Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: We're doing a lot of business with and making a
Speaker 2: lot of money. It's different than it used to be.
Speaker 2: But I'll be talking about that'll be one subject. But
Speaker 2: he's been very nice about this. You know, in all fairness,
Speaker 2: he gets like sixty percent of his oil from hormones,
Speaker 2: and he's been I think he's been very respectful. We
Speaker 2: haven't been challenged by China our challenges.
Speaker 3: I'm Stephanie Flanders, head of Government and Economics at Bloomberg,
Speaker 3: and this is Trumpnomics, the podcast that always looks at
Speaker 3: the economic world of Donald Trump, how he's shaking up
Speaker 3: the global economy, and what on earth is going to
Speaker 3: happen next. This week, we're looking ahead to what could
Speaker 3: be one of the more consequential meetings of the year
Speaker 3: if it happens. That's the long anticipated, already once rescheduled
Speaker 3: summit between President Donald Trump and President Shijingping in China
Speaker 3: in two weeks time now. President Trump has said this
Speaker 3: week he's still looking forward to meeting his Chinese counterpart,
Speaker 3: Si Jingping, and officials in the White House and Beijing
Speaker 3: have been preparing for this high stakes conversation for months.
Speaker 3: But in that period, the administration has also decided to
Speaker 3: start a war in Iran that has brought fresh trains
Speaker 3: between the two countries. It's choked off a major source
Speaker 3: of energy for China and its neighbors, and offered an
Speaker 3: opportunity for China to once again painted itself as a
Speaker 3: more reliable global citizen than the US. In the past
Speaker 3: few days, Iran related tensions have also ratcheted up again,
Speaker 3: as China has taken the unprecedented step of ordering its
Speaker 3: companies not to abide by US sanctions on private refiners
Speaker 3: involved in trading Iranian oil. It's a pretty brazen attack
Speaker 3: on the legitimacy of US sanctions. So will Trump and
Speaker 3: she actually sit down this month, and if they do,
Speaker 3: what's left to agree on? Well, we're recording this Wednesday morning,
Speaker 3: DC time, and it's really quite possible that the summit
Speaker 3: might have been canceled or postponed again by the time
Speaker 3: you hear this. But if so, I would encourage you
Speaker 3: not to turn off, but to view the next thirty
Speaker 3: minutes or so as providing valuable insights into why that happened.
Speaker 3: Because we do have in our DC studio to extremely
Speaker 3: well placed experts on US China diplomacy. Jenny Welch, the
Speaker 3: chief geoeconomics analyst for Bloomberg Economics who's been on the
Speaker 3: show before. She previously served as the director for China
Speaker 3: and Taiwan on the US National Security Council under the
Speaker 3: Biden and Trump administrations. She was also an advisor to
Speaker 3: Vice Presidents Harris and Pence on Asia and the Pacific. Jenny,
Speaker 3: thanks again for joining us, Thank you for having me,
Speaker 3: and usually in Hong Kong, and we've certainly heard him
Speaker 3: from there on occasion, but now in DC this week.
Speaker 3: Down ten Kate, Bloomberg executive editor who run all of
Speaker 3: our economics and politics coverage in Asia.
Speaker 4: Dan, thanks for coming, Thanks for having me.
Speaker 3: Do you think this is going to happen? What are
Speaker 3: the probabilities? I know you wrote on this yesterday, but
Speaker 3: what probability are you putting on this now happening on
Speaker 3: the kind of time frame that we were expecting.
Speaker 1: I tend to lean a little bit towards the meeting
Speaker 1: going forward as planned, and I think the main reason
Speaker 1: for that is that it's a relatively low cost way
Speaker 1: for both sides to maintain stability, and both of them
Speaker 1: have an interest in that, especially given all the headwinds
Speaker 1: they're facing at home and from the energy disruptions caused
Speaker 1: by the Iran War. That being said, as you mentioned, Stephanie,
Speaker 1: there are also a lot of friction points that are
Speaker 1: continuing to build, including over the war itself. China is
Speaker 1: not happy about the blockade, which is affecting a major
Speaker 1: source of energy imports for it coming through her moves.
Speaker 1: It is not happy about US pressure on a run
Speaker 1: and particularly recent US sanctions targeting is private, refined and
Speaker 1: more broadly, I think China is not happy to be
Speaker 1: hosting a major diplomatic summit in the midst of the
Speaker 1: US carrying out whether Washington says it still is or not,
Speaker 1: what the world precedes as a major military campaign in
Speaker 1: the Middle East.
Speaker 3: And I guess, yeah, so it's sort of rather it
Speaker 3: wasn't happening, but given that it is, they also would
Speaker 3: see significant costs to putting it off, for canceling.
Speaker 1: It, that's right. I think there is the risk that
Speaker 1: a could turn from just a diplomatic snafu into a
Speaker 1: larger friction point in the relationship, and that comes in
Speaker 1: a moment where while China's insulated itself from the effects
Speaker 1: of the Iran war through its reserves, its energy diversification.
Speaker 1: It's still facing costs, and it's still worried about the
Speaker 1: impact this war will have on its ability to sell
Speaker 1: its exports around the world. And so all that is
Speaker 1: to say, I think they would not necessarily want a
Speaker 1: trade fight if they can avoid it with the United States. Certainly,
Speaker 1: they would wage it if they felt they had to,
Speaker 1: but hosting Trump is relatively low cost way of potentially
Speaker 1: avoiding that outcome.
Speaker 3: Dan Jenny's obviously kind of thinking about both perspectives, having
Speaker 3: spent a lot of time sort of advising US administrations
Speaker 3: on how China is looking at things. But you know,
Speaker 3: you're normally sitting in Hong Kong. How do you think
Speaker 3: that the Chinese authorities will be viewing the summit and
Speaker 3: the decision to potentially postpone or delay.
Speaker 4: I agree with Jenny, definitely, it's not the preferred time
Speaker 4: to be having a summit. Chi Jiping will often say
Speaker 4: things to leaders, like when he dressed down Justin Trudeau
Speaker 4: at the G twenty in Bali a couple of years ago.
Speaker 4: You know, we need to create the right conditions for
Speaker 4: the relationship and this is not the right conditions. It
Speaker 4: definitely puts them in an awkward position in terms of
Speaker 4: what do you do on the ground. They like to
Speaker 4: just make sure that everything is stage managed. They measure
Speaker 4: out the distance that Hi Jiping needs to walk from
Speaker 4: point A to point B. The they don't like any surprises,
Speaker 4: so dealing with Trump normally, there's so many unknowns when
Speaker 4: it comes to that that you're not quite sure what
Speaker 4: he's going to say, and you're trying to stage manage
Speaker 4: the whole thing. So it just adds an element of
Speaker 4: uncertainty that they don't like. But they also do have
Speaker 4: a way of looking at the bigger picture, and the
Speaker 4: bigger picture is the US is still an important market.
Speaker 4: Their economy is still heavily reliant on exports in a
Speaker 4: stable external environment. They're also that the host APEC later
Speaker 4: in the year, Trump is going to host the G twenty.
Speaker 4: They're supposed to meet three more times after this, so
Speaker 4: to keep that all on track, this meeting has to
Speaker 4: happen at some point or otherwise it gets to rail
Speaker 4: and this truce is said to expire in November unless
Speaker 4: you extend it. And so for all those reasons, there's
Speaker 4: a lot of reasons to go forward with this meeting,
Speaker 4: even if it's not an optimal time.
Speaker 3: Chinese could maybe take some advice from the palace, given
Speaker 3: that you've had the planning for the King's visit in DC.
Speaker 3: I suspect was there were very similar concerns. I suspect
Speaker 3: the Chinese will be kind of thinking through similar ways
Speaker 3: to reduce the amount of time for any kind of
Speaker 3: anything surprising to happen. I do want to get into
Speaker 3: what they might talk about, what the to use the
Speaker 3: phrase is much loved in these kind of discussions. Deliverables
Speaker 3: might be from the summit, be good to get a
Speaker 3: sense of this. More recent news in the last week
Speaker 3: that I mentioned at the top that China ordering its
Speaker 3: companies to ignore US sanctions, the sanctions that were on
Speaker 3: refiners that had been linked to refining Iranian oil. How
Speaker 3: unprecedented is that because we've heard the Chinese before kind
Speaker 3: of complain about US sanctions, say they're not legitimate. But
Speaker 3: what's new in this move?
Speaker 4: Yeah, I mean we have seen this before, particularly in
Speaker 4: Hong Kong where I'm based, during the protest or the
Speaker 4: twenty twenty after the National Security Law that specifically says
Speaker 4: that China, these companies should not comply with US sanctions,
Speaker 4: and banks were in effect being forced to choose do
Speaker 4: you comply with the US or do you comply with
Speaker 4: the National Security law? And even Chinese state run banks
Speaker 4: were complying with US sanctions then because they didn't want
Speaker 4: to be cut off from the dollar system. So there
Speaker 4: is a little bit of a dance where what they
Speaker 4: say and what they do can be two different things sometimes.
Speaker 4: I think what's different now is that China has stood
Speaker 4: up to Trump, particularly last year. They have the showed
Speaker 4: the leverage they have with by cutting off rare earths,
Speaker 4: and that's still there, so they're in a relatively stronger
Speaker 4: position to say things like, hey, we're going to dare you,
Speaker 4: essentially to put sanctions on our banks, and that's going
Speaker 4: to blow up the relationship, and do you want to
Speaker 4: blow up the relationship now? Rubio was giving a briefing
Speaker 4: year in Washington yesterday where he said, we don't put
Speaker 4: sanctions on to be symbolic, and we are going to
Speaker 4: enforce them. But you know, from the Chinese perspective, they
Speaker 4: know that Trump wants the summit and doesn't want things
Speaker 4: to blow up. He's got enough problems on his plate.
Speaker 4: Now if we see them trying to squeeze Taiwan a
Speaker 4: bit more as well, so it's an opportune time in
Speaker 4: their mind to say, Okay, we'll call your bluff on
Speaker 4: this one and do you go ahead? And it potentially
Speaker 4: could royal the relationship, could royal markets. Certainly we'll have
Speaker 4: an impact on China as well. But if you're going
Speaker 4: to take a stand, you know, why not, especially ahead
Speaker 4: of the summit.
Speaker 3: It feels like a sign of the times, Jenny. If
Speaker 3: the previous situation was that the Chinese in public would
Speaker 3: say they don't respect these sanctions, but in private would
Speaker 3: largely kind of turn a blind eye to their biggest
Speaker 3: companies abiding by sanctions in order to stay in the
Speaker 3: US system, and for all those reasons, if we're now
Speaker 3: in a reverse situation where it's actually the US that
Speaker 3: has to kind of turn a blind eye to countries
Speaker 3: just ignoring the writ of America because it no longer
Speaker 3: has the same kind of weight, I mean, that's something
Speaker 3: that we're not just seeing in China.
Speaker 1: No, I think that's true. I think too, what this
Speaker 1: situation really underscores is the shift in leverage between the
Speaker 1: United States and China over the last year. I can't
Speaker 1: underscore enough the impact of China's use of its grip
Speaker 1: over critical minerals to put the ONUS back on Washington
Speaker 1: last year during the height of the trade war and
Speaker 1: push Washington towards the negotiating table, push it towards a
Speaker 1: pause that eventually led to the Bussan meeting and a
Speaker 1: more enduring truce that had a real psychological effect on Washington,
Speaker 1: and demonstrating China's trump card. And it's a trump card
Speaker 1: that even though Beijing has put a pause on some
Speaker 1: of those measures, it hasn't fully rolled them back. In fact,
Speaker 1: it's continuing to gather information from every company that imports
Speaker 1: Chinese critical minerals on how they're using it and what
Speaker 1: specifically they use them for. So all of that is
Speaker 1: information that China could very quickly use again if it felt,
Speaker 1: for example, that the US is not respecting its interest.
Speaker 1: And I think that that really casts a shadow over
Speaker 1: policymaking in this administration. You've seen them be very careful about,
Speaker 1: for example, how China is referred to, and everything from
Speaker 1: the National Defense strategy to future export control rules. And
Speaker 1: I think it's also likely to be a factor in
Speaker 1: how the US is approaching this meeting.
Speaker 3: In particular, we had a fantastic bit of research that
Speaker 3: was out about a week ago from your colleagues Nicole
Speaker 3: Gordon Carottelli and Chris Kennedy, just looking at how much
Speaker 3: rare earths are implicated in the US economy. And it's
Speaker 3: an incredibly complicated bit of work because it's going through
Speaker 3: not just the direct use but the indirect use, so
Speaker 3: you have to really get under the hood. But they
Speaker 3: find that four percent of US GDP is implicated at
Speaker 3: one point true trillion dollars, and although some of them
Speaker 3: can be substituted for rareers from other parts of the world,
Speaker 3: there's actually about one and a half percent of that
Speaker 3: which just can't substituted. China's the only source. So it
Speaker 3: really really showed us why that is such an important
Speaker 3: bit of leverage. Dan, I remember talking to you she
Speaker 3: when I was in Hong Kong earlier in the year,
Speaker 3: and we were talking about the sort of relative balance
Speaker 3: of power, the shifting ground underneath the US and China.
Speaker 3: I mean, it's not just a ran that's happened since then.
Speaker 3: We've also seen the overturning of a lot of the
Speaker 3: tariffs that had been put on China. China's now got
Speaker 3: a big advantage relative to the start of the year
Speaker 3: in the tariff rate that it's facing going into the US.
Speaker 3: What are you looking for if this meeting does go ahead?
Speaker 3: What's possible on the trade front?
Speaker 4: The US has the three oh one investigations ongoing, and
Speaker 4: they vowed to rebuild this tariff wall. So I think
Speaker 4: China's big concern now is that it doesn't get rebuilt
Speaker 4: in a way that they see US going beyond what
Speaker 4: was there before, and they just want to issue some
Speaker 4: warnings there. So there is some uncertainty hanging over what
Speaker 4: that rate is going to be or what that picture
Speaker 4: looks like. And I think until you start that out,
Speaker 4: it's really hard to go beyond that. And this notion that, Okay,
Speaker 4: they've made this truce, and then they were talking about
Speaker 4: how can we build off of that truce? Can we
Speaker 4: actually do some bigger things with the economy. Can we
Speaker 4: sell more advanced chips into China? You have the h
Speaker 4: two hundreds ready to go, not many have been shipped yet.
Speaker 3: They're not the super important the Blackwell chips. They're sort
Speaker 3: of one down from there.
Speaker 4: Right, You've got the Blackwells, got the Rubens, there are
Speaker 4: a couple generations back. We don't see that there's going
Speaker 4: to be anything further in that area. And then the
Speaker 4: question is can you get a big Chinese investment package
Speaker 4: in the US. There was some talk of are they
Speaker 4: going to you know, if anyone, I guess Trump could
Speaker 4: totally flip the script and say, you know, we're going
Speaker 4: to welcome massive BYD investments and electric vehicles and things
Speaker 4: like that, But there doesn't seem to be anything on
Speaker 4: the cards there. The national security restriction are still in
Speaker 4: place on a lot of those things. You have pent
Speaker 4: up demand for Boeing airplanes and it looks like a
Speaker 4: deal there might go through, And of course that also
Speaker 4: gives China leverage with Airbus. If you're just buying from
Speaker 4: one supplier, you don't have much leverage there. So that
Speaker 4: also helps the Chinese in a way film demand that
Speaker 4: they already have and gives them some negotiating leverage against Airbus.
Speaker 4: You're very still in the straight jacket of national security
Speaker 4: restrictions that limit how far you can go either way
Speaker 4: on the trade investment front and out some wins, but
Speaker 4: I don't see anything that would really move the needle
Speaker 4: to break through those restrictions that we've seen.
Speaker 3: Jenny, the bad news for you is that you're going
Speaker 3: to have to be quite focused all this summit if
Speaker 3: it does go ahead for the next two weeks, and
Speaker 3: get people excited about soybeans as well as maybe the
Speaker 3: old Boeing jet.
Speaker 1: Yes, I think that's right. I think the ambition is
Speaker 1: relatively low for it. That being said, obviously President Trump
Speaker 1: would trumpet it as a major foreign policy win, major deliverables,
Speaker 1: but as with so many things, all of it depends
Speaker 1: on the execution.
Speaker 3: Right.
Speaker 1: There were a lot of promises made in Bussan last year,
Speaker 1: and I think we're still waiting to see how some
Speaker 1: of those turn out, including on soybean purchases. The Chinese
Speaker 1: fulfilled the requirement to purchase I think it was twelve
Speaker 1: million metric tons by February of this year, but they're
Speaker 1: on the hook to buy about twenty five million by
Speaker 1: the end of this year, and they think is a
Speaker 1: huge question, especially for US farmers, when do those orders
Speaker 1: come in, because it makes a big difference on whether
Speaker 1: they come in now or whether they come in closer
Speaker 1: towards the end of the year, which is when Beijing
Speaker 1: might have an incentive to do it. You don't want
Speaker 1: to frontload all those orders and lose all your leverage.
Speaker 1: So there are just a number of friction points in
Speaker 1: the relationship, and I think that this meeting would help
Speaker 1: to provide some stability and additional time to work through those,
Speaker 1: but it's not going to probably resolve all of them,
Speaker 1: including because the President in the United States is not
Speaker 1: the only actor here. You have Congress, for example, considering
Speaker 1: laws that would restrain his ability to do some of
Speaker 1: the things he's talking about, including on Chinese vehicles in
Speaker 1: the United States.
Speaker 3: Dan, you said something on a news call earlier today
Speaker 3: that made me think about it slightly differently. So we've
Speaker 3: talked about, you know, the leverage that China has kind
Speaker 3: of now exercised when it comes to rare earths. We
Speaker 3: tend to feel quite beholden to China's extremely cheap evs
Speaker 3: and solar panels and all these things that are incredibly
Speaker 3: useful in the world, and right now, especially in Europe,
Speaker 3: as people are trying to avoid higher energy costs. But
Speaker 3: I guess on the other side, what's happened in the
Speaker 3: last few months is We've really seen the power of
Speaker 3: some of these AI tools, including some of the things
Speaker 3: we discussed it on the show a couple of weeks ago,
Speaker 3: things like Mythos coming out of Anthropic. The US does
Speaker 3: seem to have the lead still on these very potent
Speaker 3: forms of AI. Is that something that Donald Trump sort
Speaker 3: of has in his favor or you know, gives him
Speaker 3: a little bit more leverage, or at least the US
Speaker 3: has a bit more standing going into this. It's not
Speaker 3: all on China's side.
Speaker 4: Yeah, I think that's right, And I've been struck by
Speaker 4: that in conversations I've had here in Washington with some
Speaker 4: people in this space who see that as something that
Speaker 4: China would be very concerned about obviously, and imagine it
Speaker 4: was the other way around, where China had this AI
Speaker 4: tool that could penetrate any defenses and they would be
Speaker 4: very freaked out about that. We have actually tried to
Speaker 4: get reporting on this from the Chinese side, and they've
Speaker 4: been very very quiet on it, which suggests they're very
Speaker 4: concerned about it. And I think that that is one
Speaker 4: of the things where that also gives China an incentive
Speaker 4: for the meeting to go forward to keep things stable
Speaker 4: there how the US would use that, whether they would
Speaker 4: use it for leverage. These are all questions I don't
Speaker 4: think we know totally right now. But even if you
Speaker 4: have a two month lead or something like that before
Speaker 4: China develops a similar tool, there is an interest either
Speaker 4: way in preventing rogue actors from get this and putting
Speaker 4: some sort of guardrails on it. And I think to
Speaker 4: the Hawks point it does from what I understand here,
Speaker 4: is that it has given the Trump administration a new
Speaker 4: appreciation of the need to maintain a lead on China
Speaker 4: in these areas. So in a sense that you know,
Speaker 4: it's helped focus the mind. Instead of hey, let's give
Speaker 4: them all these advanced chips, it's like, oh, these weapons
Speaker 4: are actually really powerful and could cause widespread destruction and
Speaker 4: give us leverage in the real world. So that's a
Speaker 4: good thing. Like let's keep that advantage and press it
Speaker 4: a little bit sore. I think there has been a
Speaker 4: little shift in that regard.
Speaker 3: Jenny. We should say it's pretty unusual to have a
Speaker 3: US president go to China. I mean, the last one
Speaker 3: to go, most recent one to go was do Trump
Speaker 3: in twenty seventeen, nearly a decade ago. Are we sort
Speaker 3: of underestimating just symbolically how significant it is. I mean,
Speaker 3: why is it so rare for a US president to
Speaker 3: go to China.
Speaker 1: I would say it's rare now, it didn't always used
Speaker 1: to be, and it didn't always used to be rare
Speaker 1: for Chinese leaders to come to the United States. Hi Jimping.
Speaker 1: It's been sometimes since he made a state visit to
Speaker 1: the United States, although as Dan mentioned, that might happen
Speaker 1: later this year. And what's interesting too, is I think
Speaker 1: that President Trump was the last president to visit in
Speaker 1: twenty seventeen. It wasn't something that was seriously discussed during
Speaker 1: the Biden administration. There was no discussion of a trip
Speaker 1: one way or the other. And President Trump might be
Speaker 1: the last president to visit China again for some time.
Speaker 1: It's hard to imagine a president from either political party
Speaker 1: being willing to especially to visit China where you're sort
Speaker 1: of giving that country the opportunity to play host and
Speaker 1: to project its global clout, and a moment when both
Speaker 1: PARTI still seem to largely believe that China is a
Speaker 1: strategic rival and are very focused on the competition, even
Speaker 1: though President Trump has a different framing for that most
Speaker 1: Republicans in congres are still adhere to that, and so
Speaker 1: I think whoever is likely to follow him into the
Speaker 1: White House might face some of the same political headwinds
Speaker 1: other presidents have faced in contemplating either hosting or certainly
Speaker 1: visiting Beijing.
Speaker 3: My sense from talking to you before is that what
Speaker 3: would usually happen in the lead up to a summit
Speaker 3: is actually things go relatively quiet. That you've mentioned in
Speaker 3: the past that you'd often have a reduction in activity
Speaker 3: around Taiwan. You know, there's all these things just to
Speaker 3: kind of smooth smooth the waters. It feels like it's
Speaker 3: kind of been the opposite in the last few weeks.
Speaker 3: I mean, partly thanks to Iran, but it doesn't seem
Speaker 3: like China's making an effort on that front. If anything,
Speaker 3: there's been an effort to throw a bit more weight
Speaker 3: around in advance of this trip.
Speaker 1: I think that's exactly right. So normally you do see
Speaker 1: in advance of a visit or a major meeting, both
Speaker 1: sides sort of taking steps, as Dan mentioned, to create
Speaker 1: the proper conditions for the meeting to happen and be successful.
Speaker 1: And I will say I think the Trump administration was
Speaker 1: largely doing that when it came to specifically China issues
Speaker 1: and bilateral issues, so things like export controls again I
Speaker 1: mentioned National Defense strategy, Taiwan arm sales. There was a
Speaker 1: lot of restraint that seemed to be exercised on those fronts.
Speaker 1: But when it came to the Iran war, because that
Speaker 1: is President Trump's priority, China was kind of collateral damage, right,
Speaker 1: and so I don't think the administration was considering the
Speaker 1: China factor. It certainly wasn't considering it a priority when
Speaker 1: it came to decisions like the blockade, like the sanctions
Speaker 1: on Iran's oil trade, and I think you're likely to
Speaker 1: see that continue, that he's not necessarily going to hold
Speaker 1: off on Iran related actions out of concern for Beijing's
Speaker 1: feelings on this, and I think what you see from
Speaker 1: Beijing is a response to that and saying things like, well,
Speaker 1: if you're going to do this, we're going to use
Speaker 1: our blocking rules. If you're going to do this, then
Speaker 1: we're going to host a runs foreign minister in Beijing
Speaker 1: just beforehand to talk about the war. And those are
Speaker 1: all the potential friction points that again, it could not
Speaker 1: delay the meeting, but you could certainly see them presenting
Speaker 1: a speed bump to it going forward.
Speaker 3: Dan's the last word for you, because you're going to
Speaker 3: be the one when you get back. I suspect you'll
Speaker 3: be continuing to write your plans for the team on
Speaker 3: how to report on this summit. We tend to say,
Speaker 3: and you said at the start, you know they've got
Speaker 3: a very different approach to things. You've got a leader
Speaker 3: in China who is not really focused on relationships, very
Speaker 3: we are told, wants everything to be nailed down in advance,
Speaker 3: doesn't like surprises. President Trump is, you know, famously exactly
Speaker 3: the opposite. But I can't help remembering when there was
Speaker 3: a kind of standoff last year about the phone call
Speaker 3: between the two of them. All the very wise Chinese
Speaker 3: experts assured me there's no way that President She's going
Speaker 3: to get on a Callway doesn't know exactly but what's
Speaker 3: going to happen on the call or what's been agreed,
Speaker 3: And in fact we were all surprised because we then
Speaker 3: found out that a call had taken place. So I
Speaker 3: just wondered, do you think there are some potential surprises
Speaker 3: that come out of this where President She is kind
Speaker 3: of maybe learning to play a different kind of game
Speaker 3: with this different kind of president.
Speaker 2: Yeah.
Speaker 4: And I think with the call last year, the question
Speaker 4: was you know what would get she on the phone?
Speaker 4: And I think that it became clear in the weeks
Speaker 4: and months afterwards that China was looking at that as
Speaker 4: we are drawing a line in capping various export controls
Speaker 4: that the US could put on China, and so is
Speaker 4: that worth it? Yes, I think the Chinese do have
Speaker 4: a pragmatic side there in terms of, as we said,
Speaker 4: the bigger picture, which is, let's make sure we're seen
Speaker 4: as a like for like superpower, that we're treated with
Speaker 4: some respect, that there's reciprocity. If you do something, we'll
Speaker 4: do something thing. And there is some convergence here as
Speaker 4: well in the fact that China wants the straight of
Speaker 4: four Moos open right now. They don't want to be
Speaker 4: seen to endorse anything Trump is doing. I think they
Speaker 4: completely opposed the war and the strikes, but they do
Speaker 4: want the straight open. They don't want to be paying
Speaker 4: tolls in waterways. It was the Indonesian finance most are
Speaker 4: floating apparently saying it was joking that they were going
Speaker 4: to consider a ship tax in the Malacca Strait where
Speaker 4: a lot of Chinese oil transits.
Speaker 3: I noticed that because we did an episode a few
Speaker 3: weeks ago about how this was all this could potentially open. Well,
Speaker 3: I think open the floodgates is probably the wrong metophor,
Speaker 3: but you know that this straight and four moos issue
Speaker 3: in the US not underpinning that shipping route did potentially
Speaker 3: open the way to others being under challenged, not least
Speaker 3: that one. So I was very interested to see that happen.
Speaker 4: But sorry, I think that's right. So China wants freedom
Speaker 4: of navigation, they want a lot of things the US wants.
Speaker 4: They've benefited immensely from free and been traded across the world,
Speaker 4: and they've managed to take advantage of that, probably better
Speaker 4: than any other country. So there is some convergence of
Speaker 4: interests where they can align on those things. China, of
Speaker 4: course wants to you know, not condone that. And there's
Speaker 4: a political element to that too. So last time when
Speaker 4: Trump was there, he got a private tour of the
Speaker 4: Forbidden City and at dinner with she and in a
Speaker 4: military display. So yes, there might not be any huge
Speaker 4: breakthroughs in the relationship, But how does China treat those
Speaker 4: sorts of optical things. What is the tone of the statement.
Speaker 4: How much does the language on Taiwan change? For instance,
Speaker 4: does it roll out the red carpet for Trump, does
Speaker 4: she smile? What are the interpersonal reactions like? And I
Speaker 4: think that message for China's is much more complicated in
Speaker 4: this kind of environment. And so how they play that
Speaker 4: the tone of it will be very interesting to watch.
Speaker 4: But China does keep their eye on the ball in
Speaker 4: the eye and that is essentially, you know, keeping the
Speaker 4: commerce party in che keeping the economy stable, handling all
Speaker 4: the various domestic problems that they have at home. And
Speaker 4: you've got to remember too, there's a party Congress next
Speaker 4: year that's essentially an election year in China for all
Speaker 4: intentsive purposes. There's a lot of chocking for positions going
Speaker 4: on now. She himping has gotten rid of most of
Speaker 4: his top generals, which indicates there's a lot of turbulence
Speaker 4: under the surface of what we see. And so God
Speaker 4: knows what problems she is dealing with at home right now?
Speaker 4: Does he need? You know, he would like a stable world,
Speaker 4: and so that's the incentive to go forward, even if
Speaker 4: it's not optimal.
Speaker 3: As I said, well, we would be looking for all
Speaker 3: of those if the summit goes ahead, and if it
Speaker 3: doesn't go ahead, we will look back on this conversation
Speaker 3: and say it was all very clear in the outlines
Speaker 3: of what you were both saying. So, Jenny Welch, Doantein, Kate, thank.
Speaker 4: You very much, Thank you, thank you very much.
Speaker 3: Thanks for listening to Trumponomics from Bloomberg. It was hosted
Speaker 3: by me Stephanie Flanders. I was joined by Bloomberg's executive
Speaker 3: editor for economics and politics coverage in Asia, Dan Tang, Kate,
Speaker 3: and Jennifer Welch, chief geoeconomics analyst for Bloomberg Economics. Trumponomics
Speaker 3: was produced by Summersadi and Moses and Dam and sound
Speaker 3: design was by Blake Maples and Kelly Gary, with special
Speaker 3: thanks this week to Amy Morris. Please to help others
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