Speaker 1: It's been quite a week for UK politics.
Speaker 2: Indeed with a reshuffle that I don't think people really
Speaker 2: they knew the reshuffle was coming at some point, but
Speaker 2: the timing to lots of people by.
Speaker 3: Saying that were interesting. I mean this one, there was
Speaker 3: like this collect in the news and there was a
Speaker 3: sort of collective I mean, you don't get the moment
Speaker 3: what well.
Speaker 2: There was, but David Cameron appeared out of his ranger
Speaker 2: in Downing Street and it seemed from Twitter that everyone
Speaker 2: had a collective kind of second check like rubbing their eyes.
Speaker 4: Am I seeing things correct? Correctly?
Speaker 2: And it's really pertinent David Cameron's appointment, isn't it for
Speaker 2: the summit that took place between g and Biden last night.
Speaker 2: He's the epitome in the United Kingdom of that attempt
Speaker 2: in the twenty ten onwards period of trying to economically
Speaker 2: engage more point was that famous pub visit. And now
Speaker 2: here we are in twenty twenty three when so much
Speaker 2: has changed.
Speaker 1: But what was the appointment about. Is it about just
Speaker 1: getting a heavyweight in the cabinet or is it really
Speaker 1: about foreign but OBSSI I'm trying to get closer to China.
Speaker 2: I don't think it's the latter about China. But I
Speaker 2: think my understanding is that in the time recently, in
Speaker 2: the last month is it now five weeks since Israel
Speaker 2: and her mass have been in conflict, Richie Sunac has
Speaker 2: very often. What happens with prime ministers is they do
Speaker 2: get former prime ministers on the phone quite a lot.
Speaker 2: It's quite interesting quite how much, and it doesn't really
Speaker 2: matter which party they are they'll get people. I remember
Speaker 2: Boris Johnson would get Tony Blair on the phone during
Speaker 2: COVID and so on, so it's quite it's quite habitual
Speaker 2: for former leaders to want to help. And my understanding
Speaker 2: is that Richie Sunak was talking a lot to David
Speaker 2: Cameron because he does have insight both into the Israeli
Speaker 2: side of politics, but also to the Gulf and the
Speaker 2: Arab side of things. It does have the advantage. Lots
Speaker 2: of people have written this. I think it's true. It
Speaker 2: does have the advantage that going into an election twelve
Speaker 2: fourteen months, seeing that can do more concentration on domestic politics.
Speaker 1: Yes, the dangerous as long as he can keep David
Speaker 1: Cameron under control is another podcast.
Speaker 5: Isn't it.
Speaker 1: Welcome to in the City, Bloomberg's podcast, connecting you to
Speaker 1: the conversations and the stories shaping the world of finance.
Speaker 1: I'm Francine Lakwa in our London studio with David Merritt
Speaker 1: and elect Gross Stratton.
Speaker 3: And so this week after the Biden She meeting, we
Speaker 3: want to find out where things stand between the world's
Speaker 3: biggest economies. Also connect the dots a little bit with
Speaker 3: events here in the UK, the surprise appointment of David Cameron.
Speaker 3: He of the Golden Age between Britain and China. What
Speaker 3: that means in terms of the relationship with Britain and
Speaker 3: the world's second biggest economy.
Speaker 1: So with us from DC. Jennifer Welsh, chief economic analyst
Speaker 1: that Bloomberg Economics. Before Bloomberg, she spent nearly eight years
Speaker 1: as analyst for the government, including on the National Security
Speaker 1: Council as a director for China and Taiwan. To Jennifer,
Speaker 1: you understand this, and you've also come back fresh off
Speaker 1: a plane because you were at the meeting where President
Speaker 1: She ended at President Biden.
Speaker 5: Meeting fresh off the plane from San Francisco is still
Speaker 5: in the airport lounge, and I think both leaders can
Speaker 5: leave this meeting saying it was a success for them.
Speaker 5: I think from President Biden's perspective, he achieved a consensus
Speaker 5: on many of his main items going into it, in
Speaker 5: particular agreement to cooperate on steming fentanyl flows to the US,
Speaker 5: reopening military and military channels, establishing a working group to
Speaker 5: discuss artificial intelligence, and, as he reiterated multiple times throughout
Speaker 5: his press conference last night, a commitment to pick up
Speaker 5: the phone if the other leader needed to talk. I
Speaker 5: think from She's perspective, his main goal going in the
Speaker 5: meeting was to project stability in US China ties as
Speaker 5: part of a broader effort to reassure investors and in
Speaker 5: particular foreign and cerin businesses, that China is open for business.
Speaker 5: It's a good business environment for them still, and that
Speaker 5: seemed to be a message he was projecting not only
Speaker 5: throughout the meeting, but also at the dinner he attended
Speaker 5: last night with a number of American CEOs and investors.
Speaker 3: So, Jennifer, you know you as you know you're you're
Speaker 3: used to how these things work, and obviously they're they're
Speaker 3: very finely choreographed every sort of moment, the messages. So
Speaker 3: when you say it's a success. Does that mean it
Speaker 3: was just you know, the script that everyone came armed
Speaker 3: with was delivered, or were there any breakthroughs that perhaps
Speaker 3: surprised people in terms of you know, thawing of relations.
Speaker 3: I mean, the only sort of unscripted moment seems to
Speaker 3: be this moment when Joe Biden said he still thinks
Speaker 3: she is a dictator I mean, which is obviously hopefully
Speaker 3: not or potentially not planned. Was there anything that was
Speaker 3: kind of off script that could be counted as as
Speaker 3: a win here?
Speaker 5: I think so largely speaking, just to take a step back, Yeah,
Speaker 5: most of these agreements were probably reached in advance of
Speaker 5: the meeting to ensure that they could walk out with
Speaker 5: an agreement on what specifically they had discussed and what
Speaker 5: specifically they had agreed to. So all of that was
Speaker 5: probably negotiated in advance. The other items that they discussed
Speaker 5: but didn't come to an agreement on the many other
Speaker 5: bilateral and global issues, they probably also agreed in advance,
Speaker 5: we're going to discuss these things. They probably realized they
Speaker 5: weren't going to come to a consensus on it. I
Speaker 5: think some of the things that from my perspective, were
Speaker 5: probably more organic to the moment were the interactions between
Speaker 5: the two leaders, in particular when President Biden came out
Speaker 5: to greet President She and then at the it sounds
Speaker 5: like at some point during the meeting, President Biden handed
Speaker 5: President She a photo of she when he had visited
Speaker 5: San Francisco back in the eighties, and that was something
Speaker 5: that she apparently found very touching. He talked about this
Speaker 5: at the CEO dinner last night. And then the other
Speaker 5: piece that again she seemed to really find to be
Speaker 5: an important signaled towards him of respect was when President
Speaker 5: Biden walked him out and they took a few minutes
Speaker 5: and were chatting by She Jimping's car about the car
Speaker 5: and I think, more broadly, just trying to establish more
Speaker 5: of a rapport. Those moments were probably not scripted, and
Speaker 5: it seemed like She Jinping might have even been slightly
Speaker 5: surprised by them.
Speaker 3: So it's a little bit warmer then you reckon, like,
Speaker 3: do you think a takeaway is actually they sort of
Speaker 3: get on a bit better than leaders of two countries
Speaker 3: that have been singing so much mother around the last
Speaker 3: year should be getting on.
Speaker 5: My sense of this is that President Biden has I
Speaker 5: mean to say he has deep foreign policy expertise would
Speaker 5: be an understatement he is. He is decades of experience
Speaker 5: in this realm, and he is really a very skilled diplomat.
Speaker 5: I think a lot of that with this was his
Speaker 5: initiative thinking through how to establish a rapport with this
Speaker 5: other leader, even though the Biden administration views China as
Speaker 5: a chief rival. I think President Biden has put an
Speaker 5: emphasis on still having a relationship with She that allows
Speaker 5: them to be able to work together when necessary, and
Speaker 5: I see a lot of President Biden's sort of fingerprints
Speaker 5: on this and his thinking through of how to establish
Speaker 5: that rapport. Candidly, I don't think it's and this goes
Speaker 5: back to the question earlier about his comments about She
Speaker 5: being a digitator. I wouldn't think of this as necessarily
Speaker 5: he has necessarily warmed feelings towards teaching being so much
Speaker 5: as this is a someone he has to have a
Speaker 5: working relationship with for the sake of both of their countries.
Speaker 5: I think there are a lot of things that he
Speaker 5: disagrees with She about, and you know, obviously they have
Speaker 5: very different approaches to leadership, and President Biden is a
Speaker 5: strong believer in democracy and democratic values, so I wouldn't
Speaker 5: see this necessarily as him trying to court she out
Speaker 5: of admiration for him, so much as his feeling that
Speaker 5: it's important that they'd be able to work together for
Speaker 5: the sake of both their countries.
Speaker 2: Jennifer, can I just ask you when you talked, is
Speaker 2: really interesting to hear you say he had deep diplomatic skills,
Speaker 2: which I completely agree with from here in London. But
Speaker 2: when you look at the comments he makes at the
Speaker 2: end of that press conference about about China being a dictatorship,
Speaker 2: and then you see the cutaway of Blincoln rolling his
Speaker 2: eyes and kind.
Speaker 4: Of looking heaven worse.
Speaker 2: But the sort of the observation the obbos of the
Speaker 2: other face palm, Yeah, the observation I have. And I
Speaker 2: wonder what you think is it didn't seem to me
Speaker 2: like Biden misspoke. And we have a saying in the
Speaker 2: UK that a gaff is often a moment of honesty
Speaker 2: that people aren't supposed to say, rather than necessarily saying
Speaker 2: they're completely the wrong thing. So I just wonder what
Speaker 2: your take is on Biden and where they actually in
Speaker 2: that moment he was courting, you know, the bits of
Speaker 2: America that are really concerned and worried about China and
Speaker 2: was trying to have it both ways, or whether it
Speaker 2: was deeply unfortunate and blink and kind of looking in
Speaker 2: despair was actually nearer the truth of it.
Speaker 5: No, I think your first hypothesis is probably right. I
Speaker 5: think this is a genuine reflection in President Biden's worldview.
Speaker 5: And you know, at the beginning of his administration he
Speaker 5: was especially very clear about the global challenges facing democracies,
Speaker 5: and that's really kind of carried through and you see
Speaker 5: it and how he talks about Russia and China. You
Speaker 5: see it, and how he talks about Ukraine and other
Speaker 5: conflicts around the world. And it's not the first time
Speaker 5: he's referred to she as this. I think you know,
Speaker 5: he did take the question, even though his press conference
Speaker 5: was technically over, he did still take a moment to
Speaker 5: answer the question. And yes, part of the calculus might
Speaker 5: have been one. This is his genuine world view, and
Speaker 5: in case people are confused, he wants to make that clear.
Speaker 5: And then too, to your point, there is often a
Speaker 5: danger that people will over interpret these sorts of meetings
Speaker 5: and think that the United States is courting China or
Speaker 5: is looking the other way when it comes to China's
Speaker 5: human rights abuses, and this might have been him taking
Speaker 5: the opportunity to clarify where he is on those things,
Speaker 5: because again I do think having heard him talk about this,
Speaker 5: and having heard him talk about it, especially when it
Speaker 5: comes to these rivals, I think it's something that means
Speaker 5: genuinely quite a lot to him and is a really
Speaker 5: important part of how he views the World's.
Speaker 1: Surprising Jennifer that China didn't react more to that. And again,
Speaker 1: I can't imagine really being like a sexuary shape, but
Speaker 1: you know, having gone through I guess briefing with your
Speaker 1: boss and then here or something like that.
Speaker 4: Well, I mean I was used to work for Boris, right,
Speaker 4: feels a bit like that. You get your like ninety
Speaker 4: five percent.
Speaker 2: Of your way through the event and then you're like,
Speaker 2: oh my goodness, me the thing he's not supposed though,
Speaker 2: I think we're all agreeing that actually Providen, you know,
Speaker 2: intentionally spoke Yeah, but you know, you get all the
Speaker 2: way through this event and it's so interesting, you say, Jennifer,
Speaker 2: was that he didn't need to take that question, and
Speaker 2: I remember that feeling as well, of like why.
Speaker 4: Did he just randomly take an extra question? It was
Speaker 4: going so well up at that point.
Speaker 1: What happens afterwards? Do you actually tell the leader like, well.
Speaker 4: No, I mean you were kind of small.
Speaker 2: I mean, it's all kind of gloriously shambalic, certainly in
Speaker 2: the United Kingdom where you have a small kind of
Speaker 2: debrief huddle, and the principle is that they're known inside government.
Speaker 4: You know, in my case it would have been Boris.
Speaker 2: You know, they will just say, oh, well, you know,
Speaker 2: you can tidy that up, right, and they go after
Speaker 2: the next meeting and.
Speaker 1: You probably have like five people on the phone just
Speaker 1: to make sure, you know, how is the other side reacting.
Speaker 4: Doing the tidying up, doing the tidying up.
Speaker 1: And Jennifer and for the moment, like China seems to
Speaker 1: have reacted, Okay, they're largely ignoring it.
Speaker 5: Yeah, we're not seeing anything in terms of the public reaction, certainly,
Speaker 5: and when you can trust it with when he had
Speaker 5: made the comments earlier this summer as well, and there
Speaker 5: was more of a stronger public reaction to it, we
Speaker 5: haven't seen that yet. And in fact, she gmping gave
Speaker 5: a major speech to this business dinner last night and
Speaker 5: still was reflecting very warm feelings coming out of that
Speaker 5: meeting and talking a lot, in particular about his rapport
Speaker 5: with President Biden. My guest would be that there's not
Speaker 5: really an incentive for them to play this up publicly
Speaker 5: because she wants to portray the US channel relationship as
Speaker 5: very stable.
Speaker 3: I mean, it's so interesting, Jennifer, because just in terms
Speaker 3: of who's got the kind of upper hand here in
Speaker 3: this situation. Looking stepping back and looking at the economic
Speaker 3: situation in China right now, there's a lot of headwinds
Speaker 3: that she's doing things facing right and as a result
Speaker 3: his utter dominance of politics in China, it isn't quite
Speaker 3: as secure, was it as it was before. You've got
Speaker 3: plunging growth, You've got a demographic problem. So he comes
Speaker 3: to San Francisco and courts business leaders in a slightly
Speaker 3: less dominant fashion, right than we've seen in the past.
Speaker 3: We all remember the year what do they call it
Speaker 3: when they I think when they came here Golden era,
Speaker 3: the Golden era under Datatman we could talk China, but
Speaker 3: you know, the diplomats called themselves the wolf warriors. Is
Speaker 3: it coming in And even the Queen complained about the
Speaker 3: attitude of them when they came to Britain and now
Speaker 3: there's this feeling of coming in slightly more in supplication.
Speaker 3: Is it because they need the economic ties and they
Speaker 3: need the technology, and they need to rebuild these bridges
Speaker 3: in order to shore up the economy and therefore his
Speaker 3: domestic position. Do you what was the your sense, Jenni,
Speaker 3: from the ground of those sort of power dynamics in the.
Speaker 5: Summit, I think that that was definitely She's aim going
Speaker 5: in was to try and rebuild a foreign investor in
Speaker 5: foreign business confidence in China because that is still important
Speaker 5: for China's growth model to have the foreign investment, have
Speaker 5: access to foreign technology, as you noted, to have that
Speaker 5: growth path forward to what he eventually wants to get to,
Speaker 5: which is more self sufficiency. But they're not very yet.
Speaker 5: At the same time, from what we were hearing about,
Speaker 5: the ticket price for that dinner last night, and in
Speaker 5: particular the ticket price at the head table, was she
Speaker 5: and based on who turns up at the dinner, it
Speaker 5: seemed like there were plenty of businesses and investors that
Speaker 5: were extremely interested in going and meeting with him.
Speaker 2: So how much we're all looking at each other.
Speaker 1: I didn't had to pay for it.
Speaker 5: Oh, yes, so the reports were that the entrance ticket
Speaker 5: to the dinner itself was about two thousand dollars, and
Speaker 5: it was magnitudes higher if you wanted to the head table.
Speaker 5: Was she jimping.
Speaker 3: The White House?
Speaker 5: Definitely not the White House. I think I would assume
Speaker 5: it went to the dinner hosts, who were the US
Speaker 5: China Business Council, along with a couple of other US based, uh,
Speaker 5: you know, organizations that are involved in kind of facilitating
Speaker 5: US China cultural and other connections. But all that is
Speaker 5: to say, like the paradynamic might have been like slightly
Speaker 5: mixed in the sense that there are all these investors
Speaker 5: and businesses who were clearly really interested and getting close
Speaker 5: to she and talking with him, and who seem by
Speaker 5: all accounts still extremely interested in the China environment. I'm
Speaker 5: thinking about folks like Elon Musk and Tim Cook who
Speaker 5: were seen at the dinner last night and then at
Speaker 5: the meeting itself. Yeah, I think when you look at
Speaker 5: the wrap sheet of what President Biden's agenda was going
Speaker 5: into it, and what She's agenda probably was, and then
Speaker 5: you look at the outcomes from the meeting, I mean
Speaker 5: there are several very specific things that President and Biden
Speaker 5: can point to that he got out of it. It's
Speaker 5: not quite as clear what she dmping got out of
Speaker 5: it in terms of concessions. But we weren't really expecting
Speaker 5: him to. But all that is to say to your point, yeah,
Speaker 5: it seems like the big win for she was just
Speaker 5: you know, portraying stable, US sanitized, which is also what
Speaker 5: President Biden wanted.
Speaker 4: But then some.
Speaker 1: Businesses have legitimate concerns if they do actually operate in China.
Speaker 1: I mean, I think we've seen like local protectionism, you know,
Speaker 1: regulator environment was pretty unpredictable, and then you have crackdowns
Speaker 1: based on national security concerns. Jennifer. Has President She or
Speaker 1: people around him been able to allay some of those
Speaker 1: fears to make sure that foreign direct investment comes back
Speaker 1: into the country.
Speaker 5: I don't think we're there yet, and I think part
Speaker 5: of the challenges that foreign businesses and investors are carrying
Speaker 5: two different messages coming out of Beijing. You know, there's
Speaker 5: the message that is really, as she did last night,
Speaker 5: quite explicitly, China is open for business. China welcomes foreign investors,
Speaker 5: and that's been really consistently over the past few months.
Speaker 5: But at the same time, what they are seeing in
Speaker 5: terms of actual policies is a continued you know, continuation
Speaker 5: of national security concerns trumping economic concerns, and so I
Speaker 5: think from their perspective that still leads to an uncertain
Speaker 5: environment because you're never really sure which message is going
Speaker 5: to take prominence at that moment in time.
Speaker 4: I just state the obvious.
Speaker 2: I mean, the UK has skin in this game, right,
Speaker 2: I mean, America and China are the first and second
Speaker 2: biggest in terms of our bilateral trade, two way trade.
Speaker 2: But you can see it in James Cleverly, who was
Speaker 2: our Foreign secretary and now he's our Home Secretary, but
Speaker 2: he went to China and became the first to get
Speaker 2: to visit China in five years. Partly because this kind
Speaker 2: of double think that loads of countries are trying to do,
Speaker 2: and we've seen it with Biden in the last twenty
Speaker 2: four hours, trying to on the one hand demonstrate they
Speaker 2: know the need for caution domestic for domestic political reasons
Speaker 2: but also national security reasons. On the other hand, it
Speaker 2: is big economic fry and so you have to keep
Speaker 2: that kind of interaction going.
Speaker 4: It is difficult politically in the UK.
Speaker 2: As well as it is in America though, you know,
Speaker 2: you can see already the reaction to David cameron appointment
Speaker 2: as the new Foreign Secretary, that concern and worry about
Speaker 2: his period eight years ago now of a golden age
Speaker 2: in China, U K relationships and people feeling that a
Speaker 2: lot has changed since then.
Speaker 1: But I feel like he's also kept some times right
Speaker 1: with China, and so I wonder whether they were Cameron, Yeah,
Speaker 1: David Cameron, and so I don't know what again I saw.
Speaker 3: I mean, was it the People's Daily or one of
Speaker 3: the one of the Chinese newspapers controlled by the Communist Party,
Speaker 3: like they all are celebrating his returners foreign sectary sort
Speaker 3: of indicating warmer relations to come with Britain teams. With
Speaker 3: this summit in San Francisco, it feels like we're in
Speaker 3: a very different place now than we were under Trump,
Speaker 3: for sure, but in the last or at least for
Speaker 3: the last few.
Speaker 2: Years, well, we are in a different position. But I
Speaker 2: think that probably happened David Cameron regardless. I think we
Speaker 2: were already inching that way with the James Coverly visit,
Speaker 2: and you've obviously we saw the Chinese invited to the
Speaker 2: AI summit in the UK.
Speaker 4: What is it now, two weeks ago? Whatever was?
Speaker 2: But so I think we were going that way anyway,
Speaker 2: and I think if you listen to the UK government
Speaker 2: talking about it now, they're quite robust in.
Speaker 4: Their sort of a third way. Really that's the only
Speaker 4: way you can.
Speaker 2: You know, it's not kind of sort of euphoria and
Speaker 2: pub visits of She's visit to the UK during David
Speaker 2: Cameron's early prime ministership now around twenty ten, which started
Speaker 2: in twenty ten. But so it's not that kind of
Speaker 2: you know, su uplands. But it's also a very pragmatic
Speaker 2: I suppose that's a keyword. Pragmatic sense that you know,
Speaker 2: we need we need to continue trading and interacting, but
Speaker 2: also you know, not just bread and butter and money.
Speaker 2: We need on climate change, on Ukraine and AI and
Speaker 2: a host of issues you need, you need to engage
Speaker 2: with China.
Speaker 3: Jennifer, what is the economic then outcome of all of this?
Speaker 3: And at Bloomberg Economics, do we see the dial moving
Speaker 3: at all with some of the thawings that we've kind
Speaker 3: of talked about and since this week perhaps helped down
Speaker 3: the line with a bit more effort from the UK
Speaker 3: and maybe by down the trap perhaps the Opini Union.
Speaker 3: Are we going to see the global economy benefit from
Speaker 3: these sorts of big geo political moments.
Speaker 5: I think that there will be a certain warming effector
Speaker 5: company its restoring effect, that this meeting will have given
Speaker 5: the positive vibes coming out of it. I think the
Speaker 5: only caution I would urge is that we're not seeing
Speaker 5: any fundamental shift in how these two countries are approaching
Speaker 5: each other, And in particular, it seems pretty clear President
Speaker 5: she went in with a message for President Biden about
Speaker 5: US technological and economic policy towards China that he've used
Speaker 5: this problematic and Biden seemed to reinforce that the administration
Speaker 5: is not going to change its to birch So I
Speaker 5: don't think we're likely to see any major changes in
Speaker 5: how the US actually deals with China economically or China's
Speaker 5: access to key technology. But I do think that again,
Speaker 5: for folks who are concerned about the trajectory of US
Speaker 5: China ties, I think this will send a reassuring signal
Speaker 5: for at least the short term. The only other thing
Speaker 5: I had flag is I ten be perhaps the pessimist,
Speaker 5: so I'm always looking over the Horizon for dark Clouds,
Speaker 5: and I keep in mind that, you know, we had
Speaker 5: a similar vibe coming out as the two leaders meeting
Speaker 5: last year in Indonesia, and only a couple months later
Speaker 5: things were thrown very off track by the Chinese by
Speaker 5: Balloon Overfly. In the US and beyond even another incidance
Speaker 5: like that, the US election is coming up, and I
Speaker 5: think domestic political pressures are going to continue to build
Speaker 5: in the US to take a tougher approach to China,
Speaker 5: and that could exert its own kind of friction on
Speaker 5: a relationship.
Speaker 3: Jennifer Welch, thank you so much joining us from the
Speaker 3: Airport Lounge.
Speaker 1: Thank you for having me, Thanks for listening to this
Speaker 1: week's in the City. We'll be back next week, but
Speaker 1: in the meantime, if you like our show, please head
Speaker 1: on over to wherever you listen to podcasts, give it
Speaker 1: five stars, review and subscribe. This episode was hosted by
Speaker 1: me froncin Laqua, David Merritt, and a elecros Stratton. It
Speaker 1: was produced by Somersati, additional editing by Blake Maples. Special
Speaker 1: thanks to Jennifer Welch,