1 00:00:00,240 --> 00:00:07,200 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:08,039 --> 00:00:10,680 Speaker 2: The world has waited for months for a lasting trade 3 00:00:10,760 --> 00:00:14,040 Speaker 2: deal between China and the US, one that could potentially 4 00:00:14,120 --> 00:00:17,320 Speaker 2: cool the tariff war that's been raging between both countries 5 00:00:17,680 --> 00:00:21,960 Speaker 2: in President Trump's second term. On Monday, representatives from the 6 00:00:22,079 --> 00:00:25,279 Speaker 2: US and China hold up in a mansion near Buckingham 7 00:00:25,320 --> 00:00:29,440 Speaker 2: Palace in London to hammer that potential deal out, and 8 00:00:29,520 --> 00:00:34,960 Speaker 2: on Tuesday they were still there. Brendon Murray runs Bloomberg's 9 00:00:35,000 --> 00:00:38,040 Speaker 2: trade coverage. He and other reporters have spent the last 10 00:00:38,080 --> 00:00:40,960 Speaker 2: two days looking for any signs of how the talks 11 00:00:41,040 --> 00:00:41,680 Speaker 2: might be going. 12 00:00:41,960 --> 00:00:44,680 Speaker 1: We've seen a lot of delivery food being brought to 13 00:00:44,720 --> 00:00:49,479 Speaker 1: Lancaster House Otto Lingi both days, the upscale deli and 14 00:00:49,560 --> 00:00:52,760 Speaker 1: dessert chain, but other than that, there's not much information 15 00:00:52,840 --> 00:00:53,360 Speaker 1: coming out. 16 00:00:53,640 --> 00:00:57,040 Speaker 2: So lunch being brought in good sign, bad sign. 17 00:00:57,520 --> 00:01:01,440 Speaker 1: Well, yesterday's lunch was six bags was twelve, so we 18 00:01:01,520 --> 00:01:04,160 Speaker 1: think maybe one side bought lunch for the other. But 19 00:01:04,959 --> 00:01:08,880 Speaker 1: moments after that we saw the Chinese delegation leave for 20 00:01:08,959 --> 00:01:11,080 Speaker 1: a lunch break, so apparently they weren't into it. 21 00:01:11,560 --> 00:01:14,360 Speaker 2: Around five point thirty pm local time, the two sides 22 00:01:14,400 --> 00:01:16,880 Speaker 2: took a break, and a person familiar with the matter 23 00:01:16,959 --> 00:01:19,680 Speaker 2: told Bloomberg they were planning to resume talks at eight 24 00:01:19,720 --> 00:01:24,200 Speaker 2: pm Tuesday night. US Commerce Secretary Howard Lutnik said later 25 00:01:24,360 --> 00:01:27,520 Speaker 2: that the talks went quote really, really well, and then 26 00:01:27,560 --> 00:01:30,679 Speaker 2: while he hoped the negotiations would end this evening, they 27 00:01:30,720 --> 00:01:35,080 Speaker 2: could stretch into Wednesday morning. And Bloomberg's John lu says 28 00:01:35,280 --> 00:01:38,199 Speaker 2: there's still a lot at stake as both sides try 29 00:01:38,240 --> 00:01:39,560 Speaker 2: to find common ground. 30 00:01:40,120 --> 00:01:44,520 Speaker 3: Can the United States accept a China that is three 31 00:01:44,560 --> 00:01:48,320 Speaker 3: times as large economically and has the world's most cutting 32 00:01:48,400 --> 00:01:52,080 Speaker 3: edge technology. Until that day comes, and it may never come, 33 00:01:52,560 --> 00:01:57,919 Speaker 3: we will have trade wars. 34 00:01:58,320 --> 00:02:00,960 Speaker 2: I'm Sarah Holder, and this is the Big Take from 35 00:02:01,000 --> 00:02:04,800 Speaker 2: Bloomberg News Today. On the show inside the latest trade 36 00:02:04,880 --> 00:02:08,720 Speaker 2: negotiations between the US and China, I speak with Bloomberg 37 00:02:08,760 --> 00:02:11,760 Speaker 2: Trade editor Brendan Murray, who's on the ground in London, 38 00:02:12,240 --> 00:02:15,000 Speaker 2: and Big Take Asia host Juan ha sits down with 39 00:02:15,120 --> 00:02:19,320 Speaker 2: John Lu who's been covering developments from Beijing. Could these 40 00:02:19,360 --> 00:02:21,839 Speaker 2: talks mark a pivotal turning point in the tariff war 41 00:02:21,880 --> 00:02:25,000 Speaker 2: between the US and China and what could relations between 42 00:02:25,000 --> 00:02:31,640 Speaker 2: the two countries look like after they're done. 43 00:02:32,960 --> 00:02:33,120 Speaker 3: Well? 44 00:02:33,120 --> 00:02:36,400 Speaker 2: Brendan, You've been covering these negotiations closely over the past 45 00:02:36,400 --> 00:02:39,240 Speaker 2: few months as tensions between the US and China have 46 00:02:39,639 --> 00:02:43,360 Speaker 2: escalated and de escalated. When I spoke with you just 47 00:02:43,480 --> 00:02:46,120 Speaker 2: last week, we talked about how the deal they'd reached 48 00:02:46,160 --> 00:02:49,160 Speaker 2: in Geneva in May was on shaky ground, and how that, 49 00:02:49,360 --> 00:02:52,320 Speaker 2: plus the lack of progress on other tariff deals more 50 00:02:52,320 --> 00:02:55,799 Speaker 2: than halfway through the self imposed ninety day pause, had 51 00:02:55,800 --> 00:03:00,520 Speaker 2: put new pressure on Donald Trump's credibility at home. How 52 00:03:00,560 --> 00:03:03,720 Speaker 2: has that ticking clock played into these talks this week 53 00:03:03,760 --> 00:03:04,200 Speaker 2: in London. 54 00:03:04,639 --> 00:03:06,640 Speaker 1: Well, the focus for the past couple weeks for the 55 00:03:06,680 --> 00:03:10,560 Speaker 1: Trump administration has really been on China. It's been almost 56 00:03:10,560 --> 00:03:14,040 Speaker 1: exactly a month since they emerged from talks in Geneva, 57 00:03:14,040 --> 00:03:17,200 Speaker 1: Switzerland with what they called a deal, which was essentially 58 00:03:17,240 --> 00:03:20,840 Speaker 1: a ceasefire in the very high crippling tariffs that they 59 00:03:20,880 --> 00:03:24,000 Speaker 1: were imposing on each other. They brought those down to 60 00:03:24,040 --> 00:03:27,720 Speaker 1: a significant degree, the US to thirty percent, China brought 61 00:03:27,720 --> 00:03:30,160 Speaker 1: its tariffs down to ten percent, and they said, let's 62 00:03:30,160 --> 00:03:33,720 Speaker 1: spend the next ninety days talking through these difficulties that 63 00:03:33,760 --> 00:03:37,760 Speaker 1: we're having, reaching agreements on specific issues. But what's happened 64 00:03:37,800 --> 00:03:42,080 Speaker 1: In the meantime, is China has shown the world how 65 00:03:42,240 --> 00:03:46,880 Speaker 1: much leverage it has. China controls most of the world's 66 00:03:46,960 --> 00:03:49,920 Speaker 1: rare earth minerals. These are things that make electric car 67 00:03:50,000 --> 00:03:54,720 Speaker 1: batteries and lasers and all sorts of advanced manufactured goods, 68 00:03:54,800 --> 00:03:58,400 Speaker 1: and China controls most of the supply of them and 69 00:03:58,400 --> 00:04:01,880 Speaker 1: the processing of them. And what's happened and is China has, 70 00:04:02,000 --> 00:04:08,240 Speaker 1: either deliberately or through its bureaucratic process of permitting export 71 00:04:08,320 --> 00:04:13,120 Speaker 1: licenses for those goods, has shown the world how much 72 00:04:13,400 --> 00:04:18,360 Speaker 1: pain it can inflict on auto supply change aerospace supply 73 00:04:18,480 --> 00:04:22,680 Speaker 1: chains if it slows the export of those minerals. And 74 00:04:22,760 --> 00:04:27,520 Speaker 1: the US recently has said, look, you're not complying with 75 00:04:27,600 --> 00:04:30,760 Speaker 1: the agreement that we made in Geneva. We expected those 76 00:04:31,200 --> 00:04:34,680 Speaker 1: permits and those rare earth minerals to start flowing to 77 00:04:34,800 --> 00:04:38,560 Speaker 1: us sooner than that. Let's get back to the negotiating table. 78 00:04:38,760 --> 00:04:43,400 Speaker 1: That's what led Donald Trump to urge Hijinping to get 79 00:04:43,400 --> 00:04:46,240 Speaker 1: on the phone and say, we need to have a 80 00:04:46,279 --> 00:04:48,760 Speaker 1: talk about this because this is going to hurt our economy. 81 00:04:49,120 --> 00:04:51,600 Speaker 1: And it's not just the US. The European companies are 82 00:04:51,640 --> 00:04:55,680 Speaker 1: complaining about it. Indian automakers are also in trouble. If 83 00:04:55,760 --> 00:05:01,320 Speaker 1: China withholds these very important critical minerals really could become 84 00:05:01,400 --> 00:05:05,640 Speaker 1: a worldwide issue. The US, in the meantime started to 85 00:05:05,680 --> 00:05:10,719 Speaker 1: make moves to put controls on things like software for chips, 86 00:05:10,760 --> 00:05:16,520 Speaker 1: for jet engine parts, for nuclear reactor materials, some chemicals. 87 00:05:16,760 --> 00:05:19,960 Speaker 1: So the US struck back and said, hey, we have 88 00:05:20,040 --> 00:05:23,560 Speaker 1: stuff that you need too, and so China has an 89 00:05:23,600 --> 00:05:25,880 Speaker 1: interest in seeing that stuff moved to them too. 90 00:05:26,839 --> 00:05:29,599 Speaker 2: So how did they get back to the negotiating table. 91 00:05:29,640 --> 00:05:32,440 Speaker 2: Who was more instrumental in getting these talks actually planned 92 00:05:32,839 --> 00:05:33,360 Speaker 2: in London? 93 00:05:33,560 --> 00:05:36,520 Speaker 1: Well, Donald Trump has been urging Shijimpang to have a 94 00:05:36,560 --> 00:05:41,640 Speaker 1: talk for months now. That urgency has increased recently in 95 00:05:41,720 --> 00:05:44,359 Speaker 1: part because of the dragging of the feet that the 96 00:05:44,560 --> 00:05:47,880 Speaker 1: US would say that China has done with the rare 97 00:05:47,920 --> 00:05:51,800 Speaker 1: earth mineral those exports. And so the two leaders got 98 00:05:51,839 --> 00:05:54,880 Speaker 1: on the phone and the team's got the go ahead 99 00:05:54,880 --> 00:05:57,480 Speaker 1: to meet here in the UK. It's a bit of 100 00:05:57,520 --> 00:06:00,839 Speaker 1: a neutral territory. They're at a venue right now that's 101 00:06:00,960 --> 00:06:03,560 Speaker 1: not a US government site, not a Chinese government site. 102 00:06:03,600 --> 00:06:07,160 Speaker 1: It's neutral ground where they can hash out these differences. 103 00:06:07,839 --> 00:06:11,160 Speaker 2: Heading into these talks the US's main priority was securing 104 00:06:11,279 --> 00:06:15,279 Speaker 2: access to China's rare earth minerals, and China's goal was 105 00:06:15,320 --> 00:06:19,200 Speaker 2: to get semiconductor trips from US tech companies like Nvidia. 106 00:06:19,320 --> 00:06:22,640 Speaker 2: But those are big concessions, and Brendan says meeting in 107 00:06:22,680 --> 00:06:24,880 Speaker 2: the middle was always going to be difficult. 108 00:06:25,680 --> 00:06:28,719 Speaker 1: The problem for the US and for China for that matter, 109 00:06:28,920 --> 00:06:32,760 Speaker 1: is at what point do these products that are shipped 110 00:06:32,760 --> 00:06:37,440 Speaker 1: around the world cross over into the realm of national security. 111 00:06:37,920 --> 00:06:42,159 Speaker 1: At what point should the US say we shouldn't ship 112 00:06:42,320 --> 00:06:47,320 Speaker 1: China our most sophisticated chips for AI because those could 113 00:06:47,360 --> 00:06:52,560 Speaker 1: be used for supercomputing in defense applications and those sorts 114 00:06:52,560 --> 00:06:56,400 Speaker 1: of things, and vice versa. China would say we wouldn't 115 00:06:56,440 --> 00:06:59,400 Speaker 1: want the US Defense Department to get a hold of 116 00:06:59,480 --> 00:07:03,480 Speaker 1: our best critical minerals to be used in a military way. 117 00:07:03,600 --> 00:07:06,960 Speaker 1: So the two countries are walking a very fine line 118 00:07:07,000 --> 00:07:11,239 Speaker 1: between national security and economic security, and the line between 119 00:07:11,280 --> 00:07:14,680 Speaker 1: those two is getting blurrier and blurrier by the day. 120 00:07:15,640 --> 00:07:18,160 Speaker 2: How are they trying to balance those concerns and what 121 00:07:18,160 --> 00:07:22,520 Speaker 2: would a deal actually look like that would satisfy each party. 122 00:07:22,800 --> 00:07:26,880 Speaker 1: I think a deal that would allow both countries to 123 00:07:27,040 --> 00:07:30,640 Speaker 1: maintain a certain amount of trade, but not so much 124 00:07:30,760 --> 00:07:34,880 Speaker 1: trade that it impedes the other's ability to accomplish its 125 00:07:34,880 --> 00:07:39,200 Speaker 1: domestic goal. President Trump wants to reshore manufacturing, and one 126 00:07:39,200 --> 00:07:41,920 Speaker 1: way to do that is to put high tariffs on 127 00:07:42,040 --> 00:07:46,160 Speaker 1: Chinese imports and to force some of that production back home. 128 00:07:46,480 --> 00:07:51,080 Speaker 1: China has an interest in exporting what it makes. It's 129 00:07:51,120 --> 00:07:53,720 Speaker 1: still the factory of the world to the rest of 130 00:07:53,720 --> 00:07:56,640 Speaker 1: the world, and if it's not to the US, it 131 00:07:56,680 --> 00:07:59,840 Speaker 1: could be to other countries, to Vietnam or India or 132 00:07:59,840 --> 00:08:03,560 Speaker 1: other places where those products would be welcome if they're 133 00:08:03,600 --> 00:08:06,840 Speaker 1: not welcome in the US anymore. So, their two sides 134 00:08:06,880 --> 00:08:10,240 Speaker 1: seem to be aiming for some sort of a re 135 00:08:10,880 --> 00:08:14,920 Speaker 1: drawn arrangement where they can say, we'll trade with you, 136 00:08:15,040 --> 00:08:18,400 Speaker 1: but only up to a certain point. We'll make sure 137 00:08:18,440 --> 00:08:22,440 Speaker 1: that we diversify where we're getting our imports from or 138 00:08:22,560 --> 00:08:27,200 Speaker 1: exporting two and reduce the dependency on each other. Is 139 00:08:27,320 --> 00:08:30,520 Speaker 1: ultimately what both sides want to do if what we 140 00:08:30,560 --> 00:08:34,920 Speaker 1: are looking at is the battle for global economic supremacy 141 00:08:35,000 --> 00:08:36,439 Speaker 1: over the next decade or two. 142 00:08:36,880 --> 00:08:39,320 Speaker 2: And then there is the last chess piece in these talks, 143 00:08:39,480 --> 00:08:41,880 Speaker 2: the piece that Trump touted as a bargaining Chip on 144 00:08:41,920 --> 00:08:45,480 Speaker 2: the campaign trail and enacted when he took office. 145 00:08:45,640 --> 00:08:49,800 Speaker 1: Tariffs Tariffs are something that you keep on until the 146 00:08:49,960 --> 00:08:53,160 Speaker 1: very last moment of a trade negotiation. They are your 147 00:08:53,240 --> 00:08:56,240 Speaker 1: leverage and you don't give them up at round one 148 00:08:56,559 --> 00:09:00,400 Speaker 1: like we are now. So the tariffs that China bases 149 00:09:00,800 --> 00:09:03,880 Speaker 1: for their products coming into the US are this twenty 150 00:09:03,920 --> 00:09:09,320 Speaker 1: percent based on fentanyl and border security that initially Canada 151 00:09:09,320 --> 00:09:12,960 Speaker 1: and Mexico also we're hit with, and the ten percent 152 00:09:13,000 --> 00:09:16,560 Speaker 1: reciprocal rate that everyone else is dealing with as well, 153 00:09:16,920 --> 00:09:20,680 Speaker 1: and China has brought its tariff of US products down 154 00:09:20,720 --> 00:09:22,960 Speaker 1: to ten percent. So there is a bit of a 155 00:09:23,000 --> 00:09:26,559 Speaker 1: mismatch there, but it's a mismatch that both sides can 156 00:09:26,640 --> 00:09:28,000 Speaker 1: live with for the time being. 157 00:09:28,559 --> 00:09:31,520 Speaker 2: The two sides haven't come to an agreement yet, formal 158 00:09:31,760 --> 00:09:35,800 Speaker 2: or informal, but Brendan says once they do, both countries 159 00:09:35,920 --> 00:09:38,000 Speaker 2: expect to see the results pretty quickly. 160 00:09:38,559 --> 00:09:41,880 Speaker 1: China would want to demonstrate that it's acting in good faith. 161 00:09:42,280 --> 00:09:45,719 Speaker 1: The US said it wasn't after the Geneva agreement, so 162 00:09:45,880 --> 00:09:48,640 Speaker 1: the US will want to see fairly quick action out 163 00:09:48,640 --> 00:09:51,240 Speaker 1: of China, and China will want to see the US 164 00:09:51,320 --> 00:09:54,000 Speaker 1: back off of its threats of its own export controls. 165 00:09:56,520 --> 00:09:59,760 Speaker 2: After the break, my Colleaguejan Ha sits down with Bloomberg's 166 00:09:59,800 --> 00:10:02,440 Speaker 2: job Lou to talk about the factors that could be 167 00:10:02,520 --> 00:10:06,240 Speaker 2: shaping China's thinking as the country's representatives sit at the 168 00:10:06,280 --> 00:10:07,199 Speaker 2: negotiating table. 169 00:10:16,200 --> 00:10:17,679 Speaker 4: John, thanks so much for joining us. 170 00:10:17,880 --> 00:10:19,120 Speaker 3: Sure, it's wonderful to be here. 171 00:10:19,360 --> 00:10:22,160 Speaker 4: I really wanted to get your read of the mood 172 00:10:22,240 --> 00:10:24,560 Speaker 4: on the ground in China right now. You know, the 173 00:10:24,640 --> 00:10:27,679 Speaker 4: last time we took a temperature check, people were largely 174 00:10:27,720 --> 00:10:31,599 Speaker 4: supportive of President she standing his ground in these negotiations. 175 00:10:32,160 --> 00:10:35,120 Speaker 3: Has that changed No, I think that remains the fact. 176 00:10:35,240 --> 00:10:37,520 Speaker 3: There's a lot of support, a groundswell. I think I 177 00:10:37,559 --> 00:10:40,839 Speaker 3: would even say that wants China to stand up and 178 00:10:40,840 --> 00:10:44,720 Speaker 3: fight these tariffs. There is a broad view that the 179 00:10:44,760 --> 00:10:49,520 Speaker 3: actions that the Trump administration have taken our prejudice. They're unfair, 180 00:10:49,640 --> 00:10:53,040 Speaker 3: they're unjust. I think what's even added to it has 181 00:10:53,120 --> 00:10:57,679 Speaker 3: been these moves to void student visas. A lot of 182 00:10:57,960 --> 00:11:01,760 Speaker 3: Chinese kids, a lot of Chinese families spent years working 183 00:11:01,880 --> 00:11:05,079 Speaker 3: very hard saving money for the opportunity for that one person, 184 00:11:05,320 --> 00:11:07,680 Speaker 3: one child, to be able to go to an Ivy 185 00:11:07,760 --> 00:11:09,880 Speaker 3: League school and change the course of their lives and 186 00:11:09,880 --> 00:11:13,240 Speaker 3: now they're being denied that possibility, and there is a 187 00:11:13,280 --> 00:11:16,080 Speaker 3: lot of angst about that, and so there's a lot 188 00:11:16,120 --> 00:11:20,160 Speaker 3: of support for she standing up to the Trump administration. 189 00:11:20,200 --> 00:11:21,800 Speaker 3: But at the same time, I think there's also a 190 00:11:21,880 --> 00:11:25,680 Speaker 3: lot of worry. I think the fact that we've seen 191 00:11:26,280 --> 00:11:30,000 Speaker 3: deflation CPI in China be negative for four months in 192 00:11:30,040 --> 00:11:31,840 Speaker 3: a row, I think that speaks to how people are 193 00:11:31,880 --> 00:11:34,400 Speaker 3: trying to save more, spend less, and that is a 194 00:11:34,440 --> 00:11:38,080 Speaker 3: reflection of concern, not feeling a great deal of confidence 195 00:11:38,080 --> 00:11:42,760 Speaker 3: about the future. Exports have been really important for the 196 00:11:42,880 --> 00:11:45,560 Speaker 3: Chinese economy over the last couple of years because consumption. 197 00:11:45,640 --> 00:11:48,600 Speaker 3: Domestic consumption has been so weak, and it's been weak 198 00:11:48,640 --> 00:11:52,080 Speaker 3: because of the collapse of property prices. Households are feeling poor, 199 00:11:52,120 --> 00:11:56,040 Speaker 3: they're spending less, and so exports has really been the 200 00:11:56,200 --> 00:11:59,080 Speaker 3: major driver of growth for China's economy over the last 201 00:11:59,080 --> 00:12:02,520 Speaker 3: two or three years. That has come down substantially. Exports 202 00:12:02,559 --> 00:12:05,120 Speaker 3: from China to the United States fell by thirty four 203 00:12:05,160 --> 00:12:07,400 Speaker 3: point four percent in the month of May. 204 00:12:07,559 --> 00:12:08,319 Speaker 4: That's got to hurt. 205 00:12:08,480 --> 00:12:11,760 Speaker 3: That's the biggest drop since February of twenty twenty. So 206 00:12:11,800 --> 00:12:14,880 Speaker 3: that's at the start of COVID now. 207 00:12:14,880 --> 00:12:18,000 Speaker 4: Before the talks were confirmed, Trump took to his Truth 208 00:12:18,040 --> 00:12:21,160 Speaker 4: social platform last week to post that quote, she is 209 00:12:21,440 --> 00:12:23,920 Speaker 4: very tough and extremely hard to make a deal with. 210 00:12:24,720 --> 00:12:27,240 Speaker 4: He really wanted to get on that phone with President She, 211 00:12:27,720 --> 00:12:29,880 Speaker 4: and it seemed to be a strategic decision for she. 212 00:12:30,480 --> 00:12:32,600 Speaker 4: Was he holding out and what was the message that 213 00:12:32,640 --> 00:12:33,440 Speaker 4: he was trying to send? 214 00:12:33,880 --> 00:12:37,240 Speaker 3: So I would start by saying, we don't know. But 215 00:12:37,360 --> 00:12:39,160 Speaker 3: at the same time, I think there are some things 216 00:12:39,200 --> 00:12:42,640 Speaker 3: about President Jipin deciding to get on the phone with 217 00:12:42,720 --> 00:12:49,280 Speaker 3: President Trump that suggests one there could be more concern 218 00:12:49,679 --> 00:12:53,199 Speaker 3: about the economy from the perspective of the Chinese leadership, 219 00:12:53,880 --> 00:12:59,000 Speaker 3: and maybe that was the additional motivating factor for President 220 00:12:59,080 --> 00:13:01,920 Speaker 3: She to do something that it was unorthodox, that was 221 00:13:02,000 --> 00:13:06,000 Speaker 3: not something that Chinese leaders have done in the past. 222 00:13:06,080 --> 00:13:09,720 Speaker 3: They prefer for any deals to be struck, to be 223 00:13:10,440 --> 00:13:13,880 Speaker 3: negotiated and the details worked out by lower level officials, 224 00:13:13,880 --> 00:13:16,640 Speaker 3: and then President She would come in and sign a 225 00:13:16,679 --> 00:13:19,680 Speaker 3: document put a ribbon on it. That is the preferred 226 00:13:19,679 --> 00:13:22,960 Speaker 3: method of doing business. And so agreeing to the phone 227 00:13:23,000 --> 00:13:26,680 Speaker 3: call suggests that something else is there. It could be 228 00:13:26,800 --> 00:13:30,079 Speaker 3: more concerned about the economy. It could also be that 229 00:13:30,360 --> 00:13:34,720 Speaker 3: potentially the Chinese leadership saw some opportunity, some opening, some 230 00:13:35,600 --> 00:13:38,080 Speaker 3: chance for she to get on the phone and maybe 231 00:13:38,480 --> 00:13:41,560 Speaker 3: get a concession that the lower level officials would not 232 00:13:41,600 --> 00:13:44,000 Speaker 3: have been able to get from the American side. 233 00:13:44,160 --> 00:13:47,520 Speaker 4: Certainly for the US, resuming exports of China's rare earth's 234 00:13:47,559 --> 00:13:50,520 Speaker 4: mineral is really key in these talks, and turning the 235 00:13:50,520 --> 00:13:53,240 Speaker 4: flow of these rare earth exports on and off seems 236 00:13:53,240 --> 00:13:55,840 Speaker 4: to be a big leverage for China right now. Will 237 00:13:55,880 --> 00:13:58,800 Speaker 4: we see China increasingly play hardball on that to get 238 00:13:58,840 --> 00:14:01,120 Speaker 4: the trade deal it wants, certainly from the US, but 239 00:14:01,200 --> 00:14:03,360 Speaker 4: also potentially from other global partners. 240 00:14:03,640 --> 00:14:06,600 Speaker 3: I think China is willing to play hardball, but I 241 00:14:06,640 --> 00:14:08,960 Speaker 3: think there is an understanding in Beijing that the more 242 00:14:09,000 --> 00:14:12,439 Speaker 3: you use the rare earth card, the more it actually 243 00:14:12,480 --> 00:14:15,000 Speaker 3: gets other countries starting to think about, well, I can't 244 00:14:15,000 --> 00:14:17,360 Speaker 3: depend on China for rare earths. I gotta have my 245 00:14:17,440 --> 00:14:19,880 Speaker 3: own minds, I gotta have my own processing. And so 246 00:14:20,000 --> 00:14:23,760 Speaker 3: the more that Beijing uses it, potentially the less powerful 247 00:14:23,800 --> 00:14:27,720 Speaker 3: it becomes. Although the caveat there is you don't build 248 00:14:28,000 --> 00:14:31,120 Speaker 3: rare earth refineries and rare earth minds overnight, so it's 249 00:14:31,240 --> 00:14:32,560 Speaker 3: going to be a period of time. 250 00:14:34,280 --> 00:14:36,840 Speaker 2: On the other side, China is hoping that the US 251 00:14:36,960 --> 00:14:40,560 Speaker 2: doesn't play hardball when it comes to semiconductor chips. But 252 00:14:40,600 --> 00:14:43,800 Speaker 2: if the US is willing to compromise there and ease 253 00:14:43,880 --> 00:14:47,920 Speaker 2: restrictions on semiconductor exports, John says, it could open the 254 00:14:47,920 --> 00:14:49,120 Speaker 2: door to other deals. 255 00:14:50,880 --> 00:14:53,600 Speaker 3: If the Trump administration is going to show that it's 256 00:14:53,640 --> 00:14:57,400 Speaker 3: willing to negotiate on these sanctions, it brings up the 257 00:14:57,440 --> 00:15:00,880 Speaker 3: possibility that the Trump administration might, I'd also be willing 258 00:15:01,200 --> 00:15:05,800 Speaker 3: for the right price to negotiate the other sanctions that 259 00:15:05,880 --> 00:15:08,960 Speaker 3: were put in place by the Biden administration, sanctions that 260 00:15:09,000 --> 00:15:13,400 Speaker 3: are more targeted at more fundamental technologies, and so that 261 00:15:13,520 --> 00:15:16,520 Speaker 3: I think is another important aspect of what happens next. 262 00:15:17,400 --> 00:15:20,560 Speaker 4: Now, you mentioned at the top that these tensions we're 263 00:15:20,600 --> 00:15:23,160 Speaker 4: seeing right now between the US and China, they're not 264 00:15:23,240 --> 00:15:27,560 Speaker 4: only about trade. We've also seen the Trump administration revoke 265 00:15:27,680 --> 00:15:30,960 Speaker 4: Chinese student visas and looking at limiting intrigue to the 266 00:15:31,080 --> 00:15:34,280 Speaker 4: US for Chinese students in critical maths, science and tech fields. 267 00:15:34,720 --> 00:15:37,440 Speaker 4: How is all of that contributing to the tone around 268 00:15:37,520 --> 00:15:38,520 Speaker 4: these negotiations. 269 00:15:39,000 --> 00:15:42,920 Speaker 3: So the Chinese leadership is not elected, there are no elections. 270 00:15:43,680 --> 00:15:46,960 Speaker 3: But at the same time, the Chinese leadership is very 271 00:15:47,000 --> 00:15:50,840 Speaker 3: sensitive to public opinion. It's maybe even more so sensitive 272 00:15:50,880 --> 00:15:52,920 Speaker 3: because there are no elections, right They have to keep 273 00:15:53,040 --> 00:15:54,720 Speaker 3: track of how people are feeling. And so when you 274 00:15:54,800 --> 00:15:58,880 Speaker 3: have student visas being canceled and parents being upset and 275 00:15:58,960 --> 00:16:04,280 Speaker 3: that affects entire family, that's something that strikes accord with 276 00:16:04,560 --> 00:16:08,440 Speaker 3: the Chinese government. There is another issue, I think, which 277 00:16:08,480 --> 00:16:12,720 Speaker 3: is Taiwan, and that is the number one issue when 278 00:16:12,720 --> 00:16:15,360 Speaker 3: it comes to the US China relationship if you ask 279 00:16:15,400 --> 00:16:18,920 Speaker 3: anybody in Beijing. And before these most recent talks, there 280 00:16:19,000 --> 00:16:21,480 Speaker 3: was a report by Reuters that the Trump administration was 281 00:16:21,560 --> 00:16:25,040 Speaker 3: planning a very large weapons sale to Taiwan. We don't 282 00:16:25,080 --> 00:16:28,000 Speaker 3: know if that came up during these talks, but one 283 00:16:28,040 --> 00:16:30,600 Speaker 3: thing that Beijing would be very eager for is some 284 00:16:31,320 --> 00:16:34,760 Speaker 3: displayed by the American side of adhering to the One 285 00:16:34,840 --> 00:16:39,640 Speaker 3: China principle, not supporting Taiwanese independence, not supporting the current 286 00:16:39,680 --> 00:16:44,200 Speaker 3: Taiwan administration, which the Chinese side views as being extremely 287 00:16:44,480 --> 00:16:46,560 Speaker 3: pro independence and hostile. 288 00:16:47,520 --> 00:16:50,640 Speaker 4: What do we think China wants beyond the tariff negotiations 289 00:16:50,640 --> 00:16:53,080 Speaker 4: that are happening this week, What more does China want 290 00:16:53,120 --> 00:16:53,560 Speaker 4: out of this. 291 00:16:53,800 --> 00:16:57,920 Speaker 3: I think fundamentally, what China wants is space to maneuver 292 00:16:58,480 --> 00:17:01,800 Speaker 3: economically and diplomatic in the world. Right now, on a 293 00:17:01,840 --> 00:17:05,720 Speaker 3: per capita basis, the average Chinese citizen is making only 294 00:17:05,720 --> 00:17:08,520 Speaker 3: about a third or a quarter as much as the 295 00:17:08,640 --> 00:17:12,400 Speaker 3: average American person is, so China is still relatively poor. 296 00:17:13,040 --> 00:17:16,479 Speaker 3: The goal of the Chinese government of Xijipin is to 297 00:17:16,520 --> 00:17:19,919 Speaker 3: move China from middle income to high income, and to 298 00:17:20,040 --> 00:17:24,240 Speaker 3: do that, they need technology and they need trade, and 299 00:17:24,320 --> 00:17:26,479 Speaker 3: so that's what they want. They want to have a 300 00:17:26,520 --> 00:17:29,920 Speaker 3: world in which China has access to technology that can 301 00:17:29,960 --> 00:17:33,240 Speaker 3: fuel its economic growth, that can move its standard of 302 00:17:33,320 --> 00:17:36,639 Speaker 3: living up. And they want access to markets so that 303 00:17:36,680 --> 00:17:39,280 Speaker 3: the goods that Chinese companies produce have a place that 304 00:17:39,320 --> 00:17:40,240 Speaker 3: they can be sold into. 305 00:17:45,960 --> 00:17:48,760 Speaker 2: This is the Big Take from Bloomberg News. I'm Sarah Holder. 306 00:17:49,160 --> 00:17:51,640 Speaker 2: To get more from The Big Take and unlimited access 307 00:17:51,680 --> 00:17:55,360 Speaker 2: to all of Bloomberg dot Com, subscribe today at Bloomberg 308 00:17:55,400 --> 00:17:58,920 Speaker 2: dot com slash podcast offer. If you liked this episode, 309 00:17:59,080 --> 00:18:01,600 Speaker 2: make sure to follow and review The Big Take wherever 310 00:18:01,680 --> 00:18:04,240 Speaker 2: you listen to podcasts. It helps people find the show. 311 00:18:04,840 --> 00:18:07,160 Speaker 2: Thanks for listening. We'll be back tomorrow.