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Speaker 1: Good morning.

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Speaker 2: I'm Brian Curtis and I'm Doug Krisner. Here are the

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Speaker 2: stories we're following today.

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Speaker 1: Well, President Biden and Shi Jinping did meet. President Biden

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Speaker 1: said real progress was being made. The two leaders hope

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Speaker 1: to repair relations strained by economic competition and military issues.

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Speaker 1: Bloomberg's Tom Orleck says this would be beneficial to both

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Speaker 1: the US and China.

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Speaker 3: The US, he's got a war in Ukraine, war in

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Speaker 3: the Middle East. They really don't need things blowing up

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Speaker 3: with China at the same time, and Shi Jimping, Well,

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Speaker 3: he's wrestling with a monumental crisis in the real estate sector,

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Speaker 3: which is hammering growth, hammering wealth for China's middle class,

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Speaker 3: and there's growing concern in Beijing that the investment just

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Speaker 3: isn't coming in anymore. So for both sides right now,

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Speaker 3: the incentive is to bring a bit of stability to

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Speaker 3: the relationship.

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Speaker 1: Bloomberg's Tom Orleck. We're expecting a solo news conference from

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Speaker 1: President Biden at the APEX that will be happening at

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Speaker 1: seven fifteen pm Wall Street Time.

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Speaker 2: Well, today in Washington, d C, China's embassy slammed report

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Speaker 2: to the US Congress. It said that US China relations

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Speaker 2: were not getting better. We have more from Bloomberg's Von Men.

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Speaker 4: China denounced what was a critical report by the US

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Speaker 4: China Economic and Security Review Commission. The Commission's annual report

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Speaker 4: to Congress struck a downbeat tone, just as Presidents Joe

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Speaker 4: Biden and Chijing Ping were said to meet this week.

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Speaker 4: Chinese Embassy spokesman Leo pung Yu accuse the Commission of

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Speaker 4: entrenched bias. The Commission said China has shown an increased

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Speaker 4: willingness to engage with the US, but I said there's

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Speaker 4: little evidence that Beijing intends to make concessions or modify

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Speaker 4: its policies to improve relations. The Chinese embassy spokesman said

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Speaker 4: the Commission's comments were irresponsible. In Hong Kong, I'm von Mann,

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Speaker 4: Bloomberg Radio.

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Speaker 1: China's tech companies ten JD dot Com both reported earnings

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Speaker 1: that beat estimate. We get more from Bloomberg's Joan Wong.

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Speaker 5: In taipe A, ten Cent saw a gain of ten

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Speaker 5: percent in revenue after video advertising on we Chat propelled growth.

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Speaker 5: Third quarter revenue was twenty one point four billion dollars.

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Speaker 5: That designed that Chinese consumers are turning to social media

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Speaker 5: in games despite a nationwide downturn. Meanwhile, JD dot Com

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Speaker 5: post at a one point seven percent rise in quarterly revenue.

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Speaker 5: That's after heavy promotional spending. Revenue came in at thirty

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Speaker 5: four point two billion dollars, just beating the estimate of

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Speaker 5: thirty four billion. Net InCom rows thirty three percent. Both

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Speaker 5: stocks jumped and US trading on Wednesday in Taipam Joanne

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Speaker 5: Wong Bloomberg Radio.

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Speaker 2: Well after the bill. Here in the US, we heard

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Speaker 2: from Cisco Systems. This company is the largest manufacturer of

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Speaker 2: computer networking equipment, and Cisco gave a troubling sales forecast.

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Speaker 2: We have more from Bloomberg's Tom Busby.

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Speaker 6: Despite posting strong results for the just completed first quarter

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Speaker 6: revenue of eight percent to fourteen point seven billion dollars

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Speaker 6: earnings of a dollar eleven a share, it's Cisco's outlook

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Speaker 6: that was the big news. The computer networking hardware giant

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Speaker 6: gave a disappointing forecast well short of analyst estimates, reflected

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Speaker 6: in an expected pullback in businesses raining in their spending

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Speaker 6: on technology. Sales now forecast to be between twelve point

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Speaker 6: six and twelve point eight billion dollars, well shy of

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Speaker 6: the fourteen point two billion that analysts estimated. Tom buzzby

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Speaker 6: Bloomberg Radio.

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Speaker 2: And Brian Right now I'm looking at shares in Cisco

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Speaker 2: down more than eleven percent. In the late US session,

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Speaker 2: we hear.

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Speaker 1: That SpaceX is discussing an initial public offering for its

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Speaker 1: fast growing Starlink satellite business as soon as late twenty

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Speaker 1: twenty four. No final decisions have been made, but SpaceX

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Speaker 1: reportedly has been moving the satellite unit's assets to a

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Speaker 1: wholly owned subsidiary that would ultimately be spun off in

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Speaker 1: the IPO. More from Bloomberg's Ed Ludlow.

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Speaker 7: The idea Starling Beingk's fun off is something that Elon

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Speaker 7: Musk and Gwynn shot Well, who's the president of SpaceX,

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Speaker 7: have discussed in the past. What's changed is just that

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Speaker 7: the business has such fromentum. We reported a couple of

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Speaker 7: weeks ago that next year Starlink revenues could be above

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Speaker 7: ten billion dollars, meaning the majority of revenues overall from

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Speaker 7: SpaceX alongside the launch business.

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Speaker 1: That's Bloomberg's ed Ludlow. Following Bloomberg's report, Musk called it

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Speaker 1: false in a post on X, the social media platform

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Speaker 1: he owns he did not elaborate separately. SpaceX received approval

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Speaker 1: for the second launch of its groundbreaking Starship rocket. It

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Speaker 1: ends an almost seven month hiatus, and it inches Elon

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Speaker 1: Musk closer to his goal of sending humans to the

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Speaker 1: Moon and beyond. Now it's time for global news. President

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Speaker 1: Biden says he's making real progress in discussions with Shi Jinping.

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Speaker 1: They finished up their face to face meeting on the

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Speaker 1: sidelines of APEX at Baxter has the story and the

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Speaker 1: rest of the news from the nine to sixty news

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Speaker 1: room at San Francisco.

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Speaker 5: Ed.

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Speaker 8: Yeah, that's right, Brian on both sides, saying communication on

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Speaker 8: economic and military issues in a thaw on the cold relationship.

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Speaker 8: Biden says, real progress. There's no substitute to face to

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Speaker 8: face discussions. I've always found our discussions straightforward and frank,

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Speaker 8: and I've always appreciated it. And the White House has

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Speaker 8: issued a statement saying that the President is very pleased

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Speaker 8: with the meeting, saying he feels great progress was made.

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Speaker 8: Earlier in the day, a White House said that Biden

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Speaker 8: would make it very clear that the US was not

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Speaker 8: pushing for Taiwan independence. We should hear more about that

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Speaker 8: in the next hour. So realistically, though, Dominic Chu, senior

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Speaker 8: analyst at the Eurasia Group, says anything coming out of

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Speaker 8: this will not be earth shaking.

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Speaker 9: Both countries will step upon restoring military dialogue, restoring people

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Speaker 9: to people contact, student exchanges, tourism flights. They might also

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Speaker 9: be corporate deal emerging, but these agreements are small in scale.

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Speaker 9: It will not fundamentally altered to climb in relations.

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Speaker 8: But Bloomberg'samrie Hordern at APEX says it is important.

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Speaker 10: I think the fact that these two individuals, the leaders

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Speaker 10: of the biggest economies, two biggest economies in the world,

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Speaker 10: are sitting down shows that they do want a different

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Speaker 10: path forward, that both want to be able to manage

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Speaker 10: this relationship and get something out of this relationship. For

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Speaker 10: Shijing Ping, we know that he was pressing economic issues.

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Speaker 10: When it comes to the sanctions and terrorist regimes that

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Speaker 10: are placed on Beijing from the United States, we do

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Speaker 10: know that something the US does not want to meddle with.

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Speaker 8: At the moment, news conference scheduled for next hour, we

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Speaker 8: should know more pressure on China has not eased coming

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Speaker 8: from US law enforcement. Meanwhile, FBI Director Christopher Ray telling

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Speaker 8: a House committee today, China is heavily involved in the

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Speaker 8: fentanyl trade in the United States.

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Speaker 11: We've got easily two thousand active investigations across all fifty

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Speaker 11: six field offices into China's relentless efforts to steal our

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Speaker 11: innovation and intellectual property. And over the past two years along,

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Speaker 11: we've seized enough fentanyl to kill two hundred and seventy

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Speaker 11: million Americans. That's more than eighty percent of all Americans.

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Speaker 8: Yeah. Now, United Nations specific Middle Eastern countries including Jordan

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Speaker 8: and Turkey, have strongly condemned Israel's raid on l Ship Hospital,

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Speaker 8: but Israel says its army has found weapons at the hospital,

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Speaker 8: weapons as well used by military equipment that says shows

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Speaker 8: that Hamas was used some kind of command center. But

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Speaker 8: with the UN global reaction and becoming a bit frustrated

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Speaker 8: as all of his drags on Bloomberg's a security correspondent

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Speaker 8: Nick wadhams here.

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Speaker 12: What we understand is that the administration is growing more

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Speaker 12: and more frustrated with the way that Israel is conducting

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Speaker 12: that campaign, and also a feeling, particularly in the Pentagon,

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Speaker 12: that Israel is not heeding the advice of the US,

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Speaker 12: we should say. At the same time, the US is

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Speaker 12: continuing to supply Israel with munitions, armaments, all sorts of

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Speaker 12: military equipment, including one hundred and fifty five millimeter artillery shells.

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Speaker 8: Which humanitarian groups say are a problem because they're harder

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Speaker 8: to control and be precise. And in the US, the

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Speaker 8: government funding bill is being hashed out in the Senate.

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Speaker 8: A Senate majority leader, Chuck Schumer says he is working

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Speaker 8: with a minority leader, Mitch McConnell, and in fact, our

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Speaker 8: sources are telling us there's a good chance that there

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Speaker 8: could be a vote. Tonight, Global News twenty four hours

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Speaker 8: a day and whenever you want it with Bloomberg News

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Speaker 8: Now in San Francisco. I'm Ed Baxter, and this is Bloomberg.

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Speaker 1: I'm Brian Curtis with Vonnie Quinn. And joining us on

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Speaker 1: the show live is Max Bauchus, former US Ambassador to China.

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Speaker 1: For a closer look at the meetings between Joe Biden

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Speaker 1: and Shi Jen Ping, ambassador. Sometimes you get a lot

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Speaker 1: summed up in a line, and in she's opening remarks,

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Speaker 1: he said a lot of generic things, but he also

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Speaker 1: said that it's unrealistic for one side to remodel the other.

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Speaker 1: And I think we know what he's talking about, because

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Speaker 1: China's not really trying to remodel the US, but he's

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Speaker 1: charging the US with trying to remodel China. And in

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Speaker 1: a sense, he's trying to say, look, we're a communist country,

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Speaker 1: We're not you.

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Speaker 13: I think that's that's right. The Chinese believe that we

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Speaker 13: are trying to impose our will on them. That is,

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Speaker 13: Chinese think we do not sufficiently respect China as another

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Speaker 13: major power, the second largest power in the world. In fact,

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Speaker 13: that China believes that the United States is trying to

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Speaker 13: stop China's rise. When I talked to Chinese, I say,

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Speaker 13: do you think of the United States is trying to

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Speaker 13: stop your eyes? And oh my gosh, they've got to

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Speaker 13: taking my head off. Of course, the United States is

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Speaker 13: trying to stop our rise. So there's a lot of

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Speaker 13: tension there.

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Speaker 14: Yeah, she said, the world emerged from COVID, but the

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Speaker 14: global economy is still under threats and also COVID tremendous impact.

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Speaker 4: How much is that weighing on him, Ambassador.

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Speaker 13: Quite a bit. Frankly, it's a combination of COVID. The

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Speaker 13: Chinese think they did a good job that COVID when

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Speaker 13: at first arose by shutting down a lot of operations,

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Speaker 13: but it turned out the virus mutated made things much worse,

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Speaker 13: and then so bad frankly that there's really deep unrest

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Speaker 13: among the Chinese friends I talked to and Shining High

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Speaker 13: and so we opened up. So COVID was a huge

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Speaker 13: part the problem. On the other hand, because of COVID,

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Speaker 13: a lot of Chinese were not working, so they did

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Speaker 13: not have income to save, and so when COVID was lifted,

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Speaker 13: they didn't have money to spend. And add to that,

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Speaker 13: the Chinese government is a bit repressive on private sector.

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Speaker 13: And I talked to my Chinese friends over there. I said,

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Speaker 13: you think that the private sector has been too suppressed

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Speaker 13: and the answer I get, yeah, pretty much. It's going

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Speaker 13: to last that way, but we can still do business.

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Speaker 1: Ambassador. We understand that there is progress being made, and

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Speaker 1: we know from the setup that we're looking for the

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Speaker 1: possibility of resumption of military to military talks, a line

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Speaker 1: of communication, and also this possible deal on Chinese law

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Speaker 1: enforcement cracking down on the product that makes fentanyl being

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Speaker 1: shipped off to Mexico. Those those are two pretty dramatic developments,

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Speaker 1: But is there anything else that you think that we

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Speaker 1: can expect out of this that's quite tangible?

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Speaker 13: Not really. Frankly, mil Mill talks are extremely important because

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Speaker 13: there could be some untoward events seed a couple of

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Speaker 13: ships bump each other, and if there's some line of communication,

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Speaker 13: then one or the other could call the other and

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Speaker 13: say and explain that that was just an accident. That's

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Speaker 13: done the first shot of any kind of military aggression.

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Speaker 13: So that's very important. A FEDL is I think extremely

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Speaker 13: important for me. That's that's a that's a that's a

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Speaker 13: huge possibility. It's a for example, US Congress right now

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Speaker 13: is very strongly byparsion is dislike a China. US Congress

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Speaker 13: is also a very bi parson attempt to stop fentanyl.

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Speaker 13: I mean, it's a it's a big opportunity for China

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Speaker 13: to show some good faith crack down on those precursors

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Speaker 13: that are being sent over to Mexico. It's a mill

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Speaker 13: a bit complicated, but frankly, it's a huge opportunity for

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Speaker 13: China is to show some good faith and trying to

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Speaker 13: help the Down States to deal with that scourge.

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Speaker 1: Could I just ask a follow on that because it's

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Speaker 1: the cartels that are heavily involved in that in Mexico.

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Speaker 1: Would they be able to get the product the component elsewhere?

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Speaker 13: Well, I think not nearly as much. Of course, this

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Speaker 13: is APEX, which means Mexico is there too, So the

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Speaker 13: administration can talk to Mexico and say, hey, why don't

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Speaker 13: you help out shut down cartels China, we think it's

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Speaker 13: going to do. It's far it's complicated, but frankly, the

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Speaker 13: major supplier of the precursors is China. Now Big Farmer

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Speaker 13: has got to be helpful here too, because it's a

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Speaker 13: lot of wonderful drugs that are made by American pharmaceutical countries.

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Speaker 13: Those precursors are also in China. So it's a bit

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Speaker 13: difficult to separate the wheat from the chat. But I

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Speaker 13: think it's a huge opportunity for China to show some

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Speaker 13: good faith toward America but actually seriously cracking down on fentanyl.

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Speaker 14: Master John Kirby earlier told reporters that President Biden will

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Speaker 14: make clear that the US doesn't support Taiwan independence and

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Speaker 14: that the US doesn't want the status quo changed in

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Speaker 14: any kind of unilateral way. Will he say all that

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Speaker 14: directly to presidency and will see agree.

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Speaker 13: That directly with President she you won't show up, but

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Speaker 13: Rolla's eyeballs, he really won't believe it. You know, Chinese

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Speaker 13: think that we say we adhere to the One China policy,

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Speaker 13: but the Chinese also think we don't follow the One

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Speaker 13: China policy. That is, we keep shiping more arms to Taiwan,

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Speaker 13: we build up the military in the area, and the

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Speaker 13: Congress is not helping that much. So it's a real issue.

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Speaker 13: I don't think Americans fully understand that the Taiwan is

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Speaker 13: existential to China. It's non negotiable, you know, Chinese as

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Speaker 13: part of China in their view. And I think the

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Speaker 13: more United States could tempt fate by sending too many

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Speaker 13: arms over the war. It's going to cause more problems

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Speaker 13: frost agent being and the Hawks in China, and it's

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Speaker 13: going to just make the trip wire a little bit

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Speaker 13: more sensitive. So I just think it's very important for

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Speaker 13: our countries to be careful and we should maintain the

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Speaker 13: status quo in Taiwan as much as possible.

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Speaker 1: You have to stay away from independence. In the language,

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Speaker 1: self determination is a separate issue, and that the issue

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Speaker 1: should be resolved by the Chinese and Taiwan people. As

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Speaker 1: long as you stick with that, you're probably safe with China.

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Speaker 13: That's correct, And as a new development, the opposition parties

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Speaker 13: have reached an agreement which strengthens them. So it's very

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Speaker 13: possible that the and the elections are coming up the

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Speaker 13: first and next year, that the victor is going to

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Speaker 13: be a political party which is a little more aligned

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Speaker 13: towards China in front of that will reduce some of

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Speaker 13: the attention. On the other hand, if the current party

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Speaker 13: of CIUN prevails, that's going to tend to add to

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Speaker 13: more attention on Taiwan. Because she's very closely to the independence.

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Speaker 13: She won't cross the line she gets close a master.

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Speaker 14: We also know that various CEOs will be meeting with

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Speaker 14: President c Pfizer's CEO has confirmed this to Bloomberg, and

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Speaker 14: we have also sources telling us everybody from the Microsoft

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Speaker 14: CEO to El Moscow.

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Speaker 1: Will be there.

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Speaker 14: Obviously, there are areas of discontent Tariff's computer chips, economic

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Speaker 14: coercion and so on. Negative sentiment is plaguing China. Can

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Speaker 14: presidentcy do something to change this at this meeting?

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Speaker 13: It'll certainly try. There are about three hundred four hundred

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Speaker 13: businessmen at that dinner tonight, and frankly, he wanted to

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Speaker 13: meet with a businessman before he met with President Biden

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Speaker 13: White House. He said, no, no, no, no, you meet

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Speaker 13: with our president first before you have that dinner. At

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Speaker 13: that dinner, you're going to really try. He's going to

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Speaker 13: say lots of nice sweet words, and American businessmen will

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Speaker 13: really want to leave it. They possibly can, because it's

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Speaker 13: such a huge market China, and I think that there's

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Speaker 13: a good chance, with all the good talk around this summit,

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Speaker 13: with that dinner, it's going to be a little more

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Speaker 13: of an effort by US businessmen to think, maybe but

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Speaker 13: conducting more business than China.

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Speaker 12: After all.

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Speaker 1: Ambassator, in one sense, has the horse already bolted the stable.

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Speaker 1: Has the mindset changed by a lot of big business

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Speaker 1: that there are some things more important than profit. And

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Speaker 1: they're now looking beyond China to places like India and

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Speaker 1: Indonesia and Southeast Asian such.

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Speaker 13: Well, you know, it's everything is complicated. American business is

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Speaker 13: starting to hedge its bets a little bit. The big

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Speaker 13: enchilada is still is China. It's much more than India,

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Speaker 13: Thailand and Vietnam. So they're going to hedge their bets

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Speaker 13: a little bit and set up some plants to those

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Speaker 13: other countries. But they're going to look as much as

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Speaker 13: possible as it can in China. And add to that is,

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Speaker 13: you know, American business is also going into China to

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Speaker 13: produce for China, that is, for Chinese consumers. A lot

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Speaker 13: of American business is also going into China to kind

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Speaker 13: of piggyback on China's efforts to do business in other

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Speaker 13: Southeast Asian countries. There are lots of opportunities that are

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Speaker 13: essentially American bidiness. They're starting to hedge its bets a

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Speaker 13: little bit. But don't forget this is it depends on

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Speaker 13: the sector. High Tech doesn't do too well in China,

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Speaker 13: but rechailed is very well in China. Pharmaceutical industry is

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Speaker 13: very well in China. Energy industry does very well in China.

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Speaker 1: So it is just toctor ambassador, thank you so much

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Speaker 1: for joining us. Love the style, love the blunt talk,

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Speaker 1: making sense right here live on Bloomberg Daybreak Asia. We

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Speaker 1: appreciate it. Max Bakis the former US Ambassador to China

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Speaker 1: again serving from twenty fourteen to twenty seventeen. This is

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