1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:09,360 --> 00:00:11,840 Speaker 2: This is Bloomberg day Break Weekend, our global look at 3 00:00:11,840 --> 00:00:14,240 Speaker 2: the top stories in the coming week from our Daybreak 4 00:00:14,240 --> 00:00:16,880 Speaker 2: anchors all around the world, and straight ahead on the program, 5 00:00:16,880 --> 00:00:19,640 Speaker 2: a look at US retail sales and what that data 6 00:00:19,680 --> 00:00:23,680 Speaker 2: point may mean for Federal reserve policy moving forward. I'm 7 00:00:23,720 --> 00:00:24,960 Speaker 2: Tom Busby in New York. 8 00:00:25,280 --> 00:00:27,400 Speaker 1: I'm Stephen Carolyn London. But we're looking ahead to the 9 00:00:27,480 --> 00:00:30,600 Speaker 1: UK's new Prime minister hosting his neighbors for a meeting 10 00:00:30,760 --> 00:00:32,559 Speaker 1: of the European political community. 11 00:00:32,840 --> 00:00:35,280 Speaker 3: And I'm Brian Curtis in Hong Kong. We look ahead 12 00:00:35,320 --> 00:00:38,159 Speaker 3: to China's Third Plan of and whether it's steady as 13 00:00:38,159 --> 00:00:42,040 Speaker 3: she goes on policy or surprising new developments. 14 00:00:42,440 --> 00:00:46,440 Speaker 4: That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 15 00:00:46,479 --> 00:00:50,280 Speaker 4: Eleve Them three Own New York, Bloomberg ninety nine to one, Washington, DC, 16 00:00:50,600 --> 00:00:54,600 Speaker 4: Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco, 17 00:00:54,880 --> 00:00:59,080 Speaker 4: DAB Digital Radio, London, Sirius XM one nineteen and around 18 00:00:59,160 --> 00:01:01,800 Speaker 4: the world on Bloemberg Radio dot com and via the 19 00:01:01,840 --> 00:01:03,000 Speaker 4: Bloomberg Business App. 20 00:01:06,840 --> 00:01:09,319 Speaker 2: Good day to you. I'm Tom Busby, and we begin 21 00:01:09,400 --> 00:01:12,920 Speaker 2: today's program with US retail sales for June. That data 22 00:01:13,000 --> 00:01:15,959 Speaker 2: out on Tuesday morning, eight thirty am Wall Street Time. 23 00:01:16,120 --> 00:01:19,440 Speaker 2: And after more signs that inflation is cooling, how might 24 00:01:19,520 --> 00:01:22,320 Speaker 2: that move the needle for FED policy going forward? Well, 25 00:01:22,360 --> 00:01:28,000 Speaker 2: for more, we're joined by Estello, us economist with Bloomberg Economics. Well, Estelle, 26 00:01:28,040 --> 00:01:31,759 Speaker 2: after two months in a row of pretty lackluster retail spending, 27 00:01:32,240 --> 00:01:35,000 Speaker 2: what is your outlook for retail sales in June. 28 00:01:35,800 --> 00:01:40,280 Speaker 5: We're actually expecting another month of very weak retail sales 29 00:01:40,319 --> 00:01:44,880 Speaker 5: for June. We're expecting the headline retails print to print 30 00:01:45,000 --> 00:01:49,560 Speaker 5: at negative zero point three percent. We're expecting the more 31 00:01:49,960 --> 00:01:54,320 Speaker 5: important control group retail sales figure, that's the retail sales 32 00:01:54,480 --> 00:01:58,360 Speaker 5: figure that strips out more of the volatile components of 33 00:01:58,720 --> 00:02:02,760 Speaker 5: the retail sales data, to print at zero percent. So 34 00:02:02,800 --> 00:02:08,040 Speaker 5: that's flat reading of retail sales. Now, the negative zero 35 00:02:08,120 --> 00:02:12,600 Speaker 5: point three percent headline retail sales reading we're expecting partially 36 00:02:12,680 --> 00:02:16,840 Speaker 5: reflects a really sharp decline in auto sales in the 37 00:02:16,840 --> 00:02:20,360 Speaker 5: month of June. Now, part of this is reflective of 38 00:02:20,400 --> 00:02:22,880 Speaker 5: the fact that a lot of auto dealers in the 39 00:02:22,880 --> 00:02:26,960 Speaker 5: month of June saw a cyber attack on the software 40 00:02:27,040 --> 00:02:30,880 Speaker 5: that they use to process sales, so that affected the 41 00:02:30,919 --> 00:02:34,559 Speaker 5: top line sales figures we saw in June for automobiles 42 00:02:34,919 --> 00:02:37,800 Speaker 5: and may not actually be reflective of a sharp pullback 43 00:02:37,840 --> 00:02:40,240 Speaker 5: in consumer spending, but that's in the data. So that's 44 00:02:40,240 --> 00:02:43,960 Speaker 5: why we're forecasting a negative numbering you mentioned that we've 45 00:02:44,000 --> 00:02:48,080 Speaker 5: already had two consecutive months of week retail sales prints. 46 00:02:48,440 --> 00:02:52,600 Speaker 5: If our forecast for the June retail sales is correct, 47 00:02:52,919 --> 00:02:56,040 Speaker 5: it's going to show that consumer spending is very much 48 00:02:56,120 --> 00:02:59,720 Speaker 5: a slowing trend. And what that mainly is reflecting is 49 00:02:59,720 --> 00:03:03,680 Speaker 5: that consumers are very much feeling the pressure from the 50 00:03:03,680 --> 00:03:06,959 Speaker 5: Federal Reserve's high interest rates. The Fed is very much 51 00:03:07,080 --> 00:03:10,240 Speaker 5: waiting to have more confidence that inflation is going towards 52 00:03:10,280 --> 00:03:13,760 Speaker 5: this two percent target. And how consumer spending plays into 53 00:03:13,800 --> 00:03:17,280 Speaker 5: that is that as we see consumers being stressed about 54 00:03:17,560 --> 00:03:20,760 Speaker 5: by high interest rates, they're pulling back spending and a 55 00:03:20,760 --> 00:03:24,040 Speaker 5: lot of retailers are reacting to that by lowering prices. 56 00:03:24,160 --> 00:03:25,960 Speaker 2: Why don't we talk about the prices, because we have 57 00:03:26,040 --> 00:03:29,000 Speaker 2: seen airfares go down, we have seen used car prices 58 00:03:29,040 --> 00:03:32,720 Speaker 2: go down. Auto insurance of course still you know significantly higher, 59 00:03:33,480 --> 00:03:36,320 Speaker 2: but we did see there is some hope for consumers. 60 00:03:36,440 --> 00:03:39,640 Speaker 2: We saw a significant slow down in inflation in June. 61 00:03:39,680 --> 00:03:41,600 Speaker 2: Now most of that on housing costs and rents, but 62 00:03:41,640 --> 00:03:44,360 Speaker 2: that's a big part of household budgets. How will that 63 00:03:44,440 --> 00:03:46,120 Speaker 2: impact people spending? 64 00:03:46,520 --> 00:03:48,880 Speaker 5: As health process come down, that's going to free up 65 00:03:48,880 --> 00:03:52,920 Speaker 5: a little more disposable income for consumers. It's going to 66 00:03:52,960 --> 00:03:56,160 Speaker 5: ease off the pressure on consumers, but overall, it's not 67 00:03:56,200 --> 00:03:59,640 Speaker 5: going to change the fact that consumers are feeling a 68 00:03:59,680 --> 00:04:03,720 Speaker 5: little less flushed compared to prior to the pandemic. So 69 00:04:04,240 --> 00:04:07,120 Speaker 5: over the past you know, six months, consumers have been 70 00:04:07,240 --> 00:04:11,720 Speaker 5: spending more than their incomes have been growing. And as 71 00:04:12,000 --> 00:04:15,440 Speaker 5: the label market cools further, we're expected to consumers to 72 00:04:15,480 --> 00:04:18,520 Speaker 5: feel a little more cautious about their spending, even if 73 00:04:18,600 --> 00:04:20,560 Speaker 5: their other household costs are coming down. 74 00:04:20,800 --> 00:04:22,159 Speaker 1: But at least there is hope. 75 00:04:22,240 --> 00:04:24,240 Speaker 2: There is hope and a lot of talk now, especially 76 00:04:24,279 --> 00:04:28,320 Speaker 2: after last week's inflation data, that in September, when we 77 00:04:28,360 --> 00:04:30,400 Speaker 2: have a lot of back to schools spending, we have 78 00:04:30,480 --> 00:04:34,400 Speaker 2: a lot of new cars coming on dealership lots that 79 00:04:34,520 --> 00:04:37,160 Speaker 2: if there is a rate cut from the FED, and 80 00:04:37,440 --> 00:04:40,520 Speaker 2: it was a pretty dubbish tone last week in annual 81 00:04:40,560 --> 00:04:43,920 Speaker 2: testimony by Chairman Powell to Congress that we really could 82 00:04:44,200 --> 00:04:46,320 Speaker 2: you know, signal a real boost for the US consumer 83 00:04:46,640 --> 00:04:47,840 Speaker 2: through the end of this year. 84 00:04:47,920 --> 00:04:51,359 Speaker 5: Though, well, that's not how we're looking at things right now. 85 00:04:51,440 --> 00:04:56,039 Speaker 6: So basically we still have expectations for our VET cut 86 00:04:56,480 --> 00:05:00,799 Speaker 6: in September. But usually if you look at his historical data, 87 00:05:00,960 --> 00:05:04,680 Speaker 6: it takes time for consumers to feel confident again. If 88 00:05:04,680 --> 00:05:08,760 Speaker 6: you look at the underlying drivers of consumer spending, consumers 89 00:05:08,839 --> 00:05:12,200 Speaker 6: usually spend when they feel like their income can support it, 90 00:05:12,600 --> 00:05:16,120 Speaker 6: and income growth is supported by a strong labor market. 91 00:05:16,440 --> 00:05:19,320 Speaker 6: Right now, even if the FED cuts in September, we're 92 00:05:19,360 --> 00:05:22,400 Speaker 6: still expecting labor market to slow and consumers to not 93 00:05:22,520 --> 00:05:27,120 Speaker 6: feel at support from a FED cut until late twenty. 94 00:05:26,880 --> 00:05:30,360 Speaker 2: Okay, Well, June retail sales data out Tuesday morning. That's 95 00:05:30,360 --> 00:05:33,359 Speaker 2: ahead of Wall Street's opening bell and our thanks to Estello, 96 00:05:33,839 --> 00:05:37,680 Speaker 2: us economist with Bloomberg Economics. All right, we move next 97 00:05:37,680 --> 00:05:41,719 Speaker 2: to corporate earnings and streaming giant Netflix posting its latest 98 00:05:41,800 --> 00:05:45,159 Speaker 2: quarterly results this Thursday. Key for investors how the companies 99 00:05:45,480 --> 00:05:49,400 Speaker 2: multiple growth levers like live comedy shows, live sporting events. 100 00:05:49,440 --> 00:05:53,400 Speaker 2: It's ad supported tier and subscription price hikes has impacted 101 00:05:53,440 --> 00:05:55,840 Speaker 2: revenue and for all that and more. We're joined by 102 00:05:55,839 --> 00:06:00,760 Speaker 2: Githa ragenathin Bloomberg Intelligence analyst on US media. Well, getha, 103 00:06:00,920 --> 00:06:03,160 Speaker 2: what are you expecting to see from Netflix? 104 00:06:03,560 --> 00:06:03,839 Speaker 7: Tom? 105 00:06:03,920 --> 00:06:06,880 Speaker 8: We are really expecting a blockbuster quarter. So if you 106 00:06:07,040 --> 00:06:10,240 Speaker 8: just look at Netflix's performance over the past few months, 107 00:06:10,680 --> 00:06:13,560 Speaker 8: I would say Netflix is firing on all cylinders. The 108 00:06:13,600 --> 00:06:17,080 Speaker 8: company is in the strongest position that it's ever been, 109 00:06:18,160 --> 00:06:21,960 Speaker 8: I think fundamentally, I think competitively as well as financially. 110 00:06:22,680 --> 00:06:26,760 Speaker 8: We continue to see very good subscriber momentum. Remember they 111 00:06:26,800 --> 00:06:30,479 Speaker 8: added something like nine point three million subscribers in the 112 00:06:30,520 --> 00:06:34,919 Speaker 8: first quarter. Obviously, we don't expect the same level of 113 00:06:34,920 --> 00:06:37,560 Speaker 8: subscriber gains in the second quarter, but we think it's 114 00:06:37,560 --> 00:06:39,080 Speaker 8: going to be fairly strong. We think it's going to 115 00:06:39,120 --> 00:06:41,240 Speaker 8: be close to almost six million. And that's on the 116 00:06:41,279 --> 00:06:43,839 Speaker 8: back of a lot of initiatives that the company has introduced. 117 00:06:43,880 --> 00:06:47,720 Speaker 8: So they have this widespread password crackdown, and of course 118 00:06:47,760 --> 00:06:50,880 Speaker 8: they have this new ad supported tier, which we think 119 00:06:50,880 --> 00:06:52,640 Speaker 8: has been working really well for them. 120 00:06:52,800 --> 00:06:56,040 Speaker 2: And are the subscriber adds global? How are they doing 121 00:06:56,040 --> 00:06:57,920 Speaker 2: in the US and how are they doing elsewhere? 122 00:06:58,680 --> 00:07:02,719 Speaker 8: They're actually surprisingly strong tom in the US. And remember 123 00:07:02,720 --> 00:07:05,719 Speaker 8: the US is a fairly saturated market, and we're still 124 00:07:05,760 --> 00:07:10,360 Speaker 8: seeing pretty pretty good growth. Remember Netflix now actually at 125 00:07:10,400 --> 00:07:14,760 Speaker 8: about eighty million subscribers, actually has more subscribers than the 126 00:07:14,800 --> 00:07:19,280 Speaker 8: traditional TV bundles. So Netflix has very much become the 127 00:07:19,480 --> 00:07:22,680 Speaker 8: go to option, and if you're thinking about TV viewing, 128 00:07:22,760 --> 00:07:25,760 Speaker 8: Netflix really is the first choice and is the anchor 129 00:07:25,880 --> 00:07:29,280 Speaker 8: I would say for most consumers when it comes to 130 00:07:29,280 --> 00:07:31,640 Speaker 8: the living room. So we're seeing very good growth in 131 00:07:31,680 --> 00:07:33,960 Speaker 8: the US, given that it's a saturated market, but obviously 132 00:07:34,080 --> 00:07:37,720 Speaker 8: majority of the growth still comes from the international markets. 133 00:07:38,560 --> 00:07:42,200 Speaker 2: And let's talk about some of these newer initiatives from Netflix. 134 00:07:42,560 --> 00:07:44,720 Speaker 2: Christmas Day may never be the same again, right with 135 00:07:45,160 --> 00:07:49,680 Speaker 2: this deal to stream live NFL games, And we saw 136 00:07:49,720 --> 00:07:53,600 Speaker 2: this John Mulaney, Everyone's in LA five or six live shows, 137 00:07:53,600 --> 00:07:58,240 Speaker 2: comedy shows. It's all about something Netflix has never done before, right, 138 00:07:58,400 --> 00:07:59,720 Speaker 2: Advertising revenue. 139 00:08:00,640 --> 00:08:04,680 Speaker 8: Oh absolutely, I mean this is where I think investors 140 00:08:04,680 --> 00:08:08,280 Speaker 8: are getting really really excited about the future potential for 141 00:08:08,360 --> 00:08:12,000 Speaker 8: this company, because we know subscription growth, we know they've 142 00:08:12,040 --> 00:08:16,160 Speaker 8: really kind of delivered on subscription growth, but advertising is 143 00:08:16,200 --> 00:08:19,040 Speaker 8: a whole new area for them, and they are really 144 00:08:19,120 --> 00:08:22,560 Speaker 8: doing things to kind of really boost that revenue. So 145 00:08:23,200 --> 00:08:26,200 Speaker 8: they've moved into live event sports programming. 146 00:08:25,720 --> 00:08:27,960 Speaker 7: In a huge way, obviously with this NFL deal. 147 00:08:28,560 --> 00:08:32,640 Speaker 8: Obviously that's going to be something very very attractive to advertisers, 148 00:08:32,760 --> 00:08:38,760 Speaker 8: especially since the advertising subscription tier is priced very economically, 149 00:08:38,840 --> 00:08:41,040 Speaker 8: very competitively at seven dollars a month, So we think 150 00:08:41,080 --> 00:08:43,480 Speaker 8: a lot of people will sign on. And they're doing 151 00:08:43,480 --> 00:08:45,360 Speaker 8: lots of different things, as you just pointed out, obviously 152 00:08:45,400 --> 00:08:46,160 Speaker 8: the comedy shows. 153 00:08:46,160 --> 00:08:47,560 Speaker 7: You had the Tom Brady roast. 154 00:08:48,320 --> 00:08:51,200 Speaker 8: You know, we have a Mike Tyson Versus Jake Paul 155 00:08:51,280 --> 00:08:53,840 Speaker 8: event that is coming up sometime in November. So they're 156 00:08:53,880 --> 00:08:57,079 Speaker 8: doing a lot of things in terms of content, really 157 00:08:57,120 --> 00:09:01,120 Speaker 8: kind of broadening their content appeal quite aggressively. 158 00:09:01,800 --> 00:09:03,960 Speaker 2: And when I turn on Netflix, which I have at home, 159 00:09:04,080 --> 00:09:07,200 Speaker 2: I see a lot more international shows and some of 160 00:09:07,200 --> 00:09:10,080 Speaker 2: them have been tremendous hits here in the US, whatever 161 00:09:10,160 --> 00:09:14,959 Speaker 2: language they're in. It's incredible how this growth is everywhere. 162 00:09:16,160 --> 00:09:20,240 Speaker 8: Oh absolutely, And you know that is translating into revenue growth, 163 00:09:20,240 --> 00:09:23,600 Speaker 8: that is translating into subscriber growth, but most importantly, Tom, 164 00:09:23,920 --> 00:09:27,280 Speaker 8: that is translating into engagement. And really this is something 165 00:09:27,320 --> 00:09:30,120 Speaker 8: that Netflix has been driving home now for so many quarters, 166 00:09:30,120 --> 00:09:33,040 Speaker 8: so many years. They want to see people come to 167 00:09:33,120 --> 00:09:36,080 Speaker 8: their platform and then never leave the platform, because that 168 00:09:36,240 --> 00:09:39,280 Speaker 8: is how they can get to upsell so many more 169 00:09:39,559 --> 00:09:43,040 Speaker 8: you know, new products, whether it's gaming, whether it's advertising, 170 00:09:43,559 --> 00:09:45,760 Speaker 8: as they kind of expand into new categories. And we're 171 00:09:45,760 --> 00:09:49,000 Speaker 8: seeing that engagement is very very strong for Netflix, and 172 00:09:49,040 --> 00:09:52,280 Speaker 8: of course a lot of local language content is definitely helping. 173 00:09:52,320 --> 00:09:55,320 Speaker 8: So just in the second quarter, we saw you know, 174 00:09:55,360 --> 00:09:58,520 Speaker 8: of course, Bridgerton was the most watched show, but we 175 00:09:58,559 --> 00:10:01,240 Speaker 8: also saw some of you know, the Korean language dramas 176 00:10:01,320 --> 00:10:05,400 Speaker 8: Queen of Tears for instance, performing very very well, and 177 00:10:05,440 --> 00:10:07,520 Speaker 8: we're probably going to see more of that as Quid Game. 178 00:10:07,559 --> 00:10:09,560 Speaker 8: The second season of Squid Game comes out a little 179 00:10:09,600 --> 00:10:10,440 Speaker 8: bit later this year. 180 00:10:11,200 --> 00:10:13,840 Speaker 2: Now, also, Netflix, the success of all these shows, the 181 00:10:14,000 --> 00:10:17,000 Speaker 2: success you know, the revenue streams they have, it has 182 00:10:17,080 --> 00:10:21,319 Speaker 2: forced other streamers to look for partnerships just to compete 183 00:10:21,840 --> 00:10:23,880 Speaker 2: even close to the level of Netflix. 184 00:10:24,480 --> 00:10:27,960 Speaker 8: Yeah, and that actually works so well for for Netflix, 185 00:10:28,040 --> 00:10:31,920 Speaker 8: tom because you know, obviously, originally they were investing very 186 00:10:32,000 --> 00:10:34,679 Speaker 8: very heavily in you know, their own content, with what 187 00:10:34,720 --> 00:10:37,640 Speaker 8: we call original content. But now we're seeing a much 188 00:10:37,720 --> 00:10:40,600 Speaker 8: more kind of balanced mix, and when they go for 189 00:10:40,720 --> 00:10:44,160 Speaker 8: more licensed content, we see the effects in terms of 190 00:10:44,640 --> 00:10:47,960 Speaker 8: the bottom line because it's it's much cheaper, you know, 191 00:10:48,040 --> 00:10:50,240 Speaker 8: it's it's content that kind of travels well. It is 192 00:10:50,280 --> 00:10:54,400 Speaker 8: time tested content, and obviously we're seeing free cash flow 193 00:10:54,520 --> 00:10:57,960 Speaker 8: and operating profit get a huge boost from them being 194 00:10:58,080 --> 00:11:01,720 Speaker 8: far more rational when it comes to content costs. So 195 00:11:01,800 --> 00:11:03,960 Speaker 8: it's really kind of not only helping them kind of 196 00:11:04,000 --> 00:11:07,760 Speaker 8: build their competitive mode getting all these content titles from 197 00:11:07,840 --> 00:11:10,960 Speaker 8: other producers of content, but it is also kind of 198 00:11:11,040 --> 00:11:13,440 Speaker 8: helping them actually strengthen their bottom line. 199 00:11:14,160 --> 00:11:16,600 Speaker 2: It's big in a bottom line. Those shares of Netflix 200 00:11:16,679 --> 00:11:19,520 Speaker 2: up about forty percent so far this year. Where do 201 00:11:19,559 --> 00:11:22,320 Speaker 2: you think it heads for the remainder of twenty twenty four. 202 00:11:23,120 --> 00:11:26,160 Speaker 8: So I think, you know, we're going to see continued 203 00:11:26,200 --> 00:11:27,800 Speaker 8: momentum and we're seeing. 204 00:11:27,520 --> 00:11:29,280 Speaker 7: That with on the subscriber side. 205 00:11:29,320 --> 00:11:32,520 Speaker 8: But I think the real big catalyst that could potentially 206 00:11:32,640 --> 00:11:35,400 Speaker 8: happen in the second half of the year is a 207 00:11:35,440 --> 00:11:38,360 Speaker 8: price increase. So we have not seen Netflix increase their 208 00:11:38,400 --> 00:11:42,199 Speaker 8: prices on the standard tier, which is the fifteen dollars 209 00:11:42,240 --> 00:11:45,880 Speaker 8: fifty cent standard product that they offer in the United States. 210 00:11:45,920 --> 00:11:47,960 Speaker 8: We haven't seen them increased prices on that tier now 211 00:11:48,000 --> 00:11:50,640 Speaker 8: for almost about two years, so they're definitely due for 212 00:11:50,679 --> 00:11:53,600 Speaker 8: a price increase. And we've seen price increases across the board. 213 00:11:53,600 --> 00:11:56,200 Speaker 8: We've seen it at Spotify, We've seen it, you know, 214 00:11:56,240 --> 00:11:59,559 Speaker 8: at Max, a lot of the rival services are increasing 215 00:12:00,120 --> 00:12:04,040 Speaker 8: you know, prices. So just kind of given Netflix's low 216 00:12:04,160 --> 00:12:07,160 Speaker 8: rates of churn, we definitely think that they are going 217 00:12:07,200 --> 00:12:09,840 Speaker 8: to raise their prices very soon. And as we see 218 00:12:09,880 --> 00:12:12,480 Speaker 8: you know, those price increases returned to kind of the 219 00:12:12,520 --> 00:12:16,720 Speaker 8: normal cadence. Netflix obviously then has ample room to sustain 220 00:12:16,960 --> 00:12:21,280 Speaker 8: double digit annual revenue growth and obviously huge levels of 221 00:12:21,320 --> 00:12:22,560 Speaker 8: operating margin expansion. 222 00:12:22,880 --> 00:12:23,240 Speaker 4: Well. 223 00:12:23,600 --> 00:12:27,079 Speaker 2: Earnings for second quarter out this Thursday for Netflix. Our 224 00:12:27,080 --> 00:12:31,800 Speaker 2: thanks to Getha raghanoffin Bloomberg Intelligence analysts on US media. 225 00:12:31,920 --> 00:12:34,160 Speaker 2: Coming up on Bloomberg day Break weekend, we look ahead 226 00:12:34,160 --> 00:12:37,560 Speaker 2: to the UK's new Prime Minister hosting his neighbors for 227 00:12:37,600 --> 00:12:41,000 Speaker 2: a meeting of the European political community. I'm Tom Busby, 228 00:12:41,120 --> 00:12:55,400 Speaker 2: and this is Bloomberg. This is Bloomberg day Break Weekend, 229 00:12:55,480 --> 00:12:57,960 Speaker 2: our global look ahead at the top stories for investors 230 00:12:58,000 --> 00:13:00,600 Speaker 2: in the coming week. I'm Tom Busby in New York. 231 00:13:01,000 --> 00:13:02,960 Speaker 2: Up later on our program, we look ahead to a 232 00:13:03,040 --> 00:13:06,520 Speaker 2: major policy meeting for top officials in China, but first, 233 00:13:06,880 --> 00:13:10,200 Speaker 2: the European Political Community Meeting takes place in the UK 234 00:13:10,320 --> 00:13:13,560 Speaker 2: this week, as Keir Starmer, the country's newly elected Prime Minister, 235 00:13:14,160 --> 00:13:17,360 Speaker 2: brings dozens of high level lawmakers from across Europe together 236 00:13:17,440 --> 00:13:22,000 Speaker 2: discussing shared challenges like Russia's war against Ukraine illegal immigration, 237 00:13:22,280 --> 00:13:25,960 Speaker 2: even as many of those leaders face political challenges in 238 00:13:26,000 --> 00:13:28,679 Speaker 2: their own countries. For more, let's go to London and 239 00:13:28,720 --> 00:13:31,640 Speaker 2: bring in Bloomberg Daybreak Europe anchor Stephen Carroll. 240 00:13:32,160 --> 00:13:34,800 Speaker 1: Tom In only his second week as Prime Minister, Keir 241 00:13:34,840 --> 00:13:37,960 Speaker 1: Starmer will host European leaders at Blenham Palace for the 242 00:13:38,040 --> 00:13:41,880 Speaker 1: fourth European Political Community Meeting. The EPCs a forum for 243 00:13:41,920 --> 00:13:45,280 Speaker 1: European Union countries and their neighbors to meet. It's twice 244 00:13:45,360 --> 00:13:48,400 Speaker 1: yearly gatherings are hosted alternately by a country that's in 245 00:13:48,480 --> 00:13:51,880 Speaker 1: the EU and one that isn't. Choosing the Oxfordshire stately 246 00:13:51,960 --> 00:13:54,800 Speaker 1: home as the backdrop for these discussions may itself be 247 00:13:54,800 --> 00:13:58,079 Speaker 1: an indication of Starmer's in tensions. Known as the birthplace 248 00:13:58,120 --> 00:14:00,520 Speaker 1: of Winston Churchill, the Prime Minister may be hoping to 249 00:14:00,600 --> 00:14:04,960 Speaker 1: draw inspiration from Britain's revered wartime leader. The plight of 250 00:14:05,080 --> 00:14:07,880 Speaker 1: Ukraine is likely to be high on the agenda in discussions, 251 00:14:07,960 --> 00:14:11,440 Speaker 1: especially following the Russian bombing of a children's hospital in Kiev, 252 00:14:11,960 --> 00:14:15,360 Speaker 1: but domestic tensions in other countries may overshadow these talks. 253 00:14:15,400 --> 00:14:18,800 Speaker 1: In France, President Macron remains in a vulnerable position after 254 00:14:18,840 --> 00:14:22,280 Speaker 1: his Centrist alliance lost its relative majority in the country's 255 00:14:22,320 --> 00:14:26,200 Speaker 1: recent parliamentary elections. In Germany, Chancellor Olaf Schultz's position has 256 00:14:26,240 --> 00:14:29,240 Speaker 1: been weakened by a bruising defeat in last months European 257 00:14:29,320 --> 00:14:32,760 Speaker 1: Parliament vote. In fact, Kirs Starmer cuts a rare figure 258 00:14:32,760 --> 00:14:35,040 Speaker 1: in Europe as a leader with a clear mandate and 259 00:14:35,240 --> 00:14:39,120 Speaker 1: majority ready to implement his agenda. The UK Prime Minister's 260 00:14:39,120 --> 00:14:41,480 Speaker 1: approach to foreign and defense policy is something that we've 261 00:14:41,480 --> 00:14:45,120 Speaker 1: been discussing with Jamie She, associate fellow at Chatham House 262 00:14:45,160 --> 00:14:48,280 Speaker 1: and a former NATO official. He started by offering his 263 00:14:48,400 --> 00:14:51,960 Speaker 1: thoughts on Kiir Starmer's assertion that Ukraine can use British 264 00:14:52,000 --> 00:14:54,480 Speaker 1: missiles to strike targets inside Russia. 265 00:14:54,840 --> 00:14:57,840 Speaker 9: Well, I think it's obviously good news for President's Vilenski 266 00:14:57,920 --> 00:15:01,080 Speaker 9: because clearly at the time when Theussians have been massing 267 00:15:01,080 --> 00:15:04,000 Speaker 9: their forces just on their side of the border for 268 00:15:04,440 --> 00:15:07,400 Speaker 9: their offensives which have been taking place as you can 269 00:15:07,440 --> 00:15:11,360 Speaker 9: see in the Dombas region up near Kharkiv. If Ukraine 270 00:15:11,400 --> 00:15:13,600 Speaker 9: is going to really be able to defend itself, it 271 00:15:13,640 --> 00:15:16,360 Speaker 9: has to be able to strike the Russian fuel dumps, 272 00:15:16,760 --> 00:15:20,520 Speaker 9: the Russian storage facilities, their command and control, their communications, 273 00:15:20,840 --> 00:15:25,880 Speaker 9: their headquarters on Russian territory to disrupt their offensive preparations. 274 00:15:26,320 --> 00:15:30,600 Speaker 9: Ukraine has also had some success in attacking Russian airfields, 275 00:15:30,880 --> 00:15:35,000 Speaker 9: taking out some Russian strategic bombers very far away from 276 00:15:35,000 --> 00:15:38,320 Speaker 9: the Russian Ukraine border, and also those Russian fuel and 277 00:15:38,440 --> 00:15:41,600 Speaker 9: energy facilities that I was referring to earlier. So I 278 00:15:41,600 --> 00:15:44,680 Speaker 9: think Kairstarma has given President of Lanski a shot of 279 00:15:44,720 --> 00:15:47,160 Speaker 9: the arms to the extent and obviously, if Russia believes 280 00:15:47,200 --> 00:15:49,960 Speaker 9: it has full license from Russia to attack anything it 281 00:15:50,080 --> 00:15:53,160 Speaker 9: likes in Ukraine, the Ukrainian's cause of self defense have 282 00:15:53,240 --> 00:15:56,360 Speaker 9: to be able to strike back against the significant Russian 283 00:15:56,360 --> 00:15:59,280 Speaker 9: military targets, but obviously not Russian civilian targets. I think 284 00:15:59,400 --> 00:16:02,520 Speaker 9: Kiyostarma and other NATO leaders will draw a redline on 285 00:16:02,600 --> 00:16:06,000 Speaker 9: that the strikes have to be against the genuine military targets. 286 00:16:06,800 --> 00:16:09,480 Speaker 1: Does this though, on the question of striking military targets 287 00:16:09,520 --> 00:16:12,480 Speaker 1: open up divisions between the US and what France and 288 00:16:12,520 --> 00:16:14,960 Speaker 1: the UK are now saying about the use of weapons 289 00:16:15,000 --> 00:16:17,080 Speaker 1: to strike military targets inside Russia. 290 00:16:18,280 --> 00:16:21,080 Speaker 9: Well, since the beginning of the war, the Europeans have 291 00:16:21,160 --> 00:16:24,960 Speaker 9: often been out ahead of the United States in minery space. 292 00:16:25,040 --> 00:16:29,400 Speaker 9: For example, they decided the UK to provide tanks first, 293 00:16:29,480 --> 00:16:32,560 Speaker 9: a long time before the United States decided to do 294 00:16:32,600 --> 00:16:35,440 Speaker 9: the same. Similarly, with these long range artillery, these cruise 295 00:16:35,480 --> 00:16:39,440 Speaker 9: missilesy storm Shadows or the French scalps that we're talking 296 00:16:39,480 --> 00:16:43,920 Speaker 9: about now, the Europeans, with the Dutch and Danes, were 297 00:16:43,920 --> 00:16:45,720 Speaker 9: the first two across the Rubican when it came to 298 00:16:45,840 --> 00:16:49,280 Speaker 9: S sixteen aircraft, and the United States followed. So there 299 00:16:49,320 --> 00:16:52,200 Speaker 9: is often in NATO perception that it's always the Americans 300 00:16:52,200 --> 00:16:54,360 Speaker 9: who are out in front and the Europeans sort of 301 00:16:54,400 --> 00:16:58,280 Speaker 9: follow willy nilly sooner or later. But this time it 302 00:16:58,320 --> 00:17:00,840 Speaker 9: is the other way. But the fact of the matter 303 00:17:00,920 --> 00:17:03,120 Speaker 9: is that Biden has also recently shown a little bit 304 00:17:03,120 --> 00:17:08,480 Speaker 9: of flexibility, allowing the Ukrainians to use the long range 305 00:17:08,800 --> 00:17:13,040 Speaker 9: US attackers artillery shells against the targets on Russian territory, 306 00:17:13,160 --> 00:17:15,080 Speaker 9: but Biden has said that he doesn't want these to 307 00:17:15,119 --> 00:17:17,720 Speaker 9: go too deep into Russia. He wants them really to 308 00:17:17,800 --> 00:17:21,560 Speaker 9: be restricted to places like Crimea and just those Russian 309 00:17:21,560 --> 00:17:25,480 Speaker 9: facilities over the border preparing for the offensive which I 310 00:17:25,520 --> 00:17:27,760 Speaker 9: was referring to earlier. So the United States is sort 311 00:17:27,760 --> 00:17:30,080 Speaker 9: of halfway there, but it tends to sort of follow 312 00:17:30,080 --> 00:17:31,560 Speaker 9: where the Europeans lead on this. 313 00:17:31,480 --> 00:17:34,960 Speaker 10: One, right, So the big takeaway so far is that 314 00:17:35,000 --> 00:17:38,160 Speaker 10: these NATA allies have promised those five long range air 315 00:17:38,160 --> 00:17:42,480 Speaker 10: defense systems for Ukraine. But is NATO actually doing enough 316 00:17:42,560 --> 00:17:43,760 Speaker 10: for Ukraine to win the war? 317 00:17:45,840 --> 00:17:50,440 Speaker 9: Well, maybe not enough in the past, because the effort 318 00:17:50,640 --> 00:17:56,879 Speaker 9: was largely left to individual allies acting bilaterally, signing bilateral 319 00:17:56,920 --> 00:18:00,679 Speaker 9: agreements with Ukraine like the one that Rishie sunakas very 320 00:18:00,720 --> 00:18:04,640 Speaker 9: early on with a Kiev and basically giving the Ukrainians 321 00:18:04,680 --> 00:18:06,720 Speaker 9: what they have in their stocks, not always what the 322 00:18:06,840 --> 00:18:09,720 Speaker 9: Ukrainians need on a priority basis. But NATO is now 323 00:18:09,760 --> 00:18:12,000 Speaker 9: stepping up, and I think the big headline from this 324 00:18:12,200 --> 00:18:15,960 Speaker 9: Washington summit is that maybe too late, but still NATO 325 00:18:16,119 --> 00:18:18,440 Speaker 9: is now going to set up a command in Wisbaden 326 00:18:18,520 --> 00:18:22,320 Speaker 9: in Germany with about eight hundred NATO military planners whose 327 00:18:22,400 --> 00:18:24,920 Speaker 9: job it will be now to make this a much 328 00:18:24,960 --> 00:18:29,320 Speaker 9: more coordinated, organized, planned effort. For example, Ukraine is currently 329 00:18:29,359 --> 00:18:31,960 Speaker 9: operating about one hundred and forty different types of weapons 330 00:18:31,960 --> 00:18:35,280 Speaker 9: systems supplied by the West. This doesn't make sense because 331 00:18:35,320 --> 00:18:38,400 Speaker 9: it means one hundred and forty different supply chains, maintenance 332 00:18:38,440 --> 00:18:41,399 Speaker 9: systems and so on doesn't help the Ukrainian war effort. 333 00:18:41,480 --> 00:18:43,520 Speaker 9: So I think what NATO is going to do now 334 00:18:43,680 --> 00:18:46,600 Speaker 9: is organized this better in terms of what Ukraine needs, 335 00:18:47,080 --> 00:18:50,160 Speaker 9: ensure that the delivery is more timely and more consistent, 336 00:18:50,480 --> 00:18:52,880 Speaker 9: reduced these one hundred and forty different systems to say 337 00:18:52,880 --> 00:18:56,280 Speaker 9: twenty or thirty which Ukraine could actually maintain and operate. 338 00:18:56,600 --> 00:18:58,960 Speaker 9: And what NATO says also is that this effort is 339 00:18:59,000 --> 00:19:02,200 Speaker 9: going to be a bridge to a future Ukrainian membership 340 00:19:02,240 --> 00:19:04,240 Speaker 9: of the Alliance, because it's not just going to be 341 00:19:04,240 --> 00:19:07,280 Speaker 9: about the short term provision of weapons to Ukraine. It's 342 00:19:07,320 --> 00:19:09,800 Speaker 9: going to also be about the long term restructuring of 343 00:19:09,840 --> 00:19:12,600 Speaker 9: the Ukrainian army to look less like an old Soviet 344 00:19:12,720 --> 00:19:15,960 Speaker 9: army and more like a modern Western army able to 345 00:19:16,080 --> 00:19:19,040 Speaker 9: integrate into NATO in the fullness of time. 346 00:19:19,600 --> 00:19:22,399 Speaker 1: That was Jamie shaef Fro Chatham House speaking to Jamani 347 00:19:22,440 --> 00:19:25,399 Speaker 1: Brassacci and me on Bloomberg Radio. So what's in store 348 00:19:25,440 --> 00:19:28,440 Speaker 1: at this upcoming European political community meeting and will ker 349 00:19:28,480 --> 00:19:32,000 Speaker 1: Starmer be able to charm his EU counterparts into a 350 00:19:32,080 --> 00:19:35,520 Speaker 1: closer relationship. I've been discussing this and more with Bloomberg's 351 00:19:35,600 --> 00:19:38,880 Speaker 1: UK Politics editor Alex morales. I started by asking him 352 00:19:38,880 --> 00:19:42,159 Speaker 1: what Kir Starmer may be hoping to achieve during this event. 353 00:19:42,960 --> 00:19:45,320 Speaker 11: Well, mindful that he's just coming back from the NATO 354 00:19:45,320 --> 00:19:47,080 Speaker 11: summit where he's met a lot of the same people. 355 00:19:47,280 --> 00:19:50,840 Speaker 11: I mean, this really is about sort of meeting a 356 00:19:50,840 --> 00:19:52,679 Speaker 11: lot of the European leaders who will be working with 357 00:19:52,760 --> 00:19:54,720 Speaker 11: he hopes for the next five or ten years, but 358 00:19:54,880 --> 00:19:57,520 Speaker 11: head to head, face to face, discussing some of the 359 00:19:57,560 --> 00:19:59,719 Speaker 11: issues that they have in common, so you know, some 360 00:19:59,760 --> 00:20:02,480 Speaker 11: of their points of divergence. And he really wants to 361 00:20:02,560 --> 00:20:05,560 Speaker 11: change the tone in the way that the UK develops 362 00:20:05,600 --> 00:20:08,679 Speaker 11: its relationship with the European Union and other more wider 363 00:20:08,960 --> 00:20:09,760 Speaker 11: European countries. 364 00:20:09,880 --> 00:20:11,639 Speaker 1: How much of a test there's going to be for 365 00:20:11,760 --> 00:20:14,119 Speaker 1: him in his new job as Prime Minister it's his 366 00:20:14,119 --> 00:20:16,800 Speaker 1: first time hosting such an international summer and it's quite 367 00:20:16,840 --> 00:20:19,320 Speaker 1: a lot of you know, as you say, friends and neighbors, it's. 368 00:20:19,280 --> 00:20:20,840 Speaker 11: Quite a lot of leaders. But it's also a sort 369 00:20:20,840 --> 00:20:24,320 Speaker 11: of quite fairly informal summit. They don't have a set 370 00:20:24,359 --> 00:20:26,840 Speaker 11: communicate that they want to agree, so he doesn't have 371 00:20:26,840 --> 00:20:28,359 Speaker 11: a piece of paper that he needs to achieve by 372 00:20:28,359 --> 00:20:29,040 Speaker 11: the end of it. 373 00:20:29,040 --> 00:20:30,160 Speaker 1: It really is just. 374 00:20:30,119 --> 00:20:32,560 Speaker 11: About, you know, getting that time to speak face to 375 00:20:32,560 --> 00:20:35,480 Speaker 11: face with other leaders and to discuss all these different 376 00:20:35,520 --> 00:20:36,800 Speaker 11: issues that they need to address. 377 00:20:36,920 --> 00:20:38,320 Speaker 1: And this is one of the things that of course 378 00:20:38,320 --> 00:20:40,280 Speaker 1: we know as a priority for the new Labor government. 379 00:20:40,320 --> 00:20:43,359 Speaker 1: They want better ties with the European Union versus what 380 00:20:43,400 --> 00:20:46,680 Speaker 1: there was under the Conservatives. Does this perhaps provide an 381 00:20:46,680 --> 00:20:49,760 Speaker 1: opening for care Starmor to make progress on some key issues. 382 00:20:49,920 --> 00:20:51,840 Speaker 11: Yeah, I mean definitely think. I don't think we'll be 383 00:20:51,880 --> 00:20:53,760 Speaker 11: getting any sort of firm agreements out of it, but 384 00:20:54,240 --> 00:20:56,320 Speaker 11: clearly so one of the big things he wants to 385 00:20:56,359 --> 00:20:58,359 Speaker 11: talk about. We know that he's going there with this 386 00:20:58,400 --> 00:21:01,320 Speaker 11: sort of proposal for fence and security packed with the 387 00:21:01,359 --> 00:21:04,639 Speaker 11: European Union, so yes, he wants to tighten those ties. 388 00:21:04,640 --> 00:21:06,639 Speaker 11: But obviously there are a lot of issues like immigration 389 00:21:07,640 --> 00:21:10,199 Speaker 11: he wants to talk about. It's not free movement, but 390 00:21:10,320 --> 00:21:14,720 Speaker 11: he wants to help, for instance, British performing artists to 391 00:21:14,800 --> 00:21:16,840 Speaker 11: be able to tour more freely in Europe. There are 392 00:21:16,880 --> 00:21:19,600 Speaker 11: all these sort of issues which have risen up since 393 00:21:19,640 --> 00:21:23,000 Speaker 11: Brexit where the relationship could just be a lot easier 394 00:21:23,359 --> 00:21:24,159 Speaker 11: and better flowing. 395 00:21:24,480 --> 00:21:27,639 Speaker 1: And how much does there has there been sort of 396 00:21:27,640 --> 00:21:29,560 Speaker 1: a tone shift or could there be a tone shift 397 00:21:29,640 --> 00:21:32,720 Speaker 1: from the other side of the channel from the closer 398 00:21:32,760 --> 00:21:36,119 Speaker 1: European partners towards a new government given that it is 399 00:21:36,240 --> 00:21:40,080 Speaker 1: a different party and sort of a fairly significant step 400 00:21:40,119 --> 00:21:41,480 Speaker 1: on from Braxit as well. 401 00:21:41,880 --> 00:21:45,840 Speaker 11: I mean, it's a tough question because certainly Kissed Arm 402 00:21:46,040 --> 00:21:48,240 Speaker 11: wants to set this different tone and I'm sure his 403 00:21:48,320 --> 00:21:51,639 Speaker 11: European counterparts will welcome that change of tone. But at 404 00:21:51,680 --> 00:21:53,760 Speaker 11: the same time Starmer is going to face the same 405 00:21:53,800 --> 00:21:57,119 Speaker 11: issues that the outgoing Conservative government did, which is, for instance, 406 00:21:57,160 --> 00:21:58,840 Speaker 11: one of the things he wants is a veterany agreement 407 00:21:58,880 --> 00:22:02,040 Speaker 11: to ease the flow of fresh foods across the borders. 408 00:22:02,640 --> 00:22:05,879 Speaker 11: You might still insist on the oversight of the European 409 00:22:05,920 --> 00:22:09,720 Speaker 11: Court Justice over the regulations underpinning that, so you know, 410 00:22:09,760 --> 00:22:12,240 Speaker 11: there are these things which have come to be seen 411 00:22:12,280 --> 00:22:14,840 Speaker 11: as toxic in the UK which he will have to 412 00:22:14,880 --> 00:22:16,760 Speaker 11: overcome and try and work out a compromise. 413 00:22:17,000 --> 00:22:18,640 Speaker 1: And whether the EU. 414 00:22:18,520 --> 00:22:20,400 Speaker 11: Is willing to give him more than they were willing 415 00:22:20,440 --> 00:22:24,320 Speaker 11: to give the previous Conservative government. You know, it's an open. 416 00:22:24,720 --> 00:22:27,040 Speaker 1: An open question. Indeed, the review of the Trade and 417 00:22:27,080 --> 00:22:29,920 Speaker 1: Cooperation Agreement, the Post brags that trade deal not due 418 00:22:30,000 --> 00:22:32,280 Speaker 1: until twenty twenty six, so this would be sort of 419 00:22:32,320 --> 00:22:34,800 Speaker 1: a speeding up of that process if they were able 420 00:22:34,840 --> 00:22:38,600 Speaker 1: to make these these side agreements. The European political community 421 00:22:38,640 --> 00:22:41,080 Speaker 1: itself was an interesting idea, was something that was a 422 00:22:41,080 --> 00:22:44,320 Speaker 1: brainchild of Emmanuel Macron in France. It's only been around 423 00:22:44,320 --> 00:22:46,240 Speaker 1: since twenty twenty two, and it was sort of meant 424 00:22:46,280 --> 00:22:49,440 Speaker 1: to bridge the gap in relations with countries like the UK, 425 00:22:49,800 --> 00:22:52,280 Speaker 1: the nearest neighbors in the community as well. I mean, 426 00:22:52,320 --> 00:22:54,640 Speaker 1: what are the other sorts of things that are expected 427 00:22:54,680 --> 00:22:56,800 Speaker 1: to be under discussion at this event, apart from kars 428 00:22:56,880 --> 00:22:58,159 Speaker 1: Armor trying to make new friends. 429 00:22:58,440 --> 00:23:00,800 Speaker 11: Well, I mean, so we've mentioned security defense that seems 430 00:23:00,800 --> 00:23:02,159 Speaker 11: to be the main thing that the government wants to 431 00:23:02,200 --> 00:23:05,280 Speaker 11: talk about. I would imagine immigration would come up. I'd 432 00:23:05,320 --> 00:23:08,200 Speaker 11: be very surprised if it didn't, because it's a shared problem. 433 00:23:08,280 --> 00:23:10,400 Speaker 11: You know, you've got these sort of flows of immigrants 434 00:23:10,440 --> 00:23:13,399 Speaker 11: moving across the continent, and you know, in the UK's 435 00:23:13,400 --> 00:23:15,320 Speaker 11: case they come from France, but obviously they've got to 436 00:23:15,359 --> 00:23:20,119 Speaker 11: France somehow through other countries. So immigration's a big topic 437 00:23:20,160 --> 00:23:23,440 Speaker 11: of discussion. Ukraine is clearly a matter of huge importance 438 00:23:23,440 --> 00:23:26,480 Speaker 11: to the continent and how they cooperate on those things, 439 00:23:26,880 --> 00:23:31,080 Speaker 11: and then shared problems like energy, security, cybersecurity, climate change, 440 00:23:31,440 --> 00:23:32,919 Speaker 11: you know, all of those issues I'm sure will. 441 00:23:32,760 --> 00:23:35,480 Speaker 1: Come up and high level discussions on that as well. 442 00:23:36,000 --> 00:23:38,560 Speaker 1: This is also going to be a test of care 443 00:23:38,640 --> 00:23:41,879 Speaker 1: Starmery's government's foreign policy too. It's so first, you know, 444 00:23:42,040 --> 00:23:44,040 Speaker 1: so the second doubting after the nature, so much for 445 00:23:44,080 --> 00:23:45,679 Speaker 1: them to have a chance to talk about that and 446 00:23:45,840 --> 00:23:49,280 Speaker 1: perhaps in a range of subjects broader than just defense 447 00:23:49,400 --> 00:23:52,439 Speaker 1: and security as well. What else do we know as 448 00:23:52,480 --> 00:23:55,040 Speaker 1: a priority for the new UK government when it comes 449 00:23:55,080 --> 00:23:57,120 Speaker 1: to foreign policy, Well. 450 00:23:56,920 --> 00:23:59,320 Speaker 11: I would say that the main one is climate change 451 00:23:59,320 --> 00:24:02,360 Speaker 11: that they want to change tone on. So I think 452 00:24:02,440 --> 00:24:05,360 Speaker 11: there's a there's a perception, and I don't know how 453 00:24:05,359 --> 00:24:08,359 Speaker 11: international this perception is that the UK sort of stepped 454 00:24:08,400 --> 00:24:11,400 Speaker 11: back a bit from its climate change policies under Rishi 455 00:24:11,440 --> 00:24:15,479 Speaker 11: Sunax administration, and the incoming Labor government want to change that, 456 00:24:15,760 --> 00:24:17,400 Speaker 11: and so they want to say the UK is back 457 00:24:17,440 --> 00:24:20,439 Speaker 11: at the table. You know, we're going to be leading 458 00:24:20,440 --> 00:24:23,440 Speaker 11: on this for the next years and decades to come. 459 00:24:24,320 --> 00:24:26,320 Speaker 11: So cutting emissions is obviously going to be one of 460 00:24:26,359 --> 00:24:27,440 Speaker 11: the big things that he brings to. 461 00:24:27,920 --> 00:24:30,280 Speaker 1: Yeah, and look, it's this is also a chance to 462 00:24:30,480 --> 00:24:33,760 Speaker 1: for as you say, there's more face to face conversations 463 00:24:33,760 --> 00:24:36,240 Speaker 1: with some of those European counterparts perhaps and as you 464 00:24:36,280 --> 00:24:38,560 Speaker 1: pointed out, a less structured way than we would have 465 00:24:38,600 --> 00:24:40,960 Speaker 1: seen it the likes of the NATO some blen And 466 00:24:41,000 --> 00:24:43,520 Speaker 1: Palace being chosen as the venue for this event as well. 467 00:24:43,520 --> 00:24:45,200 Speaker 1: It's of course where the AI s it was too. 468 00:24:45,320 --> 00:24:47,840 Speaker 1: Is this, you know, a chance for those those very 469 00:24:47,960 --> 00:24:50,480 Speaker 1: chummy sort of conversations and corridors as well. 470 00:24:50,720 --> 00:24:53,000 Speaker 11: Yeah, I mean it's it's obviously a nice sort of 471 00:24:53,000 --> 00:24:56,560 Speaker 11: country house setting. I think it's also a very unsubtle 472 00:24:56,680 --> 00:24:59,840 Speaker 11: message that that security is big. It's Winston Winston Church's 473 00:24:59,840 --> 00:25:03,159 Speaker 11: birth place, so that's perhaps a message to putin of 474 00:25:03,520 --> 00:25:05,560 Speaker 11: you know, here at these forty seven countries We're all 475 00:25:05,560 --> 00:25:10,600 Speaker 11: discussing security and Ukraine and all these matters. This country 476 00:25:10,600 --> 00:25:11,800 Speaker 11: has all this history attached to it. 477 00:25:12,080 --> 00:25:15,560 Speaker 1: Thanks to Bloomberg's UK Politics editor Alex Morales, We'll have 478 00:25:15,600 --> 00:25:18,800 Speaker 1: more coverage of the European political community meeting on Bloomberg 479 00:25:18,880 --> 00:25:22,040 Speaker 1: Radio and television in the coming days. I'm Stephen Carroll 480 00:25:22,080 --> 00:25:24,400 Speaker 1: in London. You can catch us every weekday morning here 481 00:25:24,400 --> 00:25:27,240 Speaker 1: for Bloomberg Daybreak Europe, beginning at six am in London 482 00:25:27,320 --> 00:25:29,439 Speaker 1: and one am on Wall Street. Tom. 483 00:25:29,760 --> 00:25:32,479 Speaker 2: Thank you, Stephen, And coming up on Bloomberg day Break weekend, 484 00:25:32,520 --> 00:25:35,440 Speaker 2: we look ahead to a major policy meeting for China's 485 00:25:35,480 --> 00:25:50,040 Speaker 2: top officials. I'm Tom Busby, and this is Bloomberg. I'm 486 00:25:50,080 --> 00:25:52,120 Speaker 2: Tom Busby in New York with your global look ahead 487 00:25:52,119 --> 00:25:54,280 Speaker 2: at the top stories for investors in the coming week. 488 00:25:54,720 --> 00:25:57,679 Speaker 2: Top officials in China gathering this week for a major 489 00:25:57,720 --> 00:26:01,520 Speaker 2: policy meeting known as the Third Play For more, let's 490 00:26:01,520 --> 00:26:05,560 Speaker 2: get to Bloomberg Daybreak Asia hosts Brian Curtis and Doug Krisner. 491 00:26:05,880 --> 00:26:08,359 Speaker 3: Tom. The Third Plenum is a chance for China to 492 00:26:08,480 --> 00:26:12,760 Speaker 3: enact far reaching and pivotal policy actions. I think Dungshaoping's 493 00:26:12,760 --> 00:26:16,000 Speaker 3: reform and opening up back in nineteen seventy eight. That's 494 00:26:16,000 --> 00:26:19,159 Speaker 3: when China essentially opened up to the outside world. 495 00:26:19,280 --> 00:26:22,680 Speaker 12: This time, though, it's more likely the party re embraces 496 00:26:22,720 --> 00:26:26,560 Speaker 12: the recent policy guidelines of Chiechen Ping, and specifically his 497 00:26:26,720 --> 00:26:29,000 Speaker 12: call for new productive forces. 498 00:26:29,119 --> 00:26:32,119 Speaker 3: At the core of that strategy are high tech industries 499 00:26:32,160 --> 00:26:35,760 Speaker 3: and high end manufacturing. We're expecting to learn more about 500 00:26:35,800 --> 00:26:39,680 Speaker 3: how China plans to cultivate new long term growth drivers. 501 00:26:39,800 --> 00:26:42,880 Speaker 12: So how does the government implement more stimulus and how 502 00:26:42,880 --> 00:26:46,920 Speaker 12: does it address the country's major challenges, challenges that include 503 00:26:47,240 --> 00:26:51,280 Speaker 12: a property crisis, access to foreign markets, and demographics. 504 00:26:51,520 --> 00:26:55,280 Speaker 3: We approached a number of leading economists and policy advisors 505 00:26:55,280 --> 00:26:57,800 Speaker 3: for their thoughts on what comes next. 506 00:26:57,520 --> 00:27:00,879 Speaker 13: For the wishless within is basically more or like market 507 00:27:00,960 --> 00:27:05,960 Speaker 13: friendly or market biases policies, for example, like if they 508 00:27:06,000 --> 00:27:12,480 Speaker 13: could further elevation the role of the market for allocate resources, 509 00:27:12,920 --> 00:27:17,080 Speaker 13: or to emphasize the importance of more supported policies for 510 00:27:17,160 --> 00:27:18,200 Speaker 13: the private sectors. 511 00:27:18,359 --> 00:27:20,480 Speaker 14: It's kind of a consensus right now. I think the 512 00:27:20,520 --> 00:27:24,359 Speaker 14: major problem in the economy is low sentiment, a loss 513 00:27:24,359 --> 00:27:27,960 Speaker 14: of animal spirit. So I think the third planet first 514 00:27:28,040 --> 00:27:32,000 Speaker 14: and foremost provided government a rare opportunity to tackle the 515 00:27:32,119 --> 00:27:36,080 Speaker 14: lack of confidence by rekindling the gross friendly. 516 00:27:35,800 --> 00:27:40,800 Speaker 15: Reforms, there's not much of expectation going into the third Planum. 517 00:27:41,160 --> 00:27:43,960 Speaker 15: If you look at the title of the Third Planum, 518 00:27:44,200 --> 00:27:48,960 Speaker 15: it has this continuation sort of in it furthering reforms, 519 00:27:49,040 --> 00:27:51,960 Speaker 15: but it's a continuation of the things the party has 520 00:27:52,000 --> 00:27:55,679 Speaker 15: already told us, whether it's on the technology front or 521 00:27:55,800 --> 00:28:00,239 Speaker 15: some of the balancing the local government finances. 522 00:28:00,240 --> 00:28:03,800 Speaker 16: The start of Planum. I think in enterprise business they 523 00:28:03,800 --> 00:28:07,240 Speaker 16: hope the government could actually start to reprotize the economic 524 00:28:07,280 --> 00:28:10,480 Speaker 16: growth because over the past several years, the government actually 525 00:28:10,480 --> 00:28:13,119 Speaker 16: come into a new policy region where they try to 526 00:28:13,160 --> 00:28:16,240 Speaker 16: balance multiple policy goals, right, so it's no longer just 527 00:28:16,280 --> 00:28:20,720 Speaker 16: about economic growth, but also about financial stability, security, a 528 00:28:20,720 --> 00:28:23,560 Speaker 16: bunch of other objectives. But on the other hand, I 529 00:28:23,560 --> 00:28:26,800 Speaker 16: think the private sector they are really looking for the 530 00:28:26,840 --> 00:28:30,760 Speaker 16: government to they could actually reprodize economic growths or at 531 00:28:30,800 --> 00:28:34,080 Speaker 16: a list step away from some of the regulatory titaning. 532 00:28:34,119 --> 00:28:38,360 Speaker 3: Gracetam there from BNP, parabol Wealth Management, Ding Schwang at 533 00:28:38,400 --> 00:28:42,480 Speaker 3: Standard Chartered Bank, Hoi Shan from Goldman Sachs, and Xian 534 00:28:42,560 --> 00:28:45,840 Speaker 3: Wang from the Vanguard Group for more. Now we're joined 535 00:28:45,840 --> 00:28:49,120 Speaker 3: in our studios by Rebecca Choan Wilkins, Bloomberg Asia Government 536 00:28:49,160 --> 00:28:52,760 Speaker 3: and Politics correspondent and Jenny Marsh, Bloomberg Team Leader on 537 00:28:52,880 --> 00:28:57,000 Speaker 3: Economics and Government. Rebecca, let me go to you first. 538 00:28:57,240 --> 00:29:01,720 Speaker 3: A common theme there is it cantinuation of She's productive 539 00:29:01,760 --> 00:29:06,760 Speaker 3: forces and then also hopes for improving prospects for the 540 00:29:06,800 --> 00:29:10,480 Speaker 3: private sector. I'd say the former is likely. The latter, well, 541 00:29:10,480 --> 00:29:11,840 Speaker 3: what a bit of hope. 542 00:29:11,680 --> 00:29:17,520 Speaker 17: Maybe, I think there will be something for the markets. 543 00:29:17,600 --> 00:29:22,840 Speaker 17: I would caution any sense of, you know, reforms that 544 00:29:22,920 --> 00:29:26,840 Speaker 17: go into reviving animal spirits. As one of those economists referenced, 545 00:29:26,880 --> 00:29:29,480 Speaker 17: I think there is a desire to sort of use 546 00:29:29,560 --> 00:29:33,720 Speaker 17: the private sector, use the entrepreneurial class to advance some 547 00:29:33,840 --> 00:29:37,680 Speaker 17: of those key objectives in under the so called New Three, 548 00:29:38,040 --> 00:29:42,200 Speaker 17: for example, high tech domains, advanced technology. They want to 549 00:29:42,200 --> 00:29:45,320 Speaker 17: be able to use the private sector to achieve those goals. 550 00:29:45,720 --> 00:29:48,160 Speaker 17: I don't really see any signals that they want to 551 00:29:48,200 --> 00:29:52,720 Speaker 17: actually unleash animal spirits, either among the entrepreneurial class or 552 00:29:52,800 --> 00:29:57,560 Speaker 17: among markets to sort of fire power that transition. And 553 00:29:57,640 --> 00:29:59,680 Speaker 17: we also have seen over the years it sort of 554 00:29:59,720 --> 00:30:03,680 Speaker 17: hes since from she warnings over quote unquote barbaric capital, 555 00:30:03,960 --> 00:30:08,400 Speaker 17: disorderly capital There is quite still this emphasis on having 556 00:30:08,480 --> 00:30:12,800 Speaker 17: capital markets be quite ordered and structured in China today. 557 00:30:13,240 --> 00:30:16,400 Speaker 12: So, Jenny, it would appear then if we do not 558 00:30:16,520 --> 00:30:18,800 Speaker 12: get kind of a big bang initiative, there's going to 559 00:30:18,800 --> 00:30:20,040 Speaker 12: be a lot of disappointment. 560 00:30:20,400 --> 00:30:22,960 Speaker 10: Yeah, And you know, I think disappointment is sort of 561 00:30:23,080 --> 00:30:26,680 Speaker 10: priced in. You know, leading up to the planet we've 562 00:30:26,680 --> 00:30:29,400 Speaker 10: been hearing from investors and economists that they actually don't 563 00:30:29,440 --> 00:30:33,520 Speaker 10: have high expectations for this, And there's a tradition actually 564 00:30:33,560 --> 00:30:36,440 Speaker 10: for Chinese sucks to sort of react to sort of 565 00:30:36,560 --> 00:30:39,360 Speaker 10: quite mutedly after a third penant, like it isn't something 566 00:30:39,360 --> 00:30:42,320 Speaker 10: which historically has sort of really had like a big 567 00:30:42,360 --> 00:30:45,880 Speaker 10: sort of positive effect afterwards. I think it's important to 568 00:30:45,880 --> 00:30:47,360 Speaker 10: bear in mind that, you know, she's going to be 569 00:30:47,440 --> 00:30:50,200 Speaker 10: speaking from sort of a thirty thousand foot view at 570 00:30:50,200 --> 00:30:52,440 Speaker 10: this event, and the communicator get afterwards isn't going to 571 00:30:52,520 --> 00:30:55,720 Speaker 10: have policy specifics, but it's going to have sort of 572 00:30:55,880 --> 00:30:57,840 Speaker 10: language which gives you an idea of the kind of 573 00:30:57,880 --> 00:31:01,080 Speaker 10: policies that she wants to see the bodies and organizations 574 00:31:01,160 --> 00:31:03,680 Speaker 10: underneath him and the Central Committee sort of roll out 575 00:31:03,680 --> 00:31:04,520 Speaker 10: in the months to come. 576 00:31:04,960 --> 00:31:08,000 Speaker 3: It's always the case in China, it seems that social 577 00:31:08,080 --> 00:31:12,400 Speaker 3: and political objectives come first, their positioned ahead of business. 578 00:31:12,840 --> 00:31:17,680 Speaker 3: That's actually probably true in most countries. However, the lines 579 00:31:17,720 --> 00:31:20,440 Speaker 3: are drawn slightly differently in China. It seems much more 580 00:31:20,480 --> 00:31:22,040 Speaker 3: palpable in China journey. 581 00:31:22,120 --> 00:31:24,680 Speaker 10: Why, I think because of the way that the government 582 00:31:24,720 --> 00:31:26,640 Speaker 10: is set up, and you know, I think what's interesting 583 00:31:26,640 --> 00:31:29,360 Speaker 10: about the third Panem is this is the first one 584 00:31:29,400 --> 00:31:32,120 Speaker 10: of these sort of major, you know, twice a decade 585 00:31:32,360 --> 00:31:37,040 Speaker 10: events on reform since she consolidated power in twenty twenty two. Previously, 586 00:31:37,080 --> 00:31:38,760 Speaker 10: when he went into these events, he was sort of 587 00:31:38,800 --> 00:31:41,680 Speaker 10: having much more sort of balanced different factions, and you know, 588 00:31:41,680 --> 00:31:44,120 Speaker 10: at the beginning, when he had his first plane in 589 00:31:44,120 --> 00:31:46,840 Speaker 10: twenty thirteen, he was sort of, you know, the first 590 00:31:46,880 --> 00:31:49,600 Speaker 10: among equals on the standing committee. He goes into this 591 00:31:49,640 --> 00:31:53,040 Speaker 10: event having consolidated power, and now maybe what will be 592 00:31:53,080 --> 00:31:55,000 Speaker 10: different about this event is that we will see what 593 00:31:55,040 --> 00:31:57,920 Speaker 10: she's sort of raw vision for the economy is when 594 00:31:57,920 --> 00:31:59,840 Speaker 10: he gets to do exactly what he wants to do. 595 00:32:00,320 --> 00:32:02,080 Speaker 10: So I think, you know, that's something that we might 596 00:32:02,120 --> 00:32:04,400 Speaker 10: see differently because of how the balance of power in 597 00:32:04,480 --> 00:32:07,640 Speaker 10: China has shifted even more in recent years towards she 598 00:32:07,880 --> 00:32:10,480 Speaker 10: sort of personalizing power around his rule. 599 00:32:10,800 --> 00:32:14,280 Speaker 12: Rebecca, what about measures to reduce things like inequality and 600 00:32:14,320 --> 00:32:17,920 Speaker 12: tackle even the demographic challenges that we've been talking about 601 00:32:17,960 --> 00:32:19,360 Speaker 12: with respect to China. 602 00:32:19,640 --> 00:32:21,440 Speaker 17: Yeah, I think that's a really important one that people 603 00:32:21,440 --> 00:32:23,280 Speaker 17: are looking out for. You know, we hear a lot 604 00:32:23,320 --> 00:32:26,400 Speaker 17: of stories about people on the ground worried about sort 605 00:32:26,400 --> 00:32:29,480 Speaker 17: of financial security, worried about job cuts, pay cuts. We 606 00:32:29,600 --> 00:32:32,920 Speaker 17: hear anecdotes about, you know, civil servants having to repay 607 00:32:32,960 --> 00:32:35,800 Speaker 17: their bonuses that they were given from the past five years. 608 00:32:35,840 --> 00:32:39,040 Speaker 17: So for some in China, you know, prospects are looking 609 00:32:39,080 --> 00:32:42,320 Speaker 17: pretty grim. And while incomes are still growing, they're growing 610 00:32:42,320 --> 00:32:45,720 Speaker 17: at their slowest pace under she Jimping since the late 611 00:32:45,800 --> 00:32:50,960 Speaker 17: nineteen eighties, So the landscape has really changed quite fundamentally. 612 00:32:51,360 --> 00:32:53,920 Speaker 17: I don't think there are enormous expectations though, that we 613 00:32:53,960 --> 00:32:56,680 Speaker 17: are going to see sort of some kind of grand reform. 614 00:32:57,000 --> 00:32:59,800 Speaker 17: I do think there is some expectation we might see 615 00:32:59,800 --> 00:33:03,360 Speaker 17: something in, for example, reform for the welfare system, something 616 00:33:03,960 --> 00:33:07,920 Speaker 17: in the Hookoh registration system, something in public services to 617 00:33:07,960 --> 00:33:12,480 Speaker 17: help local governments improve their public services. But in terms 618 00:33:12,480 --> 00:33:15,920 Speaker 17: of sort of big bang changes that address or of 619 00:33:15,960 --> 00:33:20,360 Speaker 17: fundamental issues of social inequality. I think probably expectations are 620 00:33:20,400 --> 00:33:25,760 Speaker 17: relatively muted. It's a really interesting survey released by CSIS 621 00:33:26,120 --> 00:33:29,400 Speaker 17: as well as academics from Harvard and Stanford recently that 622 00:33:29,560 --> 00:33:33,960 Speaker 17: show in twenty twenty three, essentially more people are attributing 623 00:33:34,360 --> 00:33:38,200 Speaker 17: declines in the ability to get rich or in fact 624 00:33:38,240 --> 00:33:40,960 Speaker 17: the reasons to get poor in sort of economic structural reasons. 625 00:33:40,960 --> 00:33:42,440 Speaker 17: So they put it down to things like you can 626 00:33:42,480 --> 00:33:44,680 Speaker 17: get rich if you come from a wealthy family or 627 00:33:44,680 --> 00:33:48,240 Speaker 17: if you have connections. That's a big change from two 628 00:33:48,280 --> 00:33:51,680 Speaker 17: decades ago, when the emphasis was more on your talent, 629 00:33:51,760 --> 00:33:54,560 Speaker 17: your ability, and a higher education. So we've seen that 630 00:33:54,600 --> 00:33:58,719 Speaker 17: actual sort of perception of inequality and who's to blame 631 00:33:59,000 --> 00:34:00,960 Speaker 17: really change over the past thirty years. 632 00:34:00,960 --> 00:34:01,440 Speaker 7: In China. 633 00:34:01,920 --> 00:34:04,240 Speaker 3: It's interesting because when we look at the private sector, 634 00:34:04,440 --> 00:34:09,800 Speaker 3: we understand that there's huge competition between or among different 635 00:34:09,840 --> 00:34:13,240 Speaker 3: players there. The competition is ferce in artificial intelligence, for instance, 636 00:34:13,280 --> 00:34:16,000 Speaker 3: we hear that some companies are just not going to 637 00:34:16,000 --> 00:34:19,200 Speaker 3: be able to easily get ahead, even a company like Baidu, 638 00:34:19,280 --> 00:34:22,160 Speaker 3: which is one of the early movers in that space. 639 00:34:22,880 --> 00:34:25,480 Speaker 3: And yet we hear when we talk to economists about, 640 00:34:25,520 --> 00:34:28,160 Speaker 3: you know, trying to stimulate the private sector that people 641 00:34:28,200 --> 00:34:31,120 Speaker 3: are calling for a more level playing field. How do 642 00:34:31,160 --> 00:34:32,640 Speaker 3: we reconcile those two notions. 643 00:34:32,800 --> 00:34:36,280 Speaker 17: Well, I think there is a sort of contradiction here 644 00:34:36,320 --> 00:34:38,799 Speaker 17: in terms of which part of the private sector are 645 00:34:38,840 --> 00:34:41,759 Speaker 17: you really talking about vamping up, right? And I think 646 00:34:41,880 --> 00:34:46,320 Speaker 17: the sort of era where entrepreneurs believe that, you know, 647 00:34:46,360 --> 00:34:49,920 Speaker 17: a whole wider range of opportunities could create wealth and 648 00:34:49,960 --> 00:34:53,320 Speaker 17: in fact that was something desirable has probably that sentiment 649 00:34:53,400 --> 00:34:56,040 Speaker 17: is still really dented by the fallout of the crackdown 650 00:34:56,360 --> 00:34:59,040 Speaker 17: on the tech sector, for example, on the education sector. 651 00:34:59,400 --> 00:35:03,480 Speaker 17: People who crude enormous amounts of wealth, we're essentially targeted 652 00:35:03,920 --> 00:35:06,040 Speaker 17: for that, right, And so that we are sort of 653 00:35:06,120 --> 00:35:09,400 Speaker 17: seeing a shift away from that type of sort of 654 00:35:09,600 --> 00:35:15,560 Speaker 17: entrepreneurialism into these very targeted areas that align with government objectives. 655 00:35:15,719 --> 00:35:18,160 Speaker 17: And in some of those areas, you know things like 656 00:35:18,280 --> 00:35:22,279 Speaker 17: AI as well as evs. More obviously, those green tech 657 00:35:22,320 --> 00:35:27,040 Speaker 17: areas do receive support, extraditional support, policy support, in some 658 00:35:27,120 --> 00:35:30,240 Speaker 17: cases funding support to. 659 00:35:29,560 --> 00:35:32,200 Speaker 12: Grow Jenny, I'm curious when we use the term new 660 00:35:32,239 --> 00:35:36,360 Speaker 12: productive forces, how much of that is reliant on a 661 00:35:36,520 --> 00:35:39,239 Speaker 12: change in the way China has been thinking about research 662 00:35:39,280 --> 00:35:42,440 Speaker 12: and development. Does a lot more energy need to be 663 00:35:42,480 --> 00:35:43,560 Speaker 12: applied into. 664 00:35:43,520 --> 00:35:43,840 Speaker 7: R and D. 665 00:35:44,280 --> 00:35:46,160 Speaker 10: Yeah, I think this is an area where you know, 666 00:35:46,600 --> 00:35:49,000 Speaker 10: she has clearly signaled that he wants China to sort 667 00:35:49,000 --> 00:35:52,239 Speaker 10: of really focus its efforts on and it's allo sort 668 00:35:52,239 --> 00:35:54,680 Speaker 10: of to do with this big sort of rivalry that 669 00:35:55,239 --> 00:35:58,160 Speaker 10: China has now with the US. You know, New Productive 670 00:35:58,160 --> 00:36:00,799 Speaker 10: forces is a big sort of catual term. Essentially, what 671 00:36:00,880 --> 00:36:03,600 Speaker 10: she really wants is for trying to become a huge 672 00:36:03,640 --> 00:36:06,520 Speaker 10: tech superpower which can be self sufficient if it needs to, 673 00:36:06,560 --> 00:36:09,520 Speaker 10: but also lead the world in many of these technologies, 674 00:36:09,840 --> 00:36:12,640 Speaker 10: and they've really been investing in that. You know, they 675 00:36:12,680 --> 00:36:14,279 Speaker 10: have a long way to catch up when it does 676 00:36:14,320 --> 00:36:17,319 Speaker 10: come to some areas like AI. But then you know, 677 00:36:17,800 --> 00:36:19,440 Speaker 10: you have seen how trying to has sort of steamed 678 00:36:19,440 --> 00:36:22,080 Speaker 10: ahead in the EV sector and in terms of you know, 679 00:36:22,120 --> 00:36:23,879 Speaker 10: the way that they have sort of led the world 680 00:36:23,920 --> 00:36:26,640 Speaker 10: really in green technologies. You know, I think the interesting 681 00:36:26,680 --> 00:36:29,040 Speaker 10: thing is how that sort of then affects kind of 682 00:36:29,120 --> 00:36:32,320 Speaker 10: geopolitical relationships and standing in the world, because it seems 683 00:36:32,320 --> 00:36:34,120 Speaker 10: that the farther they do pull ahead in these kind 684 00:36:34,160 --> 00:36:36,520 Speaker 10: of areas, the more they sort of run into frictions 685 00:36:36,520 --> 00:36:39,240 Speaker 10: of their major trading partners, so they have to also 686 00:36:39,280 --> 00:36:43,280 Speaker 10: find sort of new markets for these kinds of innovations 687 00:36:43,280 --> 00:36:45,759 Speaker 10: that they are seeking to find. And also it sort 688 00:36:45,800 --> 00:36:48,680 Speaker 10: of comes back to this idea of all the emphasis 689 00:36:48,680 --> 00:36:50,880 Speaker 10: in the economy right now is on the supply side 690 00:36:51,120 --> 00:36:52,920 Speaker 10: rather than trying to create domestic demand. 691 00:36:53,560 --> 00:36:56,359 Speaker 3: If you want free, willing innovation, don't you sort of 692 00:36:56,400 --> 00:37:01,320 Speaker 3: need more freedom. And also in the the particular predicament 693 00:37:01,360 --> 00:37:03,800 Speaker 3: that they're in now, we wonder whether it's an inflection 694 00:37:03,880 --> 00:37:08,279 Speaker 3: point between this sort of step by step stimulation and 695 00:37:09,040 --> 00:37:11,200 Speaker 3: something that approaches shock and all. 696 00:37:11,560 --> 00:37:13,640 Speaker 10: I think that is a really interesting question because the 697 00:37:13,680 --> 00:37:16,319 Speaker 10: assumption is that if you want innovation yet, you need 698 00:37:16,360 --> 00:37:19,520 Speaker 10: this sort of free kind of environment where people can 699 00:37:19,560 --> 00:37:22,200 Speaker 10: sort of like you know, experiment and everything. But then 700 00:37:22,400 --> 00:37:24,480 Speaker 10: you know, if you look at China and look at 701 00:37:24,600 --> 00:37:27,560 Speaker 10: the green sectors or they have innovated, they've done all 702 00:37:27,560 --> 00:37:29,759 Speaker 10: that within a communist party system, which has just been 703 00:37:29,800 --> 00:37:32,799 Speaker 10: tightening over the past sort of twelve years. I think 704 00:37:32,880 --> 00:37:34,840 Speaker 10: like China actually is sort of the way it is 705 00:37:34,880 --> 00:37:37,680 Speaker 10: innovating is kind of challenging some of those assumptions about 706 00:37:37,920 --> 00:37:40,680 Speaker 10: the kind of environment that you do need to innovate. 707 00:37:40,719 --> 00:37:42,799 Speaker 10: I mean, the Chinese model has been to sort of 708 00:37:43,400 --> 00:37:45,520 Speaker 10: identify the areas you really want to grow, put like 709 00:37:45,600 --> 00:37:48,440 Speaker 10: a ton of government support behind it, let all of 710 00:37:48,480 --> 00:37:51,640 Speaker 10: these companies sort of go out and pile them and 711 00:37:51,719 --> 00:37:54,000 Speaker 10: the strongest will survive and the weakest will die off, 712 00:37:54,040 --> 00:37:56,800 Speaker 10: and you'll be left with really, really strong companies that 713 00:37:56,840 --> 00:37:59,560 Speaker 10: can lead sectors. So it's kind of interesting to see 714 00:37:59,640 --> 00:38:02,879 Speaker 10: China do that and sort of confound some of those 715 00:38:03,560 --> 00:38:05,560 Speaker 10: sort of stereotypes out what you do need to sort 716 00:38:05,560 --> 00:38:06,080 Speaker 10: of innovate. 717 00:38:06,360 --> 00:38:08,560 Speaker 12: Thanks to the two of you for helping us preview 718 00:38:08,600 --> 00:38:12,760 Speaker 12: the third Planum, which gets underway next week. Rebecca Chung Wilkins, 719 00:38:12,760 --> 00:38:16,960 Speaker 12: Bloomberg Asia Government and Politics correspondent and Bloomberg's Jenny Marsh, 720 00:38:17,120 --> 00:38:20,680 Speaker 12: team leader for Greater China ECO GOV. I'm Doug Krisner 721 00:38:20,719 --> 00:38:23,200 Speaker 12: along with Brian Curtis in Hong Kong. You can catch 722 00:38:23,239 --> 00:38:26,279 Speaker 12: us weekdays here for Bloomberg Daybreak Asia beginning at eight 723 00:38:26,320 --> 00:38:29,120 Speaker 12: am in Hong Kong eight pm on Wall Street. 724 00:38:29,160 --> 00:38:29,520 Speaker 4: Tom. 725 00:38:29,840 --> 00:38:32,359 Speaker 2: Thank you, Doug, and thank you Brian. And that does 726 00:38:32,440 --> 00:38:35,120 Speaker 2: it for this edition of Bloomberg day Break Weekend. Join 727 00:38:35,200 --> 00:38:37,440 Speaker 2: us again Monday morning at five am Wall Street time 728 00:38:37,480 --> 00:38:39,960 Speaker 2: for the latest on markets. Overseas and the news you 729 00:38:40,080 --> 00:38:43,080 Speaker 2: need to start your day. I'm Tom Buzby. Stay with US. 730 00:38:43,360 --> 00:38:47,280 Speaker 2: Top stories and global business headlines are coming up right now.