Daybreak Weekend: Jackson Hole Preview, UK Immigration, Tim Walz’s China History

Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg Daybreak Weekend, 0:00:13.520 --> 0:00:15.480 our global look at the top stories in the coming 0:00:15.480 --> 0:00:18.280 week from our Daybreak anchors all around the world. Straight 0:00:18.320 --> 0:00:20.000 ahead on the program, and look at what some of 0:00:20.079 --> 0:00:22.919 the top fed officials may have to say at this 0:00:23.040 --> 0:00:26.840 year's Jackson Hole Symposium. I'm Tom Busby in New York. 0:00:27.360 --> 0:00:31.920 I'm Karlin Hepburn London, where we're dissecting the UK's immigration dilemma. 0:00:32.479 --> 0:00:35.920 I'm Doug Prisoner looking at Tim Walls's relationship with China 0:00:36.000 --> 0:00:39.040 as he prepares to take the stage at the Democratic 0:00:39.120 --> 0:00:39.920 National Convention. 0:00:41.520 --> 0:00:45.520 That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 0:00:45.560 --> 0:00:49.360 Eleve Them three Own New York, Bloomberg ninety nine to one, Washington, DC, 0:00:49.680 --> 0:00:53.720 Bloomberg one O six one, Boston, Bloomberg nine sixty, San Francisco, 0:00:53.960 --> 0:00:58.160 DAB Digital Radio, London, Sirius XM one nineteen and around 0:00:58.240 --> 0:01:00.760 the world on Bloomberg Radio dot Com. Come and buya 0:01:00.800 --> 0:01:02.080 the Bloomberg Business app. 0:01:06.120 --> 0:01:08.319 Good day to you. I'm Tom Busby. We begin today's 0:01:08.360 --> 0:01:11.480 program with a look at the Annual Economic Policy Symposium 0:01:11.520 --> 0:01:14.959 in Jackson Hall, Wyoming this week the Federal Reserve Bank 0:01:15.000 --> 0:01:20.520 of Kansas City will host dozens of central bankers, policymakers, academics, economists. 0:01:19.800 --> 0:01:20.840 From all over the world. 0:01:21.200 --> 0:01:24.880 FED Chair J Powell expected to give remarks on Friday, 0:01:24.880 --> 0:01:27.360 and the big questions will he set the table for 0:01:27.440 --> 0:01:30.200 a September interest rate cut and how big a cut 0:01:30.280 --> 0:01:33.560 could we see? For more, we're joined by Michael McKee, 0:01:33.600 --> 0:01:38.360 Bloomberg International Economics and Policy correspondent. Well, Michael Powell has 0:01:38.360 --> 0:01:40.800 said all along any change in rates will be a 0:01:40.959 --> 0:01:44.520 data driven decision. Let's talk about the data and what 0:01:44.520 --> 0:01:45.760 you're expecting this week. 0:01:45.959 --> 0:01:50.160 Well, we've got data driving the economy towards a rate 0:01:50.240 --> 0:01:54.320 cut in September. This past week, we saw inflation come 0:01:54.360 --> 0:01:59.559 down significantly and also symbolically as the headline CPI number 0:01:59.600 --> 0:02:01.720 comes in two point nine percent, the first time it's 0:02:01.720 --> 0:02:05.040 been below three percent since the beginning of the pandemic. 0:02:05.160 --> 0:02:08.919 So good news on the inflation front. And then we 0:02:09.000 --> 0:02:12.880 saw late in the week the retail sales numbers come 0:02:12.919 --> 0:02:17.360 in strong, stronger than expected certainly, and Americans are still spending. 0:02:17.400 --> 0:02:20.040 So the idea of a recession is kind of off 0:02:20.080 --> 0:02:23.799 the table, but this kind of lines everything up for 0:02:23.960 --> 0:02:27.560 a rate cut in September. Now there's more data to 0:02:27.600 --> 0:02:31.600 come in September, but no significant data before Jay Powell speaks. 0:02:32.040 --> 0:02:34.560 Let me take a step back. Two weeks ago, we 0:02:34.600 --> 0:02:38.120 saw the Dow tumble one thousand points. Some people on 0:02:38.160 --> 0:02:40.359 Wall Street, yes, there was the carry trade in Japan, 0:02:40.400 --> 0:02:42.720 which was a big part of that. But also some 0:02:42.760 --> 0:02:45.000 people on Wall Street said it's because the Fed missed 0:02:45.000 --> 0:02:48.959 the boat on just prior to that, leaving rates unchanged 0:02:48.960 --> 0:02:51.280 for I think the eighth meeting in a row. But 0:02:51.400 --> 0:02:54.880 the Fed didn't budge, no emergency cut, no panicking. What 0:02:54.919 --> 0:02:57.760 does this tell you about Jay Powell and the Fed 0:02:58.000 --> 0:03:01.520 that they just ignore the noise and carry on. 0:03:01.800 --> 0:03:04.320 How did you survive the great recession of August date? 0:03:06.600 --> 0:03:09.080 It tells you that the Fed is not the market. 0:03:09.320 --> 0:03:11.040 The market is trying to adjust on a day by 0:03:11.080 --> 0:03:14.560 day basis, and people get into herd behavior or panic behavior, 0:03:14.960 --> 0:03:18.240 and we see that all the time. The Fed is 0:03:18.800 --> 0:03:21.280 going to be much slower to react. First of all, 0:03:22.240 --> 0:03:25.520 they don't really care whether the market goes up or 0:03:25.639 --> 0:03:28.680 down as long as you can still trade. If the 0:03:28.800 --> 0:03:33.160 market is functioning, then the Fed tends to leave it alone. 0:03:33.240 --> 0:03:35.240 The only time they really jump in with any kind 0:03:35.240 --> 0:03:38.440 of emergency help is when the market sees up because 0:03:38.480 --> 0:03:41.520 people won't trade, and that's not the case. It wasn't 0:03:41.520 --> 0:03:44.560 the case that week either. It was just that those 0:03:44.600 --> 0:03:47.360 who were trading were losing money, and that's not the 0:03:47.360 --> 0:03:50.400 Fed's job to keep them to keep them there. And 0:03:50.440 --> 0:03:52.520 what's funny is you see we saw this at the 0:03:52.520 --> 0:03:54.760 beginning of the year, six rate cuts, price did and 0:03:54.760 --> 0:03:57.400 then we got down to like one, and then we 0:03:57.440 --> 0:04:00.440 got down to is the Fed going to cut it all? 0:04:00.600 --> 0:04:02.720 And then all of a sudden we had people panicking 0:04:02.720 --> 0:04:05.680 and saying we're going to get four or five rate cuts, 0:04:06.000 --> 0:04:09.560 and the Fed through all this hasn't changed anything. The 0:04:09.600 --> 0:04:11.000 interest rate has stayed the same. 0:04:12.000 --> 0:04:12.160 Now. 0:04:12.200 --> 0:04:14.280 I know you mentioned the jobs report though, or what 0:04:14.320 --> 0:04:17.040 we're going to get before the next meeting September sixth. 0:04:17.040 --> 0:04:19.320 We're going to get the August jobs report. I know 0:04:19.360 --> 0:04:21.960 it's far off, but we have seen what the FED 0:04:22.080 --> 0:04:24.960 was expecting, a little slow down in job creation. Are 0:04:25.000 --> 0:04:27.440 you expecting more of the same for the month of August. 0:04:27.960 --> 0:04:28.400 We are. 0:04:28.600 --> 0:04:30.520 I've talked to a number of economists. It's too early 0:04:30.560 --> 0:04:33.280 for them to make forecasts, but basically they're thinking that 0:04:33.320 --> 0:04:37.039 we are going to rebound from the July numbers and 0:04:37.760 --> 0:04:40.560 go back up in terms of job creation and maybe 0:04:41.240 --> 0:04:45.560 even go down in terms of the unemployment rate. But 0:04:45.640 --> 0:04:48.359 they don't have a great firm grasp on number. But 0:04:48.400 --> 0:04:51.400 they do think that we may not go above job 0:04:51.440 --> 0:04:54.200 creation as we saw it for much of this year, 0:04:54.600 --> 0:04:58.080 but that it will be higher than the number we 0:04:58.120 --> 0:04:59.039 saw in July. 0:04:59.400 --> 0:05:02.880 Well that's good. Now, eight meetings in a row, rates 0:05:02.920 --> 0:05:06.080 have been left unchanged. The last change in rates a 0:05:06.160 --> 0:05:08.960 hike in July of last year. The last cut was 0:05:09.080 --> 0:05:11.680 over four years ago, at the start of the pandemic, 0:05:11.839 --> 0:05:16.200 so historically there hasn't been much movement since then, you know, 0:05:16.320 --> 0:05:21.680 little incremental certainly the past year. What do you hear 0:05:21.800 --> 0:05:25.360 from not just Jerome Powell, but other FED governors and 0:05:25.440 --> 0:05:30.200 presidents about what's coming up in September and what are 0:05:30.240 --> 0:05:34.640 the hints allegations of what we can expect to see. 0:05:34.680 --> 0:05:38.560 Well, they basically are kind of united around the idea 0:05:38.600 --> 0:05:41.840 that it is almost time to cut interest rates. There's 0:05:41.880 --> 0:05:45.520 some difference between them in terms of whether they really 0:05:45.560 --> 0:05:47.880 think they need to go in September or whether they 0:05:48.080 --> 0:05:51.080 could wait. But I think when you get to the 0:05:51.160 --> 0:05:54.760 September eighteenth meeting. If we don't see any big data 0:05:54.800 --> 0:05:58.320 surprises between now and then, you'll get another unanimous decision, 0:05:59.480 --> 0:06:03.040 because there isn't a real argument for keeping rates as 0:06:03.160 --> 0:06:06.640 high as they are right now. The housing industry would 0:06:06.680 --> 0:06:10.719 certainly love to see rates go down. That's the one 0:06:10.880 --> 0:06:14.720 lagging part of the economy. And so if they get 0:06:14.720 --> 0:06:19.560 December September eighteenth, I think they start the process, and 0:06:19.640 --> 0:06:22.760 probably not with a fifty basis point cut, but they 0:06:22.800 --> 0:06:26.400 may cut two more times this year and into next 0:06:26.480 --> 0:06:29.360 year as they feel their way toward what a neutral 0:06:29.440 --> 0:06:30.039 level will be. 0:06:30.880 --> 0:06:32.960 Now a little plug here, Michael, you're going to be 0:06:33.200 --> 0:06:35.480 in Jackson hole. Who are you going to speak with 0:06:35.560 --> 0:06:36.279 this coming week? 0:06:37.160 --> 0:06:42.200 I'm Tom Keen. He's welcome, He's welcome. We're going to 0:06:42.240 --> 0:06:45.880 speak with raphae Albostik from Atlanta, who justice last week 0:06:45.920 --> 0:06:49.440 said he's open to a September rate cut. We'll talk 0:06:49.480 --> 0:06:51.800 to Austin Goolsby from Chicago, who's been one of the 0:06:51.880 --> 0:06:57.400 more dubbish and interested in seeing a rate cut. And 0:06:57.480 --> 0:07:00.800 we'll talk to Patrick Harker from Philadelphia, who has been 0:07:01.400 --> 0:07:05.040 somewhat quiet about his views, but I think he's going 0:07:05.120 --> 0:07:07.200 to be on board with the idea of a rate 0:07:07.279 --> 0:07:08.880 cut as well. We're also going to talk to Est 0:07:08.960 --> 0:07:12.760 George and lare Mester, two familiar names who are no 0:07:12.840 --> 0:07:16.880 longer at the FED, but are still invited to the conference, 0:07:16.960 --> 0:07:19.720 so they'll give us their views from the outside of 0:07:19.760 --> 0:07:20.760 what the FED could be doing. 0:07:20.800 --> 0:07:20.880 Well. 0:07:20.920 --> 0:07:22.120 It's always nice to be invited. 0:07:22.160 --> 0:07:22.320 Well. 0:07:22.320 --> 0:07:26.720 Our thanks to Michael McKee, Bloomberg International Economics and Policy correspondent. 0:07:27.320 --> 0:07:29.880 While we wait for that Jackson Hole summit, we focus 0:07:29.960 --> 0:07:32.880 now a bit more on the US consumer now. Last week, 0:07:32.920 --> 0:07:36.560 after a strong Q two earnings report, Walmart raised its 0:07:36.600 --> 0:07:39.560 sales guidance for the full year, expecting even more bargain 0:07:39.600 --> 0:07:42.160 hunting shoppers to head to its stores and its website. 0:07:42.640 --> 0:07:46.600 This week. A top discount competitor, Target Stores, reporting second 0:07:46.640 --> 0:07:50.320 quarter earnings on Wednesday. That follows a disappointing first quarter. 0:07:50.400 --> 0:07:52.480 The question though, how is the chain holding up in 0:07:52.480 --> 0:07:55.960 this high inflation environment? What will its results tell us 0:07:55.960 --> 0:07:58.080 about the health of the US consumer? And for more 0:07:58.160 --> 0:08:01.640 on that and what to expect, Joined by Jennifer Bartasha's 0:08:01.880 --> 0:08:06.960 Bloomberg Intelligence Senior analyst Retail, Staples and packaged Foods. So 0:08:07.120 --> 0:08:10.040 Jennifer A. Lot of consumers. Well, they are spending money, 0:08:10.120 --> 0:08:13.760 but they want bargains. My question to you are they 0:08:13.760 --> 0:08:15.840 finding them at Target? And what do you expect to 0:08:15.880 --> 0:08:17.400 see in its earnings report. 0:08:17.720 --> 0:08:20.480 It's a question at the top of everyone's minds. So 0:08:20.680 --> 0:08:23.880 with regards to Target, one of the things to remember 0:08:24.040 --> 0:08:26.920 is that they have a much easier comparison in second 0:08:27.000 --> 0:08:29.960 quarter than they did a year ago because last year 0:08:29.960 --> 0:08:31.840 at this time, it was the quarter where they had 0:08:31.880 --> 0:08:35.240 the backlash from all the consumer boycotts with regards to 0:08:35.280 --> 0:08:38.480 their Pride assortment. So they had a very poor quarter 0:08:38.640 --> 0:08:41.240 a year ago, So the comparisons are a lot easier 0:08:41.600 --> 0:08:45.840 now that said, consumers are still seeking value. One of 0:08:45.840 --> 0:08:47.880 the things that Target has done is they made an 0:08:47.880 --> 0:08:51.800 announcement in July about rolling back prices, especially on food 0:08:51.800 --> 0:08:54.880 and essentials, and that seemed to resonate with people. So 0:08:55.000 --> 0:08:57.520 hopefully we'll see some stronger traffic into stores for the 0:08:57.559 --> 0:08:58.160 second quarter. 0:08:59.240 --> 0:09:01.760 Now, I think the of the Target customer for many 0:09:01.760 --> 0:09:04.480 people a little bit of a higher earner than your 0:09:04.480 --> 0:09:08.200 typical Walmart customer. How do you think Target compares to Walmart? 0:09:08.520 --> 0:09:12.760 It's customer, it's offerings, its prices, price points. 0:09:13.280 --> 0:09:17.360 Historically there was a gap between the typical Target consumer, 0:09:17.400 --> 0:09:20.760 which was a little bit higher income versus the Walmart consumer, 0:09:20.840 --> 0:09:23.600 and their core consumer was usually associated with the lower 0:09:23.600 --> 0:09:27.079 to middle lower income bands. But we've heard Walmart talk 0:09:27.120 --> 0:09:30.040 about the last two quarters that reported earnings that they're 0:09:30.040 --> 0:09:34.000 pulling more higher income households into its sphere and that 0:09:34.120 --> 0:09:37.440 more higher income households are shopping at Walmart. That is 0:09:37.480 --> 0:09:39.679 a bit of a concern for Target because that's kind 0:09:39.720 --> 0:09:43.120 of creeping into what has traditionally been their core consumer. 0:09:43.559 --> 0:09:46.120 So in order to combat that, it really comes down 0:09:46.160 --> 0:09:48.720 to things that Target is good at but just needs 0:09:48.760 --> 0:09:52.439 to continue to execute well. Private label and their fashion, 0:09:52.600 --> 0:09:56.280 you know, being fashion forward, being exactly what consumers want 0:09:56.280 --> 0:09:58.640 before they realize they need it. Those are the things 0:09:58.679 --> 0:10:01.560 that historically have made Target it really stand out from Walmart. 0:10:02.280 --> 0:10:05.000 And you know, it's a little bit hard when discretionary 0:10:05.000 --> 0:10:07.960 spending is still a bit soft, but that's really where 0:10:07.960 --> 0:10:10.880 they differentiate and can continue to differentiate from Walmart. 0:10:11.080 --> 0:10:13.720 Yeah, and I think their brands is Market, Pantry, Good 0:10:13.720 --> 0:10:16.600 and Gather. Then they have home furnishings like deal Worthy, 0:10:17.040 --> 0:10:18.800 really a big draw I think for a lot of. 0:10:18.720 --> 0:10:22.440 Consumers it really is. And you know, part of what 0:10:22.440 --> 0:10:25.600 what Target is very good at is being fashion forward, 0:10:25.600 --> 0:10:28.360 whether that's in a parallel whether that's in home decor 0:10:28.679 --> 0:10:32.040 whether that's in food and finding things that are you know, 0:10:32.280 --> 0:10:34.400 the developing trends, I think is the way you want 0:10:34.440 --> 0:10:36.880 to say it. And so as long as they can 0:10:36.920 --> 0:10:39.920 stay agile and continue to meet those that is a 0:10:40.000 --> 0:10:43.400 draw for their consumers. One of the things that could 0:10:43.400 --> 0:10:46.640 be in an area of concern for this quarter is 0:10:46.679 --> 0:10:49.040 that in the last three quarters, beauty has been sort 0:10:49.080 --> 0:10:52.640 of something that Target has highlighted. We ran a Bloomberg 0:10:52.679 --> 0:10:56.480 Intelligence Survey consumer survey on beauty and for the first 0:10:56.480 --> 0:11:00.040 time in multiple years, we've seen softening in demand and 0:11:00.240 --> 0:11:02.800 for beauty. So it will be interesting to see if 0:11:02.800 --> 0:11:06.520 that translates through to Target as well. But it is 0:11:06.640 --> 0:11:10.439 kind of a broader indicator that that category, which has 0:11:10.640 --> 0:11:12.839 been pretty strong for Target, is starting to show a 0:11:12.840 --> 0:11:13.720 little bit of weakness. 0:11:13.840 --> 0:11:17.719 Yeah, the lipstick indicator in the economy, that's not that scary. Well, 0:11:17.760 --> 0:11:20.400 I have another question about Target, and it's about e commerce. 0:11:20.679 --> 0:11:23.600 You know, obviously Amazon is the king, but are they 0:11:23.640 --> 0:11:26.280 in the same league as some of their competitors. Are 0:11:26.360 --> 0:11:27.480 they a little behind? 0:11:27.840 --> 0:11:31.320 Well, Target executes very well on e commerce, but they 0:11:31.400 --> 0:11:33.800 have a different strategy. They're not trying to conquer the 0:11:33.840 --> 0:11:37.640 world with regards to e commerce. So Target traditionally has 0:11:37.800 --> 0:11:41.400 been very has taken an approach it's more curated. So 0:11:41.679 --> 0:11:44.520 it's a curated a selection that's on their website. So 0:11:44.960 --> 0:11:48.560 although they have third party sellers, it's only items that 0:11:48.600 --> 0:11:50.960 they think their consumers will want, versus kind of those 0:11:51.040 --> 0:11:54.160 endless aisles that you expect from Amazon or even from Walmart. 0:11:54.880 --> 0:11:58.240 And so by kind of keeping that that tailored environment, 0:11:58.679 --> 0:12:01.520 it's easier for them to dish up results when people 0:12:01.559 --> 0:12:04.720 are searching for things that are relevant to them. So 0:12:04.840 --> 0:12:09.120 that has helped make targets e commerce platform pretty successful. 0:12:09.920 --> 0:12:11.839 And the other thing that is a strength for them 0:12:11.880 --> 0:12:13.800 is that a lot of those orders that they get 0:12:13.800 --> 0:12:17.640 are fulfilled in stores. When they fulfill orders from stores, 0:12:17.679 --> 0:12:21.000 it means that the product is actually closer to the customer, 0:12:21.200 --> 0:12:23.560 which means it's cheaper to deliver it to the customer, 0:12:23.640 --> 0:12:26.960 and that helps make the profitability of e commerce a 0:12:27.000 --> 0:12:30.400 lot better. And so those are sort of the strengths 0:12:30.400 --> 0:12:33.840 that Target has and I think that investors appreciate that 0:12:33.880 --> 0:12:37.360 they're doing it. Their own way and not just trying 0:12:37.400 --> 0:12:40.920 to chase any sale at the cost of the profitability 0:12:40.960 --> 0:12:41.520 of the business. 0:12:41.760 --> 0:12:44.080 Well a lot to look forward to. Second quarter earnings 0:12:44.080 --> 0:12:47.559 from Target out this Wednesday are thanks to Jennifer bartashis 0:12:47.640 --> 0:12:51.959 Bloomberg Intelligence Senior Analyst, Retail, Staples and packaged Food. Coming 0:12:52.000 --> 0:12:54.720 up on Bloomberg day Break weekend, we'll dissect the UK's 0:12:54.960 --> 0:13:11.200 immigration dilemma. I'm Tom Busby and this is Bloomberg. This 0:13:11.280 --> 0:13:13.600 is Bloomberg Daybreak Weekend, our global look ahead at the 0:13:13.600 --> 0:13:16.200 top stories for investors in the coming week. I'm Tom 0:13:16.240 --> 0:13:18.880 Busby in New York. Up later on our program, we'll 0:13:18.920 --> 0:13:22.280 look at vice presidential candidate Tim Waltz's relationship with China 0:13:22.559 --> 0:13:25.079 as he prepares to take the stage at the Democratic 0:13:25.160 --> 0:13:28.840 National Convention. But first, the UK still reeling from its 0:13:28.880 --> 0:13:32.880 worst rioting in over a decade, fueled by anti immigrant sentiment. 0:13:33.200 --> 0:13:36.000 As even more arrivals are expected, it's become a major 0:13:36.000 --> 0:13:39.320 flashpoint for Prime Minister Keir Starmer's new government, which has 0:13:39.400 --> 0:13:42.080 promised to limit the number of new entrants to the country. 0:13:42.120 --> 0:13:45.000 For more, Let's go to London and bring in Bloomberg Daybreak. 0:13:45.000 --> 0:13:47.600 Europe banker Caroline hepger Tom. 0:13:47.800 --> 0:13:50.840 More than a thousand people have now been arrested following 0:13:50.880 --> 0:13:54.200 several days of anti immigrant disorder across the UK at 0:13:54.200 --> 0:13:57.360 the end of July and beginning of August. The rioting 0:13:57.480 --> 0:14:00.840 was sparked by the fatal stabbings of three young girls 0:14:01.080 --> 0:14:05.120 attending a Taylor Swift themed dance class in Southport, in 0:14:05.200 --> 0:14:07.760 the northwest of England on the twenty ninth of July. 0:14:08.640 --> 0:14:13.240 Misinformation about the attacker being a Muslim asylum seeker spread 0:14:13.320 --> 0:14:18.359 swiftly online and encouraged by far right activists and protesters. 0:14:18.640 --> 0:14:23.520 It resulted in days of anti immigration demonstrations that turned violent, 0:14:23.840 --> 0:14:29.080 targeting the police, migrant support facilities and mosques. Prime Minister 0:14:29.160 --> 0:14:32.800 Kirs Starmer has now placed an emphasis on speedy and 0:14:32.960 --> 0:14:36.840 tough punishment in a bid to restore calm That seems 0:14:37.080 --> 0:14:40.240 to have largely worked, but it remains to be seen 0:14:40.320 --> 0:14:43.800 how his Labor Party will approach the issue of migration, 0:14:44.120 --> 0:14:48.320 a political flashpoint over the last few years that successive 0:14:48.360 --> 0:14:52.920 governments have been forced to reckon with Bloomberg's EMEA Equalities 0:14:53.080 --> 0:14:57.480 editor Syrage Datu says that the recent disorder fueled by 0:14:57.520 --> 0:15:03.000 that online misinformation lay is bare the scale of the challenge. 0:15:02.400 --> 0:15:06.960 And very very quickly things online turned quite violent. And 0:15:07.000 --> 0:15:10.640 so you had that misinformation right from the start that 0:15:10.760 --> 0:15:13.760 largely at the beginning happened on X and then you 0:15:13.840 --> 0:15:20.000 started having groups organizing on different platforms, places like Telegram, 0:15:20.080 --> 0:15:25.440 places like discord where they're not necessarily available to their public. 0:15:26.320 --> 0:15:30.240 You really had a very quick virality of this misinformation 0:15:30.760 --> 0:15:33.920 that the key thing that happened in this time was 0:15:34.000 --> 0:15:36.840 that it played on the fears that people have, and 0:15:36.960 --> 0:15:39.120 very quickly y had that they're escalated into violence. 0:15:39.440 --> 0:15:41.160 How much do you think that foreign states have been 0:15:41.400 --> 0:15:44.320 interfering in this in this business, the. 0:15:44.320 --> 0:15:47.440 Government is very much looking into the idea of foreign 0:15:47.480 --> 0:15:50.280 interference and foreign involvement, and this is you know, this 0:15:50.360 --> 0:15:53.320 is not necessarily new. We know that our style states 0:15:53.360 --> 0:15:57.240 have been involved in missing and spreading sharing misinformation for 0:15:57.320 --> 0:15:59.680 some time. But what I will say is I spoke 0:15:59.720 --> 0:16:03.840 to a called Logically, a group that counters disinformation, and 0:16:03.880 --> 0:16:06.520 they spoke to me about a group called Channel three now, 0:16:06.600 --> 0:16:08.720 which is a fake news channel, and they were one 0:16:08.720 --> 0:16:11.680 of the first accounts on x to share this fake name. 0:16:12.480 --> 0:16:15.600 And it started out as a YouTube channel that was 0:16:15.640 --> 0:16:19.120 sharing Russian home videos. It then made the shift to 0:16:19.400 --> 0:16:24.360 Pakistani content. It went through a cycle of different branding, 0:16:24.560 --> 0:16:28.520 different fake news organization names, and then now it's registered 0:16:28.560 --> 0:16:30.880 in Lithuania. And what they said to me is it 0:16:31.000 --> 0:16:36.120 mirrors the tactics of a Russian disinformation campaign. But then 0:16:36.240 --> 0:16:40.280 cautioned and added, but the problem is that real people, 0:16:40.640 --> 0:16:43.840 especially in their ways, people who are extremely online people 0:16:44.520 --> 0:16:47.880 tend to post online in a way that mirrors bots. 0:16:48.000 --> 0:16:50.160 That's why it's so hard to retell who's behind some 0:16:50.280 --> 0:16:50.480 of this. 0:16:51.200 --> 0:16:54.240 What about Elon Musk and his role you mentioned x 0:16:54.800 --> 0:16:59.040 he has found the flames one can argue of extremism 0:16:59.120 --> 0:17:01.520 in the UK. What's his involvement here? 0:17:03.320 --> 0:17:06.919 This is a really interesting one. So obviously, even masked 0:17:07.000 --> 0:17:11.320 the owner effects, he's made really provocative posts on his 0:17:11.359 --> 0:17:16.920 own platform saying that civil war is inevitable. Henry Parker 0:17:16.960 --> 0:17:21.560 from Logically told me that actually he's really going against 0:17:21.560 --> 0:17:24.560 the terms and conditions off his own platform. This, you know, 0:17:24.600 --> 0:17:28.520 this isn't really this sort of language isn't acceptable. But 0:17:28.560 --> 0:17:30.040 of course he has the owners. I don't think they're 0:17:30.040 --> 0:17:33.119 going to delete his account. But what we have seen recently, 0:17:33.160 --> 0:17:36.600 people like Tommy Robinson whose real name is Stephen Yaxley Lennon, 0:17:37.200 --> 0:17:40.879 who's been inspiring a lot of the protests in person, 0:17:40.960 --> 0:17:45.240 but while he's been abroad reportedly in Cypress on holiday, 0:17:45.880 --> 0:17:47.920 he wasn't allowed on Twitter. Just a few years ago 0:17:48.640 --> 0:17:51.520 he was banned and he's been allowed back on x 0:17:52.040 --> 0:17:55.920 so I think Mask's role has been twofold. It's not 0:17:56.040 --> 0:18:00.000 just potentially, you know, getting into clashes with Prime Minie, 0:18:00.840 --> 0:18:03.320 but also the way that he has led his company. 0:18:03.800 --> 0:18:06.600 Something that you must posted about people being arrested for 0:18:06.680 --> 0:18:10.840 social media posts, people being arrested on the Communications Act 0:18:10.920 --> 0:18:14.040 for posting on social media. But this is a controversial error, 0:18:14.040 --> 0:18:16.840 isn't it. Can the UK really police the Internet in 0:18:16.880 --> 0:18:17.280 this way? 0:18:18.119 --> 0:18:20.919 Yeah? Again, this is a of course it's going to 0:18:20.920 --> 0:18:23.719 be controversial. I guess it comes down to the idea 0:18:23.880 --> 0:18:29.800 that should incitement of hatred only apply in person or 0:18:29.880 --> 0:18:33.399 should you be charged for incitement of hatred wherever it happens. 0:18:33.400 --> 0:18:36.800 And obviously the Communications Act means that you know, and 0:18:36.840 --> 0:18:40.399 the government decided that it should be so that it's 0:18:40.440 --> 0:18:42.679 not necessarily it's not really new, something that's been happening 0:18:42.680 --> 0:18:46.479 for quite a while, but obviously in situations like this, 0:18:46.600 --> 0:18:49.560 where there are inflamed tensions where we do have violence. 0:18:50.160 --> 0:18:53.919 Perhaps we're hearing about these charges being made more whereas 0:18:53.960 --> 0:18:56.560 in normal circumstances it just happens behind the scenes. I 0:18:56.560 --> 0:18:58.679 should terrify you know that the people who have been 0:18:58.760 --> 0:19:01.960 charged on this, who have been saying things like go 0:19:02.000 --> 0:19:05.360 and burn hotels that have asylums because in them it's 0:19:05.400 --> 0:19:08.960 not language that is it's not tempered language. Obviously you 0:19:08.960 --> 0:19:11.919 know that it is quite a violent language. 0:19:12.200 --> 0:19:15.639 That was Sirage Datu speaking to me on the Bloomberg 0:19:15.720 --> 0:19:21.120 UK Politics program. Well aside from questions about social integration, 0:19:21.400 --> 0:19:26.159 immigration is also heavily tied to the UK's economic performance. 0:19:26.640 --> 0:19:29.720 Just last month, the Confederation for British Industry, the main 0:19:29.840 --> 0:19:34.600 business lobby here, one that curves on migration could hinder 0:19:34.640 --> 0:19:39.160 the country's economic outlook. So what will the government's approach 0:19:39.359 --> 0:19:42.800 be to this issue. Kirs Starmer has talked about wanting 0:19:42.880 --> 0:19:46.520 to quote smash the gangs, quite similar really to Rishi 0:19:46.600 --> 0:19:50.520 Sunac's stop the boat's message when it comes to people 0:19:50.720 --> 0:19:54.560 who are coming illegally to Britain. But the new government 0:19:54.600 --> 0:19:58.720 has yet to settle on its overall migration policy. Since 0:19:58.760 --> 0:20:03.080 the landslide elect victory of July. Join me now to 0:20:03.160 --> 0:20:06.760 discuss this in greater depth is Bloomberg's UK economics reporter 0:20:07.080 --> 0:20:11.240 Lucy White, Lucy Fogods, have you on the program. There 0:20:11.280 --> 0:20:16.400 are various different kinds of migration statistics and that can 0:20:16.480 --> 0:20:18.439 get a lot of people into a lot of trouble 0:20:18.560 --> 0:20:22.440 very quickly. What do you think though, that the migration 0:20:22.680 --> 0:20:26.159 numbers overall are looking like for the UK and the 0:20:26.240 --> 0:20:27.800 debate in Britain at the moment. 0:20:28.400 --> 0:20:30.960 So we had the last time we had migration data 0:20:30.960 --> 0:20:33.439 out that was from the Office for National Statistics, a 0:20:33.480 --> 0:20:37.200 big set of migration data, and that was around long 0:20:37.320 --> 0:20:41.480 term migration to the UK, and that showed migration falling 0:20:41.720 --> 0:20:44.800 to six hundred and eighty five thousand net migration, so 0:20:44.920 --> 0:20:48.080 that the total number of people coming in compared to 0:20:48.119 --> 0:20:50.600 those going out falling to six hundred and eighty five 0:20:50.640 --> 0:20:53.359 thousand in twenty twenty three from seven hundred and sixty 0:20:53.400 --> 0:20:56.399 four thousand a year earlier. That's obviously quite a big drop, 0:20:56.720 --> 0:21:00.040 but it's still showing migration at very high levels and 0:21:00.600 --> 0:21:03.400 away off the tens of thousands that David Cameron spoke 0:21:03.400 --> 0:21:05.199 about when he was trying to get elected back in 0:21:05.200 --> 0:21:09.400 twenty ten. Brexit has changed the type of migration coming 0:21:09.480 --> 0:21:12.000 into the UK. So before we tended to have a 0:21:12.000 --> 0:21:14.879 lot of European migrants coming to the UK, many of 0:21:14.880 --> 0:21:17.520 whom would fill you know, kind of more casual roles 0:21:17.560 --> 0:21:21.240 bar work and you know, hospitality as well as other roles. 0:21:21.840 --> 0:21:24.680 But while there's a huge focus on the small boats elements, 0:21:24.680 --> 0:21:28.240 as you just mentioned, they only constitute a tiny proportion 0:21:28.440 --> 0:21:31.520 of the people coming in to the UK. The vast 0:21:31.520 --> 0:21:33.720 majority of people who are now coming into the UK 0:21:33.960 --> 0:21:38.000 are through government approved routes, So that's work visas, that's 0:21:38.920 --> 0:21:42.080 through humanitarian routes, although that is falling off now. So 0:21:42.240 --> 0:21:44.239 that was such as you know, the people coming in 0:21:44.400 --> 0:21:47.920 due to conflict in Ukraine and conflict in Hong Kong. 0:21:48.840 --> 0:21:52.840 So what does the relationship then look like between immigration 0:21:53.160 --> 0:21:55.680 and economic performance in the UK. 0:21:56.040 --> 0:21:58.399 I mean, there's varying takes on this, depending on whose 0:21:58.440 --> 0:22:01.320 research you look at, and what data they are looking at, 0:22:01.840 --> 0:22:04.920 how they interpret it, what other factors they're taking into account. 0:22:05.320 --> 0:22:05.840 But it is. 0:22:05.840 --> 0:22:12.000 Widely accepted that migration does generally boost productivity in developed countries, 0:22:12.040 --> 0:22:15.480 so the value of work done per hour. Essentially it 0:22:15.520 --> 0:22:20.600 gives employers more choice over who they employ. You know, 0:22:20.600 --> 0:22:22.800 you've got you've got a bigger labor pool to look at, 0:22:22.880 --> 0:22:25.840 so you can you can pick and choose a little more. 0:22:26.640 --> 0:22:29.320 There is some worry that among some people, and you know, 0:22:29.359 --> 0:22:32.920 this is possibly what we saw inflaming some of those 0:22:33.000 --> 0:22:36.280 riots that you were talking about earlier, that this can 0:22:36.400 --> 0:22:40.719 lead to fewer job opportunities for people in the country 0:22:40.760 --> 0:22:44.280 and lower wages for people in the country. But according 0:22:44.280 --> 0:22:47.560 to the government's Migration Advisory Committee, who've looked at a 0:22:47.560 --> 0:22:50.840 lot of evidence on this historically, there's actually been very 0:22:51.000 --> 0:22:55.160 little evidence that migration does have a huge impact on wages. 0:22:56.200 --> 0:22:57.720 So what do you think it means then, for this 0:22:57.920 --> 0:23:00.560 still quite new Prime minister, I mean only about six 0:23:00.600 --> 0:23:03.879 weeks into his term of office, Kirs Starmer. I mean 0:23:03.880 --> 0:23:06.160 he's got to balance then the warnings that I mentioned 0:23:06.200 --> 0:23:10.520 from the CBI about curbs on migration hurting or stunting 0:23:10.560 --> 0:23:14.680 economic growth and then at the same time public services 0:23:14.960 --> 0:23:16.320 being very very stretched. 0:23:16.440 --> 0:23:18.639 I think Britain does have to face a reckoning at 0:23:18.640 --> 0:23:20.320 the moment. I mean, the truth is that we are 0:23:20.400 --> 0:23:23.640 hugely reliant on migrant workers in many sectors. I mean 0:23:23.960 --> 0:23:26.879 I spoke about the increase in the number of people 0:23:26.880 --> 0:23:29.320 coming for work. A huge number of those are coming 0:23:29.359 --> 0:23:33.520 on health and social care visas. These tend to be 0:23:33.600 --> 0:23:36.560 lower wages, lower paid jobs, you know, in the care sector, 0:23:37.240 --> 0:23:41.480 and we are hugely reliant on these people. If we're 0:23:41.480 --> 0:23:45.920 to raise wages and you know, encourage more British workers 0:23:45.960 --> 0:23:48.080 to work in this sector, that's going to take a 0:23:48.160 --> 0:23:52.200 huge amount of public funding and possibly a whole rejig 0:23:52.240 --> 0:23:55.920 of the social care system. So, I mean, Kirs Darma 0:23:55.960 --> 0:23:59.080 really does have a balancing act here. And I obviously 0:23:59.280 --> 0:24:04.080 migration does pose worries about pressure on public services. You know, 0:24:04.119 --> 0:24:07.120 there are more people who'll be wanting houses, more people 0:24:07.200 --> 0:24:11.280 who'll be wanting to use education, to use hospitals. But 0:24:11.520 --> 0:24:13.600 at the same time, you know, we do have to 0:24:13.640 --> 0:24:17.159 remember that migrants do also you know, kind of add 0:24:17.200 --> 0:24:20.520 to the demand in the economy, so will also be 0:24:20.640 --> 0:24:23.159 you know, kind of paying their taxes as well. So 0:24:23.640 --> 0:24:25.760 we do have to balance at the end of the day, 0:24:26.320 --> 0:24:30.240 whether we can afford to be less reliant on migrants. 0:24:30.280 --> 0:24:34.520 I suppose yeah, Well, especially with an aging population within 0:24:34.600 --> 0:24:37.360 the UK. I mean, the other big theme has been 0:24:37.440 --> 0:24:40.720 about kind of talent UK universities could be at risk 0:24:41.280 --> 0:24:45.399 from have been at risk from immigration and crackdowns that 0:24:45.560 --> 0:24:49.040 then deter foreign students. You know, that's long been the 0:24:49.119 --> 0:24:52.879 kind of golden goose for universities and colleges in the UK, 0:24:53.320 --> 0:24:56.119 you know, for an advanced economy like ohs tell us 0:24:56.119 --> 0:24:56.600 about that. 0:24:56.800 --> 0:24:59.360 Yeah, I mean, I've heard a lot of concerns from 0:24:59.440 --> 0:25:03.480 academics in universities. They are becoming more and more reliant 0:25:03.480 --> 0:25:05.840 as we've seen you know, kind of pressures on domestic 0:25:05.920 --> 0:25:09.160 funding for universities. They are becoming more and more reliant 0:25:09.320 --> 0:25:14.360 on the international students who are paying higher fees. And 0:25:14.880 --> 0:25:17.840 we're seeing a huge reduction in the number of students 0:25:17.880 --> 0:25:20.359 who are coming to use UK universities at the moment, 0:25:20.440 --> 0:25:24.800 since the government imposed a ban on most students bring 0:25:24.960 --> 0:25:28.359 their dependence into the country. That has for some people 0:25:28.400 --> 0:25:30.919 made it less attractive to come to a UK university 0:25:31.359 --> 0:25:34.680 when you're comparing that with you know, very good institutions 0:25:34.480 --> 0:25:37.360 in Europe, in the US where they might otherwise go. 0:25:37.880 --> 0:25:40.159 So there is a lot of concern within universities that 0:25:40.320 --> 0:25:43.160 on a global stage, we are becoming less competitive. 0:25:43.280 --> 0:25:47.280 It remains a potent topic, a huge you know, economic 0:25:47.800 --> 0:25:50.520 issue for Britain. As well many thanks to Bloomberg's UK 0:25:50.680 --> 0:25:54.119 economics reporter Lucy White. I'm Caroline Hepge here in London. 0:25:54.359 --> 0:25:57.280 You can catch us every weekday morning for Bloomberg Daybreak. 0:25:57.320 --> 0:25:59.840 You up beginning at six am in London. That's one. 0:26:00.000 --> 0:26:01.399 I am on Wall Street, Tom. 0:26:01.760 --> 0:26:04.679 Thank you, Caroline. And coming up on Bloomberg day Break Weekend, 0:26:04.720 --> 0:26:08.280 we'll look at Democratic vice presidential candidate Tim Waltz's relationship 0:26:08.640 --> 0:26:22.879 with China. I'm Tom Busby and this is Bloomberg. This 0:26:22.920 --> 0:26:25.280 is Bloomberg day Break Weekend, our global look ahead at 0:26:25.280 --> 0:26:27.880 the top stories for investors in the coming week. I'm 0:26:27.920 --> 0:26:31.160 Tom Busby in New York. The Democratic National Convention will 0:26:31.160 --> 0:26:34.960 take place in the week ahead. Democrats rallying around Kamala 0:26:34.960 --> 0:26:37.680 Harris and her running mate, Governor Tim Walts of Minnesota, 0:26:37.840 --> 0:26:41.080 who has a long history with China. Let's look now 0:26:41.119 --> 0:26:44.440 at how that relationship might play out during the campaign. 0:26:44.720 --> 0:26:47.600 Here's Bloomberg Daybreak Asia co host Doug Krisner. 0:26:48.040 --> 0:26:52.720 Tom. This connection goes back decades. Walls taught English in Foshan, China, 0:26:52.760 --> 0:26:55.600 in nineteen eighty nine and nineteen ninety. That city is 0:26:55.680 --> 0:26:59.240 in the southern Guangdong province and Walts was in China 0:26:59.280 --> 0:27:02.600 after the Ken Men's Square massacre in nineteen eighty nine. 0:27:02.680 --> 0:27:05.280 You know, he is the first person on a presidential 0:27:05.320 --> 0:27:09.800 ticket with experience of living in China since George H. W. Bush, 0:27:09.840 --> 0:27:12.719 who served as US ambassador to Beijing in the nineteen 0:27:12.760 --> 0:27:16.520 seventies and as a Minnesota congressman in two thousand and seven. 0:27:16.960 --> 0:27:19.920 Walls aligned with politicians on both sides of the aisle 0:27:20.119 --> 0:27:23.840 focused on China's weak human rights record. He often spoke 0:27:23.880 --> 0:27:27.000 affectionately about the Chinese people. As a member of the 0:27:27.000 --> 0:27:32.280 House Agriculture Committee, Walls was interviewed for Agripol's Communications in 0:27:32.359 --> 0:27:33.200 twenty sixteen. 0:27:33.640 --> 0:27:36.040 I lived in China, and as I said, I've been 0:27:36.040 --> 0:27:38.800 there about thirty times. But if someone tells you and 0:27:38.840 --> 0:27:40.879 they're an expert on China, they're probably not telling you 0:27:40.920 --> 0:27:43.680 the truth because it's complex country, but it's critically important 0:27:43.680 --> 0:27:46.200 for us. I don't fall into the category that China 0:27:46.280 --> 0:27:49.800 necessarily needs to be an adversarial relationship. I totally disagree, 0:27:49.800 --> 0:27:51.320 and I think we need to stand firm on what 0:27:51.320 --> 0:27:53.600 they're doing in the South China Sea, but there's many 0:27:53.680 --> 0:27:57.000 areas of cooperation that we can work on. 0:27:57.200 --> 0:28:00.280 That's Tim Walls speaking in twenty sixteen, and after he 0:28:00.320 --> 0:28:03.359 returned from China in nineteen ninety, he described the Chinese 0:28:03.400 --> 0:28:06.920 people to a local newspaper in Nebraska. He said, if 0:28:06.960 --> 0:28:10.119 they had proper leadership, there are no limits on what 0:28:10.200 --> 0:28:12.600 they could accomplish. He went on to say, they are 0:28:12.640 --> 0:28:16.880 such a kind, generous, capable people. I got reaction earlier 0:28:17.000 --> 0:28:20.160 from Michael Sobolik, he is senior fellow at the American 0:28:20.200 --> 0:28:21.359 Foreign Policy Council. 0:28:21.800 --> 0:28:25.040 Governor Walls tapped into something that is still true today 0:28:25.080 --> 0:28:28.760 in twenty twenty four, which is, the Chinese people are 0:28:28.800 --> 0:28:31.480 not the enemies of the American people at all, nor 0:28:31.560 --> 0:28:35.040 should they be. I've been to China as well, and 0:28:35.119 --> 0:28:40.920 I've experienced that same hospitality and generosity that Walls experienced 0:28:40.920 --> 0:28:43.520 when he was there too, and I think many Americans 0:28:43.560 --> 0:28:46.640 would attest to the same thing. The problem for Washington 0:28:46.720 --> 0:28:50.640 policymakers is not the Chinese people, it's the Chinese Communist Party. 0:28:51.000 --> 0:28:54.280 And that distinction is quite meaningful, and I am gratified 0:28:54.320 --> 0:28:57.160 greatly that Governor Walls recognizes that difference. 0:28:57.280 --> 0:29:00.360 That's an important distinction to make. But in terms of 0:29:00.440 --> 0:29:04.200 influencing policy, imagine a world where Kamala Harris is the 0:29:04.240 --> 0:29:07.320 next president. Is it the role of the vice president 0:29:07.360 --> 0:29:10.200 at all to kind of get involved with setting the agenda? 0:29:10.360 --> 0:29:13.400 So that's going to vary from administration to administration to 0:29:13.520 --> 0:29:15.920 be sure, but ultimately, if she wins, she is going 0:29:16.000 --> 0:29:19.360 to face this million dollar question in American foreign policy? 0:29:20.040 --> 0:29:23.800 Is China the Chinese Communist Party a potential competitor or 0:29:23.800 --> 0:29:27.920 an adversary? And Hijinping, the leader of China, is not 0:29:28.000 --> 0:29:30.920 really leaving America with much of a choice. We're going 0:29:31.000 --> 0:29:32.280 to have to choose one or the other. 0:29:32.480 --> 0:29:35.480 How do you imagine Beijing would react to this type 0:29:35.480 --> 0:29:39.920 of situation where you have someone in the administration who 0:29:39.960 --> 0:29:42.200 knows so much about China. 0:29:42.240 --> 0:29:45.840 I think they'll probably try to play this much like 0:29:45.960 --> 0:29:50.160 they have attempted to work with President Joe Biden and 0:29:50.400 --> 0:29:52.760 what not, just she at the most highest levels. 0:29:52.760 --> 0:29:56.240 But what Chinese diplomats will often do is try to 0:29:56.320 --> 0:30:01.000 fall back on mutual feelings of friendship and cooperation and 0:30:01.040 --> 0:30:05.840 shared cultural experiences to try to get American politicians to 0:30:05.960 --> 0:30:09.720 give a little bit on the competitive agenda. I am 0:30:09.880 --> 0:30:11.760 certain they will try to do the same thing with 0:30:11.880 --> 0:30:15.040 Walls if he assumes the Vice Presidency. In fact, as 0:30:15.120 --> 0:30:18.960 governor of Minnesota, he's already received some of those diplomatic overtures. 0:30:19.360 --> 0:30:21.960 How do you think he's going to frame the conversation 0:30:22.080 --> 0:30:24.040 around the South China Sea. 0:30:24.080 --> 0:30:27.160 So he's on record as a member of Congress saying 0:30:27.560 --> 0:30:30.720 that the United States needs to stand up to China 0:30:30.760 --> 0:30:33.600 and call out their illegal territorial claims in the South 0:30:33.680 --> 0:30:37.000 China see And listen, that's great. We need to hold 0:30:37.320 --> 0:30:41.280 the Chinese Communist Party accountable for their illegal actions with 0:30:41.320 --> 0:30:43.880 our rhetoric, but we are at a point in our 0:30:43.920 --> 0:30:47.719 security situation where we need to move beyond words. We 0:30:47.840 --> 0:30:52.360 need to start making the Chinese Communist Party pay for 0:30:52.600 --> 0:30:55.719 endangering the security of our allies and our partners and 0:30:55.760 --> 0:30:59.000 frankly American interests in the South China see. And this 0:30:59.080 --> 0:31:00.880 is the big question with Governor Wallas. 0:31:01.160 --> 0:31:01.720 He has a. 0:31:01.640 --> 0:31:05.480 Strong rhetorical record on human rights with China, but he hasn't, 0:31:05.600 --> 0:31:08.080 in the position of a representative, really been in a 0:31:08.160 --> 0:31:12.560 position to make those hard executive level decisions on how 0:31:12.560 --> 0:31:14.600 do you assess those tradeoffs, because if you want to 0:31:14.600 --> 0:31:17.520 hold them accountable, you're probably going to have to give 0:31:17.560 --> 0:31:21.360 a bit on the cooperative agenda with Beijing, and it's 0:31:21.600 --> 0:31:24.520 really unclear how he's going to make that calculation if 0:31:24.680 --> 0:31:25.560 he wins the selection. 0:31:25.680 --> 0:31:28.640 With Kamala Harris, he is Michael Soberlik, Senior Fellow at 0:31:28.680 --> 0:31:32.040 the American Foreign Policy Council. Joining me now for some 0:31:32.120 --> 0:31:36.280 discussion is Nick Waddams. He is Bloomberg US National Security 0:31:36.320 --> 0:31:39.800 Team leader. Nick is based in Washington, d C. Thanks 0:31:39.800 --> 0:31:41.640 for making time to chat with us, Nick, So I 0:31:41.720 --> 0:31:44.280 laid out a bit of the Walls backstory as it 0:31:44.320 --> 0:31:46.760 relates to China. Is there anything that you would like 0:31:46.800 --> 0:31:47.920 to add for context? 0:31:48.200 --> 0:31:53.200 A couple interesting things there. One, it is notable, amid 0:31:53.280 --> 0:31:57.280 all the questions about Tim Walls's attitude towards China, he 0:31:57.320 --> 0:32:02.280 got married on the anniversary of the Tieneman Square crackdown 0:32:02.920 --> 0:32:06.600 because he said he wanted to have a memorable anniversary date. 0:32:06.680 --> 0:32:10.080 But also I think that was meant as a sort 0:32:10.120 --> 0:32:14.440 of signal for himself that he did really side with 0:32:14.480 --> 0:32:17.800 the Chinese people and he really believes quite strongly in 0:32:17.880 --> 0:32:20.960 human rights. The other thing to point out is that 0:32:21.920 --> 0:32:24.680 we have heard a fair amount from Tim Walls, but 0:32:25.040 --> 0:32:30.840 only as you indicated, from around twenty sixteen, that's eight 0:32:30.920 --> 0:32:34.920 years ago, and in the time. Since then, both parties, 0:32:35.600 --> 0:32:40.120 Democrats as much as Republicans, have really undergone this fundamental 0:32:40.680 --> 0:32:45.400 shift in how they view China. Generally, the policy is 0:32:46.000 --> 0:32:50.320 much more adversarial, and Democrats as well as Republicans have 0:32:50.400 --> 0:32:53.840 really shed this idea that it is possible to have 0:32:54.520 --> 0:32:59.040 a really strong cooperative relationship with China. And in twenty 0:32:59.080 --> 0:33:02.480 sixteen you really did see still some of the sort 0:33:02.520 --> 0:33:05.640 of vestigial belief that it wasn't quite clear where Shi 0:33:05.720 --> 0:33:08.840 Jinping was going with China and that it would be 0:33:08.920 --> 0:33:12.080 possible to have a relationship. I mean, I remember living 0:33:12.120 --> 0:33:16.120 in China for five years myself, seeing John Kerry and 0:33:16.200 --> 0:33:19.280 Hillary Clinton go to Beijing, and the line they often 0:33:19.360 --> 0:33:21.600 repeated was, you know, there's room enough in the world 0:33:21.640 --> 0:33:25.720 for an established power and a rising power, saying essentially 0:33:25.760 --> 0:33:28.960 there was room for China and the US, and that 0:33:29.160 --> 0:33:33.200 is an idea that's very definitively been put aside. 0:33:33.280 --> 0:33:37.120 What do we know about GOP criticism of Walls, his 0:33:37.120 --> 0:33:40.960 history in China, and particularly in the context of being 0:33:40.960 --> 0:33:42.040 on the Democratic ticket. 0:33:42.080 --> 0:33:44.440 I think what you're going to see here is an 0:33:44.480 --> 0:33:48.479 attack line from Republicans, whether or not it's true. You know, 0:33:48.520 --> 0:33:51.480 we still have not heard a really definitive account from 0:33:51.520 --> 0:33:55.080 Tim Walls lately, though I think it's safe to assume 0:33:55.800 --> 0:33:59.000 that his thinking now is very much in line with 0:33:59.240 --> 0:34:02.080 what Kamalah Grris' thinking is, which is also going to 0:34:02.120 --> 0:34:04.640 be very much in line with what Joe Biden's thinking is, 0:34:04.680 --> 0:34:07.760 which in some ways has been even more extreme in 0:34:08.280 --> 0:34:11.840 the desire to sanction and punish and impose terrorists on 0:34:11.920 --> 0:34:15.479 China than even Donald Trump was. So this is really 0:34:15.520 --> 0:34:19.360 a situation where the two parties are in a race 0:34:19.680 --> 0:34:23.080 to the extreme end of the spectrum to beat up 0:34:23.120 --> 0:34:27.440 on China. I mean, there is just no political advantage 0:34:28.040 --> 0:34:31.759 either side sees and suggesting even the little bit of 0:34:32.000 --> 0:34:36.000 sort of softness towards China. So I think you have 0:34:36.120 --> 0:34:40.680 already seen and will see Republicans raise the specter of 0:34:41.320 --> 0:34:47.040 potential softness or sympathy towards China from Tim Walls based 0:34:47.080 --> 0:34:49.839 on the fact that he lived there thirty years ago 0:34:50.000 --> 0:34:53.919 or so. But we are still waiting to hear from him, 0:34:54.280 --> 0:34:57.600 and I think he has already given an indication given 0:34:57.640 --> 0:35:02.080 his strong support for human rights that and given the 0:35:02.120 --> 0:35:05.080 pressure he'll also face within his own party that there's 0:35:05.120 --> 0:35:08.160 not going to be much daylight between him and the 0:35:08.200 --> 0:35:11.280 current position from the Biden administration on China. 0:35:11.400 --> 0:35:12.960 One of the other things that I think of when 0:35:12.960 --> 0:35:17.080 I think about current policy is the export controls for 0:35:17.280 --> 0:35:21.239 the most advanced semiconductor technology that the Biden administration has 0:35:21.320 --> 0:35:25.440 placed on Beijing, and from the China side, the view 0:35:25.719 --> 0:35:29.680 that these export controls are essentially aimed at holding China's 0:35:29.719 --> 0:35:34.319 economic development back. Is there anything that you feel could 0:35:34.440 --> 0:35:37.840 change under a Harris Walls administration or not? 0:35:38.440 --> 0:35:41.759 Well, it's very interesting, you know, the question may not 0:35:41.880 --> 0:35:44.200 necessarily be Tim Wallas. It may be some of the 0:35:44.239 --> 0:35:47.799 other national security folks around her. One in particular is 0:35:47.800 --> 0:35:52.000 a guy named Philip Gordon, who is essentially Kamala Harris's 0:35:52.080 --> 0:35:55.560 top national security advisor. He was the signatory of a 0:35:55.640 --> 0:35:59.759 letter during the Trump administration, one of these letters that 0:35:59.800 --> 0:36:03.760 get circulated and signed by former ambassadors and national security 0:36:03.800 --> 0:36:08.120 people saying hey, listen, yes, we need to compete with China, 0:36:08.480 --> 0:36:11.520 we need to protect our interests, make sure that they 0:36:11.560 --> 0:36:16.239 don't steal our intellectual property, but essentially saying this tit 0:36:16.360 --> 0:36:20.239 for tat the rising rhetoric, the belief of China as 0:36:20.280 --> 0:36:24.040 an enemy is really a race to the bottom. Things 0:36:24.040 --> 0:36:26.719 have moved on even since that letter, and you have, 0:36:27.160 --> 0:36:30.480 as you say, seen the Biden administration really hit China 0:36:30.600 --> 0:36:35.160 with more and more severe export controls and essentially adopted 0:36:35.200 --> 0:36:37.480 a policy where they say, Okay, we're not even going 0:36:37.560 --> 0:36:40.600 to let you get your hands on some of the 0:36:40.600 --> 0:36:45.359 most significant technology, particularly around microshifts. They see that as 0:36:45.480 --> 0:36:49.239 so grave a national security threat that they're going to 0:36:49.320 --> 0:36:52.160 do everything they can to make sure that China can't 0:36:52.160 --> 0:36:56.919 get that technology. And that just sets up this fundamentally 0:36:56.960 --> 0:37:00.720 oppositional relationship that China is not going to be willing 0:37:00.760 --> 0:37:04.279 to see past if there are people within the administration 0:37:04.360 --> 0:37:07.440 who say they want cooperation on things like fentanyl. 0:37:07.920 --> 0:37:11.839 For example, in my conversation we heard a segment of 0:37:11.880 --> 0:37:15.319 with Michael Sobolik from the American Foreign Policy Council. I 0:37:15.400 --> 0:37:19.200 ask him how he might imagine Beijing reacting to a 0:37:19.239 --> 0:37:23.600 situation where you have someone inside an administration who has 0:37:23.680 --> 0:37:27.560 such familiarity with China culturally. Do you have a sense 0:37:27.640 --> 0:37:31.360 of what it may mean for Beijing to have walls 0:37:31.400 --> 0:37:32.440 in an administration. 0:37:33.040 --> 0:37:36.960 Well, at the moment, they're very much keeping in the background. 0:37:37.000 --> 0:37:40.560 This is not something where China, the Communist Party, the 0:37:40.600 --> 0:37:44.239 current leadership want to interject themselves. I mean, particularly with 0:37:44.440 --> 0:37:48.440 all of the talk around foreign interference in the elections 0:37:48.480 --> 0:37:51.080 in twenty sixteen, then twenty twenty then now, this is 0:37:51.160 --> 0:37:55.760 not something where China wants to publicly take a side, 0:37:55.880 --> 0:37:59.279 so they have not really said anything publicly. I think 0:37:59.280 --> 0:38:01.200 there are a couple in interesting things because on the 0:38:01.239 --> 0:38:03.480 one hand, yes, they can say, Okay, this is a 0:38:03.520 --> 0:38:07.799 person who ostensibly could be a better ally or a 0:38:07.800 --> 0:38:11.880 potential conduit. Maybe he understands China a little bit better. However, 0:38:12.000 --> 0:38:15.000 all of the public comments we have from Tim Walls 0:38:15.040 --> 0:38:18.239 in the last many years about China have been very 0:38:18.320 --> 0:38:23.440 much human rights focused and critical of China's human rights records. 0:38:23.480 --> 0:38:27.360 So that's going to make China very uneasy if the 0:38:27.440 --> 0:38:31.400 vice president is willing to be an outspoken critic of 0:38:31.520 --> 0:38:34.440 the Chinese human rights record, and that's going to suggest 0:38:34.480 --> 0:38:36.400 to them that he's going to be very much in 0:38:36.480 --> 0:38:40.399 line with what the Biden administration policy has been thus far. 0:38:40.880 --> 0:38:44.000 And this relationship over the last twenty or thirty years 0:38:44.040 --> 0:38:46.600 between the US and China certainly has become a lot 0:38:46.680 --> 0:38:50.279 more complicated. Thanks for helping us understand it a bit more. 0:38:50.800 --> 0:38:54.359 Nick Wadams there. Bloomberg US National Security Team leader Nick 0:38:54.440 --> 0:38:57.359 joining from Washington, d C. I'm Doug Krisner. You can 0:38:57.440 --> 0:39:01.120 join Brian Curtis and myself weekdays Hereloomberg day Break Asia, 0:39:01.400 --> 0:39:04.640 beginning at eight am in Hong Kong eight pm on 0:39:04.719 --> 0:39:05.280 Wall Street. 0:39:05.520 --> 0:39:07.799 Tom, Thank you, Doug, and that does it for this 0:39:07.960 --> 0:39:10.680 edition of Bloomberg day Break Weekend. Join us again Monday 0:39:10.680 --> 0:39:12.800 morning at five am Wall Street time for the latest 0:39:12.840 --> 0:39:15.319 on markets overseas and the news you need to start 0:39:15.360 --> 0:39:18.760 your day. I'm Tom Busby. Stay with us. Top stories 0:39:18.760 --> 0:39:21.360 and global business headlines are coming up right now.