WEBVTT - Will the Xi-Trump Summit Be Over Before It Starts? 0:00:02.720 --> 0:00:07.240 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.000 --> 0:00:10.000 We're doing a lot of business with and making a 0:00:10.000 --> 0:00:12.000 lot of money. It's different than it used to be. 0:00:12.400 --> 0:00:14.600 But I'll be talking about that'll be one subject. But 0:00:15.080 --> 0:00:17.799 he's been very nice about this. You know, in all fairness, 0:00:17.800 --> 0:00:21.280 he gets like sixty percent of his oil from hormones, 0:00:21.280 --> 0:00:24.520 and he's been I think he's been very respectful. We 0:00:24.560 --> 0:00:27.400 haven't been challenged by China our challenges. 0:00:36.600 --> 0:00:39.640 I'm Stephanie Flanders, head of Government and Economics at Bloomberg, 0:00:39.840 --> 0:00:43.919 and this is Trumpnomics, the podcast that always looks at 0:00:43.960 --> 0:00:47.040 the economic world of Donald Trump, how he's shaking up 0:00:47.040 --> 0:00:49.440 the global economy, and what on earth is going to 0:00:49.479 --> 0:00:54.200 happen next. This week, we're looking ahead to what could 0:00:54.240 --> 0:00:57.080 be one of the more consequential meetings of the year 0:00:57.200 --> 0:01:01.840 if it happens. That's the long anticipated, already once rescheduled 0:01:01.880 --> 0:01:06.840 summit between President Donald Trump and President Shijingping in China 0:01:07.080 --> 0:01:09.840 in two weeks time now. President Trump has said this 0:01:09.920 --> 0:01:12.880 week he's still looking forward to meeting his Chinese counterpart, 0:01:13.000 --> 0:01:15.679 Si Jingping, and officials in the White House and Beijing 0:01:16.120 --> 0:01:19.520 have been preparing for this high stakes conversation for months. 0:01:20.160 --> 0:01:23.000 But in that period, the administration has also decided to 0:01:23.120 --> 0:01:26.480 start a war in Iran that has brought fresh trains 0:01:26.600 --> 0:01:29.640 between the two countries. It's choked off a major source 0:01:29.680 --> 0:01:32.440 of energy for China and its neighbors, and offered an 0:01:32.440 --> 0:01:35.600 opportunity for China to once again painted itself as a 0:01:35.680 --> 0:01:39.440 more reliable global citizen than the US. In the past 0:01:39.520 --> 0:01:43.000 few days, Iran related tensions have also ratcheted up again, 0:01:43.520 --> 0:01:47.160 as China has taken the unprecedented step of ordering its 0:01:47.200 --> 0:01:51.120 companies not to abide by US sanctions on private refiners 0:01:51.160 --> 0:01:54.680 involved in trading Iranian oil. It's a pretty brazen attack 0:01:55.080 --> 0:01:59.120 on the legitimacy of US sanctions. So will Trump and 0:01:59.160 --> 0:02:02.000 she actually sit down this month, and if they do, 0:02:02.560 --> 0:02:06.680 what's left to agree on? Well, we're recording this Wednesday morning, 0:02:06.800 --> 0:02:09.880 DC time, and it's really quite possible that the summit 0:02:09.960 --> 0:02:12.720 might have been canceled or postponed again by the time 0:02:12.760 --> 0:02:15.200 you hear this. But if so, I would encourage you 0:02:15.240 --> 0:02:18.320 not to turn off, but to view the next thirty 0:02:18.320 --> 0:02:22.440 minutes or so as providing valuable insights into why that happened. 0:02:22.560 --> 0:02:25.720 Because we do have in our DC studio to extremely 0:02:25.760 --> 0:02:30.760 well placed experts on US China diplomacy. Jenny Welch, the 0:02:30.840 --> 0:02:34.360 chief geoeconomics analyst for Bloomberg Economics who's been on the 0:02:34.360 --> 0:02:37.880 show before. She previously served as the director for China 0:02:37.960 --> 0:02:41.040 and Taiwan on the US National Security Council under the 0:02:41.040 --> 0:02:44.000 Biden and Trump administrations. She was also an advisor to 0:02:44.120 --> 0:02:48.160 Vice Presidents Harris and Pence on Asia and the Pacific. Jenny, 0:02:48.280 --> 0:02:50.840 thanks again for joining us, Thank you for having me, 0:02:52.080 --> 0:02:54.400 and usually in Hong Kong, and we've certainly heard him 0:02:54.400 --> 0:02:57.120 from there on occasion, but now in DC this week. 0:02:57.400 --> 0:03:00.480 Down ten Kate, Bloomberg executive editor who run all of 0:03:00.520 --> 0:03:02.600 our economics and politics coverage in Asia. 0:03:02.720 --> 0:03:04.880 Dan, thanks for coming, Thanks for having me. 0:03:08.760 --> 0:03:10.400 Do you think this is going to happen? What are 0:03:10.440 --> 0:03:13.160 the probabilities? I know you wrote on this yesterday, but 0:03:13.639 --> 0:03:17.160 what probability are you putting on this now happening on 0:03:17.240 --> 0:03:19.200 the kind of time frame that we were expecting. 0:03:19.720 --> 0:03:22.480 I tend to lean a little bit towards the meeting 0:03:22.520 --> 0:03:24.959 going forward as planned, and I think the main reason 0:03:25.000 --> 0:03:27.440 for that is that it's a relatively low cost way 0:03:27.520 --> 0:03:30.480 for both sides to maintain stability, and both of them 0:03:30.520 --> 0:03:33.680 have an interest in that, especially given all the headwinds 0:03:33.720 --> 0:03:37.000 they're facing at home and from the energy disruptions caused 0:03:37.000 --> 0:03:40.520 by the Iran War. That being said, as you mentioned, Stephanie, 0:03:40.600 --> 0:03:42.760 there are also a lot of friction points that are 0:03:42.760 --> 0:03:46.960 continuing to build, including over the war itself. China is 0:03:47.040 --> 0:03:50.400 not happy about the blockade, which is affecting a major 0:03:50.440 --> 0:03:53.400 source of energy imports for it coming through her moves. 0:03:54.000 --> 0:03:56.320 It is not happy about US pressure on a run 0:03:56.520 --> 0:04:01.160 and particularly recent US sanctions targeting is private, refined and 0:04:01.280 --> 0:04:03.440 more broadly, I think China is not happy to be 0:04:03.520 --> 0:04:05.960 hosting a major diplomatic summit in the midst of the 0:04:06.080 --> 0:04:09.640 US carrying out whether Washington says it still is or not, 0:04:10.400 --> 0:04:12.880 what the world precedes as a major military campaign in 0:04:12.880 --> 0:04:14.680 the Middle East. 0:04:14.800 --> 0:04:17.320 And I guess, yeah, so it's sort of rather it 0:04:17.440 --> 0:04:20.120 wasn't happening, but given that it is, they also would 0:04:20.160 --> 0:04:25.000 see significant costs to putting it off, for canceling. 0:04:24.560 --> 0:04:27.240 It, that's right. I think there is the risk that 0:04:27.640 --> 0:04:31.080 a could turn from just a diplomatic snafu into a 0:04:31.160 --> 0:04:34.440 larger friction point in the relationship, and that comes in 0:04:34.520 --> 0:04:37.760 a moment where while China's insulated itself from the effects 0:04:37.760 --> 0:04:40.880 of the Iran war through its reserves, its energy diversification. 0:04:41.320 --> 0:04:43.719 It's still facing costs, and it's still worried about the 0:04:43.760 --> 0:04:46.400 impact this war will have on its ability to sell 0:04:46.600 --> 0:04:49.520 its exports around the world. And so all that is 0:04:49.560 --> 0:04:51.919 to say, I think they would not necessarily want a 0:04:51.960 --> 0:04:55.120 trade fight if they can avoid it with the United States. Certainly, 0:04:55.160 --> 0:04:56.960 they would wage it if they felt they had to, 0:04:57.600 --> 0:05:02.040 but hosting Trump is relatively low cost way of potentially 0:05:02.040 --> 0:05:03.080 avoiding that outcome. 0:05:03.720 --> 0:05:07.599 Dan Jenny's obviously kind of thinking about both perspectives, having 0:05:07.839 --> 0:05:11.640 spent a lot of time sort of advising US administrations 0:05:11.760 --> 0:05:14.479 on how China is looking at things. But you know, 0:05:14.520 --> 0:05:18.000 you're normally sitting in Hong Kong. How do you think 0:05:18.360 --> 0:05:22.039 that the Chinese authorities will be viewing the summit and 0:05:22.120 --> 0:05:25.560 the decision to potentially postpone or delay. 0:05:25.760 --> 0:05:28.559 I agree with Jenny, definitely, it's not the preferred time 0:05:28.680 --> 0:05:31.240 to be having a summit. Chi Jiping will often say 0:05:31.560 --> 0:05:34.920 things to leaders, like when he dressed down Justin Trudeau 0:05:35.040 --> 0:05:37.680 at the G twenty in Bali a couple of years ago. 0:05:38.480 --> 0:05:40.440 You know, we need to create the right conditions for 0:05:40.520 --> 0:05:44.039 the relationship and this is not the right conditions. It 0:05:44.120 --> 0:05:47.480 definitely puts them in an awkward position in terms of 0:05:47.920 --> 0:05:49.960 what do you do on the ground. They like to 0:05:50.120 --> 0:05:54.800 just make sure that everything is stage managed. They measure 0:05:54.839 --> 0:05:57.599 out the distance that Hi Jiping needs to walk from 0:05:57.839 --> 0:06:01.400 point A to point B. The they don't like any surprises, 0:06:01.440 --> 0:06:04.680 so dealing with Trump normally, there's so many unknowns when 0:06:04.760 --> 0:06:07.720 it comes to that that you're not quite sure what 0:06:07.760 --> 0:06:10.200 he's going to say, and you're trying to stage manage 0:06:10.240 --> 0:06:12.520 the whole thing. So it just adds an element of 0:06:12.680 --> 0:06:16.320 uncertainty that they don't like. But they also do have 0:06:16.400 --> 0:06:19.000 a way of looking at the bigger picture, and the 0:06:19.040 --> 0:06:22.280 bigger picture is the US is still an important market. 0:06:22.520 --> 0:06:26.080 Their economy is still heavily reliant on exports in a 0:06:26.080 --> 0:06:30.640 stable external environment. They're also that the host APEC later 0:06:30.680 --> 0:06:34.159 in the year, Trump is going to host the G twenty. 0:06:34.520 --> 0:06:36.800 They're supposed to meet three more times after this, so 0:06:37.400 --> 0:06:39.800 to keep that all on track, this meeting has to 0:06:39.800 --> 0:06:42.159 happen at some point or otherwise it gets to rail 0:06:42.560 --> 0:06:45.279 and this truce is said to expire in November unless 0:06:45.279 --> 0:06:48.760 you extend it. And so for all those reasons, there's 0:06:48.760 --> 0:06:51.200 a lot of reasons to go forward with this meeting, 0:06:51.320 --> 0:06:53.080 even if it's not an optimal time. 0:06:53.520 --> 0:06:56.359 Chinese could maybe take some advice from the palace, given 0:06:56.400 --> 0:06:59.760 that you've had the planning for the King's visit in DC. 0:07:00.000 --> 0:07:02.680 I suspect was there were very similar concerns. I suspect 0:07:02.720 --> 0:07:05.920 the Chinese will be kind of thinking through similar ways 0:07:06.000 --> 0:07:08.640 to reduce the amount of time for any kind of 0:07:08.839 --> 0:07:11.480 anything surprising to happen. I do want to get into 0:07:11.640 --> 0:07:14.040 what they might talk about, what the to use the 0:07:14.080 --> 0:07:18.080 phrase is much loved in these kind of discussions. Deliverables 0:07:18.200 --> 0:07:21.440 might be from the summit, be good to get a 0:07:21.560 --> 0:07:24.720 sense of this. More recent news in the last week 0:07:24.800 --> 0:07:27.680 that I mentioned at the top that China ordering its 0:07:27.720 --> 0:07:31.840 companies to ignore US sanctions, the sanctions that were on 0:07:31.960 --> 0:07:37.280 refiners that had been linked to refining Iranian oil. How 0:07:37.360 --> 0:07:40.320 unprecedented is that because we've heard the Chinese before kind 0:07:40.400 --> 0:07:44.040 of complain about US sanctions, say they're not legitimate. But 0:07:44.880 --> 0:07:46.280 what's new in this move? 0:07:46.880 --> 0:07:49.440 Yeah, I mean we have seen this before, particularly in 0:07:49.800 --> 0:07:54.160 Hong Kong where I'm based, during the protest or the 0:07:54.400 --> 0:07:59.240 twenty twenty after the National Security Law that specifically says 0:07:59.360 --> 0:08:03.920 that China, these companies should not comply with US sanctions, 0:08:03.960 --> 0:08:06.800 and banks were in effect being forced to choose do 0:08:06.840 --> 0:08:09.600 you comply with the US or do you comply with 0:08:09.640 --> 0:08:12.920 the National Security law? And even Chinese state run banks 0:08:12.920 --> 0:08:15.760 were complying with US sanctions then because they didn't want 0:08:15.760 --> 0:08:18.320 to be cut off from the dollar system. So there 0:08:18.400 --> 0:08:20.760 is a little bit of a dance where what they 0:08:20.800 --> 0:08:23.880 say and what they do can be two different things sometimes. 0:08:24.280 --> 0:08:27.160 I think what's different now is that China has stood 0:08:27.240 --> 0:08:30.640 up to Trump, particularly last year. They have the showed 0:08:30.880 --> 0:08:33.320 the leverage they have with by cutting off rare earths, 0:08:33.760 --> 0:08:38.240 and that's still there, so they're in a relatively stronger 0:08:38.400 --> 0:08:42.360 position to say things like, hey, we're going to dare you, 0:08:42.520 --> 0:08:45.760 essentially to put sanctions on our banks, and that's going 0:08:45.800 --> 0:08:47.599 to blow up the relationship, and do you want to 0:08:47.600 --> 0:08:51.000 blow up the relationship now? Rubio was giving a briefing 0:08:51.080 --> 0:08:54.320 year in Washington yesterday where he said, we don't put 0:08:54.360 --> 0:08:56.760 sanctions on to be symbolic, and we are going to 0:08:56.840 --> 0:08:59.760 enforce them. But you know, from the Chinese perspective, they 0:08:59.840 --> 0:09:03.600 know that Trump wants the summit and doesn't want things 0:09:03.600 --> 0:09:06.240 to blow up. He's got enough problems on his plate. 0:09:06.280 --> 0:09:08.480 Now if we see them trying to squeeze Taiwan a 0:09:08.480 --> 0:09:11.800 bit more as well, so it's an opportune time in 0:09:11.840 --> 0:09:14.400 their mind to say, Okay, we'll call your bluff on 0:09:14.440 --> 0:09:17.760 this one and do you go ahead? And it potentially 0:09:17.800 --> 0:09:21.720 could royal the relationship, could royal markets. Certainly we'll have 0:09:21.760 --> 0:09:24.960 an impact on China as well. But if you're going 0:09:25.000 --> 0:09:27.640 to take a stand, you know, why not, especially ahead 0:09:27.679 --> 0:09:28.160 of the summit. 0:09:28.640 --> 0:09:31.319 It feels like a sign of the times, Jenny. If 0:09:31.360 --> 0:09:35.480 the previous situation was that the Chinese in public would 0:09:35.480 --> 0:09:38.880 say they don't respect these sanctions, but in private would 0:09:39.000 --> 0:09:43.040 largely kind of turn a blind eye to their biggest 0:09:43.080 --> 0:09:46.640 companies abiding by sanctions in order to stay in the 0:09:46.760 --> 0:09:49.439 US system, and for all those reasons, if we're now 0:09:49.440 --> 0:09:53.720 in a reverse situation where it's actually the US that 0:09:53.800 --> 0:09:56.360 has to kind of turn a blind eye to countries 0:09:56.679 --> 0:10:00.560 just ignoring the writ of America because it no longer 0:10:00.600 --> 0:10:03.800 has the same kind of weight, I mean, that's something 0:10:03.840 --> 0:10:06.040 that we're not just seeing in China. 0:10:06.160 --> 0:10:08.600 No, I think that's true. I think too, what this 0:10:08.720 --> 0:10:12.520 situation really underscores is the shift in leverage between the 0:10:12.640 --> 0:10:15.400 United States and China over the last year. I can't 0:10:15.480 --> 0:10:19.920 underscore enough the impact of China's use of its grip 0:10:20.000 --> 0:10:24.760 over critical minerals to put the ONUS back on Washington 0:10:24.840 --> 0:10:28.080 last year during the height of the trade war and 0:10:28.600 --> 0:10:31.360 push Washington towards the negotiating table, push it towards a 0:10:31.360 --> 0:10:34.440 pause that eventually led to the Bussan meeting and a 0:10:34.760 --> 0:10:39.920 more enduring truce that had a real psychological effect on Washington, 0:10:40.280 --> 0:10:43.000 and demonstrating China's trump card. And it's a trump card 0:10:43.040 --> 0:10:45.480 that even though Beijing has put a pause on some 0:10:45.520 --> 0:10:48.560 of those measures, it hasn't fully rolled them back. In fact, 0:10:48.600 --> 0:10:52.319 it's continuing to gather information from every company that imports 0:10:52.640 --> 0:10:54.920 Chinese critical minerals on how they're using it and what 0:10:55.000 --> 0:10:58.560 specifically they use them for. So all of that is 0:10:58.600 --> 0:11:02.320 information that China could very quickly use again if it felt, 0:11:02.360 --> 0:11:05.200 for example, that the US is not respecting its interest. 0:11:05.240 --> 0:11:07.600 And I think that that really casts a shadow over 0:11:07.960 --> 0:11:11.840 policymaking in this administration. You've seen them be very careful about, 0:11:11.880 --> 0:11:14.319 for example, how China is referred to, and everything from 0:11:14.360 --> 0:11:18.680 the National Defense strategy to future export control rules. And 0:11:18.760 --> 0:11:21.000 I think it's also likely to be a factor in 0:11:21.040 --> 0:11:22.640 how the US is approaching this meeting. 0:11:22.720 --> 0:11:25.320 In particular, we had a fantastic bit of research that 0:11:25.440 --> 0:11:28.080 was out about a week ago from your colleagues Nicole 0:11:28.240 --> 0:11:31.760 Gordon Carottelli and Chris Kennedy, just looking at how much 0:11:32.040 --> 0:11:36.320 rare earths are implicated in the US economy. And it's 0:11:37.480 --> 0:11:40.360 an incredibly complicated bit of work because it's going through 0:11:40.400 --> 0:11:42.679 not just the direct use but the indirect use, so 0:11:42.760 --> 0:11:44.880 you have to really get under the hood. But they 0:11:44.920 --> 0:11:49.920 find that four percent of US GDP is implicated at 0:11:49.920 --> 0:11:52.839 one point true trillion dollars, and although some of them 0:11:52.880 --> 0:11:56.240 can be substituted for rareers from other parts of the world, 0:11:56.640 --> 0:11:58.840 there's actually about one and a half percent of that 0:11:59.040 --> 0:12:01.920 which just can't substituted. China's the only source. So it 0:12:02.000 --> 0:12:06.040 really really showed us why that is such an important 0:12:06.080 --> 0:12:09.440 bit of leverage. Dan, I remember talking to you she 0:12:09.559 --> 0:12:11.640 when I was in Hong Kong earlier in the year, 0:12:11.960 --> 0:12:14.520 and we were talking about the sort of relative balance 0:12:14.559 --> 0:12:19.040 of power, the shifting ground underneath the US and China. 0:12:19.080 --> 0:12:22.240 I mean, it's not just a ran that's happened since then. 0:12:22.720 --> 0:12:26.080 We've also seen the overturning of a lot of the 0:12:26.200 --> 0:12:29.400 tariffs that had been put on China. China's now got 0:12:29.440 --> 0:12:31.480 a big advantage relative to the start of the year 0:12:31.480 --> 0:12:35.120 in the tariff rate that it's facing going into the US. 0:12:35.600 --> 0:12:38.560 What are you looking for if this meeting does go ahead? 0:12:38.840 --> 0:12:40.720 What's possible on the trade front? 0:12:41.080 --> 0:12:44.360 The US has the three oh one investigations ongoing, and 0:12:44.400 --> 0:12:47.440 they vowed to rebuild this tariff wall. So I think 0:12:47.600 --> 0:12:51.319 China's big concern now is that it doesn't get rebuilt 0:12:51.320 --> 0:12:54.440 in a way that they see US going beyond what 0:12:54.640 --> 0:12:57.120 was there before, and they just want to issue some 0:12:57.160 --> 0:13:01.320 warnings there. So there is some uncertainty hanging over what 0:13:01.400 --> 0:13:03.640 that rate is going to be or what that picture 0:13:03.679 --> 0:13:06.120 looks like. And I think until you start that out, 0:13:06.120 --> 0:13:10.360 it's really hard to go beyond that. And this notion that, Okay, 0:13:10.240 --> 0:13:12.800 they've made this truce, and then they were talking about 0:13:13.080 --> 0:13:15.040 how can we build off of that truce? Can we 0:13:15.160 --> 0:13:18.240 actually do some bigger things with the economy. Can we 0:13:18.280 --> 0:13:21.719 sell more advanced chips into China? You have the h 0:13:21.880 --> 0:13:25.040 two hundreds ready to go, not many have been shipped yet. 0:13:25.080 --> 0:13:28.679 They're not the super important the Blackwell chips. They're sort 0:13:28.679 --> 0:13:29.600 of one down from there. 0:13:29.679 --> 0:13:32.200 Right, You've got the Blackwells, got the Rubens, there are 0:13:32.240 --> 0:13:35.840 a couple generations back. We don't see that there's going 0:13:35.880 --> 0:13:39.040 to be anything further in that area. And then the 0:13:39.120 --> 0:13:42.120 question is can you get a big Chinese investment package 0:13:42.120 --> 0:13:44.520 in the US. There was some talk of are they 0:13:44.559 --> 0:13:47.240 going to you know, if anyone, I guess Trump could 0:13:47.800 --> 0:13:49.760 totally flip the script and say, you know, we're going 0:13:49.840 --> 0:13:54.839 to welcome massive BYD investments and electric vehicles and things 0:13:54.920 --> 0:13:57.640 like that, But there doesn't seem to be anything on 0:13:57.720 --> 0:14:01.160 the cards there. The national security restriction are still in 0:14:01.200 --> 0:14:03.280 place on a lot of those things. You have pent 0:14:03.360 --> 0:14:06.920 up demand for Boeing airplanes and it looks like a 0:14:07.000 --> 0:14:09.839 deal there might go through, And of course that also 0:14:09.920 --> 0:14:13.000 gives China leverage with Airbus. If you're just buying from 0:14:13.040 --> 0:14:15.520 one supplier, you don't have much leverage there. So that 0:14:15.679 --> 0:14:18.120 also helps the Chinese in a way film demand that 0:14:18.120 --> 0:14:22.000 they already have and gives them some negotiating leverage against Airbus. 0:14:22.040 --> 0:14:25.160 You're very still in the straight jacket of national security 0:14:25.200 --> 0:14:28.840 restrictions that limit how far you can go either way 0:14:29.320 --> 0:14:32.240 on the trade investment front and out some wins, but 0:14:32.320 --> 0:14:34.800 I don't see anything that would really move the needle 0:14:34.880 --> 0:14:37.680 to break through those restrictions that we've seen. 0:14:38.000 --> 0:14:39.360 Jenny, the bad news for you is that you're going 0:14:39.440 --> 0:14:41.640 to have to be quite focused all this summit if 0:14:41.640 --> 0:14:43.640 it does go ahead for the next two weeks, and 0:14:43.720 --> 0:14:47.080 get people excited about soybeans as well as maybe the 0:14:47.120 --> 0:14:48.000 old Boeing jet. 0:14:48.400 --> 0:14:50.600 Yes, I think that's right. I think the ambition is 0:14:50.680 --> 0:14:53.640 relatively low for it. That being said, obviously President Trump 0:14:53.680 --> 0:14:57.600 would trumpet it as a major foreign policy win, major deliverables, 0:14:58.120 --> 0:15:00.640 but as with so many things, all of it depends 0:15:00.640 --> 0:15:01.360 on the execution. 0:15:01.640 --> 0:15:01.800 Right. 0:15:01.840 --> 0:15:04.280 There were a lot of promises made in Bussan last year, 0:15:04.320 --> 0:15:06.080 and I think we're still waiting to see how some 0:15:06.120 --> 0:15:09.760 of those turn out, including on soybean purchases. The Chinese 0:15:09.840 --> 0:15:12.400 fulfilled the requirement to purchase I think it was twelve 0:15:12.440 --> 0:15:15.160 million metric tons by February of this year, but they're 0:15:15.160 --> 0:15:17.440 on the hook to buy about twenty five million by 0:15:17.480 --> 0:15:20.520 the end of this year, and they think is a 0:15:20.600 --> 0:15:24.120 huge question, especially for US farmers, when do those orders 0:15:24.160 --> 0:15:26.160 come in, because it makes a big difference on whether 0:15:26.200 --> 0:15:28.720 they come in now or whether they come in closer 0:15:28.720 --> 0:15:30.520 towards the end of the year, which is when Beijing 0:15:30.640 --> 0:15:32.480 might have an incentive to do it. You don't want 0:15:32.520 --> 0:15:35.240 to frontload all those orders and lose all your leverage. 0:15:35.520 --> 0:15:37.640 So there are just a number of friction points in 0:15:37.680 --> 0:15:40.320 the relationship, and I think that this meeting would help 0:15:40.360 --> 0:15:44.760 to provide some stability and additional time to work through those, 0:15:44.800 --> 0:15:47.280 but it's not going to probably resolve all of them, 0:15:47.360 --> 0:15:50.040 including because the President in the United States is not 0:15:50.120 --> 0:15:53.520 the only actor here. You have Congress, for example, considering 0:15:53.600 --> 0:15:56.440 laws that would restrain his ability to do some of 0:15:56.440 --> 0:15:59.440 the things he's talking about, including on Chinese vehicles in 0:15:59.440 --> 0:16:00.360 the United States. 0:16:00.840 --> 0:16:04.120 Dan, you said something on a news call earlier today 0:16:04.160 --> 0:16:06.560 that made me think about it slightly differently. So we've 0:16:06.560 --> 0:16:09.720 talked about, you know, the leverage that China has kind 0:16:09.760 --> 0:16:13.360 of now exercised when it comes to rare earths. We 0:16:13.520 --> 0:16:19.320 tend to feel quite beholden to China's extremely cheap evs 0:16:19.520 --> 0:16:22.359 and solar panels and all these things that are incredibly 0:16:22.440 --> 0:16:24.880 useful in the world, and right now, especially in Europe, 0:16:24.880 --> 0:16:27.560 as people are trying to avoid higher energy costs. But 0:16:27.640 --> 0:16:29.320 I guess on the other side, what's happened in the 0:16:29.400 --> 0:16:31.440 last few months is We've really seen the power of 0:16:31.440 --> 0:16:34.360 some of these AI tools, including some of the things 0:16:34.360 --> 0:16:36.400 we discussed it on the show a couple of weeks ago, 0:16:36.480 --> 0:16:40.640 things like Mythos coming out of Anthropic. The US does 0:16:40.720 --> 0:16:44.120 seem to have the lead still on these very potent 0:16:44.200 --> 0:16:47.800 forms of AI. Is that something that Donald Trump sort 0:16:47.840 --> 0:16:50.360 of has in his favor or you know, gives him 0:16:50.800 --> 0:16:54.520 a little bit more leverage, or at least the US 0:16:54.600 --> 0:16:56.760 has a bit more standing going into this. It's not 0:16:56.800 --> 0:16:57.960 all on China's side. 0:16:58.080 --> 0:17:00.520 Yeah, I think that's right, And I've been struck by 0:17:00.520 --> 0:17:05.280 that in conversations I've had here in Washington with some 0:17:05.359 --> 0:17:09.800 people in this space who see that as something that 0:17:10.119 --> 0:17:14.919 China would be very concerned about obviously, and imagine it 0:17:15.000 --> 0:17:17.520 was the other way around, where China had this AI 0:17:17.560 --> 0:17:21.959 tool that could penetrate any defenses and they would be 0:17:22.080 --> 0:17:25.040 very freaked out about that. We have actually tried to 0:17:25.080 --> 0:17:28.720 get reporting on this from the Chinese side, and they've 0:17:28.760 --> 0:17:31.880 been very very quiet on it, which suggests they're very 0:17:31.920 --> 0:17:35.000 concerned about it. And I think that that is one 0:17:35.000 --> 0:17:37.879 of the things where that also gives China an incentive 0:17:37.920 --> 0:17:40.760 for the meeting to go forward to keep things stable 0:17:40.800 --> 0:17:44.000 there how the US would use that, whether they would 0:17:44.080 --> 0:17:47.760 use it for leverage. These are all questions I don't 0:17:47.800 --> 0:17:50.800 think we know totally right now. But even if you 0:17:50.880 --> 0:17:53.280 have a two month lead or something like that before 0:17:53.359 --> 0:17:56.640 China develops a similar tool, there is an interest either 0:17:56.680 --> 0:18:01.600 way in preventing rogue actors from get this and putting 0:18:01.640 --> 0:18:04.439 some sort of guardrails on it. And I think to 0:18:04.480 --> 0:18:08.160 the Hawks point it does from what I understand here, 0:18:08.280 --> 0:18:11.160 is that it has given the Trump administration a new 0:18:11.240 --> 0:18:15.560 appreciation of the need to maintain a lead on China 0:18:15.680 --> 0:18:20.800 in these areas. So in a sense that you know, 0:18:20.840 --> 0:18:23.520 it's helped focus the mind. Instead of hey, let's give 0:18:23.520 --> 0:18:26.840 them all these advanced chips, it's like, oh, these weapons 0:18:26.880 --> 0:18:30.919 are actually really powerful and could cause widespread destruction and 0:18:30.960 --> 0:18:33.760 give us leverage in the real world. So that's a 0:18:33.760 --> 0:18:36.240 good thing. Like let's keep that advantage and press it 0:18:36.280 --> 0:18:39.119 a little bit sore. I think there has been a 0:18:39.119 --> 0:18:40.919 little shift in that regard. 0:18:52.000 --> 0:18:55.240 Jenny. We should say it's pretty unusual to have a 0:18:55.400 --> 0:18:58.000 US president go to China. I mean, the last one 0:18:58.080 --> 0:19:00.520 to go, most recent one to go was do Trump 0:19:00.760 --> 0:19:04.120 in twenty seventeen, nearly a decade ago. Are we sort 0:19:04.160 --> 0:19:08.040 of underestimating just symbolically how significant it is. I mean, 0:19:08.200 --> 0:19:10.199 why is it so rare for a US president to 0:19:10.200 --> 0:19:10.800 go to China. 0:19:10.920 --> 0:19:13.080 I would say it's rare now, it didn't always used 0:19:13.080 --> 0:19:14.880 to be, and it didn't always used to be rare 0:19:15.000 --> 0:19:17.840 for Chinese leaders to come to the United States. Hi Jimping. 0:19:18.520 --> 0:19:20.639 It's been sometimes since he made a state visit to 0:19:20.680 --> 0:19:23.600 the United States, although as Dan mentioned, that might happen 0:19:23.760 --> 0:19:27.880 later this year. And what's interesting too, is I think 0:19:27.920 --> 0:19:30.639 that President Trump was the last president to visit in 0:19:30.680 --> 0:19:34.360 twenty seventeen. It wasn't something that was seriously discussed during 0:19:34.359 --> 0:19:37.280 the Biden administration. There was no discussion of a trip 0:19:37.400 --> 0:19:40.320 one way or the other. And President Trump might be 0:19:40.359 --> 0:19:43.120 the last president to visit China again for some time. 0:19:43.280 --> 0:19:47.080 It's hard to imagine a president from either political party 0:19:47.160 --> 0:19:51.240 being willing to especially to visit China where you're sort 0:19:51.280 --> 0:19:55.520 of giving that country the opportunity to play host and 0:19:55.560 --> 0:19:59.720 to project its global clout, and a moment when both 0:19:59.720 --> 0:20:03.159 PARTI still seem to largely believe that China is a 0:20:03.200 --> 0:20:06.800 strategic rival and are very focused on the competition, even 0:20:06.800 --> 0:20:09.600 though President Trump has a different framing for that most 0:20:09.640 --> 0:20:12.840 Republicans in congres are still adhere to that, and so 0:20:12.880 --> 0:20:14.840 I think whoever is likely to follow him into the 0:20:14.840 --> 0:20:18.359 White House might face some of the same political headwinds 0:20:18.440 --> 0:20:22.840 other presidents have faced in contemplating either hosting or certainly 0:20:22.960 --> 0:20:23.760 visiting Beijing. 0:20:24.640 --> 0:20:26.800 My sense from talking to you before is that what 0:20:26.840 --> 0:20:29.000 would usually happen in the lead up to a summit 0:20:29.400 --> 0:20:32.840 is actually things go relatively quiet. That you've mentioned in 0:20:32.840 --> 0:20:36.080 the past that you'd often have a reduction in activity 0:20:36.160 --> 0:20:38.679 around Taiwan. You know, there's all these things just to 0:20:38.760 --> 0:20:41.800 kind of smooth smooth the waters. It feels like it's 0:20:41.840 --> 0:20:43.680 kind of been the opposite in the last few weeks. 0:20:43.760 --> 0:20:46.760 I mean, partly thanks to Iran, but it doesn't seem 0:20:46.840 --> 0:20:49.600 like China's making an effort on that front. If anything, 0:20:50.200 --> 0:20:52.880 there's been an effort to throw a bit more weight 0:20:52.960 --> 0:20:54.399 around in advance of this trip. 0:20:55.080 --> 0:20:57.639 I think that's exactly right. So normally you do see 0:20:57.680 --> 0:21:00.560 in advance of a visit or a major meeting, both 0:21:00.600 --> 0:21:02.880 sides sort of taking steps, as Dan mentioned, to create 0:21:02.880 --> 0:21:05.880 the proper conditions for the meeting to happen and be successful. 0:21:06.600 --> 0:21:09.480 And I will say I think the Trump administration was 0:21:09.560 --> 0:21:13.159 largely doing that when it came to specifically China issues 0:21:13.200 --> 0:21:17.280 and bilateral issues, so things like export controls again I 0:21:17.320 --> 0:21:21.399 mentioned National Defense strategy, Taiwan arm sales. There was a 0:21:21.400 --> 0:21:24.400 lot of restraint that seemed to be exercised on those fronts. 0:21:24.680 --> 0:21:26.399 But when it came to the Iran war, because that 0:21:26.560 --> 0:21:30.640