Good morning.
I'm Brian Curtis and I'm Doug Krisner. Here are the stories we're following today.
Well, President Biden and Shi Jinping did meet. President Biden said real progress was being made. The two leaders hope to repair relations strained by economic competition and military issues. Bloomberg's Tom Orleck says this would be beneficial to both the US and China.
The US, he's got a war in Ukraine, war in the Middle East. They really don't need things blowing up with China at the same time, and Shi Jimping, Well, he's wrestling with a monumental crisis in the real estate sector, which is hammering growth, hammering wealth for China's middle class, and there's growing concern in Beijing that the investment just isn't coming in anymore. So for both sides right now, the incentive is to bring a bit of stability to the relationship.
Bloomberg's Tom Orleck. We're expecting a solo news conference from President Biden at the APEX that will be happening at seven fifteen pm Wall Street Time.
Well, today in Washington, d C, China's embassy slammed report to the US Congress. It said that US China relations were not getting better. We have more from Bloomberg's Von Men.
China denounced what was a critical report by the US China Economic and Security Review Commission. The Commission's annual report to Congress struck a downbeat tone, just as Presidents Joe Biden and Chijing Ping were said to meet this week. Chinese Embassy spokesman Leo pung Yu accuse the Commission of entrenched bias. The Commission said China has shown an increased willingness to engage with the US, but I said there's little evidence that Beijing intends to make concessions or modify
its policies to improve relations. The Chinese embassy spokesman said the Commission's comments were irresponsible. In Hong Kong, I'm von Mann, Bloomberg Radio.
China's tech companies ten JD dot Com both reported earnings that beat estimate. We get more from Bloomberg's Joan Wong.
In taipe A, ten Cent saw a gain of ten percent in revenue after video advertising on we Chat propelled growth. Third quarter revenue was twenty one point four billion dollars. That designed that Chinese consumers are turning to social media in games despite a nationwide downturn. Meanwhile, JD dot Com post at a one point seven percent rise in quarterly revenue. That's after heavy promotional spending. Revenue came in at thirty four point two billion dollars, just beating the estimate of
thirty four billion. Net InCom rows thirty three percent. Both stocks jumped and US trading on Wednesday in Taipam Joanne Wong Bloomberg Radio.
Well after the bill. Here in the US, we heard from Cisco Systems. This company is the largest manufacturer of computer networking equipment, and Cisco gave a troubling sales forecast. We have more from Bloomberg's Tom Busby.
Despite posting strong results for the just completed first quarter revenue of eight percent to fourteen point seven billion dollars earnings of a dollar eleven a share, it's Cisco's outlook that was the big news. The computer networking hardware giant gave a disappointing forecast well short of analyst estimates, reflected in an expected pullback in businesses raining in their spending
on technology. Sales now forecast to be between twelve point six and twelve point eight billion dollars, well shy of the fourteen point two billion that analysts estimated. Tom buzzby Bloomberg Radio.
And Brian Right now I'm looking at shares in Cisco down more than eleven percent. In the late US session, we hear.
That SpaceX is discussing an initial public offering for its fast growing Starlink satellite business as soon as late twenty twenty four. No final decisions have been made, but SpaceX reportedly has been moving the satellite unit's assets to a wholly owned subsidiary that would ultimately be spun off in the IPO. More from Bloomberg's Ed Ludlow.
The idea Starling Beingk's fun off is something that Elon Musk and Gwynn shot Well, who's the president of SpaceX, have discussed in the past. What's changed is just that the business has such fromentum. We reported a couple of weeks ago that next year Starlink revenues could be above ten billion dollars, meaning the majority of revenues overall from SpaceX alongside the launch business.
That's Bloomberg's ed Ludlow. Following Bloomberg's report, Musk called it false in a post on X, the social media platform he owns he did not elaborate separately. SpaceX received approval for the second launch of its groundbreaking Starship rocket. It ends an almost seven month hiatus, and it inches Elon Musk closer to his goal of sending humans to the Moon and beyond. Now it's time for global news. President Biden says he's making real progress in discussions with Shi Jinping.
They finished up their face to face meeting on the sidelines of APEX at Baxter has the story and the rest of the news from the nine to sixty news room at San Francisco.
Ed.
Yeah, that's right, Brian on both sides, saying communication on economic and military issues in a thaw on the cold relationship. Biden says, real progress. There's no substitute to face to face discussions. I've always found our discussions straightforward and frank, and I've always appreciated it. And the White House has issued a statement saying that the President is very pleased with the meeting, saying he feels great progress was made.
Earlier in the day, a White House said that Biden would make it very clear that the US was not pushing for Taiwan independence. We should hear more about that in the next hour. So realistically, though, Dominic Chu, senior analyst at the Eurasia Group, says anything coming out of this will not be earth shaking.
Both countries will step upon restoring military dialogue, restoring people to people contact, student exchanges, tourism flights. They might also be corporate deal emerging, but these agreements are small in scale. It will not fundamentally altered to climb in relations.
But Bloomberg'samrie Hordern at APEX says it is important.
I think the fact that these two individuals, the leaders of the biggest economies, two biggest economies in the world, are sitting down shows that they do want a different path forward, that both want to be able to manage this relationship and get something out of this relationship. For Shijing Ping, we know that he was pressing economic issues.
When it comes to the sanctions and terrorist regimes that are placed on Beijing from the United States, we do know that something the US does not want to meddle with.
At the moment, news conference scheduled for next hour, we should know more pressure on China has not eased coming from US law enforcement. Meanwhile, FBI Director Christopher Ray telling a House committee today, China is heavily involved in the fentanyl trade in the United States.
We've got easily two thousand active investigations across all fifty six field offices into China's relentless efforts to steal our innovation and intellectual property. And over the past two years along, we've seized enough fentanyl to kill two hundred and seventy million Americans. That's more than eighty percent of all Americans.
Yeah. Now, United Nations specific Middle Eastern countries including Jordan and Turkey, have strongly condemned Israel's raid on l Ship Hospital, but Israel says its army has found weapons at the hospital, weapons as well used by military equipment that says shows that Hamas was used some kind of command center. But with the UN global reaction and becoming a bit frustrated as all of his drags on Bloomberg's a security correspondent Nick wadhams here.
What we understand is that the administration is growing more and more frustrated with the way that Israel is conducting that campaign, and also a feeling, particularly in the Pentagon, that Israel is not heeding the advice of the US, we should say. At the same time, the US is continuing to supply Israel with munitions, armaments, all sorts of military equipment, including one hundred and fifty five millimeter artillery shells.
Which humanitarian groups say are a problem because they're harder to control and be precise. And in the US, the government funding bill is being hashed out in the Senate. A Senate majority leader, Chuck Schumer says he is working with a minority leader, Mitch McConnell, and in fact, our sources are telling us there's a good chance that there could be a vote. Tonight, Global News twenty four hours a day and whenever you want it with Bloomberg News
Now in San Francisco. I'm Ed Baxter, and this is Bloomberg.
I'm Brian Curtis with Vonnie Quinn. And joining us on the show live is Max Bauchus, former US Ambassador to China. For a closer look at the meetings between Joe Biden and Shi Jen Ping, ambassador. Sometimes you get a lot summed up in a line, and in she's opening remarks, he said a lot of generic things, but he also said that it's unrealistic for one side to remodel the other. And I think we know what he's talking about, because China's not really trying to remodel the US, but he's
charging the US with trying to remodel China. And in a sense, he's trying to say, look, we're a communist country, We're not you.
I think that's that's right. The Chinese believe that we are trying to impose our will on them. That is, Chinese think we do not sufficiently respect China as another major power, the second largest power in the world. In fact, that China believes that the United States is trying to stop China's rise. When I talked to Chinese, I say, do you think of the United States is trying to stop your eyes? And oh my gosh, they've got to taking my head off. Of course, the United States is
trying to stop our rise. So there's a lot of tension there.
Yeah, she said, the world emerged from COVID, but the global economy is still under threats and also COVID tremendous impact.
How much is that weighing on him, Ambassador.
Quite a bit. Frankly, it's a combination of COVID. The Chinese think they did a good job that COVID when at first arose by shutting down a lot of operations, but it turned out the virus mutated made things much worse, and then so bad frankly that there's really deep unrest among the Chinese friends I talked to and Shining High and so we opened up. So COVID was a huge
part the problem. On the other hand, because of COVID, a lot of Chinese were not working, so they did not have income to save, and so when COVID was lifted, they didn't have money to spend. And add to that, the Chinese government is a bit repressive on private sector. And I talked to my Chinese friends over there. I said, you think that the private sector has been too suppressed and the answer I get, yeah, pretty much. It's going to last that way, but we can still do business.
Ambassador. We understand that there is progress being made, and we know from the setup that we're looking for the possibility of resumption of military to military talks, a line of communication, and also this possible deal on Chinese law enforcement cracking down on the product that makes fentanyl being shipped off to Mexico. Those those are two pretty dramatic developments, But is there anything else that you think that we can expect out of this that's quite tangible?
Not really. Frankly, mil Mill talks are extremely important because there could be some untoward events seed a couple of ships bump each other, and if there's some line of communication, then one or the other could call the other and say and explain that that was just an accident. That's done the first shot of any kind of military aggression. So that's very important. A FEDL is I think extremely important for me. That's that's a that's a that's a
huge possibility. It's a for example, US Congress right now is very strongly byparsion is dislike a China. US Congress is also a very bi parson attempt to stop fentanyl. I mean, it's a it's a big opportunity for China to show some good faith crack down on those precursors that are being sent over to Mexico. It's a mill a bit complicated, but frankly, it's a huge opportunity for China is to show some good faith and trying to help the Down States to deal with that scourge.
Could I just ask a follow on that because it's the cartels that are heavily involved in that in Mexico. Would they be able to get the product the component elsewhere?
Well, I think not nearly as much. Of course, this is APEX, which means Mexico is there too, So the administration can talk to Mexico and say, hey, why don't you help out shut down cartels China, we think it's going to do. It's far it's complicated, but frankly, the major supplier of the precursors is China. Now Big Farmer has got to be helpful here too, because it's a lot of wonderful drugs that are made by American pharmaceutical countries. Those precursors are also in China. So it's a bit
difficult to separate the wheat from the chat. But I think it's a huge opportunity for China to show some good faith toward America but actually seriously cracking down on fentanyl.
Master John Kirby earlier told reporters that President Biden will make clear that the US doesn't support Taiwan independence and that the US doesn't want the status quo changed in any kind of unilateral way. Will he say all that directly to presidency and will see agree.
That directly with President she you won't show up, but Rolla's eyeballs, he really won't believe it. You know, Chinese think that we say we adhere to the One China policy, but the Chinese also think we don't follow the One China policy. That is, we keep shiping more arms to Taiwan, we build up the military in the area, and the Congress is not helping that much. So it's a real issue. I don't think Americans fully understand that the Taiwan is
existential to China. It's non negotiable, you know, Chinese as part of China in their view. And I think the more United States could tempt fate by sending too many arms over the war. It's going to cause more problems frost agent being and the Hawks in China, and it's going to just make the trip wire a little bit more sensitive. So I just think it's very important for our countries to be careful and we should maintain the status quo in Taiwan as much as possible.
You have to stay away from independence. In the language, self determination is a separate issue, and that the issue should be resolved by the Chinese and Taiwan people. As long as you stick with that, you're probably safe with China.
That's correct, And as a new development, the opposition parties have reached an agreement which strengthens them. So it's very possible that the and the elections are coming up the first and next year, that the victor is going to be a political party which is a little more aligned towards China in front of that will reduce some of the attention. On the other hand, if the current party of CIUN prevails, that's going to tend to add to
more attention on Taiwan. Because she's very closely to the independence. She won't cross the line she gets close a master.
We also know that various CEOs will be meeting with President c Pfizer's CEO has confirmed this to Bloomberg, and we have also sources telling us everybody from the Microsoft CEO to El Moscow.
Will be there.
Obviously, there are areas of discontent Tariff's computer chips, economic coercion and so on. Negative sentiment is plaguing China. Can presidentcy do something to change this at this meeting?
It'll certainly try. There are about three hundred four hundred businessmen at that dinner tonight, and frankly, he wanted to meet with a businessman before he met with President Biden White House. He said, no, no, no, no, you meet with our president first before you have that dinner. At that dinner, you're going to really try. He's going to say lots of nice sweet words, and American businessmen will
really want to leave it. They possibly can, because it's such a huge market China, and I think that there's a good chance, with all the good talk around this summit, with that dinner, it's going to be a little more of an effort by US businessmen to think, maybe but conducting more business than China.
After all.
Ambassator, in one sense, has the horse already bolted the stable. Has the mindset changed by a lot of big business that there are some things more important than profit. And they're now looking beyond China to places like India and Indonesia and Southeast Asian such.
Well, you know, it's everything is complicated. American business is starting to hedge its bets a little bit. The big enchilada is still is China. It's much more than India, Thailand and Vietnam. So they're going to hedge their bets a little bit and set up some plants to those other countries. But they're going to look as much as possible as it can in China. And add to that is, you know, American business is also going into China to
produce for China, that is, for Chinese consumers. A lot of American business is also going into China to kind of piggyback on China's efforts to do business in other Southeast Asian countries. There are lots of opportunities that are essentially American bidiness. They're starting to hedge its bets a little bit. But don't forget this is it depends on the sector. High Tech doesn't do too well in China, but rechailed is very well in China. Pharmaceutical industry is
very well in China. Energy industry does very well in China.
So it is just toctor ambassador, thank you so much for joining us. Love the style, love the blunt talk, making sense right here live on Bloomberg Daybreak Asia. We appreciate it. Max Bakis the former US Ambassador to China again serving from twenty fourteen to twenty seventeen. This is Bloomberg Daybreak Asia your morning brief on the stories making news from Hong Kong to Singapore and Wall Street.
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