WEBVTT - Trump Issues Warning to Putin After Summit Prep With Europe 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, Podcasts, radio News. 0:00:08.920 --> 0:00:13.240 This is Bloomberg Business Week Daily reporting from the magazine 0:00:13.240 --> 0:00:17.880 that helps global leaders stay ahead with insight on the people, companies, 0:00:17.920 --> 0:00:22.800 and trends shaping today's complex economy. Plus global business, finance 0:00:22.840 --> 0:00:26.520 and tech news as it happens. The Bloomberg Business Weekdaily 0:00:26.680 --> 0:00:31.760 Podcast with Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:32.600 --> 0:00:35.080 Also on the Bloomberg is what's going on out of 0:00:35.080 --> 0:00:38.519 the White House and about an upcoming meeting tim between 0:00:38.680 --> 0:00:42.120 the United States and Russia. This hasn't happened in a 0:00:42.200 --> 0:00:44.520 long long time, and certainly not on US soil. 0:00:44.720 --> 0:00:47.480 Yeah, with what to expect, we have Bloomberg News National 0:00:47.520 --> 0:00:50.200 Security Team leader Nick Wadams. He joins us from our Washington, 0:00:50.479 --> 0:00:54.360 DC bureau. Nick, I'm curious about the not just the 0:00:54.400 --> 0:00:57.880 timing of this, but more importantly the placement of this 0:00:58.200 --> 0:01:00.880 on US soil. It's something that we've spoken quite a 0:01:00.920 --> 0:01:04.080 bit about in recent days, but I'm wondering if the 0:01:04.120 --> 0:01:07.480 expectations have shifted with rhetoric that we've heard from President 0:01:07.480 --> 0:01:10.240 Trump just today and also what we've heard and what 0:01:10.280 --> 0:01:13.760 we've reported about the President of Ukraine and what he 0:01:13.840 --> 0:01:16.280 would and would not give up when it comes to 0:01:16.480 --> 0:01:19.040 some sort of deal with Vladimir Putin. 0:01:19.760 --> 0:01:22.480 Right, I mean, there's a big question about what we're 0:01:22.520 --> 0:01:24.080 actually going to get out of this meeting. I mean, 0:01:24.360 --> 0:01:27.319 when these sort of things happen, you know, there's a 0:01:27.360 --> 0:01:30.480 lot of froth and ferment over the fact that the 0:01:30.520 --> 0:01:32.760 two leaders are going to be face to face staring 0:01:32.800 --> 0:01:36.320 each other down adversaries or maybe not adversaries in the 0:01:36.319 --> 0:01:38.960 case of Putin and Trump, and the expectation is that 0:01:39.040 --> 0:01:40.920 they're going to come out of this with some big deal. 0:01:41.000 --> 0:01:44.160 But Trump himself has shown he's very willing to come 0:01:44.160 --> 0:01:47.039 out of these meetings with nothing. He walked away from 0:01:47.080 --> 0:01:50.680 a meeting with Kim Jong un in Vietnam some years 0:01:50.720 --> 0:01:53.520 ago in his first term. And then obviously there was 0:01:53.560 --> 0:01:58.160 the Biden Putin meeting in Geneva, Switzerland in twenty twenty 0:01:58.160 --> 0:02:02.240 one that results in a document and some proposals but 0:02:02.360 --> 0:02:05.320 really achieve very little. So I think what you're seeing 0:02:05.440 --> 0:02:08.799 is the administration sort of crashing up against reality, where 0:02:08.840 --> 0:02:11.799 in some ways they've portrayed President Trump to be the 0:02:12.360 --> 0:02:14.600 deal maker and the problem solver who's going to get 0:02:14.600 --> 0:02:17.960 this thing done. But then you know, given Russia's advances 0:02:17.960 --> 0:02:21.200 in Ukraine and President Putin's unwillingness to stop the war 0:02:21.280 --> 0:02:24.600 so far, you now see them trying to massage expectations 0:02:24.639 --> 0:02:26.880 a little bit, you know, to make sure that this 0:02:27.040 --> 0:02:30.560 is not seen as a failure when, as seems likely, 0:02:30.600 --> 0:02:32.679 there is not going to be a major announcement from it. 0:02:32.800 --> 0:02:34.959 So you've seen the President describe it as a feel 0:02:34.960 --> 0:02:38.600 out meeting. Marco Rubio echoed this words, and then President 0:02:38.639 --> 0:02:41.560 Trump again said today we expect this to lead to 0:02:41.639 --> 0:02:46.040 another meeting between Vladimir Putin and Volodimir Zelensky and maybe 0:02:46.080 --> 0:02:48.240 Trump as well, where they may get down to brass 0:02:48.320 --> 0:02:52.760 tax on a possible ceasefire agreement or some other deal 0:02:52.840 --> 0:02:53.960 that could lead to an end. 0:02:53.840 --> 0:02:54.320 Of the fighting. 0:02:54.560 --> 0:02:56.959 All Right, we're talking with Dick Wadams, Bloomberg News National 0:02:57.000 --> 0:02:59.600 Security Team leader. Here's just what President Trump had to 0:02:59.639 --> 0:03:02.919 say earlier today. When it comes to the upcoming meeting 0:03:03.000 --> 0:03:04.360 with President Putin. 0:03:05.639 --> 0:03:07.079 There's a very good chance that we're going to have 0:03:07.120 --> 0:03:09.880 a second meeting, which will be more productive than the first, 0:03:09.960 --> 0:03:12.480 because the first is I'm going to find out where 0:03:12.480 --> 0:03:15.720 we are and what we're doing. Again, this is Biden's work. 0:03:15.760 --> 0:03:17.560 This isn't my work. He got us into this thing, 0:03:18.639 --> 0:03:20.560 and they should have never happened. This war would have 0:03:20.600 --> 0:03:23.880 never happened to viral president. But it is what it is, 0:03:23.919 --> 0:03:24.560 and I'm here. 0:03:24.400 --> 0:03:26.960 To fix it, all right that of course, as President 0:03:28.080 --> 0:03:33.079 Trump earlier today, Nick wadhams, isn't it President Putin's war? 0:03:33.240 --> 0:03:35.840 And isn't it just something that he is very clear 0:03:36.120 --> 0:03:40.600 about wanting to expand his territory? And what I have 0:03:40.640 --> 0:03:44.320 heard from most folks who follow President Putin, who are 0:03:44.360 --> 0:03:47.400 experts at President Putin, even folks like yourself, like that 0:03:47.760 --> 0:03:48.320 he doesn't. 0:03:48.480 --> 0:03:51.520 He's not going to give up. He still wants a. 0:03:51.560 --> 0:03:55.920 Land grab, and he I don't know, wants to remain 0:03:56.000 --> 0:03:58.240 president forever. And I don't know whether by having this 0:03:58.320 --> 0:04:02.200 war keeps him as president. I don't know what's the 0:04:02.200 --> 0:04:03.760 intelligence briefing on this. 0:04:04.520 --> 0:04:06.360 Well, you know, the big question that a lot of 0:04:06.560 --> 0:04:10.480 folks are asking the president is sort of what incentive 0:04:10.520 --> 0:04:14.600 does Vladimir Putin have to stop his campaign? He's continued 0:04:14.640 --> 0:04:17.440 to gain territory. I mean, and when you have a 0:04:17.560 --> 0:04:20.560 grinding war of attrition like this, this is something that 0:04:20.640 --> 0:04:23.480 plays to Russia's advantage. They have more troops, They have 0:04:23.960 --> 0:04:27.599 a bigger army, they have more materiel, they can really 0:04:27.680 --> 0:04:31.400 tap their own country to continue to fight this war, 0:04:31.440 --> 0:04:34.279 whereas Ukraine's resources are much more limited. So when you 0:04:34.320 --> 0:04:36.320 look at the long term, it may be very, very 0:04:36.360 --> 0:04:39.800 costly for Russia and it really may squeeze the economy, 0:04:39.880 --> 0:04:43.919 But in the long run, experts largely agree that a 0:04:44.040 --> 0:04:47.440 long term, grinding war does favor Russia. So then the 0:04:47.520 --> 0:04:50.839 question is what incentive does Vladimir Putin have to stop, 0:04:51.279 --> 0:04:54.400 which then raises the question, well, if President Trump eases 0:04:54.440 --> 0:04:58.880 off the gas on military supplies to Ukraine, is Vladimir 0:04:58.920 --> 0:05:02.719 Putin's beverage actually enhanced and he can really make some 0:05:02.839 --> 0:05:05.920 demands here? There is no incentive for him to essentially 0:05:05.960 --> 0:05:09.160 give anything up. Why would he withdraw from territory when 0:05:09.200 --> 0:05:12.440 he continues to make advances. So that is why there's 0:05:12.440 --> 0:05:14.679 a lot of questions about why President Trump is holding 0:05:14.720 --> 0:05:17.800 this meeting in the first place. He theoretically would have 0:05:17.920 --> 0:05:22.080 plenty of staff other officials who could go to Russia 0:05:22.240 --> 0:05:25.560 or speak to intermediaries to understand what Putin wants. That's 0:05:25.600 --> 0:05:29.360 not really something that the president himself would need to do. 0:05:29.560 --> 0:05:33.200 And obviously, just the mere fact of having this meeting 0:05:33.440 --> 0:05:35.919 does give President Putin a bit of an advantage because 0:05:35.960 --> 0:05:38.440 it essentially cuts out Ukraine. So he's going to try 0:05:38.440 --> 0:05:40.960 to do some sort of a deal with President Trump 0:05:41.320 --> 0:05:44.000 or at least get Trump to put more pressure on 0:05:44.120 --> 0:05:46.359 Vladimir Putin. Those are a lot of the concerns that 0:05:46.360 --> 0:05:49.400 we're hearing about this meeting taking place in the first place. 0:05:49.560 --> 0:05:51.200 Yeah, just interesting to see. 0:05:51.200 --> 0:05:53.159 I can't wait to see kind of the optics, you know, 0:05:53.240 --> 0:05:56.279 in terms of whatever they ultimately come out and say, hey, 0:05:56.480 --> 0:05:58.680 while we have you. Just one last thing, there's a 0:05:58.680 --> 0:06:02.680 story that Reuter's has been reporting out about the US 0:06:02.760 --> 0:06:06.880 secretly placing location tracking devices and targeted shipments of advanced 0:06:06.920 --> 0:06:09.760 AI semi conductors that are at risk of a legal 0:06:09.760 --> 0:06:12.560 diversion to China. This is citing two people familiar with 0:06:12.600 --> 0:06:16.880 the matter, and they talk about commerce usually involved homeland security. 0:06:17.080 --> 0:06:20.320 FBI may also take a part. Would this be a 0:06:20.360 --> 0:06:24.520 surprising thing? I just think all countries are doing things 0:06:24.560 --> 0:06:25.239 back and forth. 0:06:25.279 --> 0:06:27.440 But what's your read on that? Before you weak out right? 0:06:27.480 --> 0:06:29.280 I mean, I think you have to see. It sort 0:06:29.320 --> 0:06:31.440 of fits into a broader spectrum of the push and 0:06:31.480 --> 0:06:33.680 pull between the US and China. I mean, there's so 0:06:33.760 --> 0:06:39.200 much sensitivity around these chips. Obviously, you know, they do 0:06:39.240 --> 0:06:41.240 not want to lose track of them, and there's just 0:06:41.279 --> 0:06:43.640 so many questions about whether these chips are actually going 0:06:43.680 --> 0:06:47.000 to go ahead. You know, we did have that deal 0:06:47.440 --> 0:06:51.840 where President Trump essentially extracted fifteen percent from Nvidia and 0:06:51.880 --> 0:06:55.479 amb but so many unknowns around that. But you know, 0:06:55.520 --> 0:06:57.840 there are a lot of concerns about these chips entering 0:06:57.839 --> 0:07:01.039 the wrong hands, and obviously companies US government want to 0:07:01.040 --> 0:07:03.040 do everything you can to make sure that doesn't happen. 0:07:03.320 --> 0:07:05.440 All right, so appreciate checking in with you. 0:07:05.520 --> 0:07:08.800 Nick Wadhams, National Security Team leader there in our Washington, 0:07:08.880 --> 0:07:09.920 DC News Bureau. 0:07:10.360 --> 0:07:14.360 You're listening to the Bloomberg Business Weekdaily podcast. Catch US 0:07:14.440 --> 0:07:17.880 Live weekday afternoons from two to five pm Eastern Listen 0:07:17.920 --> 0:07:21.480 on Applecarplay and Android Auto with the Bloomberg Business app, 0:07:21.640 --> 0:07:24.280 or watch US live on YouTube. 0:07:24.360 --> 0:07:27.400 Well, under President Trump, the US has launched a multi 0:07:27.440 --> 0:07:31.400 pronged attack on China's economy. Since chair At Mauzadong's reign, 0:07:31.560 --> 0:07:34.840 China has seen it coming. A US system built around 0:07:34.840 --> 0:07:38.720 the ideal of openness and interdependence is facing off against 0:07:38.720 --> 0:07:43.280 a Chinese counterpart constructed as a fortress of control, both 0:07:43.320 --> 0:07:47.360 sides of powerful resources. Only one has been preparing for 0:07:47.400 --> 0:07:51.600 the fight for decades. And it's not the US that's right. 0:07:51.720 --> 0:07:54.440 And so writes Tom Orlick, Eric Zhu and Jennifer Welch 0:07:54.760 --> 0:07:58.600 for Bloomberg Markets Magazine. I feel like, if you're listening, 0:07:58.880 --> 0:08:03.040 sit down and sit tight, because we know the US 0:08:03.080 --> 0:08:06.360 and China are at odds in a big way on many, 0:08:06.400 --> 0:08:10.160 many different levels. And this really gets into where China 0:08:10.240 --> 0:08:11.360 might have the advantage to him. 0:08:11.560 --> 0:08:15.840 Jennifer Welchi's Bloomberg Economics Chief geoeconomics analyst. She previously served 0:08:15.880 --> 0:08:18.560 as the director for China and Taiwan on the US 0:08:18.680 --> 0:08:21.800 National Security Council that was under the Biden and Trump administrations, 0:08:22.280 --> 0:08:24.800 and as the advisor to Vice Presidents Harrison Pence on 0:08:24.840 --> 0:08:27.480 Asia and the Pacific. So yes, she knows what she's 0:08:27.520 --> 0:08:31.720 talking about. She joins us from our Washington, DC bureau. Jennifer, 0:08:31.760 --> 0:08:33.840 good to have you with us this afternoon. A great 0:08:33.840 --> 0:08:38.640 story in Bloomberg Markets Magazine from you and our colleagues. 0:08:39.280 --> 0:08:41.840 How has China been preparing for this trade war? 0:08:43.080 --> 0:08:44.920 Well, in a sense, as we wrote in that article, 0:08:44.960 --> 0:08:47.600 Beijing's been preparing for this for a long time. China 0:08:47.640 --> 0:08:50.680 has a long tradition of self sufficiency, dating back to 0:08:50.720 --> 0:08:52.680 the late Qing Empire, if you want to go that 0:08:52.800 --> 0:08:55.520 far back. And it is also a tradition in paranoia, 0:08:55.640 --> 0:08:58.760 dating back in particular to Chairman Mao, but more recently, 0:08:59.040 --> 0:09:01.520 China's long suspense that the United States was going to 0:09:01.520 --> 0:09:04.559 be out to contain its rise, and to many in Beijing, 0:09:05.000 --> 0:09:07.559 President Trump's first term and now his second term are 0:09:07.600 --> 0:09:10.560 confirming a lot of those fears. So we've seen China, 0:09:10.640 --> 0:09:14.599 especially since his first trade war with Beijing, really emphasize 0:09:14.640 --> 0:09:18.040 reducing their reliance on the US market, building up its 0:09:18.080 --> 0:09:20.360 own leverage over the United States in the form of 0:09:20.400 --> 0:09:24.680 critical mineral exports, and trying to work around US export controls, 0:09:24.720 --> 0:09:27.800 in particular when it comes to technology like semiconductors. 0:09:28.960 --> 0:09:30.600 I got to get to one number that's in the 0:09:30.679 --> 0:09:34.120 story that shocked me. And I know you're not an economist, 0:09:34.160 --> 0:09:37.240 but you look at US China relations, but it talked 0:09:37.240 --> 0:09:41.560 about it, says. Following Donald Trump's first trade war with China, 0:09:41.679 --> 0:09:44.240 China made an active effort to reduce its direct exposure 0:09:44.280 --> 0:09:47.320 to the US market. Chinese Exports to the United States 0:09:47.800 --> 0:09:51.400 now make up around three percent of GDP, down from 0:09:51.520 --> 0:09:55.400 seven percent twenty years ago. US is still China's single 0:09:55.480 --> 0:09:58.880 largest market, you guys, right, and many of its goods 0:09:59.120 --> 0:10:01.560 go to the US throughout countries, suggesting more of its 0:10:01.600 --> 0:10:05.920 GPDTP could be at risk. But it really shows that 0:10:06.000 --> 0:10:09.400 if the US continues to pull back, China is not 0:10:09.840 --> 0:10:11.480 going to just fall apart. 0:10:11.920 --> 0:10:13.720 Is that a fair assessment of that. 0:10:14.679 --> 0:10:16.720 I think that's a fair assessment. And it's also what 0:10:16.920 --> 0:10:18.760 has borne out over the course of this trade war. 0:10:18.800 --> 0:10:21.320 I think President Trump came back into office thinking that 0:10:21.360 --> 0:10:24.480 he could use tariffs to really bring Beijing to its knees, 0:10:24.840 --> 0:10:26.840 and that's not how things played out. And in fact, 0:10:26.880 --> 0:10:29.280 that's when we saw Beijing kind of pull the ace 0:10:29.320 --> 0:10:31.680 out of its sleeve with the critical mineral controls and 0:10:31.720 --> 0:10:35.240 bring Washington to the negotiating table and force Washington to 0:10:35.240 --> 0:10:39.120 make concessions on export controls. Not to be clear, China 0:10:39.200 --> 0:10:42.480 definitely does have vulnerabilities here, and not only is the 0:10:42.559 --> 0:10:46.000 US its single largest market, but many other countries are 0:10:46.040 --> 0:10:48.520 trying to close their doors to Chinese goods as well, 0:10:48.640 --> 0:10:51.560 the European Union being a key example. Beijing is also 0:10:51.720 --> 0:10:54.600 very concerned about Washington's efforts to embed in part of 0:10:54.600 --> 0:10:58.199 these trade agreements and effort to shut out Chinese transhipment. 0:10:58.720 --> 0:11:01.960 So Beijing's not exactactly resting easy, but it's not in 0:11:02.080 --> 0:11:04.600 as weakened of a position as I think President Trump 0:11:04.600 --> 0:11:06.760 and maybe many of his aids thought it would. 0:11:06.559 --> 0:11:08.160 Be Chinese transhipment. 0:11:08.200 --> 0:11:11.080 That is, when Chin China ships to other countries, is 0:11:11.080 --> 0:11:12.959 that I make sure I understand, okay. 0:11:13.000 --> 0:11:16.680 It ships through other countries, or the goods are largely 0:11:16.720 --> 0:11:20.640 manufactured in China, but perhaps a final sticker is put 0:11:20.679 --> 0:11:23.600 on them and say Vietnam, and then shipped from Vietnam 0:11:23.640 --> 0:11:25.800 to the US under the auspices of this being a 0:11:25.840 --> 0:11:29.160 Vietnamese good. That's been one of the reasons why the 0:11:29.240 --> 0:11:32.079 Trump administration is so focused in part of these trade deals, 0:11:32.160 --> 0:11:35.400 especially with Southeast Asia, on trying to curb those practices 0:11:35.720 --> 0:11:38.199 and is starting to apply a much higher tariff rate 0:11:38.559 --> 0:11:41.520 to goods that its suspects are coming from outside of 0:11:41.520 --> 0:11:42.600 those individual countries. 0:11:42.640 --> 0:11:43.280 How does it know. 0:11:45.679 --> 0:11:48.720 That is a great question. Implementation is going to be 0:11:48.800 --> 0:11:51.520 extremely difficult here, and there's a lot of details that 0:11:51.559 --> 0:11:54.960 remain to be decided, like what percentage of a good 0:11:55.080 --> 0:11:57.719 has to be manufactured in a particular country for it 0:11:57.840 --> 0:12:01.360 to count as being made in that country, especially when 0:12:01.360 --> 0:12:03.960 some of these supply chains are so heavily integrated. So 0:12:04.120 --> 0:12:06.040 the devil's going to be in the details and in 0:12:06.080 --> 0:12:08.600 the enforcement. But so far, it seems a couple of 0:12:08.640 --> 0:12:12.920 key Southeast Asian partners, including Vietnam and Indonesia, have accepted 0:12:12.920 --> 0:12:15.080 these terms as part of their trade deals with the US. 0:12:15.360 --> 0:12:17.600 I want to know, based on your reporting and based 0:12:17.640 --> 0:12:21.080 on the team's reporting, to what extent its surprised leaders 0:12:21.120 --> 0:12:24.959 in Washington just how prepared China has been for a 0:12:25.000 --> 0:12:27.559 prolonged trade war with the US. As I mentioned to 0:12:27.640 --> 0:12:30.360 the top, you spent a lot of time in Washington. 0:12:30.400 --> 0:12:32.599 You're coming to us from Washington. You were director for 0:12:32.760 --> 0:12:35.000 China and Taiwan at the US National Security Council. You 0:12:35.040 --> 0:12:37.400 worked under the Biden and Trump administrations. You advised Vice 0:12:37.440 --> 0:12:40.920 President Harris and Vice President Pence on Asia and the Pacific. 0:12:41.559 --> 0:12:42.840 Didn't we know this was coming? 0:12:44.120 --> 0:12:46.400 I think many of us in the China watching community 0:12:46.480 --> 0:12:49.400 suspected this was coming. You know, certainly, China's dominance over 0:12:49.480 --> 0:12:52.560 critical minerals, in particular rare Earth, is not a secret 0:12:52.760 --> 0:12:56.560 Over a decade ago, Beijing employed this vulnerability against Japan 0:12:56.679 --> 0:13:00.280 over a territorial dispute that those two had, so that 0:13:00.320 --> 0:13:03.280 there was a vulnerability out there. However, looking at the 0:13:03.280 --> 0:13:06.560 Trump administration's actions, it's hard not to interpret some of 0:13:06.600 --> 0:13:09.560 what happened there, and in particular that timeline events as 0:13:09.600 --> 0:13:13.320 suggesting there was some surprise that either Washington didn't think 0:13:13.360 --> 0:13:16.480 Beijing would go this far and exercising its control over 0:13:16.520 --> 0:13:19.960 those supply chains, or they didn't realize their inability to 0:13:19.960 --> 0:13:23.280 shift to alternative sources in a timely manner. Because we 0:13:23.320 --> 0:13:26.199 saw a very quick turnaround from when Beijing started to 0:13:26.240 --> 0:13:29.120 put those export controls in place, when US companies started 0:13:29.120 --> 0:13:31.839 to complain that they weren't getting these key inputs to win, 0:13:32.000 --> 0:13:34.719 Washington was suddenly talking about maybe we should meet with 0:13:34.760 --> 0:13:36.240 the Chinese and try and find a way to de 0:13:36.400 --> 0:13:38.600 escalate things. Part of that was about the pain the 0:13:38.679 --> 0:13:40.440 terrists are causing, but I think a good part of 0:13:40.440 --> 0:13:42.600 it was also about the pain that these critical mineral 0:13:42.640 --> 0:13:44.320 export controls were causing as well. 0:13:44.440 --> 0:13:51.960 Today, how hip is Beijing when it comes to US 0:13:52.000 --> 0:13:54.559 moves and maneuvers. I think about all of a sudden 0:13:55.000 --> 0:13:57.839 advanced chips being allowed to go out to China, that 0:13:57.920 --> 0:14:02.600 China's saying no, maybe we don't want to buy your chips, 0:14:02.880 --> 0:14:05.280 and the whole thinking the reversal, it almost feels like 0:14:05.320 --> 0:14:07.160 in thinking is wait, don't give them. 0:14:07.080 --> 0:14:08.800 Access to our sophisticated technology. 0:14:08.800 --> 0:14:11.920 Oh wait, let's give them access to our sophisticated technology, 0:14:11.920 --> 0:14:14.880 because that means will be in control, will set the terms, 0:14:14.920 --> 0:14:18.320 will be advanced. China won't spend time developing their own 0:14:18.679 --> 0:14:23.320 high tech community. But China is smart and they are 0:14:23.400 --> 0:14:24.800 hipped to all of this, aren't. 0:14:24.520 --> 0:14:27.880 They Also, they read the news just like all of us. 0:14:27.880 --> 0:14:30.800 So when you have, for example, top US officials going 0:14:30.840 --> 0:14:33.240 out there and saying no, our strategy is going to 0:14:33.240 --> 0:14:35.800 be that we make China dependent on the US tech stack, 0:14:36.240 --> 0:14:38.840 Beijing is able to read those words as well. But 0:14:38.960 --> 0:14:42.720 even before some of that language came out, Beijing's predominant 0:14:42.760 --> 0:14:46.400 thesis is that the United States would be using these reliancies, 0:14:46.480 --> 0:14:50.520 these dependencies as sort of strategic leverage with China. So 0:14:50.880 --> 0:14:53.640 I don't think it requires usin Huang or David Sachs 0:14:53.720 --> 0:14:55.680 or others coming out to say that to sort of 0:14:55.680 --> 0:14:59.200 trip Beijing's concerns. But it certainly didn't help that case. 0:14:59.680 --> 0:15:01.840 I think Beijing also thinks about this from the perspective 0:15:01.880 --> 0:15:04.560 of what would I China do if someone was reliant 0:15:04.600 --> 0:15:06.920 on me for a particular good right, So that's the 0:15:06.960 --> 0:15:09.320 sort of mindset it applies when it thinks about its 0:15:09.360 --> 0:15:10.920 vulnerabilities with other countries. 0:15:11.240 --> 0:15:14.480 So does the US then thing China stupid that they're 0:15:14.520 --> 0:15:16.400 not going to like as you say, they're reading the 0:15:16.440 --> 0:15:20.720 same headlines we all are like, I don't. 0:15:20.480 --> 0:15:24.280 Know, I think, sorry, that's a great question. No, no, 0:15:24.320 --> 0:15:26.880 it's a great question. And I can't speak for what 0:15:26.960 --> 0:15:29.360 the strategy might have been behind saying some of those 0:15:29.400 --> 0:15:32.640 things publicly, but I think regardless of whatever the intent 0:15:32.840 --> 0:15:35.480 was or whatever the merits of that particular idea was, 0:15:35.760 --> 0:15:38.920 Beijing's moves over the last few days to actively discourage 0:15:38.960 --> 0:15:42.200 companies from buying these foreign made chips, despite the fact 0:15:42.240 --> 0:15:45.040 that there's still an advantage and an edge over the 0:15:45.080 --> 0:15:48.840 domestic competitors, suggests that that strategy is not going to work, 0:15:48.840 --> 0:15:52.200 That Beijing's not going to allow itself to become dependent 0:15:52.280 --> 0:15:54.880 on the US tech stack. It's going to continue to 0:15:54.920 --> 0:15:59.000 work towards having a domestic, indigenous solution, And so then 0:15:59.000 --> 0:16:02.440 the question becomes, if you're still shipping them these powerful 0:16:02.520 --> 0:16:05.000 chips that they can use to advance their AI models 0:16:05.200 --> 0:16:09.160 that they can perhaps base their domestic competitors on. Are 0:16:09.200 --> 0:16:11.760 you still playing to an advantage here or are you 0:16:11.840 --> 0:16:14.440 playing a losing game where eventually China's going to overtake 0:16:14.440 --> 0:16:15.680 you on these technologies? 0:16:16.320 --> 0:16:19.760 Can the US become a self reliant as China has become? 0:16:21.920 --> 0:16:24.200 You know, that's a great question that probably economists have 0:16:24.200 --> 0:16:27.160 a more sophisticated answer to. I would say China's approach 0:16:27.360 --> 0:16:30.680 takes a lot of costs under it, and it certainly 0:16:30.720 --> 0:16:33.440 comes with other costs beyond the economic realm, in terms 0:16:33.440 --> 0:16:37.240 of the social the political costs as well. I think 0:16:37.320 --> 0:16:40.800 most economists would say that autarchy is not a feasible 0:16:40.840 --> 0:16:43.920 solution for any country, but certainly for an economy is 0:16:44.040 --> 0:16:46.720 big and is well integrated into the global economy as 0:16:46.760 --> 0:16:49.040 the United States. I think, actually, if you look at 0:16:49.040 --> 0:16:52.040 a lot of President Trump's strategies trying to bring manufacturing 0:16:52.040 --> 0:16:54.800 back to the United States, just this one aspect of 0:16:54.840 --> 0:16:58.440 self sufficiency, it's clear how many hurdles there are to 0:16:58.560 --> 0:17:01.680 just achieving that one LM element of it. So I 0:17:01.720 --> 0:17:04.359 don't think it's feasible, certainly not within the timeline of 0:17:04.359 --> 0:17:06.200 competition with China. 0:17:05.720 --> 0:17:07.400 And it's a risky play for China as well. 0:17:07.440 --> 0:17:09.680 Just got about thirty seconds, right, I mean, they've got 0:17:09.680 --> 0:17:14.240 their own economic challenges and pressure, so there is some 0:17:14.400 --> 0:17:16.399 risk for them as well in playing this game. 0:17:17.160 --> 0:17:21.760 Absolutely, they've got property market problems, They've undergoing a demographic juranisition. 0:17:22.200 --> 0:17:24.560 Market sentiment has taken a real hit over the last 0:17:24.560 --> 0:17:27.520 few years post COVID. This is not necessarily a moment 0:17:27.640 --> 0:17:29.959 of great economic strength for them. They're feeling a lot 0:17:29.960 --> 0:17:33.280 of vulnerability and weakness. But sometimes it's that sense of 0:17:33.320 --> 0:17:36.520 weakness and vulnerability that actually leads Chinese leaders to sort 0:17:36.520 --> 0:17:39.120 of buckle down, dig in their heels because they don't 0:17:39.119 --> 0:17:41.000 want other countries to think that they can be taken 0:17:41.040 --> 0:17:41.679 advantage of. 0:17:42.560 --> 0:17:45.119 Unbelievable Thank you so much. It's a story we so 0:17:45.280 --> 0:17:48.000 wanted to do and we're so glad you could find 0:17:48.000 --> 0:17:51.560 time for us. Jennifer Welch, she's Bloomberg Economics Chief geoeconomics 0:17:51.600 --> 0:17:52.640 analyst there in DC. 0:17:54.320 --> 0:17:58.160 This is the Bloomberg Business Week Daily Podcast. Listen live 0:17:58.240 --> 0:18:01.119 each weekday starting at two pm Eastern on Apple car 0:18:01.240 --> 0:18:04.080 Play and the Android Auto with the Bloomberg Business App. 0:18:04.119 --> 0:18:06.920 You can also listen live on Amazon Alexa from our 0:18:06.920 --> 0:18:10.639 flagship New York station Just Say Alexa played Bloomberg eleven 0:18:10.760 --> 0:18:13.520 thirty ROUBMUCO. 0:18:14.000 --> 0:18:15.040 I'll beout you let me drive. 0:18:15.280 --> 0:18:18.760 Oh no, no, no no, this is not a toy to judge. 0:18:19.720 --> 0:18:22.440 All right, please, I'll do the riding gravels. 0:18:22.520 --> 0:18:23.920 Let's wait, I want to drive. 0:18:26.160 --> 0:18:27.080 It's a good question. 0:18:27.520 --> 0:18:28.359 Good drives. 0:18:30.960 --> 0:18:33.120 This is the drive to the clothes. 0:18:33.040 --> 0:18:33.840 Punks, the music. 0:18:33.960 --> 0:18:37.000 Well ri run down on Bloomberg Radio. 0:18:37.320 --> 0:18:39.480 All right, TikTok, everybody, About eighteen and a half minutes 0:18:39.480 --> 0:18:42.359 to go until we wrap up the trade on this Wednesday. 0:18:42.440 --> 0:18:45.440 Just heard from Bill Maloney and Charlie Pellett on where 0:18:45.440 --> 0:18:48.639 we are in today's session. Just a little bit higher 0:18:48.640 --> 0:18:50.959 on the S and P five hundred and fourteen points 0:18:51.320 --> 0:18:53.800 at sixty four to fifty nine down Joe's industrial average 0:18:53.840 --> 0:18:56.119 again have almost one percent four and forty points to 0:18:56.160 --> 0:18:58.320 the upside, and then ask one hundred under a little 0:18:58.320 --> 0:19:01.119 bit of pressure, tim, it's down about sixteen points, so 0:19:01.240 --> 0:19:02.720 call it little changed on the day. 0:19:02.920 --> 0:19:05.680 Hey, I want to bring in Gillian Wolf Bloomberg Intelligence 0:19:05.720 --> 0:19:08.000 Global Equity Strategy. She joins us here in the Bloomberg 0:19:08.040 --> 0:19:11.679 Interactive Brokers studio, Jillian You and the team out with 0:19:11.720 --> 0:19:14.840 a note. It's all about how global text hot streak 0:19:14.920 --> 0:19:18.760 masks growing gaps and stock returns. It's all about the concentration. 0:19:19.160 --> 0:19:21.800 It's not a new story. Yeah, it's something that a 0:19:21.840 --> 0:19:24.760 lot of people have been concerned about. Is this a 0:19:24.760 --> 0:19:26.400 tale of two different markets right now? 0:19:26.760 --> 0:19:29.160 I wouldn't say it's entirely a tale of two different markets, 0:19:29.160 --> 0:19:30.840 but I do think there is a little bit of 0:19:30.880 --> 0:19:34.439 masking going on with how much the largest stocks, just 0:19:34.480 --> 0:19:37.480 because of their sheer magnitude, are able to mask some 0:19:37.600 --> 0:19:40.240 issues in some of the smaller stocks. In the S 0:19:40.280 --> 0:19:43.240 and P five hundred. We're even seeing that today with 0:19:43.359 --> 0:19:45.600 the S and P five hundred at a new high. 0:19:45.880 --> 0:19:49.000 About sixty stocks or at a new high today. The 0:19:49.040 --> 0:19:51.040 rest have not hit new highs at all in August, 0:19:51.680 --> 0:19:55.239 so there's definitely room for expansion. This isn't necessarily a 0:19:55.280 --> 0:20:00.199 bad thing. That said, there's definitely a distortion happening with 0:20:00.359 --> 0:20:01.920 what some of these larger stocks are doing. 0:20:02.520 --> 0:20:05.760 You know, it's interesting too write the concentration. 0:20:05.840 --> 0:20:08.960 We've been here before, right, and everybody's like broaden out 0:20:09.119 --> 0:20:13.200 by other stuff better valuations. And yet we come back 0:20:13.200 --> 0:20:15.200 and we see why people buy some of the big 0:20:15.200 --> 0:20:19.040 cap names, certainly in the tech sector, because that's where 0:20:19.040 --> 0:20:20.159 a lot of the momentum is. 0:20:20.520 --> 0:20:22.680 Some of the numbers are off the charts. But is 0:20:22.720 --> 0:20:26.439 that I don't know is fundamentally still is that a 0:20:26.480 --> 0:20:27.560