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Speaker 1: Good morning. It's Friday, the first of September in London.

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Speaker 1: This is the Bloomberg Daybaqut podcast that I'm Caroline Hipkat and.

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Speaker 2: I'm Stephen Carroll. Coming up today. As Beijing ramps up

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Speaker 2: economic support, rivals and allies look to capitalize on China's

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Speaker 2: mounting challenges.

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Speaker 1: The Bank of England's chief economist says that the UK's

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Speaker 1: ratepath is likely to look like South Africa's table mountain.

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Speaker 2: And faking it how bogus UK parts were supplied to

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Speaker 2: fix jet engines on Airbus and Boeing passenger planes.

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Speaker 1: Let's start with a roundup of our top stories.

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Speaker 2: Beijing is intensifying efforts to stimulate the economy and support

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Speaker 2: its currency as investor concerns continue to grow. China Central

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Speaker 2: Bank will trim the amount of foreign currency deposits banks

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Speaker 2: are required to hold as reserves in a bid to

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Speaker 2: prop up the weakening yuan. The move comes just hours

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Speaker 2: after authorities announced fresh stimulus for the beleaguered property sector

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Speaker 2: and plans to expand family tax breaks. Malcolm Scots, Bloomberg's

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Speaker 2: Asia Economy Managing editor, breaks down what all that means.

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Speaker 3: It's all adding up and the Bloomberg economists they've added

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Speaker 3: up the stimulus so far and what they expect, including

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Speaker 3: what we saw yesterday and some more stuff that they've

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Speaker 3: put in the pipeline.

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Speaker 4: They think it all adds up to about a one

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Speaker 4: percentage point boost to GDP for this year, around the

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Speaker 4: same maybe even a tad more for next year. So,

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Speaker 4: you know, the strip feed of stimulus that had been

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Speaker 4: leaving many economists thinking, hey, hold on, is this really

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Speaker 4: going to help? Maybe now we're starting to see some

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Speaker 4: talk that perhaps this could put at least a flaw

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Speaker 4: under some sentiment.

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Speaker 2: Malcolm Scott's analysis comes as Bloomberg reports at officials in

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Speaker 2: G seven countries are considering how to deal with a

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Speaker 2: China that may be approaching a peak in its economic

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Speaker 2: and geopolitical power.

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Speaker 1: Former US House Speaker Nancy Pelosi says relations between the

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Speaker 1: US and China are being hindered by a lack of

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Speaker 1: shared values. After President Joe Biden China's economy a quote

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Speaker 1: ticking time bomb last month, Pelosi has told Bloomberg that

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Speaker 1: there's been a clear shift in thinking from Western nations.

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Speaker 5: We and other countries decided to ride this tiger, and

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Speaker 5: we poured money. You know, they just we just bought

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Speaker 5: everything they.

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Speaker 6: Had to sell.

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Speaker 5: We increased their and then when and then when their

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Speaker 5: economy is in trouble, we're like, oh, look it has

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Speaker 5: an impact on us. Surprise, surprise.

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Speaker 1: You can see the full interview with former US Speaker

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Speaker 1: of the House Nazi Pelosi on Bloemberg Television's Leaders with Laqua.

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Speaker 1: It airs at nine thirty pm New York time on

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Speaker 1: the twenty seventh of September in the US. Here in

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Speaker 1: London six thirty pm the following day, it's been.

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Speaker 2: Allowed to the JP Morgan disclosed more than one billion

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Speaker 2: dollars and suspicious transactions linked to Jeffrey Epstein to the

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Speaker 2: US government after his death. In its lawsuit against the bank.

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Speaker 2: The US Virgin Islands claims the financial activity was detailed

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Speaker 2: in a filing to the US Treasury in twenty nineteen.

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Speaker 2: JP Morgan denies the suggestion that it let Epstein fly

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Speaker 2: under the radar, and has previously stated that it reported

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Speaker 2: about one hundred and fifty cash transactions related to Epstein

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Speaker 2: to a federal regulator.

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Speaker 1: The Bank of England's chief economists prefers holding interest rates

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Speaker 1: at high levels to further hikes Hugh Pill explained the

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Speaker 1: flat and high view at a conference in South Africa.

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Speaker 7: I think it probably imposes fewer risks to financial stability.

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Speaker 7: I think it's more of a response to trying to

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Speaker 7: squeeze inflation out of the wage price and cost setting system.

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Speaker 7: And crucially, I think in the UK it's more effective

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Speaker 7: at ensuring that we see transmission through the sort of

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Speaker 7: two to five view maturity rates that have become very

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Speaker 7: central to the way the mortgage market and private borring operates.

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Speaker 1: Traders change their interest rate bets. For the Bank of England.

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Speaker 1: After Pill's remarks, they are still pricing in a quarter

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Speaker 1: point hike in September, but have almost removed any bets

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Speaker 1: on a larger increase.

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Speaker 2: European aviation regulators say a small London company has been

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Speaker 2: supplying bogus spare parts to fixed top selling jet engines.

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Speaker 2: AOG Technics has been accused of using forged documents to

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Speaker 2: sell parts for the jet engines that power older Airbus

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Speaker 2: and Boeing passenger planes. It's unclear how many fake parts

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Speaker 2: may have been installed or how many aircraft might be affected.

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Speaker 2: The European Unions Aviation's Safety agency told operators last month

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Speaker 2: to quarantine parts that are backed by false documentation. AOG

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Speaker 2: Techniques isn't an improved vendor for the parts in question,

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Speaker 2: and didn't respond to calls and messages from Bloomberg in

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Speaker 2: response to the story here In the.

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Speaker 1: UK, a key university advocacy group says that the government

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Speaker 1: is risking the prestige of British higher education. University's UK

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Speaker 1: Chief Executive, Vivian Stern says the sector is being driven

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Speaker 1: into the sand.

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Speaker 8: Can't continue to drive down the university system, which is

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Speaker 8: probably one of the few areas the UK can really

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Speaker 8: hold up as world leading.

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Speaker 1: Stern's warning comes as universities face capped student fees, strikes

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Speaker 1: and skywooketing costs. You can hear the full interview on

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Speaker 1: the UK Politics podcast episode on the Future of higher education.

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Speaker 2: Hong Kong is bracing for what might be the strongest

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Speaker 2: storm to hit the city in five years as Typhoon

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Speaker 2: Sauler approaches the city. The government has issued the Storms Signal,

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Speaker 2: bringing the city to a halt on Friday, with schools closing,

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Speaker 2: flights canceled, and the stock exchange shot. Chief Secretary Chan Quackie,

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Speaker 2: who is leading a government task force to deal with

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Speaker 2: the storm, warrned residents to stay indoors.

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Speaker 1: Okay, so those are our top stys in the markets.

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Speaker 1: This caught my eye this morning. Two million people in

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Speaker 1: Britain are using by Now Pay Later BNP for essential items.

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Speaker 1: I think there's absolutely extraordinary the kind of rapid rise

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Speaker 1: of BNPL, and now a number of people, including the

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Speaker 1: Money and Pensions Advisory Service, warning about just how many

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Speaker 1: people have become quite rapidly dependent on these buy now,

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Speaker 1: pay later products.

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Speaker 2: So yeah, and it's something that the cost of living

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Speaker 2: crisis has affected. Half of the user's surveyed Buy the

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Speaker 2: Money and Pension Service for this study said that their

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Speaker 2: cost of living pressures had changed how they were using

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Speaker 2: Buy Now, Pay Later. The numbers involved are quite small,

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Speaker 2: but aggregated together it's a huge issue. So around thirty

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Speaker 2: percent of those polled, One in three users had at

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Speaker 2: least two outstanding bills, about thirty percent had more than

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Speaker 2: one hundred pounds outstanding. That's according to this point of

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Speaker 2: two thousand people Buy the Money and Pensions Service, but

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Speaker 2: more than ten million people are estimated to be using BNPL.

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Speaker 1: I mean, I just think it's staggering and I'm a

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Speaker 1: little bit of ghass because it's the story of that

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Speaker 1: Bloomberg has covered, that we've covered on the radio program.

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Speaker 1: Regulation of the sector has basically stalled since the update

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Speaker 1: that we got in February the Treasury paper which basically

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Speaker 1: was going to put the Financial Conduct Authority give it

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Speaker 1: new oversight powers. Yes, I take your point that it's

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Speaker 1: not a very large sum of money, but it is

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Speaker 1: an awful lot of people in the UK.

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Speaker 2: True, and it also depends, of course on how much

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Speaker 2: your household budget is. That can be an awful lot

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Speaker 2: of money to some people as well. And the reasons

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Speaker 2: behind that people are using BMPL are the sort of

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Speaker 2: things that will worry regulators as well, because it's oftentimes

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Speaker 2: things like them having to prioritize other repayments and that's

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Speaker 2: why they're using buyn now pay later and using them

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Speaker 2: to buy essentials, which to the part of that story

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Speaker 2: as well. So that'll be an interesting to feed into

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Speaker 2: the conversation from regulators too.

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Speaker 1: Yeah. Absolutely. Let's turn our focus now though to China,

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Speaker 1: which is ramping up its campaign to boost a fragile economy.

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Speaker 1: So the central Bank is cutting the amount of foreign

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Speaker 1: currency deposits that banks have to hold. The government's also

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Speaker 1: offering more help for home owners and for parents. This

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Speaker 1: is China's economic travails. Suddenly, Sleep seem to be flipping

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Speaker 1: the view that China would inevitably overtake America economically. Joining

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Speaker 1: us now to discuss this is Bloomberg's China Economy and

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Speaker 1: Government editor Jill Desisi. Good morning. Great to have you

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Speaker 1: back on radio. We've seen over the course of this

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Speaker 1: week a number of incremental moves by China. How important

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Speaker 1: are these latest measures today?

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Speaker 9: Hey, Carolyn, Yeah, Look, I think that these latest measures

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Speaker 9: are actually fairly it's existent. I mean, obviously, as we've

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Speaker 9: been talking on this program and others, we haven't seen

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Speaker 9: any kind of big Bizuka style for yours that China

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Speaker 9: has rolled out. But there has been this drip seed

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Speaker 9: that has been going on for several weeks at this point,

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Speaker 9: and it does seem to be having at least the

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Speaker 9: limited impact on confidence and sentiments. So the foreign exchange

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Speaker 9: of reserve ratio that you just mentioned, and that's kind

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Speaker 9: of a move that affectively boosts the amount of foreign

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Speaker 9: currency that's available in the local market, so that makes

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Speaker 9: it relatively more appealing for traders to buy the on. So,

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Speaker 9: you know, as you've been talking about market reaction and

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Speaker 9: how and how much the currency has been sliding, that's

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Speaker 9: maybe has a limited boosts there. And then you know,

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Speaker 9: you mentioned the mortgage rates as well. I mean, we've

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Speaker 9: been waiting for a lot more action on the property sector,

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Speaker 9: and here's an example of China taking some concrete actions

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Speaker 9: to actually make it easier for people to buy homes,

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Speaker 9: take out mortgages, or do some rates on existing mortgages.

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Speaker 9: That kind of stuff potentially has the effect of shoring

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Speaker 9: up some confident in the sector. Although I think, as

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Speaker 9: we've been discussing, there's a lot of really really deep

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Speaker 9: systemic problems within this economy right now, and it will

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Speaker 9: likely take more to actually turn things around.

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Speaker 2: Yeah, it's interesting to look in particular the steps taken

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Speaker 2: the property sector, because we've talked so much about the

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Speaker 2: depth of the issues there as well. Are these measures

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Speaker 2: announced for in terms of fresh relief for homeowners going

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Speaker 2: to actually have much of an impact.

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Speaker 9: I think the newest ones are certainly they carry some significance,

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Speaker 9: at least more than we've seen so far. So banks

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Speaker 9: are no longer just qualifying people who have mortgage report

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Speaker 9: even if they fully repay them as first time buyers.

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Speaker 9: That's again making it a bit easier for people buy

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Speaker 9: into property. I also think some of the productions on

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Speaker 9: down payments are really interesting. So that's cutting the floor

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Speaker 9: on a down payment ratio across the country. I think

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Speaker 9: to a certain extent, some local governments have to decide

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Speaker 9: whether they want to adopt some of these measures. But

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Speaker 9: I mean, you've got like districts and parts of Beijing

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Speaker 9: where the down payment requirement for homes can be as

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Speaker 9: high as like eighty percent in some areas, and massive

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Speaker 9: barriers to entry for getting into these property markets. So

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Speaker 9: if you're seeing, at least in some parts of the country,

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Speaker 9: in some cities, in some districts, start to lower these

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Speaker 9: ratios a little bit more, maybe that's going to help

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Speaker 9: boost a bit more confidence and sentence for the factor.

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Speaker 1: Yeah. Just lastly, Bloomberg has a fascinating piece on the

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Speaker 1: terminal today speaking to officials in G seven capitals. The

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Speaker 1: narrative about the rise of China inevitably overtaking the US

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Speaker 1: is the biggest economy in the world, that that view

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Speaker 1: may now be changing in the West and in finance.

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Speaker 9: Yes, this is a really interesting piece so just kind

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Speaker 9: of taking a look at and collating all of these

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Speaker 9: comments that officials has made and then putting in our

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Speaker 9: books on the officials and also very very prominent voices

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Speaker 9: been saying about China recently. I mean, look, Caroline, just

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Speaker 9: a few years ago, before the pandemic, I don't know

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Speaker 9: how many thing pieces they either writer wrote honestly about

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Speaker 9: how essentially inevitable for the Chinese economy to eventually become

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Speaker 9: the world's largest economies are passing the United States. I mean,

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Speaker 9: I think we were talking at one point how that

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Speaker 9: happened back to them expected by the end of the decade.

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Speaker 9: Now that narrative is really shifting, and I think that

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Speaker 9: a lot of officials, particularly in the US and Europe,

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Speaker 9: are pointing to some of these systemic issues that the

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Speaker 9: Chinese economy has, whether it's the population decline, challenges in

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Speaker 9: terms of growth and investment, local debt issues, and they're

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Speaker 9: looking at that and saying this actually seems like it

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Speaker 9: shifts the narrative on how we may be effectively dealing

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Speaker 9: with China. You combine that with a lot of the

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Speaker 9: risking strategies that the Europe and the US in particular

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Speaker 9: have been adopting towards China, and it does present this

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Speaker 9: question of whether there's a shift in its balance of power.

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Speaker 9: In this view of how to encounter China that may

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Speaker 9: be growing more prominent.

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Speaker 2: Okay, Jill Lisa is our China Economy editor. Thanks very

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Speaker 2: much for joining us on the program from Hong Kong

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Speaker 2: this morning where markets are closed. Use that typhoon and

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Speaker 2: Jill is also not in the office as a result.

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Speaker 2: But Jill, we appreciate you joining us on the program

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Speaker 2: this morning with the details of that story.

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Speaker 8: Yeah.

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Speaker 1: Absolutely, the city honkered down. Another really amazing story on

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Speaker 1: the Bloomberg terminal today around Cabon. The country is to

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Speaker 1: swear in general and Guyema as a transitional president on Monday,

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Speaker 1: which will be five days after soldiers overthrew Ali Bongo

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Speaker 1: as leader. It has been the eighth coup in a

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Speaker 1: former French colony in three years. It leaves Paris down.

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Speaker 1: He had another longtime friend in the region and Bloomberg's

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Speaker 1: Neil Munchi, who is our Africa editor based in Nairobi,

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Speaker 1: joins us now to discuss. Neil, this has been a

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Speaker 1: story that we've been looking at the last few days.

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Speaker 1: What has happened in Gabon. What is driving all of

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Speaker 1: these coups in Sub Saharan Africa?

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Speaker 6: Hey morning. So on last Saturday, Gabon held a deeply

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Speaker 6: flawed election in which Ali Bongo was declared the winner.

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Speaker 6: His government had shut the internet and sort of closed

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Speaker 6: the political space ahead of it, and a few hours

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Speaker 6: after he was declared winner on Wednesday, the army came

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Speaker 6: on state TV and said they'd over thrown him. Bongo

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Speaker 6: sent out a video plea for support, but given how

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Speaker 6: little pushback any of the other coups in the region

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Speaker 6: have received this very little expectation that he'll return to power,

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Speaker 6: and that is in part what's driving all these coups

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Speaker 6: that we're seeing across Africa is that there isn't a

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Speaker 6: real international response to them, and there kind of can't be.

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Speaker 6: You know, there isn't much appetite either on the continent

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Speaker 6: or in the West for some kind of ground invasion

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Speaker 6: to restore democracy. But ultimately it comes down to bad governance,

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Speaker 6: neglect by political elites who generally stuff their pockets rather

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Speaker 6: than serve their citizens. You know, most of these countries,

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Speaker 6: including Gebbon, are incredibly resource rich, but remain you know,

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Speaker 6: many of their people remain among the poorest in the world,

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Speaker 6: even as politicians own homes in London and Paris. And

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Speaker 6: at the same time, you have this kind of insecurity

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Speaker 6: that's royally in the western Sahel Jehadist insurgency that governments

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Speaker 6: can't get a handle on, and that's kind of feeding

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Speaker 6: frustration as well. So soldiers step in and say, we're

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Speaker 6: the ones who can fix this.

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Speaker 2: Neil this who comes just a month after the one

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Speaker 2: in Niger? Are there a risk of more? Who's on

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Speaker 2: the horizon? Are there other regimes in Africa worried about

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Speaker 2: them perhaps being next?

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Speaker 6: Yeah, So Bongo is kind of part of this.

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Speaker 10: Crew of either longtime authoritarians or guys who inherited the

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Speaker 10: presidency from their fathers who were longtime authoritarians in Francophone Africa.

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Speaker 6: So Paul Bia and Cameroon's been there for about forty years,

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Speaker 6: Dennis Sasso and Guesto and Congo Brazzaville not a guy

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Speaker 6: for forty years. The rulers of Chad and Togo inherited

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Speaker 6: their presidencies and they're there. Is you know, there is

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Speaker 6: this sense, like I was saying, that there's not gonna

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Speaker 6: be much pushback against these coups, and all of these

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Speaker 6: countries have strong militaries that have taken power in the past.

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Speaker 2: This is Bloomberg Daybreak Europe, your morning brief on the

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Speaker 2: stories making news from London to Wall Street and beyond.

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Speaker 1: I'm Caroline Hepka.

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Speaker 2: And I'm Stephen Carroll. Join us again tomorrow morning for

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