 --> 00:07:52,920 Speaker 7: though it's moderated, remains you know, elevated from you know, 145 00:07:53,080 --> 00:07:55,840 Speaker 7: pre pandemic and people remember what things you know, used 146 00:07:55,840 --> 00:07:57,880 Speaker 7: to cost only you know, three or four years ago. 147 00:07:58,480 --> 00:08:01,360 Speaker 7: So so that's sort of of you know, reins in 148 00:08:01,440 --> 00:08:05,080 Speaker 7: spending a little bit and has people you know, continuing 149 00:08:05,120 --> 00:08:08,520 Speaker 7: to spend but being picky about it. So given that 150 00:08:08,600 --> 00:08:12,840 Speaker 7: target is pretty exposed to you know, those discretionary items, 151 00:08:13,640 --> 00:08:16,480 Speaker 7: you know, the sort of general merchandise, that's part of 152 00:08:16,520 --> 00:08:19,400 Speaker 7: where their struggle comes from in terms of bringing those 153 00:08:19,400 --> 00:08:20,440 Speaker 7: same store sales up. 154 00:08:20,600 --> 00:08:22,640 Speaker 1: Yeah, and they know their customers though. They are a 155 00:08:22,800 --> 00:08:26,320 Speaker 1: nimble retailer, and just last week they announced a new 156 00:08:26,440 --> 00:08:30,000 Speaker 1: springtime clothing collection yep, with most prices under fifty bucks. 157 00:08:30,040 --> 00:08:32,240 Speaker 7: Who is it, Diane von Furstenberg. 158 00:08:32,280 --> 00:08:32,760 Speaker 2: There you go. 159 00:08:32,960 --> 00:08:36,600 Speaker 7: So, yes, they've had that tradition for some time of 160 00:08:36,960 --> 00:08:42,320 Speaker 7: you know, enlisting major designers for capsule collections, and that 161 00:08:42,360 --> 00:08:43,600 Speaker 7: has done pretty well for them. 162 00:08:43,679 --> 00:08:44,239 Speaker 2: Yeah. 163 00:08:44,280 --> 00:08:48,040 Speaker 1: They also have a new in house brand called deal Worthy. Yeah, 164 00:08:48,080 --> 00:08:51,560 Speaker 1: and that is hundreds of items, some as low as 165 00:08:51,559 --> 00:08:52,200 Speaker 1: a dollar each. 166 00:08:52,800 --> 00:08:53,199 Speaker 4: Yeah. 167 00:08:53,440 --> 00:08:57,599 Speaker 7: Yeah, so you know, they do have that value proposition 168 00:08:57,679 --> 00:09:00,120 Speaker 7: as well. You know, so they certainly try to be 169 00:09:00,520 --> 00:09:05,679 Speaker 7: you know, sort of current and somewhat fashionable, but always 170 00:09:05,720 --> 00:09:09,199 Speaker 7: mindful of, you know, keeping those prices relatively low. Yeah. 171 00:09:09,280 --> 00:09:12,439 Speaker 1: Now, let me ask you about Macy's announcing that over 172 00:09:12,440 --> 00:09:14,400 Speaker 1: the next few years it's going to close one hundred 173 00:09:14,400 --> 00:09:17,480 Speaker 1: and fifty stores, and they're obviously pivoting toward a more 174 00:09:17,640 --> 00:09:22,160 Speaker 1: upscale consumer, right with Bloomy Dale's Blue Mercury. Are discounters 175 00:09:22,200 --> 00:09:26,640 Speaker 1: like Target Walmart going to be the beneficiary of those closing. 176 00:09:27,320 --> 00:09:29,720 Speaker 7: You know, to some extent, But you know, a lot 177 00:09:29,760 --> 00:09:32,760 Speaker 7: of it depends on, you know, really the mix of 178 00:09:32,800 --> 00:09:36,520 Speaker 7: retail in a given area. It's often there isn't a 179 00:09:36,880 --> 00:09:39,200 Speaker 7: sort of one to one exchange between a you know, 180 00:09:39,240 --> 00:09:43,400 Speaker 7: a big traditional department store like a Macy's and you know, 181 00:09:43,480 --> 00:09:46,640 Speaker 7: more of a discount model like a Target or a Walmart. 182 00:09:47,040 --> 00:09:50,440 Speaker 7: But yeah, certainly, you know, they can expect to see 183 00:09:50,840 --> 00:09:54,120 Speaker 7: some pick up from from some of those lost shoppers, 184 00:09:54,520 --> 00:09:56,520 Speaker 7: but a lot of it and a lot of why 185 00:09:56,760 --> 00:09:58,720 Speaker 7: those stores are closing in the first place is you know, 186 00:09:58,760 --> 00:10:01,160 Speaker 7: a lot of it will just shift on line. And 187 00:10:01,600 --> 00:10:04,120 Speaker 7: you know, and and certainly you know, Target, Walmart and 188 00:10:04,120 --> 00:10:07,199 Speaker 7: others will hope that some of those online sales they 189 00:10:07,200 --> 00:10:09,400 Speaker 7: pick up as well, but a lot of them will 190 00:10:09,400 --> 00:10:12,200 Speaker 7: continue to go to Amazon. And you know, as as 191 00:10:12,200 --> 00:10:13,920 Speaker 7: we've as we've seen before. 192 00:10:13,840 --> 00:10:17,560 Speaker 1: As we see in our own homes, now that that 193 00:10:17,960 --> 00:10:21,520 Speaker 1: Target has made a big push online, it's also a 194 00:10:21,559 --> 00:10:25,880 Speaker 1: subscription based plan like Amazon Prime, like Walmart Plus. 195 00:10:25,920 --> 00:10:27,080 Speaker 2: What what's the status on that? 196 00:10:27,280 --> 00:10:29,920 Speaker 7: Yeah, well, listen to here if we get any update 197 00:10:29,960 --> 00:10:33,960 Speaker 7: on that. You know, our reporter Jaywon Kang broke the 198 00:10:34,000 --> 00:10:39,720 Speaker 7: news that Target is considering a membership program along those lines, 199 00:10:39,880 --> 00:10:42,560 Speaker 7: which could launch as soon as this year. We're not 200 00:10:42,600 --> 00:10:45,960 Speaker 7: sure exactly when, but you know, and they're somewhat you know, 201 00:10:46,080 --> 00:10:49,600 Speaker 7: late getting into that market, given that you know, Prime 202 00:10:49,720 --> 00:10:52,920 Speaker 7: is well established and Walmart Plus seems to be doing 203 00:10:52,920 --> 00:10:56,680 Speaker 7: pretty well. But you know it's another way to you know, 204 00:10:56,760 --> 00:11:00,240 Speaker 7: get shoppers to be stickier, keep coming back to your 205 00:11:00,679 --> 00:11:03,319 Speaker 7: locations looking for those membership points. 206 00:11:03,640 --> 00:11:05,440 Speaker 2: Well, that's great, a lot to look forward to. 207 00:11:05,480 --> 00:11:05,600 Speaker 4: Well. 208 00:11:05,600 --> 00:11:09,840 Speaker 1: Our thanks to John Edwards, Bloomberg News US Consumer team Leader, 209 00:11:10,040 --> 00:11:12,280 Speaker 1: and coming up on Bloomberg day Break weekend to look 210 00:11:12,280 --> 00:11:15,320 Speaker 1: ahead to the UK's tax and spending plans for the 211 00:11:15,320 --> 00:11:28,600 Speaker 1: coming year. I'm Tom Busby and this is Bloomberg. This 212 00:11:28,640 --> 00:11:31,080 Speaker 1: is Bloomberg day Break weekend, our global look ahead at 213 00:11:31,080 --> 00:11:33,200 Speaker 1: the top stories for investors in the coming week. 214 00:11:33,320 --> 00:11:34,880 Speaker 2: I'm Tom Busby in New York. 215 00:11:35,320 --> 00:11:37,120 Speaker 1: Up later on our program we look ahead to a 216 00:11:37,120 --> 00:11:41,080 Speaker 1: gathering of China's top political advisory body and legislature. But 217 00:11:41,200 --> 00:11:44,400 Speaker 1: first in the UK, the government preparing to present its 218 00:11:44,440 --> 00:11:44,920 Speaker 1: tax and. 219 00:11:44,880 --> 00:11:46,520 Speaker 2: Spending plans for the coming year. 220 00:11:46,960 --> 00:11:50,440 Speaker 1: It could be the Chancellor, Jeremy Hunt's last chance to 221 00:11:50,480 --> 00:11:54,480 Speaker 1: announce big policy changes before a general election do this year, 222 00:11:54,800 --> 00:11:57,840 Speaker 1: but will economic headwinds prevent him from making his mark? 223 00:11:58,160 --> 00:12:01,880 Speaker 1: The key question everyone wants answered, but will he prioritize 224 00:12:01,880 --> 00:12:05,440 Speaker 1: cutting taxes over bolstering public services and for more, Let's 225 00:12:05,440 --> 00:12:09,199 Speaker 1: go to London and bring in Bloomberg Daybreak anchor Stephen Carroll. 226 00:12:09,200 --> 00:12:12,840 Speaker 3: Tom The ceremonial red box used to carry the Chancellor's 227 00:12:12,880 --> 00:12:16,520 Speaker 3: budget speech is being dusted off and speculation is rife 228 00:12:16,559 --> 00:12:20,199 Speaker 3: about its contents. Jeremy Hunt and Prime Minister Rici Soonak 229 00:12:20,240 --> 00:12:23,400 Speaker 3: have been at pains to paint themselves as responsible stewards 230 00:12:23,400 --> 00:12:27,040 Speaker 3: of the UK's public finances, especially after the previous Conservative 231 00:12:27,040 --> 00:12:29,520 Speaker 3: government sparked a crisis in the guilt markets with their 232 00:12:29,640 --> 00:12:33,040 Speaker 3: tax and spending plans. During the Chancellor's last big announcement 233 00:12:33,080 --> 00:12:35,920 Speaker 3: in November, he promised measures to back British business and 234 00:12:36,040 --> 00:12:39,160 Speaker 3: soothe the cost of living crisis. This time around, things 235 00:12:39,240 --> 00:12:42,240 Speaker 3: might be working out in his favor. The UK's fiscal watchdog, 236 00:12:42,280 --> 00:12:45,240 Speaker 3: responsible for checking the plans, has disclosed its preparing forecast, 237 00:12:45,360 --> 00:12:49,040 Speaker 3: using data that will potentially improve the public finances and 238 00:12:49,080 --> 00:12:51,959 Speaker 3: create more room for things like tax cuts. But Jeremy 239 00:12:52,000 --> 00:12:54,280 Speaker 3: Hunt will still have to balance steps that might please 240 00:12:54,360 --> 00:12:57,439 Speaker 3: voters ahead of an election expected later this year and 241 00:12:57,679 --> 00:13:01,040 Speaker 3: being fiscally responsible ahead of the lobby groups have been 242 00:13:01,040 --> 00:13:03,360 Speaker 3: lining up with their shopping list for the Chancellor. On 243 00:13:03,400 --> 00:13:06,239 Speaker 3: the Bloomberg UK Politics podcast, we spoke to the manufacturing 244 00:13:06,280 --> 00:13:09,040 Speaker 3: group Make UK. They've laid out a plan for radical 245 00:13:09,120 --> 00:13:12,160 Speaker 3: changes to how the British economy is managed, including splitting 246 00:13:12,200 --> 00:13:15,960 Speaker 3: up the Treasury into separate Economy and Finance ministers. Here's 247 00:13:16,000 --> 00:13:18,760 Speaker 3: some of what make UK's chief operating officer, Ben Fletcher 248 00:13:18,800 --> 00:13:21,160 Speaker 3: told us about what they want to hear from the Chancellor. 249 00:13:21,480 --> 00:13:24,880 Speaker 8: We are still one of the ten biggest manufacturing nations 250 00:13:24,920 --> 00:13:27,439 Speaker 8: on Earth, and in the last twelve months we've actually 251 00:13:27,520 --> 00:13:30,160 Speaker 8: overtaken France to move from ninth to eighth in the 252 00:13:30,160 --> 00:13:33,960 Speaker 8: Global League table. So British manufacturing is strong, it's healthy, 253 00:13:34,640 --> 00:13:38,880 Speaker 8: and it's a sector that is in a position where 254 00:13:38,920 --> 00:13:41,400 Speaker 8: it can start to grow. What we're looking for, I 255 00:13:41,440 --> 00:13:45,520 Speaker 8: think is a recognition from government that we're a huge 256 00:13:45,520 --> 00:13:48,480 Speaker 8: part of the economy, that there is real potential there, 257 00:13:48,880 --> 00:13:52,080 Speaker 8: and we are making some fairly radical requests of government 258 00:13:52,120 --> 00:13:54,440 Speaker 8: and indeed, in what's likely to be an election year 259 00:13:54,760 --> 00:13:57,640 Speaker 8: the opposition parties as well, because what we're saying is 260 00:13:57,720 --> 00:14:00,000 Speaker 8: there's a kind of hidden gem here within the economy. 261 00:14:00,440 --> 00:14:03,680 Speaker 8: It could deliver you some really substantial growth. It would 262 00:14:03,720 --> 00:14:07,440 Speaker 8: support a huge number of new businesses and growing businesses. 263 00:14:07,760 --> 00:14:10,559 Speaker 8: It would lead to growth in other considery and related sectors. 264 00:14:10,600 --> 00:14:13,520 Speaker 8: Like logistics and so on. But what we do need, 265 00:14:13,600 --> 00:14:16,360 Speaker 8: I think, is a bold vision for manufacturing and a 266 00:14:16,400 --> 00:14:20,040 Speaker 8: policy agenda that reflects, that responds to that and really 267 00:14:20,040 --> 00:14:22,320 Speaker 8: seizes the opportunity that we're presented with today. 268 00:14:23,080 --> 00:14:25,720 Speaker 3: Is this essentially about just wanting more money from the government. 269 00:14:25,880 --> 00:14:27,760 Speaker 3: I mean, if you're looking for more defense spending, that's 270 00:14:27,800 --> 00:14:31,119 Speaker 3: one way of funneling money into the sector that you represent. 271 00:14:31,320 --> 00:14:32,920 Speaker 3: But the UK is never really going to be able 272 00:14:32,960 --> 00:14:35,479 Speaker 3: to compete with it spending from the likes of the US. 273 00:14:36,000 --> 00:14:38,600 Speaker 8: It isn't just about money. I think what our central 274 00:14:38,640 --> 00:14:41,400 Speaker 8: ask is for quite some time now and today really 275 00:14:41,920 --> 00:14:44,600 Speaker 8: distills this and brings it together on the back of 276 00:14:44,600 --> 00:14:47,880 Speaker 8: our big national conference. What we're saying is that we 277 00:14:47,960 --> 00:14:51,600 Speaker 8: need a plan, and unlike most of our big competitor 278 00:14:51,680 --> 00:14:55,200 Speaker 8: nations around the world, Britain doesn't have an industrial strategy 279 00:14:55,240 --> 00:14:58,800 Speaker 8: and it doesn't really have a clear plan. Government expenditure 280 00:14:58,840 --> 00:15:03,120 Speaker 8: is always important, and when we think about defense, very 281 00:15:03,120 --> 00:15:07,680 Speaker 8: importantly for our sector, big infrastructure projects as well. Government 282 00:15:07,680 --> 00:15:12,400 Speaker 8: expenditure is vitally important for triggering private sector investment. But 283 00:15:12,520 --> 00:15:15,120 Speaker 8: the really big message of today is that if we're 284 00:15:15,120 --> 00:15:17,720 Speaker 8: going to grow, if we're going to deal with the 285 00:15:17,840 --> 00:15:21,080 Speaker 8: very threatening landscape that we face if we're going to 286 00:15:21,080 --> 00:15:24,880 Speaker 8: continue to be a major manufacturing power. The thing that 287 00:15:24,920 --> 00:15:27,880 Speaker 8: we're going to need from the government, and the message 288 00:15:27,920 --> 00:15:31,080 Speaker 8: that we're sending to the opposition parties is very consistent. 289 00:15:31,440 --> 00:15:34,960 Speaker 8: We really need a plan because the nations that we're 290 00:15:35,000 --> 00:15:38,960 Speaker 8: competing with do have much clearer plans. That's very important 291 00:15:38,960 --> 00:15:41,840 Speaker 8: for triggering in with investment. It's really important at the 292 00:15:41,880 --> 00:15:45,080 Speaker 8: moment for triggering confidence. And when we think about both 293 00:15:45,120 --> 00:15:48,440 Speaker 8: defense and infrastructure, we think about the challenge of net 294 00:15:48,520 --> 00:15:52,720 Speaker 8: zero and moving our car industry in a massively different direction, 295 00:15:53,200 --> 00:15:55,640 Speaker 8: We're going to need to have really clear skills policies. 296 00:15:55,680 --> 00:15:58,080 Speaker 8: We're going to need a massive investment in people leaving 297 00:15:58,120 --> 00:16:00,840 Speaker 8: school and college the right kind of skills and the 298 00:16:00,920 --> 00:16:04,720 Speaker 8: right kind of qualifications. So whatever set of issues we 299 00:16:04,720 --> 00:16:07,720 Speaker 8: look at, whether it be defense, whether it be challenging 300 00:16:07,720 --> 00:16:10,120 Speaker 8: that zero, whether we think about some of the big 301 00:16:10,200 --> 00:16:12,760 Speaker 8: challenges of automation and digitization, which are going to be 302 00:16:13,360 --> 00:16:17,320 Speaker 8: absolute game changes in British manufacturing, what we need are 303 00:16:17,680 --> 00:16:21,040 Speaker 8: a series of decisions by government that can enable us 304 00:16:21,120 --> 00:16:23,200 Speaker 8: to have the workforce of the future, to allow the 305 00:16:23,320 --> 00:16:27,560 Speaker 8: current workforce to transform but really importantly set a very 306 00:16:27,600 --> 00:16:31,120 Speaker 8: clear message to the big private sector businesses that they 307 00:16:31,160 --> 00:16:33,720 Speaker 8: can have the confidence to invest because if we get 308 00:16:33,720 --> 00:16:36,480 Speaker 8: government spending right, the thing that will absolutely dwarf that 309 00:16:36,600 --> 00:16:39,000 Speaker 8: is private sector investment and we need the right landscape 310 00:16:39,040 --> 00:16:39,160 Speaker 8: for that. 311 00:16:39,480 --> 00:16:42,200 Speaker 3: So that would make UK's Chief Operating Officer Ben Fletcher, 312 00:16:42,280 --> 00:16:44,120 Speaker 3: speaking of Lizzie Birden and I in the Bloomberg UK 313 00:16:44,200 --> 00:16:46,640 Speaker 3: Politics podcast. To help us look ahead to what to 314 00:16:46,720 --> 00:16:49,280 Speaker 3: expect from the budget is our UK Government reporter Joel 315 00:16:49,320 --> 00:16:51,680 Speaker 3: May's Joe, great to have you with us. First of all, 316 00:16:51,920 --> 00:16:54,440 Speaker 3: how much do we know about how much money Jeremy 317 00:16:54,480 --> 00:16:56,000 Speaker 3: Hunt has to play with in the budgets? 318 00:16:56,320 --> 00:16:59,200 Speaker 9: So we have latest forecasts that the OBI has been 319 00:16:59,240 --> 00:17:01,600 Speaker 9: giving Jeremy Hudh and our latest understanding is that he 320 00:17:01,640 --> 00:17:04,399 Speaker 9: has about thirteen billion pounds to play with. Now that 321 00:17:04,560 --> 00:17:07,040 Speaker 9: is much less than he had at the autumn statement 322 00:17:07,040 --> 00:17:09,600 Speaker 9: in November, and it's near an historic low. So he 323 00:17:09,720 --> 00:17:12,600 Speaker 9: really is starting from a weak position compared to chancellors 324 00:17:12,640 --> 00:17:15,440 Speaker 9: in the past, and that's the framework that he's having 325 00:17:15,520 --> 00:17:17,159 Speaker 9: to wrestle with when coming up with his tax and 326 00:17:17,200 --> 00:17:17,880 Speaker 9: spend decisions. 327 00:17:18,280 --> 00:17:19,520 Speaker 2: Yeah, so the. 328 00:17:19,640 --> 00:17:22,240 Speaker 3: Fiscal rules here are very important. Because there's sort of 329 00:17:22,240 --> 00:17:26,000 Speaker 3: a guideline for how governments have to make these decisions. 330 00:17:26,160 --> 00:17:28,760 Speaker 3: How important is it that he comes in under that 331 00:17:28,880 --> 00:17:29,719 Speaker 3: thirteen billion. 332 00:17:30,200 --> 00:17:31,919 Speaker 9: Yeah, So the fiscal rule is that you need to 333 00:17:31,960 --> 00:17:35,120 Speaker 9: have national debts falling as a share of the size 334 00:17:35,119 --> 00:17:38,399 Speaker 9: of the economy within five years. It's self imposed rule, 335 00:17:38,480 --> 00:17:41,080 Speaker 9: but markets like it, and it seemed to be the 336 00:17:41,119 --> 00:17:43,400 Speaker 9: test that you need to pass to maintain in credibility 337 00:17:43,440 --> 00:17:46,399 Speaker 9: with markets to respect that rule. And he's at thirteen 338 00:17:46,400 --> 00:17:48,600 Speaker 9: billion now. He would like to do things like cut 339 00:17:48,640 --> 00:17:50,720 Speaker 9: income tax and cut NASH insurance, but each of those 340 00:17:50,760 --> 00:17:54,040 Speaker 9: measures takes him closer and closer to breaking the rule, 341 00:17:54,359 --> 00:17:56,879 Speaker 9: so he has to be careful about that, and we 342 00:17:56,960 --> 00:17:59,200 Speaker 9: think that he's likely to want to maintain a buffer 343 00:17:59,240 --> 00:18:01,520 Speaker 9: of say six billion. You always want to you always 344 00:18:01,520 --> 00:18:05,479 Speaker 9: want to keep something above that that that that zero figure, 345 00:18:05,840 --> 00:18:08,320 Speaker 9: just in case there are sharks, just in case things 346 00:18:08,520 --> 00:18:11,040 Speaker 9: go turn for the worse. So that's why we think 347 00:18:11,040 --> 00:18:13,359 Speaker 9: he'd like to end up. Obviously, the other thing to 348 00:18:13,359 --> 00:18:15,440 Speaker 9: add is that he can boost the headroom, and that's 349 00:18:15,480 --> 00:18:18,760 Speaker 9: what you can do through spending decisions. For example, you 350 00:18:18,800 --> 00:18:21,280 Speaker 9: could say, let's not spend as much in the future 351 00:18:21,480 --> 00:18:23,040 Speaker 9: gives us more money to play with. Now there'll be 352 00:18:23,080 --> 00:18:24,920 Speaker 9: a polity controversial thing to do, but it could boost 353 00:18:24,920 --> 00:18:27,959 Speaker 9: the headroom so he can manipulate that headroom figure. But 354 00:18:28,280 --> 00:18:29,840 Speaker 9: there are difficult choices, and. 355 00:18:29,840 --> 00:18:33,159 Speaker 3: Instantly you've actually put these difficult choices into a game 356 00:18:33,240 --> 00:18:35,920 Speaker 3: that people can go on the Bloomberg website and play 357 00:18:36,160 --> 00:18:39,119 Speaker 3: and decide how exactly if they were a chancellor for 358 00:18:39,160 --> 00:18:40,840 Speaker 3: the day they do it. Just talk us through how 359 00:18:40,840 --> 00:18:41,480 Speaker 3: the game works. 360 00:18:41,680 --> 00:18:43,920 Speaker 9: So yeah, it took me what thirty seconds a minute 361 00:18:43,960 --> 00:18:45,399 Speaker 9: to explain that nature of. 362 00:18:45,400 --> 00:18:47,320 Speaker 2: The physical a so now you can try. 363 00:18:47,400 --> 00:18:50,399 Speaker 9: Yeah, So I thought, what better way could we do this? Well, 364 00:18:50,440 --> 00:18:52,400 Speaker 9: let's make a game where you just are thrown into 365 00:18:52,400 --> 00:18:55,399 Speaker 9: the scenario yourself and you have that headroom given to you, 366 00:18:55,440 --> 00:18:56,840 Speaker 9: and you have to make choices. So you're right, We 367 00:18:56,840 --> 00:18:59,520 Speaker 9: have this budget game on bloombog dot com where you 368 00:18:59,560 --> 00:19:02,400 Speaker 9: can decide will you cut income tax, will you cutlash insurance, 369 00:19:02,680 --> 00:19:04,560 Speaker 9: will you cut inheritance tax. You have all these tax 370 00:19:04,600 --> 00:19:07,080 Speaker 9: and spend choices, and at the end of it, you're 371 00:19:07,080 --> 00:19:09,760 Speaker 9: given a result. How would markets react, how would voters 372 00:19:09,800 --> 00:19:13,520 Speaker 9: react to your choices? We use our best kind of 373 00:19:13,600 --> 00:19:16,119 Speaker 9: estimates of what's like to happen and you get a result. 374 00:19:16,160 --> 00:19:18,600 Speaker 9: So yeah, I encourage all our listeners to play the game. 375 00:19:18,920 --> 00:19:22,480 Speaker 3: I mean, it's a really interesting exercise because you essentially 376 00:19:22,840 --> 00:19:25,040 Speaker 3: it's because it's yes or no choices, do you want 377 00:19:25,080 --> 00:19:27,080 Speaker 3: to do this? And then you know when you get 378 00:19:27,119 --> 00:19:28,680 Speaker 3: to the end, it decides whether or not you've crashed 379 00:19:28,680 --> 00:19:30,280 Speaker 3: the economy. I think on our team we have about 380 00:19:30,280 --> 00:19:32,320 Speaker 3: a fifty to fifty rate of who's crashed the economy 381 00:19:32,359 --> 00:19:36,160 Speaker 3: and who hasn't, which I think is probably almost I'm 382 00:19:36,200 --> 00:19:39,760 Speaker 3: not going to make a parallel to previous chancellors and 383 00:19:39,800 --> 00:19:42,840 Speaker 3: how they've performed on this as well, but it says 384 00:19:42,880 --> 00:19:46,480 Speaker 3: it lays out the difficult balance that has to be 385 00:19:46,560 --> 00:19:49,520 Speaker 3: struck at a moment like this. We're also in an 386 00:19:49,520 --> 00:19:51,840 Speaker 3: election year in the UK, so that means that also 387 00:19:51,880 --> 00:19:54,520 Speaker 3: the Chancellor has one eye on what's going to win votes. 388 00:19:54,960 --> 00:19:57,000 Speaker 3: Talk us through some of the measures that we do 389 00:19:57,080 --> 00:20:00,119 Speaker 3: think he's going to take when he gets up to 390 00:20:00,119 --> 00:20:01,080 Speaker 3: make that budget speach. 391 00:20:01,359 --> 00:20:03,439 Speaker 9: So we think it's very likely you get to prioritize 392 00:20:03,440 --> 00:20:05,720 Speaker 9: personal tax cuts because those are the tax cuts that 393 00:20:05,760 --> 00:20:08,639 Speaker 9: are likely to have most impacts on the popularity of 394 00:20:08,640 --> 00:20:11,000 Speaker 9: the Conservative Party and help them to win the next election, 395 00:20:11,320 --> 00:20:13,320 Speaker 9: and so that will take the form of we expect 396 00:20:13,560 --> 00:20:16,760 Speaker 9: an income tax cut of at least one percentage point 397 00:20:16,800 --> 00:20:19,239 Speaker 9: on the basic rate. That would save people about two 398 00:20:19,320 --> 00:20:22,359 Speaker 9: hundred pounds a year for an average earner. He'd like 399 00:20:22,400 --> 00:20:24,160 Speaker 9: to go further. He would like to do say two 400 00:20:24,160 --> 00:20:27,440 Speaker 9: p off income tax, but it all comes down to 401 00:20:27,480 --> 00:20:29,879 Speaker 9: that headline question we've just been talking about. He also 402 00:20:30,280 --> 00:20:32,919 Speaker 9: might cut national insurance, which is a payroll tax, and 403 00:20:33,240 --> 00:20:35,760 Speaker 9: he already reduced NASH insurance by two pence in the 404 00:20:35,760 --> 00:20:38,560 Speaker 9: pounds in the Ausome statement. He might do that again 405 00:20:38,640 --> 00:20:42,200 Speaker 9: because he sees it as a measure which also incentivizes 406 00:20:42,520 --> 00:20:44,480 Speaker 9: people to return to the labor markets. It makes work 407 00:20:44,520 --> 00:20:47,159 Speaker 9: more attractive and that can boost growth as well. He's 408 00:20:47,160 --> 00:20:49,800 Speaker 9: always trying to look at measures that will boost boost 409 00:20:49,800 --> 00:20:51,320 Speaker 9: growth in the economy. That helps his numbers from the 410 00:20:51,359 --> 00:20:53,479 Speaker 9: AVR as well. But then there's also a list of 411 00:20:53,560 --> 00:20:56,800 Speaker 9: things that are kind of on the table but might 412 00:20:56,840 --> 00:20:59,359 Speaker 9: not happen, but might happen. So for example, reporting that 413 00:20:59,400 --> 00:21:02,040 Speaker 9: the non tax status that might be abolished, because that 414 00:21:02,080 --> 00:21:04,840 Speaker 9: would be a move that would raise revenue, it would 415 00:21:04,880 --> 00:21:07,840 Speaker 9: also jam labor to a certain extent because labor are 416 00:21:08,119 --> 00:21:11,359 Speaker 9: assuming that they could use the revenues from scrapping London 417 00:21:11,960 --> 00:21:13,760 Speaker 9: tax status to fund some of their own policies. 418 00:21:13,800 --> 00:21:15,680 Speaker 3: So this was the policy that Labor had been talking 419 00:21:15,680 --> 00:21:16,760 Speaker 3: about for quite a long time. 420 00:21:16,920 --> 00:21:17,240 Speaker 9: Exactly. 421 00:21:17,240 --> 00:21:21,359 Speaker 3: Special status applied to typically very wealthy individuals who have 422 00:21:21,440 --> 00:21:23,680 Speaker 3: earnings coming from outside the UK and they're able to 423 00:21:23,720 --> 00:21:26,560 Speaker 3: benefit from a tax advantage, and closing this loophole as Actually, 424 00:21:26,680 --> 00:21:29,400 Speaker 3: when you ask Labor politicians as you and I do frequently, 425 00:21:29,440 --> 00:21:31,600 Speaker 3: what they're going to do if they win the next election, 426 00:21:31,720 --> 00:21:33,360 Speaker 3: it comes up quite frequently is one of the things 427 00:21:33,359 --> 00:21:35,600 Speaker 3: they're going to do to boost tax revenues. So the 428 00:21:35,640 --> 00:21:37,880 Speaker 3: potential that the Conservators could decide to do it before 429 00:21:37,960 --> 00:21:40,560 Speaker 3: them an interesting consideration. 430 00:21:40,200 --> 00:21:43,200 Speaker 9: Yes, exactly, because Labor have repeatedly been saying, oh, we 431 00:21:43,240 --> 00:21:45,480 Speaker 9: would fund you know, more doctors and lots of nice 432 00:21:45,520 --> 00:21:48,879 Speaker 9: things with the revenue raised from scrapping the Nordmon tax status. 433 00:21:49,040 --> 00:21:50,560 Speaker 9: But if the Toys have already done that and have 434 00:21:50,600 --> 00:21:53,000 Speaker 9: spent that money themselves on a tax cir elsewhere, then 435 00:21:53,040 --> 00:21:54,680 Speaker 9: Labor have lost that. So that's why you can see 436 00:21:54,680 --> 00:21:56,119 Speaker 9: there's that there will be a piscal advantage for the 437 00:21:56,200 --> 00:22:01,200 Speaker 9: Tories if they discrap the no on tax status and yeah. 438 00:22:00,800 --> 00:22:03,560 Speaker 3: And the other dilemma here is also the question of 439 00:22:03,560 --> 00:22:06,360 Speaker 3: public services. There's an awful lot of discussion about how 440 00:22:06,359 --> 00:22:09,440 Speaker 3: public services are under pressure, particularly the health service here 441 00:22:09,480 --> 00:22:11,879 Speaker 3: in the UK, and the question of how much money 442 00:22:11,920 --> 00:22:15,200 Speaker 3: these services need also comes into the budget play. And 443 00:22:15,520 --> 00:22:17,840 Speaker 3: boys you mentioned you know the Chancellor can choose to 444 00:22:17,880 --> 00:22:20,960 Speaker 3: pull back on some spending decisions, that that's something that 445 00:22:21,000 --> 00:22:22,360 Speaker 3: could prove very controversial. 446 00:22:22,840 --> 00:22:27,679 Speaker 9: Yes, And the situation Hunt already has is an autumn 447 00:22:27,680 --> 00:22:30,920 Speaker 9: statement where he baked in spending plans that were already 448 00:22:31,000 --> 00:22:35,720 Speaker 9: seen as rather unlikely and criticized by economists, and the 449 00:22:35,800 --> 00:22:39,520 Speaker 9: argument being, look, you're perhaps unlikely to ever have to 450 00:22:39,720 --> 00:22:41,720 Speaker 9: implement those plans if you don't win the next election, 451 00:22:41,760 --> 00:22:44,280 Speaker 9: So there's a very little cost to you to having 452 00:22:44,440 --> 00:22:47,399 Speaker 9: an implausibly low assumption for future public spending. But then 453 00:22:47,440 --> 00:22:50,119 Speaker 9: you use that what's been described by the ABI and 454 00:22:50,119 --> 00:22:53,360 Speaker 9: others as a fiction, use that fiction to create revenue 455 00:22:53,560 --> 00:22:55,399 Speaker 9: now that you can spend on tax cuds. 456 00:22:55,560 --> 00:22:56,080 Speaker 2: Let's talk a. 457 00:22:56,080 --> 00:22:58,120 Speaker 3: Little bit about the politics that comes behind this, because 458 00:22:58,119 --> 00:23:00,960 Speaker 3: even within the Conservative Party, see there's a lot of 459 00:23:01,000 --> 00:23:05,520 Speaker 3: debate over where the Chancellor should apportion his limited choices, 460 00:23:05,560 --> 00:23:08,960 Speaker 3: as we've been discussing, even within his own supporters. 461 00:23:09,480 --> 00:23:11,320 Speaker 9: Yes, there is. I mean there are those on the 462 00:23:11,400 --> 00:23:15,280 Speaker 9: right of the Conservative Party, those backs of Liz Trusts, 463 00:23:15,560 --> 00:23:17,720 Speaker 9: who would say that you should do things like cut 464 00:23:17,720 --> 00:23:20,240 Speaker 9: inheritance tax for example. That's they say that would be 465 00:23:20,400 --> 00:23:23,359 Speaker 9: a widely popular measure. They also want to go and 466 00:23:23,440 --> 00:23:26,000 Speaker 9: be more aggressive on things like corporation tax and cutting 467 00:23:26,000 --> 00:23:28,359 Speaker 9: that and do more for business and so on. But 468 00:23:28,520 --> 00:23:30,800 Speaker 9: it feels like those in more the center of the party, 469 00:23:30,800 --> 00:23:33,879 Speaker 9: those closes to Hunt are more conscious of the electro 470 00:23:34,000 --> 00:23:37,359 Speaker 9: dynamics and thinking that personal tax cuts, that which you 471 00:23:37,400 --> 00:23:41,400 Speaker 9: can sell to your average voter, are perhaps more preferable 472 00:23:41,400 --> 00:23:42,960 Speaker 9: at this time, and therefore we should do that. So 473 00:23:43,000 --> 00:23:45,840 Speaker 9: there are splits within the Tory camp and Hunters decide 474 00:23:45,840 --> 00:23:46,520 Speaker 9: who he's going to go with. 475 00:23:46,560 --> 00:23:48,400 Speaker 3: Okay, we should make for a very interesting budget today. 476 00:23:48,440 --> 00:23:50,320 Speaker 3: Joe May is our UK government reporter. Thank you very 477 00:23:50,400 --> 00:23:52,119 Speaker 3: much for joining us with the details of that, and 478 00:23:52,160 --> 00:23:54,960 Speaker 3: of course we will have full coverage of the budgets 479 00:23:55,040 --> 00:23:58,680 Speaker 3: here on Bloomberg. I'm Stephen Carroll in London. You can 480 00:23:58,720 --> 00:24:01,439 Speaker 3: catch us every weekday winning here for Bloomberg Daybreak. Here 481 00:24:01,440 --> 00:24:04,040 Speaker 3: at beginning at six am in London and one am 482 00:24:04,160 --> 00:24:04,959 Speaker 3: on Wall Streets. 483 00:24:05,160 --> 00:24:08,000 Speaker 1: Tom, thank you, Steven, And coming up on Bloomberg day 484 00:24:08,040 --> 00:24:10,480 Speaker 1: Break weekend, we look ahead to a gathering of China's 485 00:24:10,520 --> 00:24:15,080 Speaker 1: top political advisory body and legislature. I'm Tom Busby and 486 00:24:15,200 --> 00:24:28,600 Speaker 1: this is Bloomberg. I'm Tom Busby in New York with 487 00:24:28,640 --> 00:24:31,000 Speaker 1: your global look ahead at the top stories for investors 488 00:24:31,000 --> 00:24:34,159 Speaker 1: in the coming week. China's top political advisory body and 489 00:24:34,240 --> 00:24:38,600 Speaker 1: legislature gathering for their annual two sessions. What should we 490 00:24:38,680 --> 00:24:41,160 Speaker 1: be watching for during the eight day meeting For more, 491 00:24:41,320 --> 00:24:43,919 Speaker 1: Let's go to Hong Kong and Bloomberg Daybreak Asia hosts 492 00:24:43,920 --> 00:24:45,920 Speaker 1: Brian Curtis and Doug Krisner. 493 00:24:46,280 --> 00:24:49,640 Speaker 4: Tom, we look forward to the annual meetings of China's parliament, 494 00:24:49,680 --> 00:24:53,280 Speaker 4: the National People's Congress, next week. The NPC will set 495 00:24:53,320 --> 00:24:56,240 Speaker 4: policies that will guide the economy over the next year. 496 00:24:56,600 --> 00:24:59,560 Speaker 4: It's an opportunity for policymakers to do a kind of 497 00:24:59,640 --> 00:25:04,760 Speaker 4: research to shore up confidence in consumers, in businesses and investors. 498 00:25:04,840 --> 00:25:08,000 Speaker 5: Now, in terms of what to expect, Bloomberg Intelligence thinks 499 00:25:08,040 --> 00:25:11,640 Speaker 5: the NPC will announce a larger budget deficit for the government. 500 00:25:11,760 --> 00:25:15,240 Speaker 5: That means more fiscal spending. In addition, our economists are 501 00:25:15,280 --> 00:25:19,560 Speaker 5: expecting more supportive monetary policy along with additional efforts to 502 00:25:19,640 --> 00:25:22,280 Speaker 5: smooth out the correction of the property market. 503 00:25:23,000 --> 00:25:26,160 Speaker 4: And then, as we heard from Catherine Jung at Fidelity, 504 00:25:26,440 --> 00:25:27,760 Speaker 4: there's also messaging. 505 00:25:28,520 --> 00:25:30,520 Speaker 10: There's definitely a messaging that seems to be coming from 506 00:25:30,560 --> 00:25:33,840 Speaker 10: the regulators about what they're going to say at the NPC, 507 00:25:34,480 --> 00:25:37,600 Speaker 10: But in reality it's probably going to be this continuation 508 00:25:37,880 --> 00:25:42,280 Speaker 10: of tweaking of accommodative measures. So areas of the economy 509 00:25:42,359 --> 00:25:45,359 Speaker 10: that needs support, such as property, are likely to be 510 00:25:45,480 --> 00:25:48,720 Speaker 10: key in terms of their focus, but really is about 511 00:25:48,720 --> 00:25:51,520 Speaker 10: restoring confidence, especially with the consumer. And then the knock 512 00:25:51,560 --> 00:25:54,080 Speaker 10: on effect would obviously be an impact on corporates in 513 00:25:54,119 --> 00:25:54,919 Speaker 10: the overall market. 514 00:25:55,080 --> 00:25:58,560 Speaker 5: That is Katherine Jung at Fidelity, And as we mentioned earlier, 515 00:25:58,600 --> 00:26:02,600 Speaker 5: restoring confidence may require more deficit spending by the government. 516 00:26:02,960 --> 00:26:06,199 Speaker 5: Bloomberg's Jill Diese says that will be key in showing 517 00:26:06,240 --> 00:26:09,840 Speaker 5: how far policymakers are willing to go to revive the economy. 518 00:26:10,400 --> 00:26:13,080 Speaker 11: I think what we'd be looking for out of this 519 00:26:13,200 --> 00:26:15,280 Speaker 11: meeting is, you know what they're going to be setting 520 00:26:15,320 --> 00:26:18,680 Speaker 11: that budget at? How much in sovereign debt they plan 521 00:26:18,720 --> 00:26:21,680 Speaker 11: on issuing this year. What exactly that level of calculation 522 00:26:21,760 --> 00:26:24,680 Speaker 11: looks like, because as we know, China is still dealing 523 00:26:24,760 --> 00:26:27,400 Speaker 11: with a lot of serious economic pressures that don't really 524 00:26:27,400 --> 00:26:28,960 Speaker 11: seem to be going away, and they've got to kind 525 00:26:28,960 --> 00:26:31,560 Speaker 11: of manage what that recovery and growth structory looks like. 526 00:26:32,240 --> 00:26:34,760 Speaker 4: In the run up to the NPC meeting, the economy 527 00:26:34,800 --> 00:26:38,840 Speaker 4: did actually see a modest reprieve of late consumption picking 528 00:26:38,960 --> 00:26:41,960 Speaker 4: up slightly during the Lunar New Year holidays. The CSI 529 00:26:42,040 --> 00:26:45,119 Speaker 4: three hundred has bounced about ten to twelve percent, and 530 00:26:45,160 --> 00:26:48,640 Speaker 4: while property is still soft, it weakened in January at 531 00:26:48,640 --> 00:26:51,800 Speaker 4: a slower pace than in December. Well, joining us now 532 00:26:51,800 --> 00:26:54,680 Speaker 4: for a deeper look at the NPC meetings is Jenny 533 00:26:54,720 --> 00:26:59,520 Speaker 4: Marsh Bloomberg, team leader for Greater China ECO GOV. So, Jenny, 534 00:26:59,560 --> 00:27:02,320 Speaker 4: let's delve right into a couple of specific items first 535 00:27:02,400 --> 00:27:04,600 Speaker 4: before we get to some of the sort of broader 536 00:27:04,640 --> 00:27:08,120 Speaker 4: takeaways from the meetings, the setting of a growth target, 537 00:27:08,359 --> 00:27:11,399 Speaker 4: what that might be, and then also what sort of 538 00:27:11,480 --> 00:27:14,320 Speaker 4: level of deficit spending might we see as a percentage 539 00:27:14,359 --> 00:27:16,120 Speaker 4: of GDP What can we expect. 540 00:27:16,400 --> 00:27:19,639 Speaker 12: So the consensus among most economists right now is that 541 00:27:19,640 --> 00:27:23,200 Speaker 12: they're going to maintain the target of around five percent, 542 00:27:24,080 --> 00:27:26,440 Speaker 12: so it's not going to be below five I think 543 00:27:26,520 --> 00:27:30,439 Speaker 12: is what most people are expecting. The caveat there is that, 544 00:27:30,520 --> 00:27:32,359 Speaker 12: you know, it's going to be much harder to achieve 545 00:27:32,400 --> 00:27:35,639 Speaker 12: this year because twenty twenty three had the benefit of 546 00:27:35,680 --> 00:27:38,719 Speaker 12: the low base of you know, previous year when the 547 00:27:38,760 --> 00:27:44,200 Speaker 12: COVID restrictions really impacted activity. So I think it's important 548 00:27:44,240 --> 00:27:46,919 Speaker 12: that the government does keep this around five percent, not 549 00:27:46,920 --> 00:27:50,520 Speaker 12: below five percent, because it's going to be all about confidence. 550 00:27:50,560 --> 00:27:50,720 Speaker 13: You know. 551 00:27:50,760 --> 00:27:53,440 Speaker 12: One of the biggest things that plague the Chinese economy 552 00:27:53,520 --> 00:27:58,080 Speaker 12: last year was a crisis in confidence among investors, you know, 553 00:27:58,160 --> 00:28:00,880 Speaker 12: foreign business people and consumers. So they've got to come 554 00:28:00,880 --> 00:28:03,160 Speaker 12: out with a positive message. But at the same time, 555 00:28:03,560 --> 00:28:06,080 Speaker 12: it does have to be realistic because it's going to 556 00:28:06,080 --> 00:28:08,320 Speaker 12: be a lot of work and sort of careful policymaking 557 00:28:08,359 --> 00:28:10,679 Speaker 12: this year to make sure they don't under shoot their 558 00:28:10,720 --> 00:28:11,320 Speaker 12: own target. 559 00:28:11,760 --> 00:28:14,280 Speaker 5: So maybe we can agree that up until this point, 560 00:28:14,440 --> 00:28:18,400 Speaker 5: Beijing has been fairly restrained in trying to provide additional 561 00:28:18,440 --> 00:28:20,920 Speaker 5: stimulus to get the economy going. The question is whether 562 00:28:21,040 --> 00:28:23,919 Speaker 5: or not we begin to see a pivot point at 563 00:28:23,960 --> 00:28:28,480 Speaker 5: the NPC where things are modulated maybe to a higher 564 00:28:28,600 --> 00:28:30,480 Speaker 5: rate than what we have seen in the past. Do 565 00:28:30,480 --> 00:28:31,320 Speaker 5: you think that's likely. 566 00:28:32,040 --> 00:28:34,560 Speaker 12: I think they're going to continue on the same course. 567 00:28:34,760 --> 00:28:34,919 Speaker 4: You know. 568 00:28:34,960 --> 00:28:37,760 Speaker 12: I think Premier Le Chang was very clear when he 569 00:28:37,800 --> 00:28:41,520 Speaker 12: was speaking at Davos in January saying, you know, they'd 570 00:28:41,560 --> 00:28:44,040 Speaker 12: reached five point two percent. He front run that number 571 00:28:44,080 --> 00:28:47,320 Speaker 12: for last year, saying they've done it without stimulus. You know, 572 00:28:47,360 --> 00:28:49,840 Speaker 12: he seemed very proud of this. So I think, you know, 573 00:28:50,080 --> 00:28:52,920 Speaker 12: that's a very clear signal that they're not going to 574 00:28:52,920 --> 00:28:54,800 Speaker 12: go back to sort of the old playbook of using 575 00:28:54,800 --> 00:28:57,560 Speaker 12: sort of really big broad stimulus. But I think what 576 00:28:57,600 --> 00:29:01,160 Speaker 12: we might see is more targeted help for sectors that 577 00:29:01,280 --> 00:29:04,520 Speaker 12: really need it, so such as property, you know, support 578 00:29:04,520 --> 00:29:08,400 Speaker 12: for local governments by sort of shifting debt from local 579 00:29:08,440 --> 00:29:13,080 Speaker 12: provinces onto the central government's balance sheet. Whether that comes 580 00:29:13,480 --> 00:29:17,520 Speaker 12: in the actual official fiscal deficit target or if they 581 00:29:17,520 --> 00:29:19,360 Speaker 12: do what they did last year where they sort of 582 00:29:19,480 --> 00:29:22,560 Speaker 12: tweak it during the year to sort of put more 583 00:29:22,560 --> 00:29:25,680 Speaker 12: spending on the on the central government's budget remains to 584 00:29:25,720 --> 00:29:26,080 Speaker 12: be seen. 585 00:29:26,360 --> 00:29:29,040 Speaker 4: Yeah, there has been a kind of an incremental move 586 00:29:29,160 --> 00:29:31,120 Speaker 4: up in the level of deficit spending used to be 587 00:29:31,200 --> 00:29:33,800 Speaker 4: three percent with the target then three point two, and 588 00:29:33,920 --> 00:29:36,000 Speaker 4: you hear about three and a half percent or maybe 589 00:29:36,080 --> 00:29:39,360 Speaker 4: even more. I'm curious whether or not our team at 590 00:29:39,360 --> 00:29:42,280 Speaker 4: Bloomberry Economics thinks that it would Would it send a 591 00:29:42,280 --> 00:29:44,760 Speaker 4: bad message if it was, say raised to four percent 592 00:29:44,920 --> 00:29:45,640 Speaker 4: or something like that. 593 00:29:46,840 --> 00:29:50,400 Speaker 12: I think four percent would be quite dramatic. Yeah, So 594 00:29:51,000 --> 00:29:53,200 Speaker 12: I don't know if that would send a bad message. 595 00:29:54,280 --> 00:29:56,360 Speaker 12: You know, it would send a signal for sure that 596 00:29:56,360 --> 00:29:58,200 Speaker 12: the government's willing to take on more debt. I mean, 597 00:29:58,240 --> 00:30:03,160 Speaker 12: three percent is extremely low deficit ratio target anyway, for 598 00:30:03,360 --> 00:30:04,840 Speaker 12: an economy the size of China's. 599 00:30:05,200 --> 00:30:07,320 Speaker 5: When it comes to growth, one of the themes that 600 00:30:07,360 --> 00:30:10,040 Speaker 5: we have heard in the past is high quality development, 601 00:30:10,080 --> 00:30:13,160 Speaker 5: and I suspect that we're going to hear that theme reiterated. 602 00:30:13,280 --> 00:30:17,640 Speaker 5: And as we know, there have been instances where regulators 603 00:30:17,640 --> 00:30:20,560 Speaker 5: have really been able to kind of clamp down on 604 00:30:20,800 --> 00:30:23,880 Speaker 5: a lot of the entrepreneurial spirit as it relates to 605 00:30:23,960 --> 00:30:27,320 Speaker 5: high tech, particularly, and I'm wondering whether we're going to 606 00:30:27,400 --> 00:30:32,440 Speaker 5: see some acknowledgment of overreach maybe and also an admission 607 00:30:32,520 --> 00:30:37,600 Speaker 5: that regulators and authorities need to embrace the entrepreneurial class, 608 00:30:37,680 --> 00:30:40,920 Speaker 5: and this is a really powerful way of driving growth 609 00:30:40,960 --> 00:30:41,600 Speaker 5: going forward. 610 00:30:42,440 --> 00:30:44,440 Speaker 12: A high quality development, I think is one of the 611 00:30:44,520 --> 00:30:47,560 Speaker 12: key things sort of to be watching out for. Shi 612 00:30:47,640 --> 00:30:51,480 Speaker 12: Jimping like increased his mentions of the slogan last year, 613 00:30:51,480 --> 00:30:53,600 Speaker 12: I think to one hundred and thirty eight times, which 614 00:30:53,640 --> 00:30:56,080 Speaker 12: was sort of double the previous year, so they're really 615 00:30:56,160 --> 00:30:58,640 Speaker 12: ramping up. But yeah, it's still this kind of fuzzy 616 00:30:58,800 --> 00:31:02,040 Speaker 12: sort of phrase that people don't fully understand what it means. 617 00:31:01,840 --> 00:31:05,040 Speaker 12: It sort of broadly seems to mean that they're okay 618 00:31:05,120 --> 00:31:09,840 Speaker 12: with not prioritizing chasing sort of growth, and they want 619 00:31:09,840 --> 00:31:13,200 Speaker 12: to prioritize slower growth if it's more sustainable and you 620 00:31:13,240 --> 00:31:15,880 Speaker 12: know it isn't going to sort of saddle the country 621 00:31:15,920 --> 00:31:19,320 Speaker 12: with more debt through things like stimulus. I think that 622 00:31:19,440 --> 00:31:22,040 Speaker 12: sort of will leaders to sort of look at for 623 00:31:22,080 --> 00:31:27,120 Speaker 12: signals on you know, green innovation, perhaps evs, more support 624 00:31:27,160 --> 00:31:31,000 Speaker 12: for that supply chain resilience. There's also another phrase I 625 00:31:31,000 --> 00:31:32,800 Speaker 12: think people are going to be watching out for within 626 00:31:32,840 --> 00:31:36,479 Speaker 12: that umbrella, which is new productive forces. And that's a 627 00:31:36,600 --> 00:31:39,640 Speaker 12: saying that she introduced during a trip to Halo Jean 628 00:31:40,360 --> 00:31:42,040 Speaker 12: at the end of last year and then sort of 629 00:31:42,080 --> 00:31:45,720 Speaker 12: since was mentioned in a polyp beer study session, another broad, 630 00:31:45,960 --> 00:31:48,600 Speaker 12: fuzzy phrase, it's sort of hard to pin down. So 631 00:31:48,640 --> 00:31:50,960 Speaker 12: I think any meat that they put on the bone 632 00:31:51,560 --> 00:31:53,680 Speaker 12: within the work report and various other documents that are 633 00:31:53,680 --> 00:31:57,080 Speaker 12: published will be something investors are very very key to 634 00:31:57,160 --> 00:31:58,719 Speaker 12: sort of get information on. 635 00:31:59,000 --> 00:32:00,800 Speaker 4: So we talked a couple of times here in this 636 00:32:00,840 --> 00:32:04,120 Speaker 4: discussion about the possibility of more debt. So we're curious 637 00:32:04,120 --> 00:32:06,720 Speaker 4: whether or not that would be at the national or 638 00:32:06,720 --> 00:32:10,160 Speaker 4: the provincial level. We put that question earlier to Bloomberg's 639 00:32:10,240 --> 00:32:12,760 Speaker 4: Jill desis about getting the balance right. 640 00:32:13,320 --> 00:32:15,240 Speaker 11: The line that China has to walk this year is 641 00:32:15,280 --> 00:32:18,920 Speaker 11: that they're really concerned about local governments in particular taking 642 00:32:18,960 --> 00:32:21,160 Speaker 11: on more debt than you know, they're able to afford. 643 00:32:21,200 --> 00:32:23,600 Speaker 11: There's been a lot of chatter about whether or not 644 00:32:23,640 --> 00:32:26,560 Speaker 11: the central government needs to take a larger role in 645 00:32:26,640 --> 00:32:28,680 Speaker 11: terms of, you know, taking on some of that debt 646 00:32:28,680 --> 00:32:31,120 Speaker 11: and alleviating some of those burdens among local governments. 647 00:32:32,200 --> 00:32:36,240 Speaker 4: Again, Jill deesis from the Bloomberg Eco Government team, So, Jenny, 648 00:32:36,400 --> 00:32:38,920 Speaker 4: what's our thinking. Will we see more at the national 649 00:32:39,000 --> 00:32:42,000 Speaker 4: level or will it fall back down to the provincial level. 650 00:32:43,120 --> 00:32:44,800 Speaker 12: You know, I think the trend that we were seeing 651 00:32:44,800 --> 00:32:46,880 Speaker 12: towards the end of last year was the government was 652 00:32:46,920 --> 00:32:51,520 Speaker 12: shifting to putting at on the national level for the 653 00:32:51,600 --> 00:32:54,640 Speaker 12: reason that, you know, they do not want this problem 654 00:32:54,680 --> 00:32:57,600 Speaker 12: of local governments being in debt and sort of having 655 00:32:57,600 --> 00:33:01,800 Speaker 12: sort of teaching on default to continue. So I think 656 00:33:01,840 --> 00:33:04,120 Speaker 12: that's what most people are expecting. There are sort of 657 00:33:04,800 --> 00:33:06,640 Speaker 12: other risks from that though. I think, you know, we 658 00:33:06,680 --> 00:33:09,320 Speaker 12: wrote last year about the fact that well, that's well 659 00:33:09,320 --> 00:33:11,400 Speaker 12: and good for the government to take on more debt 660 00:33:11,440 --> 00:33:13,800 Speaker 12: to prevent local government sort of going to these hidden 661 00:33:14,280 --> 00:33:19,640 Speaker 12: financing vehicles to finance infrastructure to sort of boost their economies. 662 00:33:20,120 --> 00:33:23,240 Speaker 12: You know, it comes with greater control for the central government. 663 00:33:23,480 --> 00:33:25,840 Speaker 12: So when the government is raising these funds themselves and 664 00:33:25,880 --> 00:33:28,760 Speaker 12: then distributing them out to the provinces, they get to 665 00:33:28,840 --> 00:33:32,240 Speaker 12: decide more who gets what pile of the pot. And 666 00:33:32,320 --> 00:33:33,880 Speaker 12: so there's a risk that when you do that, you 667 00:33:33,920 --> 00:33:38,400 Speaker 12: can disincentivize local officials who no longer you know, have 668 00:33:38,520 --> 00:33:42,120 Speaker 12: this system where if they are working hard and being innovative, 669 00:33:42,120 --> 00:33:44,640 Speaker 12: they're sort of generating their own revenue that perhaps relying 670 00:33:44,640 --> 00:33:47,560 Speaker 12: on handouts from the government. So I think it's a 671 00:33:47,600 --> 00:33:49,520 Speaker 12: good idea in practice, and it's going to sort of 672 00:33:50,080 --> 00:33:53,280 Speaker 12: sort of go some way to sort of address some 673 00:33:53,360 --> 00:33:56,760 Speaker 12: of the risks involved in local government spending. But they 674 00:33:56,760 --> 00:33:59,760 Speaker 12: also have to sort of manage how those funds are 675 00:33:59,800 --> 00:34:01,960 Speaker 12: just out and make sure they keep the local officials 676 00:34:02,000 --> 00:34:03,000 Speaker 12: also motivated. 677 00:34:03,400 --> 00:34:06,000 Speaker 5: So we've talked about the crisis of confidence both among 678 00:34:06,040 --> 00:34:08,719 Speaker 5: consumers and businesses. We know that we know about the 679 00:34:08,760 --> 00:34:12,520 Speaker 5: problem and the property market that's apparent. Chinese stocks have 680 00:34:13,000 --> 00:34:16,040 Speaker 5: been floundering near five year lows, a lot of concern 681 00:34:16,080 --> 00:34:19,520 Speaker 5: about economic growth going forward. We haven't mentioned the deflation 682 00:34:19,719 --> 00:34:22,680 Speaker 5: story that is obviously deep into levels that we haven't 683 00:34:22,719 --> 00:34:25,960 Speaker 5: seen since the global financial crisis. Brian and I were 684 00:34:26,000 --> 00:34:29,279 Speaker 5: talking last week with our own John Liu from our 685 00:34:29,360 --> 00:34:33,160 Speaker 5: bureau in Beijing about whether it's fair to compare what 686 00:34:33,280 --> 00:34:36,320 Speaker 5: China is going through these days with a turmoil that 687 00:34:36,440 --> 00:34:39,120 Speaker 5: was seen back in twenty fifteen. Here's John lu. 688 00:34:39,239 --> 00:34:41,600 Speaker 13: The relationship with the United States is much worse than 689 00:34:41,640 --> 00:34:44,319 Speaker 13: it was in twenty fifteen. That was the Obama administration. 690 00:34:44,719 --> 00:34:48,160 Speaker 13: China hosted the G twenty. Barack Obama and Shiji King 691 00:34:48,239 --> 00:34:50,720 Speaker 13: stood up at the G twenty in Hanjo and announced 692 00:34:50,760 --> 00:34:52,920 Speaker 13: that the US and China we're going to cooperate on 693 00:34:53,560 --> 00:34:57,400 Speaker 13: carbon goals. That period of time has ended. At the 694 00:34:57,400 --> 00:35:00,400 Speaker 13: same time, there are other issues. The population China is 695 00:35:00,400 --> 00:35:03,560 Speaker 13: now shrinking. There's a demographic sort of conundrum that is 696 00:35:03,640 --> 00:35:06,560 Speaker 13: much more pronounced now than it was in twenty fifteen. 697 00:35:06,960 --> 00:35:10,560 Speaker 4: Yeah, that's Sean Liu in Beijing. And it does raise 698 00:35:10,600 --> 00:35:13,480 Speaker 4: a point here at Jenny about if the United States 699 00:35:13,560 --> 00:35:17,160 Speaker 4: relationship with China is really winging on the Chinese economy. 700 00:35:17,640 --> 00:35:21,480 Speaker 12: Yeah, I mean, I think when we've conducted surveys among 701 00:35:21,560 --> 00:35:24,080 Speaker 12: investors and economists, it comes up as sort of one 702 00:35:24,080 --> 00:35:27,799 Speaker 12: of the top concerns the geopolitical swings. I would say 703 00:35:27,880 --> 00:35:31,200 Speaker 12: since since the she Biden meeting, things seem to have 704 00:35:31,239 --> 00:35:34,160 Speaker 12: really leveled off and the relationship has improved. But you know, 705 00:35:34,320 --> 00:35:37,200 Speaker 12: there's a US election looming this year, and one of 706 00:35:37,239 --> 00:35:42,440 Speaker 12: the candidates or presumed candidates, is threatening sixty percent tariffs 707 00:35:42,880 --> 00:35:47,000 Speaker 12: on China. So there's a lot of headwinds in the pipeline. 708 00:35:47,440 --> 00:35:50,000 Speaker 12: And so for US companies in China, they don't know 709 00:35:50,080 --> 00:35:52,880 Speaker 12: at the moment, and you know what sort of trade 710 00:35:52,920 --> 00:35:55,560 Speaker 12: curves are down the road. So I would say it's 711 00:35:55,800 --> 00:35:58,640 Speaker 12: a year full of unknowns. Right now in terms of 712 00:35:58,640 --> 00:36:00,520 Speaker 12: the US China relationship. 713 00:36:00,200 --> 00:36:02,480 Speaker 5: Are we likely to get any guidance on how much 714 00:36:02,520 --> 00:36:06,520 Speaker 5: more the government is willing to spend for its military budget. 715 00:36:07,160 --> 00:36:07,359 Speaker 4: Yeah. 716 00:36:07,400 --> 00:36:09,279 Speaker 12: Absolutely, That's one of the things that we'll be working 717 00:36:09,360 --> 00:36:12,760 Speaker 12: looking out for in the work report, and it tends 718 00:36:12,800 --> 00:36:15,960 Speaker 12: to increase every single year. I think China has the 719 00:36:16,040 --> 00:36:18,640 Speaker 12: second highest military budget in the world after the US, 720 00:36:19,239 --> 00:36:22,840 Speaker 12: so we'll certainly be looking out for that, and also 721 00:36:22,920 --> 00:36:27,120 Speaker 12: sort of any language in any of the reports around Taiwan. 722 00:36:27,200 --> 00:36:29,640 Speaker 12: I think last year it was kind of fairly a 723 00:36:29,760 --> 00:36:32,600 Speaker 12: commodative language that we saw, sort of saying that they 724 00:36:32,640 --> 00:36:35,000 Speaker 12: were looking for like peaceful relationships and to sort of 725 00:36:35,040 --> 00:36:41,000 Speaker 12: improve ties in the toy's economies rather than any warmongering talk. 726 00:36:41,160 --> 00:36:43,560 Speaker 12: So we'll also be on the lookout for that as well. 727 00:36:43,840 --> 00:36:45,560 Speaker 5: Jenny will have to have you back in the week 728 00:36:45,560 --> 00:36:49,160 Speaker 5: ahead when we start to get details of the NPC meeting. 729 00:36:49,239 --> 00:36:52,320 Speaker 5: That is Bloomberg's Jenny Marsh, the team leader for Greater 730 00:36:52,480 --> 00:36:55,839 Speaker 5: China ECO and GOV. I'm Doug Krisner. You can join 731 00:36:55,880 --> 00:37:00,400 Speaker 5: Brian Curtison myself weekdays here for Bloomberg Daybreak Asia at 732 00:37:00,440 --> 00:37:04,400 Speaker 5: nine am in Hong Kong eight pm on Wall Street Tom. 733 00:37:04,560 --> 00:37:07,160 Speaker 1: Our thanks to Brian and Doug. And that does it 734 00:37:07,239 --> 00:37:09,920 Speaker 1: for this edition of Bloomberg day Break Weekend. Join us 735 00:37:09,920 --> 00:37:12,160 Speaker 1: again Monday morning at five am Wall Street time for 736 00:37:12,200 --> 00:37:14,920 Speaker 1: the latest on markets overseas and the news you need 737 00:37:14,960 --> 00:37:18,000 Speaker 1: to start your day. I'm Tom Buzzby. Stay with us. 738 00:37:18,040 --> 00:37:21,920 Speaker 1: Top stories and global business headlines are coming up right now.