WEBVTT - House on Fire 0:00:03.920 --> 0:00:07.800 Welcome to Bloomberg Opinion. I'm only Quinn this week right now. 0:00:07.920 --> 0:00:10.520 An attempt to invade Tail one, there's a great deal 0:00:10.560 --> 0:00:13.920 of risk that that would fail. And if you were 0:00:14.000 --> 0:00:16.840 to try to invade Taiwan, kill the Chinese economy and 0:00:16.880 --> 0:00:19.200 then also not be able to take Taiwan, that would 0:00:19.200 --> 0:00:22.920 put him in an extremely precarious position domestically in China. 0:00:23.040 --> 0:00:24.720 I just don't think he would take that risk at 0:00:24.720 --> 0:00:28.400 this moment. Bloomberg Executive Editor for Greater China, John Lure 0:00:28.480 --> 0:00:30.840 in New York for the first time since Maitland China 0:00:30.920 --> 0:00:34.519 Open for Travel, joins for an extended conversation about China's 0:00:34.520 --> 0:00:39.160 direction of travel, politically and economically. Later, at some point, 0:00:39.280 --> 0:00:42.239 the House cream concuss people. The radicals are going to 0:00:42.479 --> 0:00:45.839 believe that McCarthy sold them out, whether it's after no 0:00:45.920 --> 0:00:49.160 shutdown at all or after a three month shutdown. They're 0:00:49.159 --> 0:00:51.840 gonna think, oh, if only the government closed two more weeks, 0:00:51.880 --> 0:00:54.400 we would have gotten everything we wanted. And then if 0:00:54.400 --> 0:00:56.880 they use that and decide, well, let's get rid of 0:00:56.920 --> 0:00:59.920 the speaker, they may do that. Bloomberg Opinions Jonathan burns 0:01:00.120 --> 0:01:03.000 enjoins to discuss the aftermath of the fifteen round speaker 0:01:03.080 --> 0:01:07.360 election in the House and what comes next for the Congress. 0:01:07.400 --> 0:01:10.120 So to China now, and the question over what kind 0:01:10.200 --> 0:01:12.600 of leader President she Jin Pink turns out to be 0:01:12.680 --> 0:01:16.640 for China's economy and markets over the coming years. Bloomberg 0:01:16.680 --> 0:01:20.360 Executive Editor for Greater China, John Leeu joins. So, John, 0:01:20.360 --> 0:01:22.280 we've spoken a lot on the show to Shooli Wren 0:01:22.440 --> 0:01:24.640 for updates on how China has been faring through COVID 0:01:24.720 --> 0:01:26.679 zero and the pivot away from that. So I wanted 0:01:26.720 --> 0:01:28.600 to zoom out a little bit and ask you some 0:01:28.880 --> 0:01:31.720 larger questions about China's direction of travel under President she 0:01:31.840 --> 0:01:35.120 Now that he's effectively consolidated power for life or for 0:01:35.160 --> 0:01:38.200 as long as he wants, is this position solid? First 0:01:38.200 --> 0:01:40.959 of all, is there anyone in the CCP providing a 0:01:41.040 --> 0:01:44.600 checker balance? I think he's got a pretty solid grasp 0:01:44.680 --> 0:01:47.920 of power. There does not seem to be any challengers 0:01:47.960 --> 0:01:52.320 on the horizon. Like you said, he's consolidated power in 0:01:52.360 --> 0:01:56.240 a way that that has been actually quite surprising to observers. 0:01:56.360 --> 0:01:59.760 At the Party Congress. The new Standing Committee is filled 0:01:59.800 --> 0:02:04.200 with his allies. There are no political opponents there. He 0:02:04.280 --> 0:02:08.160 should have quite a large amount of flexibility in terms 0:02:08.160 --> 0:02:11.520 of policy, in terms of decision making, and as you said, 0:02:11.760 --> 0:02:13.919 you know, I think he's in a position to be 0:02:14.000 --> 0:02:17.040 in power for quite some time. How popular is he 0:02:17.080 --> 0:02:19.880 among the one point for billion people or so of China. 0:02:19.919 --> 0:02:22.760 I know that's a large question. You know, it's hard 0:02:22.800 --> 0:02:25.960 to say because there is not publicly available polling as 0:02:26.000 --> 0:02:28.079 you have in many other places like the United States. 0:02:28.080 --> 0:02:31.639 But I would say he's probably more popular than not. 0:02:32.320 --> 0:02:35.920 And the reasons for that are one. Corruption during his 0:02:36.040 --> 0:02:39.160 time in power has really been reined in. I remember 0:02:39.240 --> 0:02:41.840 when I first got to Beijing, our colleagues were telling me, 0:02:42.080 --> 0:02:44.639 you know, they used to bribe their school teachers so 0:02:44.680 --> 0:02:46.880 that their kids could sit at the front of the class, 0:02:47.040 --> 0:02:51.040 and that that's just unheard of now. Pollution has gotten 0:02:51.120 --> 0:02:53.600 much much better. You'll remember the stories a couple of 0:02:53.639 --> 0:02:55.440 years ago about you know, there are being so much 0:02:55.440 --> 0:02:58.560 smog in Beijing that planes couldn't take off, for example, 0:02:58.600 --> 0:03:02.520 and that's it's the skies have gotten much bluer under 0:03:02.520 --> 0:03:05.160 she and so as a result of that, I think 0:03:05.160 --> 0:03:07.560 there there is a lot of reason for people to 0:03:07.800 --> 0:03:10.440 like some of the changes that they've seen under j Ping. 0:03:10.760 --> 0:03:12.680 At the same time, there are things when it comes 0:03:12.720 --> 0:03:16.240 to the room for descent, when it comes to cracking 0:03:16.240 --> 0:03:19.960 down on things like rights lawyers or or even women's 0:03:20.040 --> 0:03:23.320 rights groups. There are other parts of society that have 0:03:23.480 --> 0:03:26.560 lots of reasons to oppose many of she policies, and 0:03:26.560 --> 0:03:28.880 and where he's not that popular, and there does seem 0:03:28.880 --> 0:03:31.280 to be a new found well I'm not sure how 0:03:31.280 --> 0:03:34.000 a new found it is, but desire to protest sometimes. 0:03:34.520 --> 0:03:36.920 I mean the protests that we saw at the end 0:03:36.960 --> 0:03:41.080 of November because of COVID that was There are protests 0:03:41.080 --> 0:03:44.720 in China. They're exceptionally rare, but they do happen. I 0:03:44.760 --> 0:03:47.520 think what stood out about those protests were that they 0:03:48.000 --> 0:03:52.600 happened basically over the same weekend across cities all over China, 0:03:52.680 --> 0:03:55.040 and for the same reason. And in the past when 0:03:55.080 --> 0:03:57.800 we've had protests, they've been largely about very local issues 0:03:57.880 --> 0:04:00.240 like I don't want to landfill in my back yard 0:04:00.240 --> 0:04:03.040 and so I'm going to protest. But that situation, you 0:04:03.120 --> 0:04:05.880 had people in different cities all over the country protesting 0:04:05.920 --> 0:04:08.160 the same thing, and so that would have made it 0:04:08.480 --> 0:04:12.000 made that situation more alarming for the government. How will 0:04:12.000 --> 0:04:15.920 he provide for or so of China's youth who are unemployed, 0:04:15.960 --> 0:04:18.560 he certainly doesn't want to see it any discontent in 0:04:18.680 --> 0:04:22.000 that group. I think opening up, you know, exiting COVID 0:04:22.120 --> 0:04:23.880 zero is going to go a long way and helping 0:04:23.920 --> 0:04:26.720 provide jobs, especially in the service industry, which has been 0:04:26.720 --> 0:04:29.160 really hit. So if you think about restaurants, if you 0:04:29.200 --> 0:04:33.560 think about airlines, if you think about tourism in general, hotels, 0:04:34.000 --> 0:04:37.000 those are all businesses that you still employ lots of people, 0:04:37.080 --> 0:04:41.960 especially younger people. Uh And if if people start traveling again, 0:04:42.000 --> 0:04:44.360 people start shopping again because they're not being locked down, 0:04:44.360 --> 0:04:46.839 they don't have to do testing all the time, then 0:04:46.880 --> 0:04:49.160 that will go a long way again the economy going 0:04:49.240 --> 0:04:52.359 and providing job opportunities for for that segment of society. 0:04:52.839 --> 0:04:55.440 In terms of markets, John, how much does she want 0:04:55.480 --> 0:04:58.760 to keep international market participants interested in China. It did 0:04:58.839 --> 0:05:01.239 seem like there was a it to a more domestic agenda, 0:05:01.279 --> 0:05:03.680 but that could have been just through COVID. I think 0:05:03.760 --> 0:05:06.359 we're gonna see uh we I think we've already started 0:05:06.360 --> 0:05:09.560 to see in three and the latter part of real 0:05:09.600 --> 0:05:12.800 focus on growth. I think the embrace that we've seen 0:05:12.800 --> 0:05:16.080 in the last couple of weeks of private business at 0:05:16.120 --> 0:05:21.240 financial for example, getting the right to recapitalize add more capital. UH. 0:05:21.440 --> 0:05:25.680 They've the government has shown a lot more tolerance for 0:05:25.960 --> 0:05:28.800 the big internet companies. We had the Party Secretary of 0:05:28.839 --> 0:05:32.200 jo John Province where Ali Baba is based visiting the company. 0:05:32.279 --> 0:05:35.400 So I think that UH is part and parcel of 0:05:35.400 --> 0:05:39.080 an attempt to add confidence, not just to global markets, 0:05:39.080 --> 0:05:43.279 with domestic markets. I think the government right now is growth, growth, growth. 0:05:43.279 --> 0:05:45.479 They will do anything to get the economy going, and 0:05:45.560 --> 0:05:49.040 that means sacrificing things like that domestic agenda that you 0:05:49.120 --> 0:05:53.440 talked about. There's one big elephant in the room. How 0:05:53.560 --> 0:05:56.479 soon before he decides Taiwan needs to be back in 0:05:56.600 --> 0:05:59.120 his fold. Markets were quite stressed about that question before 0:05:59.200 --> 0:06:01.000 Russia and bad did you train? And I think there's 0:06:01.040 --> 0:06:04.479 still an underlying tension among investors. I mean, I think 0:06:04.520 --> 0:06:07.240 it's the I don't know what the answer to that is, 0:06:07.440 --> 0:06:12.839 but in my opinion, I think currently markets are over 0:06:12.920 --> 0:06:16.200 pricing the risk of an invasion the short term. I 0:06:16.279 --> 0:06:19.040 don't think it's gonna happen in the short term, and 0:06:19.120 --> 0:06:21.160 the reason I think it will be further off than 0:06:21.160 --> 0:06:24.400 people expect is that Jijimi has two things he wants 0:06:24.400 --> 0:06:29.160 to do. He wants to revitalize the economy. He wants 0:06:29.240 --> 0:06:32.800 to get China to you know, make it a rich nation, 0:06:33.040 --> 0:06:36.560 a developed nation, catch the US in terms of GDP. 0:06:36.800 --> 0:06:40.160 And that's part of this revitalization of the Chinese nation 0:06:40.200 --> 0:06:42.600 that he talks about all the time. And and part 0:06:42.600 --> 0:06:46.320 of that revitalization also includes bringing Taiwan into the fold. Well, 0:06:46.320 --> 0:06:49.560 those those goals are contradictory. And so if he were 0:06:49.640 --> 0:06:52.400 to if there were an invasion of Taiwan, it would 0:06:52.839 --> 0:06:55.400 it would crash the global economy, and it would definitely 0:06:55.400 --> 0:06:59.120 crash the Chinese economy. And you know, right now an 0:06:59.160 --> 0:07:02.400 attempt to invade Taiwan is not there are there's a 0:07:02.440 --> 0:07:06.440 great deal of risk that that would fail. And if 0:07:06.440 --> 0:07:09.320 you were to try to invade Taiwan, kill the Chinese 0:07:09.320 --> 0:07:12.000 economy and then also not be able to take Taiwan, 0:07:12.040 --> 0:07:14.520 that would be that would put him in an extremely 0:07:14.600 --> 0:07:18.040 precarious position domestically in China. I just don't think he 0:07:18.040 --> 0:07:20.560 would take that risk at this moment, as someone who 0:07:20.600 --> 0:07:23.440 studied him quite a lot. How capricious is he is 0:07:23.480 --> 0:07:25.600 there a danger that something like that might just happen 0:07:25.720 --> 0:07:30.520 overnight on a whim. I think he's he's uh. From 0:07:30.560 --> 0:07:33.360 what we can tell, he seems to be a very 0:07:33.360 --> 0:07:38.480 studied person, considers his steps very purposeful in his actions. 0:07:39.080 --> 0:07:42.040 I think the recent reopening that we've seen in China, 0:07:42.080 --> 0:07:44.160 it's surprised a lot of people and the speed and 0:07:44.200 --> 0:07:46.640 the pace that it's it's happened, and there's a lot 0:07:46.680 --> 0:07:48.840 of things about it that are that are hard to defend. 0:07:49.120 --> 0:07:51.800 Why they didn't do it until why didn't they didn't 0:07:51.880 --> 0:07:54.680 get vaccination rates higher before trying to do it? But 0:07:54.680 --> 0:07:56.960 at the same time, I think it suggests an ability 0:07:57.120 --> 0:08:00.840 at course correction that is greater than people had expected. 0:08:00.920 --> 0:08:04.920 So I think being able to take a pragmatic approach, 0:08:06.480 --> 0:08:09.760 I think is something that has you know, benefited the 0:08:09.760 --> 0:08:12.400 Communist Party, and I think is something that she in 0:08:12.440 --> 0:08:15.240 this sense, has shown he can do. It was extraordinary 0:08:15.360 --> 0:08:19.520 sudden flexibility, So there had been no flexibility. But then, 0:08:19.680 --> 0:08:21.840 as you say, because of so unexpected, it did seem 0:08:21.880 --> 0:08:24.040 like maybe he can be flexible when he wants to be. 0:08:24.440 --> 0:08:27.000 I mean, I think with COVID, they found themselves, they 0:08:27.000 --> 0:08:29.200 had paid themselves into a corner where there was no 0:08:29.320 --> 0:08:32.120 other choice, And I think it's very apparent to them 0:08:32.240 --> 0:08:36.280 that reopening will lead to a large number of deaths, 0:08:36.400 --> 0:08:41.680 especially among the vulnerable population, the elderly, those with underlying conditions, 0:08:41.720 --> 0:08:45.480 and they ultimately made the decision that they would reopen 0:08:45.720 --> 0:08:48.160 in spite of that, because the economy was in such 0:08:48.200 --> 0:08:52.040 a bad place, they had people protesting. They just couldn't 0:08:52.080 --> 0:08:55.880 continue to execute COVID zero without causing even more distress. 0:08:56.160 --> 0:08:59.880 And at least delta was over, so perhaps the number 0:08:59.880 --> 0:09:01.959 of deaths won't be as great as would have been 0:09:02.000 --> 0:09:04.640 if it was. The delta a variant A little bit 0:09:04.640 --> 0:09:06.920 about the economy, if you don't mind so. In terms 0:09:06.920 --> 0:09:09.559 of consumption, there's a lot of chatter about whether we'll 0:09:09.559 --> 0:09:11.439 see a V shape or an L tape recovery. These 0:09:11.480 --> 0:09:13.240 letters are back. We used to talk about them in 0:09:13.240 --> 0:09:15.040 the United States a lot before we had other things 0:09:15.080 --> 0:09:18.480 to worry about. What happens in China. I think you 0:09:18.520 --> 0:09:23.880 will see a slow economy in the first quarter because 0:09:24.120 --> 0:09:26.640 with the reopening a lot of people are getting sick. 0:09:26.880 --> 0:09:30.000 We will see absentee ism because people are sick, they 0:09:30.000 --> 0:09:32.040 won't be able to work. They won't go to the factory, 0:09:32.080 --> 0:09:34.720 they won't go to the office. I think by the 0:09:34.840 --> 0:09:36.800 end of the first quarter, you will start to see 0:09:36.840 --> 0:09:41.440 the benefits of reopening becoming more visible. People going out shopping, 0:09:41.640 --> 0:09:46.199 people going to the beach, some greater amount of confidence 0:09:46.200 --> 0:09:49.040 about spending being instilled into the economy. At the same time, 0:09:49.080 --> 0:09:51.480 the government is going to be, in terms of monetary 0:09:51.480 --> 0:09:54.839 and fiscal policy, doing more to get the economy going again, 0:09:54.880 --> 0:09:56.840 and I think that will start to show up. We 0:09:56.920 --> 0:10:00.440 talked about the embrace of private business, of of the 0:10:00.480 --> 0:10:03.600 internet companies. The government's also trying to do more to 0:10:03.800 --> 0:10:06.320 help stabilize the property market, and I think that will 0:10:06.360 --> 0:10:08.120 start to show up as the year goes on, and 0:10:08.160 --> 0:10:12.320 so I think through the second half the latter parts 0:10:12.320 --> 0:10:14.720 of the year, growth will be stronger than the first part. 0:10:15.240 --> 0:10:19.160 John lieu There Bloomberg Executive Editor for Greater China. John 0:10:19.160 --> 0:10:23.320 continues with us in moments, it has certainly a debt problem, 0:10:23.440 --> 0:10:26.560 and it is certainly a vulnerability. The government understands that. 0:10:26.600 --> 0:10:28.600 They see that very clearly. I think what we are 0:10:28.640 --> 0:10:33.000 seeing is this oscillation. When growth is good, the government 0:10:33.040 --> 0:10:36.480 will start to take steps to try and deleverage the economy. 0:10:36.679 --> 0:10:40.120 But when growth is bad, they're going to push that 0:10:40.240 --> 0:10:43.040 off to the side and pile on more debt. If 0:10:43.040 --> 0:10:46.839 it means they can help stimulate growth, they will let 0:10:46.840 --> 0:10:50.800 companies borrow more. It'll just put deleveraging and trying to 0:10:50.880 --> 0:10:53.360 fix that that problem on the back burner. More Next 0:10:53.440 --> 0:10:57.319 on Bloomberg Opinion. I'm Vannie Quinn. You're listening to Bloomberg Opinion. 0:10:57.360 --> 0:11:00.360 I'm Vonnie Quinn, and we're back with John Lieu, executive 0:11:00.440 --> 0:11:03.400 editor for Greater China in New York for the first 0:11:03.440 --> 0:11:06.439 time since the pandemic hit China and President chit and 0:11:06.480 --> 0:11:10.480 Ping locked down. We spoke about particular areas of vulnerability 0:11:10.520 --> 0:11:13.760 for China. You mentioned the property market. Will that policy 0:11:13.800 --> 0:11:17.120 pivot work. Is it clear that Chinese people are as 0:11:17.240 --> 0:11:19.559 interested as they were in property and the second property 0:11:19.600 --> 0:11:22.719 and buying properties that aren't built. So, I think the 0:11:22.760 --> 0:11:25.760 steps that the government has taken recently have been aimed 0:11:25.800 --> 0:11:29.960 at stabilizing the finances for the developers. And so one 0:11:30.000 --> 0:11:32.000 of the most striking things that's happened in the the last 0:11:32.000 --> 0:11:34.559 couple of years has been defaults by the developers ever 0:11:34.640 --> 0:11:37.520 grant for example. And so the first thing the government 0:11:37.520 --> 0:11:39.440 has been trying to do is to make sure that 0:11:39.679 --> 0:11:42.720 situation is stabilized and I think that's steps that they've taken, 0:11:43.200 --> 0:11:47.000 allowing companies to to raise money through share sells for 0:11:47.040 --> 0:11:50.120 the first time in a long time, helping companies sell 0:11:50.280 --> 0:11:54.360 debt again. That that should help stable stabilize that situation. 0:11:54.400 --> 0:11:57.080 Whether or not consumers come back into the market and 0:11:57.120 --> 0:12:01.000 buy more homes, I think is more uncertain. Uh. I 0:12:01.040 --> 0:12:03.760 think in larger cities where there is obvious demand, in 0:12:03.800 --> 0:12:06.760 places like Beijing and Shanghai shen Jin, I think you 0:12:06.800 --> 0:12:08.760 will see people coming back into the market if they 0:12:08.760 --> 0:12:11.320 see an opportunity to pick something up they want. In 0:12:11.400 --> 0:12:14.040 smaller cities, I think it's less clear if that will happen, 0:12:14.040 --> 0:12:17.520 and I think it's going to be more challenging for 0:12:17.600 --> 0:12:19.840 the government to convince people to come back and start 0:12:19.880 --> 0:12:22.640 buying again. Is it fair today that China has a 0:12:22.679 --> 0:12:26.440 debt problem and that there are vulnerabilities there. It has 0:12:26.480 --> 0:12:30.240 certainly a debt problem, and it is certainly a vulnerability. 0:12:30.320 --> 0:12:33.960 I don't. I don't think the government. The government understands that. 0:12:33.960 --> 0:12:36.000 They see that very clearly. I think what we are 0:12:36.040 --> 0:12:40.960 seeing is this oscillation. When growth is good, when GDP 0:12:41.160 --> 0:12:43.880 is five six percent, the government will start to take 0:12:43.880 --> 0:12:47.560 steps to try and deleverage the economy, but when growth 0:12:47.640 --> 0:12:50.760 is bad, they're going to push that off to the 0:12:50.800 --> 0:12:54.199 side and pile on more debt. If it means they 0:12:54.200 --> 0:12:58.040 can help stimulate growth, they will let companies borrow more. 0:12:58.679 --> 0:13:01.559 It'll just put del averaging and trying to fix that 0:13:01.720 --> 0:13:05.200 problem on the back burner. And how much of an 0:13:05.240 --> 0:13:09.360 inflation problem could that give China. China's managed to not 0:13:09.480 --> 0:13:12.640 have an inflation problem for a very long time. If ever, 0:13:13.320 --> 0:13:16.560 does it suddenly have to worry about inflation Right now, 0:13:17.000 --> 0:13:22.240 there are no signs that the inflation is a concern. Obviously, 0:13:23.480 --> 0:13:27.120 as the central bank, as the government tries to simulate 0:13:27.120 --> 0:13:31.000 the economy when it comes to monetary policy, that's a 0:13:31.320 --> 0:13:34.200 that's a risk. But I think in the in the 0:13:34.280 --> 0:13:39.400 recent past, the government has relied more on fiscal on 0:13:39.880 --> 0:13:43.319 infrastructure spending is a way to get the economy going again, 0:13:43.360 --> 0:13:47.600 and so I think they've purposely tried to avoid that 0:13:47.960 --> 0:13:51.840 risk because in the in the aftermath of the financial crisis, 0:13:51.880 --> 0:13:55.560 that became a real problem with that with the money 0:13:55.559 --> 0:13:58.959 that was flooded into the economy, it caused inflation, and 0:13:59.000 --> 0:14:00.680 I think the government has learned the lesson from that 0:14:00.840 --> 0:14:04.960 end is relying more on the fiscal side of stimulus 0:14:05.040 --> 0:14:07.920 to try and get growth going. How much room fiscally 0:14:07.960 --> 0:14:12.480 does China have so uh, there's a difference at the 0:14:12.520 --> 0:14:15.719 local level. With local governments, it's very very stretched. I mean, 0:14:15.760 --> 0:14:19.120 we have lots of cases where, for example, we have 0:14:19.520 --> 0:14:21.960 there's a story out about how some of the people 0:14:21.960 --> 0:14:25.320 who are hired to do the COVID testing mass testing 0:14:25.440 --> 0:14:28.120 during COVID's era, they have not been paid because local 0:14:28.120 --> 0:14:31.880 governments are so stressed in terms of their financing. At 0:14:31.920 --> 0:14:35.560 the central government level, there is much more room to 0:14:35.680 --> 0:14:38.760 take on debt to increase fiscal spending, and I think 0:14:38.800 --> 0:14:43.200 that's where we will see it in and deficit wise, 0:14:43.800 --> 0:14:46.720 does China have to worry about that expanding. I think 0:14:46.800 --> 0:14:49.400 we will. I think the deficit will expand. The central 0:14:49.440 --> 0:14:52.800 government deficit I think it was in the range of 0:14:52.840 --> 0:14:56.160 about three and so they have more room and I 0:14:56.160 --> 0:14:58.440 think they will take that. I don't think they're gonna 0:14:58.880 --> 0:15:02.480 blow it out, but there will be an increase I expect. 0:15:02.520 --> 0:15:08.320 For So this pivot too domestic priorities hasn't just happened 0:15:08.360 --> 0:15:11.400 in China. It happened during President Trump's era in the 0:15:11.480 --> 0:15:14.480 United States. And it's also not clear that President Biden 0:15:14.520 --> 0:15:17.200 is interested in on doing some of those changes in 0:15:17.280 --> 0:15:20.840 terms of trade policy, semiconductor policy, and so on. Where 0:15:20.880 --> 0:15:24.160 do you foresee U. S. China relations headed. I think 0:15:24.160 --> 0:15:29.160 in you will see from the Chinese side at least 0:15:29.280 --> 0:15:33.000 more of an attempt to to be uh, to try 0:15:33.000 --> 0:15:35.960 and get the relationship in a more stable footing, a 0:15:36.000 --> 0:15:40.240 better place. We've got a new foreign minister in office 0:15:40.280 --> 0:15:44.120 in China, the former ambassador to the United States. UH. 0:15:44.240 --> 0:15:47.400 Some of the commentary that's come from him has been 0:15:47.480 --> 0:15:51.960 very glowing. He was calling Americans, you know, great people, UH, 0:15:52.400 --> 0:15:54.440 really complimentary in a way that we haven't seen in 0:15:54.520 --> 0:15:58.080 a long time. I think that indicates this desire by 0:15:58.080 --> 0:16:01.480 the Chinese side to try and improve the relationship because 0:16:01.480 --> 0:16:04.000 I think they see that, you know, China in the 0:16:04.080 --> 0:16:06.800 last couple of years, during the pandemic years, has really 0:16:07.320 --> 0:16:10.880 lost its footing globally and is finding the relationship that 0:16:10.960 --> 0:16:14.160 it has with the US, with Europe, Japan, and you 0:16:14.200 --> 0:16:17.960 have lots of different countries around the world UH being 0:16:18.000 --> 0:16:21.520 in a very problematic place that that in turn makes 0:16:21.560 --> 0:16:23.840 it more difficult to get the economy going and has 0:16:23.880 --> 0:16:28.680 weighed on the economy, especially with the chip uh the 0:16:28.760 --> 0:16:31.200 chip sanctions that have been put into place by the 0:16:31.280 --> 0:16:34.680 United States. I think the government and agencies that, you know, 0:16:34.960 --> 0:16:38.160 trying to improve the relationship will have a real impact 0:16:38.200 --> 0:16:41.480 on not only economic growth, but China's own efforts to 0:16:41.560 --> 0:16:44.960 become self sufficient in technologies. Yeah, because China has a 0:16:45.040 --> 0:16:47.920 problem with US, right, China is a little bit I mean, 0:16:48.000 --> 0:16:49.880 it's not behind in much, but it does seem to 0:16:49.920 --> 0:16:52.000 be a little bit behind when it comes to technology 0:16:52.720 --> 0:16:55.320 when some technology is not all obviously, when it comes 0:16:55.360 --> 0:16:58.880 to chips, it's certainly behind. I mean it's several generations 0:16:58.920 --> 0:17:01.320 behind the cutting you know, just if you look at 0:17:01.400 --> 0:17:04.399 what happened, what has happened with Huawei. You know, Whwawi 0:17:04.440 --> 0:17:08.720 used to be one of the world's biggest mobile phone vendors, 0:17:08.800 --> 0:17:11.400 and because the United States essentially cut it off from 0:17:11.400 --> 0:17:13.720 cutting edge chips, it's no longer able to compete and 0:17:13.760 --> 0:17:16.919 it's it's actually had to unload that business. And so 0:17:17.440 --> 0:17:21.199 when it comes to chips, when it comes to various 0:17:21.200 --> 0:17:25.400 parts of software, China is not at the cutting edge. 0:17:26.040 --> 0:17:30.879 It needs access to American, European Western technologies to try 0:17:31.040 --> 0:17:34.560 and get ahead, to catch up and to you know, 0:17:34.600 --> 0:17:37.400 power its economy, and I think the government there has 0:17:37.440 --> 0:17:41.520 realized that if it continues to take a more aggressive 0:17:41.560 --> 0:17:44.119 stance when it comes to diplomacy, that it's going to 0:17:44.160 --> 0:17:46.560 see its access cut off more quickly. And so that's 0:17:46.560 --> 0:17:49.240 why I think three you probably are going to see 0:17:49.280 --> 0:17:51.800 more of a charm offensive from Beijing than anything else. 0:17:52.480 --> 0:17:55.960 Interesting in the Year of the Rabbit Um. There seems 0:17:55.960 --> 0:17:57.440 to be a determination on the part of the US 0:17:57.520 --> 0:17:59.719 to not let that happen, whether it's on national security, 0:17:59.720 --> 0:18:02.439 go out or other grounds. Does the US change its 0:18:02.480 --> 0:18:06.080 tone a little bit? I'm not sure, you know. I 0:18:06.119 --> 0:18:09.160 think there is a lot of bipartisan support for being 0:18:09.200 --> 0:18:12.440 tough on China, and I don't think that's going to change. 0:18:13.160 --> 0:18:15.800 But I would say if there was a year for 0:18:15.880 --> 0:18:20.280 the relationship to improve, the year, because in four you 0:18:20.280 --> 0:18:22.919 have the election cycle kicking off again in the United States, 0:18:23.600 --> 0:18:25.439 and I would have to think it would make it 0:18:25.480 --> 0:18:27.960 even more difficult to improve the relationship in that year. 0:18:28.400 --> 0:18:32.160 John new their executive editor for Greater China in New York. 0:18:32.720 --> 0:18:36.760 Stay tuned. We turn our attention to the eighteen Congress 0:18:36.880 --> 0:18:40.560 next with Bloomberg Opinions Jonathan Bernstein. Again, they have to 0:18:40.600 --> 0:18:43.960 actually function and what we saw with the speaker vote, 0:18:44.160 --> 0:18:46.280 and what we'd like to going forward is that this 0:18:46.320 --> 0:18:49.720 isn't the unified party that can easily keep the whole 0:18:49.720 --> 0:18:51.840 party together on the floor of the House. Some of 0:18:51.880 --> 0:18:55.919 them have specific policy preferences, but you know, anytime they 0:18:55.920 --> 0:18:58.359 can have a tantrum that works for them, you know, 0:18:58.359 --> 0:19:00.960 whether it does anything any good to anybody else or not. 0:19:01.359 --> 0:19:03.840 Some of these members seem to enjoy just disruption for 0:19:03.880 --> 0:19:07.120 disruption's sake. It's not often that they want something in particular, 0:19:07.119 --> 0:19:09.400 and we saw that through the fifteen votes. It seemed 0:19:09.600 --> 0:19:12.440 do you foresee chaos? I think that it's going to 0:19:12.520 --> 0:19:15.080 be extremely hard. Yeah. I don't think we're gonna have 0:19:15.119 --> 0:19:17.840 a different speaker every week, as some people are talking about, 0:19:17.960 --> 0:19:20.040 but it's going to be very difficult for them to 0:19:20.119 --> 0:19:24.000 do their basic responsibilities, which you know in this Congress 0:19:24.000 --> 0:19:27.400 in particular, we're talking about raising the debt limit, which 0:19:27.440 --> 0:19:29.080 will happen sometime in the second half of the year. 0:19:29.160 --> 0:19:32.199 Has to happen, with the danger being that if they 0:19:32.240 --> 0:19:34.960 don't raise the debt limit, the government could default, which 0:19:35.000 --> 0:19:38.880 will have a huge immediate catastrophic effect on the economy 0:19:39.119 --> 0:19:41.920 and passing spending bills, and if they can't do that, 0:19:42.280 --> 0:19:44.240 then we get a government shutdown, which I would say 0:19:44.359 --> 0:19:48.280 is way more than fifty fifty likely. Jonathan Bernstein continues 0:19:48.320 --> 0:19:50.800 with us in moments. I'd love to invite you to 0:19:50.920 --> 0:19:53.720 share your thoughts and opinions with us. You can email 0:19:53.760 --> 0:19:56.760 me at v Quinn at Bloomberg dot net. And also, 0:19:56.760 --> 0:19:59.680 don't forget we're available as a podcast on Apple, Spotify 0:19:59.840 --> 0:20:03.080 or your favorite podcast platform. More next on Bloomberg Opinion, 0:20:03.119 --> 0:20:07.359 I'm Vonnie Quinn. You're listening to Bloomberg Opinion. I'm Vonnie Quinn. 0:20:07.480 --> 0:20:11.639 I hope one thing is clear after this week. I 0:20:11.680 --> 0:20:15.720 never give up. Well, the show went on in d 0:20:15.800 --> 0:20:18.720 C last week, that's for sure. With markets largely ignoring 0:20:18.760 --> 0:20:22.080 the potential for dead ceiling drama later this year. If anything, 0:20:22.160 --> 0:20:25.320 market participants seem to enjoy the fifteen round speakership vote 0:20:25.440 --> 0:20:28.800 and the emergence of Kevin McCarthy's concessions for one thing, 0:20:28.880 --> 0:20:30.960 it looks like it might lead to policies friendlier to 0:20:31.040 --> 0:20:33.359 big business. But let's get an overview of where we 0:20:33.400 --> 0:20:36.840 stand now with Bloomberg Opinions and Jonathan Bernstein. So, Jonathan, 0:20:36.880 --> 0:20:39.560 we have three Freedom Caucus members now who are going 0:20:39.600 --> 0:20:42.120 to be helping set rules in the Rules Committee. Tell 0:20:42.200 --> 0:20:46.120 us how that's going to impact congressional business going forward. Well, 0:20:46.160 --> 0:20:50.160 the Rules Committee is terribly important when it acts independently 0:20:50.200 --> 0:20:51.800 of the party, which has not been the case for 0:20:51.920 --> 0:20:55.000 sixty years. But once upon a time, Rules was a 0:20:55.040 --> 0:20:59.439 powerful committee which could make or break legislation. These days, 0:21:00.080 --> 0:21:04.200 Rules for the last sixty years has served as a 0:21:04.320 --> 0:21:07.879 tool of the party leadership, therefore of the party. But 0:21:08.000 --> 0:21:10.959 every bill that passes through a regular committee on Agriculture, 0:21:11.000 --> 0:21:14.320 or Ways and Means or arm Services then goes to 0:21:14.520 --> 0:21:17.320 the Rules Committee to get what they call a rule, 0:21:17.400 --> 0:21:20.119 which is the procedures under which the bill will be 0:21:20.160 --> 0:21:23.520 considered in the House of Representatives. And rules can basically 0:21:23.520 --> 0:21:26.200 do anything. They can kill the bill entirely by refusing 0:21:26.240 --> 0:21:28.760 to write a rule for it. They can rewrite the 0:21:28.800 --> 0:21:30.800 bill as much as they want and send it to 0:21:30.840 --> 0:21:33.560 the floor rewritten, and they can decide if they are 0:21:33.560 --> 0:21:35.760 sending as the floor. They can decide which amendments are 0:21:35.760 --> 0:21:38.200