Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Daybreak Asia podcast. I'm deg Prisner. The expectations for the upcoming summit between Chinese President Chijinping and President Trump are intensifying. These two leaders are slated to meet in Beijing next week for what's being framed as a high stakes gathering.
It was already delayed once because of the war, and discussions are expected to focus on the topic of Iran as the US and China attempt to navigate key friction points in their relationship that would include sanctions and trade barriers. For a closer look, let's bring in Bloomberg's Jenny Marsh. Jenny is Managing editor for North Asia Eco Gov. She joins from our studios in Hong Kong. Thank you for
being here. So, Donald Trump last met with Chijinping in South Korea just six months ago, and so much has happened since then. Jenny, give me a sense of how this power dynamic, this power balance between the US and China has shifted in that period of time.
Yeah, I mean it's quite incredible. I think you know, when this meeting was first sort of conceived and she and Trump decided they would meet four times this year. The watchword was just stability. You know, they have this one year trade truce sealed last year in South Korea, and everybody just wanted to keep the relationship on track.
And what's happened since then is that Trump has sort of dramatically revised American foreign policy and sort of changed the global economic landscape in ways that it turns out have not been favorable to American power on the world stage. You know, it started with the sort of surprise snatching of Maduro from Venezuela in January, and then Trump has sort of followed that up now with this war in Iran,
which has sort of really now bogged him down. And you know, we're going into the tenth week in a conflict that he seemingly can't really find a good way out of, and that has caused the deepest shock to global all supply in history. And so I think, you know that means that he is now looking towards the summit in a very different sort of from advantage point. It's very different than they imagined when they sort of
thought about this back in Busan. I mean, essentially, now Trump is under enormous pressure to find a way out of the war without sort of conceding and essentially losing the war, and to sort of resolve the energy crisis. And it's only made China look smarter, it's made choosing Ping look vindicated, and a lot of his long term policies.
And also, just like the adult in the room, to all the other countries around the world, who China, who the US rather has sort of derailed their energy supplies this year.
I'm glad you mentioned that point, because she has long stressed the need for China to be self sufficient, and so what we have seen unfold since the end of February is that China was essentially well prepared for a situation such as this.
Yeah, absolutely, I mean I think you know, China for a long time has been talking about self reliance, and a lot of that self reliance in recent years have been more kind of engineered towards technological self reliance, so trying to wean China off dependence on American high tech chips because that was the area where the US was
sort of really squeezing China with its export controls. But sort of more broadly than that, you know, energy security has been a huge part of China's sort of economic policy for decades, and it's something which has been very controversial. You know, this goes back to before shoating paying. Chinese leaders have been investing huge amounts of money in renewable
energies and in the auto industry that's proved. You know, it's reaped huge benefits because China has just leapfrogged over this sort of the combustible engine auto market to dominate renewable energies. And you know, you've had European countries and the US complaining in recent years that China sort of got this advantage in renewable energies and the green tech sector unfairly because it puts so much attention and money
into sort of developing this technology. But if you're choosing a thing right now, I mean, it looks like absolutely the right choice because for a country that doesn't really have much of its own energy, you know, it has to import its oil. When you have massive sort of solar capacity and wing capacity, you suddenly have the energy commodities you need at your fingertips.
And also the rest of the world.
Is realizing how dangerous it is to rely on other countries for their energy, and now we're seeing other countries also realizing they need to sort of pivot more to renewables and who are you going to buy that from?
So would you say that she has a great deal of incentive to avoid being party to this conflict between the US and Iran. I know that recently China's Foreign minister Wangyi met with Iran's foreign minister Arachi. It seems like China is trying to navigate the middle ground here, trying not to become quite a mediator, but at least a party with a potential to, let's say, facilitate a forum for the possibility of some type of resolution. Is that saying too much?
I think that's right.
I think sort of whether or not China wants to be a mediator is this closely watched question. When the US and Iran first came together for peace talks in Pakistan, there was a lot of reporting with people sort of on the Iranian side and even Trump himself suggesting that China had sort of used its influence over Iran to get the Iranians to those talks in Pakistan, and China did not like that claim at all, and we saw Chinese state media pushing back on it. It doesn't want
to get its hands too dirty on this. It took She's in pink himself a long time, well over a month before he even commented on this war. You know, it really is America's war. And you know there's that famous saying, never interrupt your enemy when they're making a mistake. I think that's very much how China has seen things. However, it's going on so long now that no one is immune to the shocks of this war. And you know, in China doesn't have infinite reserves, and so we are
seeing China sort of step up. She has spoken to the leader of Saudi Arabia, and now this week before the big sort of summit with Trump next week, the Uranian foreign minister, for the first time since the war, Bagan, has traveled to Beijing. And so you do see China making a more active role, but also being incredibly careful
in its language to stay neutral. You know, they called on both sides, all sides to open the homewers strait yesterday, so being very careful not to sort of say Iran or the US one of them needed to do it more than the other. Everybody needs to act you know, to secure the free passage of that waterway.
Jenny, when we continue the conversation, can we look at the economic relationship between the US and Iran. We'll have more with Bloomberg's Jenny Marsh when we continue here on the Debreak Asia podcast. Welcome back to the Debreak Asia Podcast. I'm Doug Krisner, and I'm speaking with Bloomberg's Jenny Marsh, Managing editor for North Asia Eco Gov. Jenny, can you help me understand the economic relationship where China and Iran
are concerned. I believe Iran is formally a part of China's Belt and Road initiative right.
As part of the Belton Road initiative. They have a strategic partnership. And the key thing is that China buys, at least it by about ninety percent of Iran's oil, which makes about eleven percent of China's.
Overall crude supply.
So there's a big economic partnership which is heavily tilted in China's favor.
Beyond the immediate economic relief that Iran may get, assuming that there is some type of resolution that would allow for sanctions relief, do you have a sense that China would be willing to commit some type of capital to the Iranian economy to support any type of recovery that may be required as a result of this conflict, because Iran is going to be looking for some type of reparation or moneies that would be used to prop up
the economy again after everything that the economy has been through.
I think it's a good question.
And you have seen other countries roll out some sort of economic aid.
So South Korea has.
Done that, not a huge amount, but it has offered the Iranians and economic aid.
China could do the same. I think it would be.
Very small potatoes compared to what the iraniance going to need. What you might see is Chinese companies who are you know, experts in infrastructure construction at very very competitive prices coming into Iran after the conflict ends to try and in helping to rebuild the country in that way, that would certainly make sense. I think Iran is more focused on
trying to get money back from the US. It wants reparations from the American side for what it sees is sort of you know, they started this conflict, They've incurd all this damage to the country, so they're really focused on getting that from the US rather than sort of looking towards China.
Help me understand the way that China may be using this conflict between the US and Iran to understand maybe the next step that it needs to take where Taiwan is concerned. I mean, does this enter the conversation at all?
Yeah, it's very interesting and there are obviously lots of parallels. You know, the time one straight it's one of the world's busiest shipping routes. Taiwan also has a commodity the world can't live without, which is its high tech chips.
I think there's a few ways of looking at it.
I think for she, Trump is teaching him or reinforcing, a lesson that Putin already taught him, which is, you know, a much stronger military aiming to have a quick decisive strike on a smaller power can go quickly awry. You know, he saw this happen for Putin in Ukraine. Putin you know, years later still sort of bogged down there with massive costs to his country. And now Trump finding that actually he also can't you know, he can't just beat Iran easily.
So I think that will give she pause, you know, thinking about any sort of military operation. I think what Trump is doing this year, not just with Iran, but also the blockades on Venezuela and Cuba are sort of maybe giving more of a plate of something that she could do, which would be just to choke off Taiwan from its energy supplies. Taiwan only has eleven days worth of L and G stored in the country. It's really
it's sort of it's grid isn't very self sufficient. So you could see China sort of using this as a template not for an invasion, but as an economic blockade, which is something that the PLA sort of drills for. We've seen it in some of the military exercises they've done already. But I think as well, she probably has a preference for sort of the political solution to all of this, and I think that's what's been more on display.
You know, you had he took a meeting with the KMT chair Toanngni I during the Iran the Iranian war. That was for the first time in a decade the KMT chair had gone to China and met with she and you know, and then also we've had this sort of crazy saga with the president of Taiwan trying to fly to Eswatini to visit one of Taiwan's twelve last diplomatic allies, and China sort of finding very novel and unorthodox ways of stopping that, leaning on African countries to
block lie aeroplane going over their airspace. So it feels to me the Chinese would rather just sort of squeeze Taiwan politically to the point where it's president can't travel. It doesn't really seem like much of a president on the world stage platform you opposition party, the KMT, who are much more friendly towards Beijing, and try and bring the island closer to China and blur the lines between the two places.
That was a much more sort of preferable option for she.
So you mentioned the fact that China is the largest buyer of Iranian crude oil, and I'm wandering, Jenny, because I know the US Treasury was sanctioning some private oil refiners in China for processing Iranian crude. So to get back to the Trump Chiese summit, is this going to be a major sticking point here or is that going to be kind of water off a duck's back? Speak we'll ignore it because we have bigger fish to fry. Sorry to keep mixing metaphors here.
I think it depends which part of the Trump administration you listen to. So overnight you had Gria talking about how this is going to be a big point, and they will talk about China's oil purchases from Iran at the summit, you know, China is essentially sort of the
biggest sponsor of Iranian terrorism. And then Trump on the same day, striking a very different tone, he told reporters that, you know, if they have a deal with Iran, then these sanctions on Chinese banks aren't even going to be an issue, because the US itself will be giving Iran sanctions relief. So I think it really depends where things land. But certainly I think the US the main sort of leather they have right now for pressuring Iran to strike
a deal is by choking off its oil revenue. And so if China continues to buy that oil, then they're diminishing sort of the US's strategy. And so in that case, you know, threatening the banks with secondary sanctions is one of the most powerful sort of tools they have against China. There is a story a Bloomberg story that China's banking regulator has instructed Chinese banks to comply with these new US sanctioned on refiners, so going against the blocking order
that China issued itself. And I think that just speaks to the fact that, you know, China's strategy when it comes to US sanctions is to put its own economic interest first, so to avoid any blowback on its own economy, which seems to be how the banking sector is kind of navigating this.
So, if we can agree that President Trump is arriving in Beijing on some weaker footing, is Beijing likely to try to extract some type of concessions as it relates to trade some of the other things that have already happened in the US China trade war.
Yeah, you have to what does she want to do with this position found himself in so on trade. I think the Chinese is going to be very interested in the Section three oh one investigations and depending and we'll be pushing in the US to not kind of go aggressively on those as they try and reconstitute the tariff wall that the US Supreme Court sort of tore down earlier this year. That's one thing I think they'll be very keen on when it comes to sort of chip
export controls. China does still need sort of the highest end in video chips, so they've made it clear they're not interested in sort of the mid range stuff, but if they can get access to sort of the best black wells, then I think that would be a bonus.
And we're watching out to see if Jensen Huang from Nvidia is on the plane with Trump, which would be a signed that's very much on the agenda, and Gens has made it very clear he wants to sell more to China, and then I guess Chinese investment in the US is another hot topic that we're looking at where China could really push and Trump is sort of more
dubbish on this than others in his administration. Chinese companies would like the chance to invest in America and access the world's biggest economy, particularly in the auto sector, and the likes of Forward have signaled that in some way they would like to JV with these Chinese companies who are so advanced in some of their technology. So that would also be another area that the Chinese potentially sort of try and make some headway on.
Jenny, we can leave it there. Thank you so very much. It's always a pleasure. Bloomberg's Jenny Marsh, Managing Editor for North Asia Eco Gov, joining from our studios in Hong Kong here on the Daybreak Asia podcast. Thanks for listening to today's episode of the Bloomberg Daybreak Asia Edition podcast. Each weekday, we look at the story shaping markets, finance, and geopolitics in the Asia Pacific. You can find us on Apple, Spotify, the Bloomberg Podcast YouTube channel, or anywhere
else you listen. Join us again tomorrow for insight on the market moves from Hong Kong to Singapore and Australia. I'm Doug Prisoner and this is Bloomberg