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