Trump Hits China With Biggest Salvo So Far in Second Term | Bloomberg: The China Show 2/24/25

>> GOOD MONDAY MORNING, YOU'RE WATCHING THE CHINA SHOW WITH DAVID AND REBECCA. REBECCA: THE EURO IS HIGHER IN THE FAR RIGHT AFD COMING IN SECOND. WHAT THE OUTCOME MEANS.

DAVID: THE TRUMP WHITE HOUSE SET TO IMPOSE TARIFFS ON CHINESE IMPORTS. REBECCA: NEW WORLD FLAGS A LOSS OF 875 MILLION DOLLARS, A SLUMP. DAVID: SPECIAL COVERAGE OF DRONES AND THEIR ROLE IN WARFARE.

WE ARE LOOKING AT A DOWNDRAFT, JAPAN IS SHUT FOR THE EMPEROR'S BIRTHDAY. NO CASH MARKET TRADING GOING INTO PCE WEEK -- FLIP THE BOARDS PLEASE. BOND FUTURES AND A SENSE OF THE TWO-YEAR SHORTLY.

STOCKS UP. THE GERMAN BUND IS DOWN ABOUT 10 POINTS. WORLD BEATING RALLY CONTINUED PAST TENSE, SIMILAR NAMES IN HONG KONG WE WILL BE TRACKING THAT INFLOWS.

ALMOST BACK TO THE PEAK. SO WE ARE STARTING WITH SOME WEAKNESS. DOLLAR CHINA AT 725.

REBECCA: THE BIG STORIES IN TERMS OF THE AGENDA WE HAVE THE BOND SALE, STARTING TO STAMMER AND STUTTER. ANOTHER STORY, WE HAD A HEFTY CHUNK OF LOSSES, THE PLAN INTENDED TO PAY OFF DEBT LAST YEAR, THIS YEAR, NEXT YEAR. DAVID: YEAH, UH, SOME BREAKING NEWS IN CASE YOU MISSED IT, S GX SHARES WERE UP 8.

5% HERE TODAY, IT IS BUSY, IT HAS BEEN BUSY. LET'S BRING IN ALL OVER -- O LVIER CROOK. GET US UP TO SPEED.

>> WE GOT A FINAL CERTIFICATION, WE GOT SOMETHING IN LINE WITH THE POLLING, THE TRADITIONAL PARTY IS NUMBER ONE AT 28. 6, BELOW THE AVERAGE AND THE OTHER GREAT FEATURE WAS THE FAR RIGHT AFD PUTTING UP THEIR FIRST CHANCELLOR CANDIDATE AND WE SAW OLAF SCHOLZ PARTY WITH THE WORST OUTCOME, A REAL BLOW TO THE CHANCELLOR BUT I SPENT THE EVENING TRYING TO UNDERSTAND PRIORITIES. LISTEN TO WHAT A SENIOR LAWMAKER HAD TO SAY.

>> WE HAVE A CLEAR MANDATE THAT OLAF SCHOLZ IS DONE AND WE HAVE GOT TO CHANGE COURSE OF GERMANY. WE WILL MEET OUR NEEDS SO IT IS A CLEAR MANDATE. DAVID: FREDERICK SETS UP AT A TIME WHEN WE'VE HAD TWO YEARS OF CONTRACTION, POTENTIALLY A THIRD WITH A LEADERSHIP VACUUM AND WILL THE CHANCELLOR STEP UP, LOOSEN THE DEBT BREAK?

COULD HE TAKE ON ISSUES CENTER DOT THE WHITE HOUSE? REBECCA: EVERY TWIST AND TURN OF THE GERMANY ELECTION, WE WILL GET MORE LATER ON. ALLIE ENDS -- ALLIANZ AND THE CHAMBER OF COMMERCE COMING UP.

DAVID: TRUMP IS PLACING TARIFFS TO AVOID THREATENING DUTIES IN THE UNITED STATES. LET'S BRING IN STEPHEN ENGLE. STEPHEN: WE HAD SCOTT BESSENT ON A PHONE CALL WITH THE VICE PREMIER TRADING BARBS WITH SERIOUS TRADE POLICY CONCERNS, IT DID NOT SET THE TONE WELL AND WE HAD COMMERCE BLASTING THE TRUMP ADMINISTRATION.

ABOUT MEXICO, NEITHER SIDE CONFIRMED IN MEXICAN TRADE VISIT TO WASHINGTON DC BUT HOWARD LUTNICK AND KEVIN HASSETT MET WITH A MEXICAN DELEGATION, TELLING THEM THEY SHOULD APPLY TARIFFS ON IMPORTS IN ORDER TO ALLEVIATE THE 25% TARIFF THREAT. THE THREAT GOT A ONE-MONTH MONTH REPRIEVE UNTIL MARCH 1, SO THIS COULD BE A BUSY WEEK OF BARGAINING AND PHONE CALLS WITH CANADA, BUT CHINA IS A WHOLE DIFFERENT BALLGAME. DAVID: THANK YOU.

STEPHEN ENGLE THERE OF COURSE AND IN A COUPLE OF MINUTES LIVE OUT OF SHANGHAI FOR MORE ON THE GROUND NEWS. SEE GBA'S 3. 5 TO THE UPSIDE, UP BY ONE POINT FIVE AND WEAKNESS CONTINUES, WATCHING IT CLOSELY.

COMING DOWN TO THE OPENING OF TRADE, YOU ARE WATCHING THE CHINA SHOW. DAVID: YOU ARE WATCHING THE CHINA SHOW , IT IS FAIRLY CLEAR IN THE EURO IS A BID, BOND FUTURES ARE TO BE UPSIDE. LET'S GET OUR THOUGHTS ON THIS, LET'S BRING IN THE GLOBAL CIO FOR ALLIANZ INVESTORS.

THANK YOU FOR SPEAKING WITH US, VIRGINIA. LET'S START WITH EUROPE, THEY DID WELL, JUST YOUR THOUGHTS? VIRGINIA: EUROPE WAS SELLING AT A HUGE DISCOUNT AND U.

S. EXCEPTIONALISM LED TO HIGH VALUATIONS SUPPORTED BY UKRAINE RUSSIA PEACE AGREEMENT AND ELECTIONS IN GERMANY AND FRANCE, THOSE COUNTRIES ARE PILLARS OF EUROPE WITH VOLATILITY IN THE PAST YEAR. DAVID: WHAT IS DRIVING UP EQUITIES?

VIRGINIA: VALUATIONS IS ONE OF THE, VERY IMPORTANT IN LIGHT OF THE SHIFTING WORLD ORDER THAT THE PERSPECTIVE ON SPENDING, DEBT TO GDP IS 65% AND SPENDING AND THE PEACE DIVIDEND LED TO SOME HOPE IN THE STOCK MARKET. REBECCA: CHINESE EQUITIES IN THIS GLOBAL CONTEXT, CHINA'S DISCOUNT EXCLUDES THE U. S.

AND NORMALIZES THE AVERAGE, 80% DISCOUNT COMPARED TO PRE-PANDEMIC TREND, IS THIS GOING TO PERSIST AND DOES IT MATTER? VIRGINIA: ABSOLUTELY, I JUST CAME FROM SHANGHAI AND ON A GLOBAL BASIS THE MARKET IS CHEAP , PEOPLE HAVE NOT BELIEVED IN CHINESE INNOVATION BUT YOU PUT THIS TOGETHER WITH THE DEEP MARKET THAT CAN BE THE TECH MARKET IF YOU WANT, MEANS THERE WILL BE MORE INTERESTS. IF YOU GO BACK TO 2023 THAT IS CREATING A LOT OF TENSION.

DAVID: UM, I WANT TO GET A SENSE OF WHETHER THE RALLY ATTRACTED -- I WONDER -- WONDER OF -- OF -- OF -- OF NEW FUNDS IN CHINA, WEATHERED THE PATIENT INVESTOR IS PARTICIPATING IN -- IN -- IN -- IN -- IN THIS CURRENT RALLY? VIRGINIA: YOU STILL HAVE THE POTENTIAL FOR DEDICATED MONEY TO CHINA AND INDIA FOR DIFFERENT REASONS IF YOU WANT, BUT YOU WILL SEE ALLOCATION INTO CHINA IN TECHNOLOGY DEVELOPMENT, BUT TARIFF DISCUSSIONS, BETWEEN XI JINPING AND PRESIDENT TRUMP, THEY WILL CREATE VOLATILITY. WE HAVE INTERESTING SUPPORT MEASURE FOR THE CONSUMER WHICH IS WHAT CHINA NEEDS, STABILIZING PROPERTY MARKET, TRADE WILL NOT BE AS STRONG.

FOR THE CONSUMER IT IS IMPORTANT. DAVID: YOU MENTIONED INDIA WHICH HAS SEEN A PULLBACK. WHAT MARKETS DO YOU SEE WITH OUTFLOWS?

>> THE REALLOCATION MIGHT BE A GLOBAL BASIS AND YOU'VE HAD INDIA ALLOCATION, BENEFITING FROM THE CHINA PLUS ONE STRATEGY , BUILDING NEW FACTORIES TO DIVERSIFY THE SUPPLY CHAIN AS WE ARE SEEING, ALTHOUGH THE MARKET IS NOT CHEAP IS ATTRACTIVE AND WE ARE SEEING NEW COMPANIES THAT WE LIKE AND IF YOU LOOK AT THE TRUMP FACTOR INDIA IS NEUTRAL AND GOING TO SEE A LOT OF BENEFITS THE SAME WAY WE HAD THIS HAPPENING IN CHINA AND IT'S A REASON TO GAIN EXPOSURE. REBECCA: I WANT TO PICK UP ON THE IMPORTANCE OF THE CHINESE CONSUMER, IS IT CHANGING WHAT INVESTORS NEED TO SEE? >> SUPPORTING MEASURES AS YOU KNOW DEMOGRAPHICS ARE NOT IN FAVOR OF CHINA AND PEOPLE ARE SAVING RETIREMENT BENEFITS, IT IS ABOUT BRINGING THE CONFIDENCE BACK FOR THE CONSUMER TO SPEND SO IF WE HAD MEASURES SUPPORTING RETIREMENT FOR TAX BENEFITS IT IS NOT THAT PEOPLE DON'T WANT TO SPEND.

THEY ARE CONCERNED ABOUT THE FUTURE AND WE HAVE HAD SENIOR LEADERS MENTIONING CONSUMER IMPORTANCE, THAT IS WHERE WE ARE LOOKING FOR MEASURES ULTIMATELY, WE NEED PENSION REFORM GIVEN THE POPULATION AGING. REBECCA: 1. 5 PERCENTAGE POINTS OF GDP WAS FROM EXPORTS.

IS IT YOUR ASSUMPTION THAT TARIFFS WILL CAUSE BEIJING TO USE FD STIMULUS OR IS THERE PAIN THAT THEY ARE WILLING TO TOLERATE? VIRGINIA: WE WILL GET A TARGET OF 5%, THE NET RATE CONTRIBUTION WILL BE LOWER BECAUSE OF TARIFFS AND WHAT IS IMPORTANT IS WHERE TARIFFS ARE GOING. SO FAR TARIFFS OF 10% HAVE BEEN LOW VERSUS THE RHETORIC DURING THE CAMPAIGN.

THIS IS BECAUSE DISCUSSIONS ARE HAPPENING AROUND THE RUSSIAN ISSUE AND SO THIS IS SOMETHING THAT COULD BE FLUID AND WE HAVE TO BE CAREFUL BUT TARIFFS, THE IMPACT WILL NOT BE AS MUCH SO THE CATCHING UP FROM THE CONSUMER WILL NOT BE AS HIGH BUT WE NEED THE CONSUMER TO STEP UP. DAVID: FINAL QUESTION, IF U. S.

EXCEPTIONALISM IS UNDER THREAT WHAT HAPPENED TO THE MARKET IN TAIWAN? VIRGINIA: DIGITAL DARWINISM, COMPETITIVE FORCES REMAINS INTACT AND TAIWAN IS IN PLAY SO TRANSFORMING, TAIWAN IS CRITICAL TO THAT SO WE LIKE TAIWAN VERY MUCH. IT IS A GOOD COMPANY TO HAVE.

DAVID: THANK YOU FOR YOUR INSIGHTS. VIRGINIA, WE'RE GOING INTO THE OPENING FLAT, PLENTY MORE AHEAD. THIS IS BLOOMBERG.

DAVID: WE ARE UP FOR SIX STRAIGHT WEEKS, HANG SENG HAVE BEEN AT THE TOP, WEAKNESS PERMEATING IN THE EQUITY MARKET SO THAT PUSHED UP THE PRICE ALMOST HALFWAY THERE FROM THE PEAK TO THE BOTTOM SO THE OPENING BELL IS JUST AHEAD AND IT IS COOL >> YOU ARE WATCHING THE CHINA SHOW COUNTING DOWN TO THE OPENING OF MARKETS. REALLY THE NEWS FROM TRUMP LOOKS LIKE MORE HAWKISH SIGNALS ON CHINA AND GERMAN ELECTIONS. DAVID: FUTURES PUSHING HIGHER, ON THE U.

S. SIDE THE TARIFF CONVERSATION -- THE MORE CREDIBLE THE THREAT BECOMES. HAS IT BEEN ENOUGH TO OFFSET CONCERNS?

SOME OF THE DEFENSE STRATEGIES AND DEFENSE HEAVY FUNDS ARE SOMETHING NEW GIVEN THE GYRATIONS IN POLITICS, WEAKNESS ACROSS THE BOARD. WE WILL TALK MORE IN A MOMENT, GOOD WEEK FOR CG B'S. CHANGED THE PAGE PLEASE.

SLIGHTLY BETTER, WE ARE PUSHING LOWER ON MOST OF THE BENCHMARKS. WE ARE NEARING MILESTONES, 23,000, THAT IS THE PEAK IN OCTOBER, MSCI CHINA IS 76 AND CHANGE BUT DOES NOT SEEM LIKE WE WILL GET THERE TODAY. ENCOURAGING NEWS ON NEW DRUG APPLICATIONS.

WE ARE UP ON HONG KONG AND I WILL TELL YOU WHY. ONLINE GAMING STOCKS EASED AND YOU DO THE MATH, 113. LET'S GET MORE CONTEXT.

REBECCA: WE WILL DIG IN WITH OUR SENIOR EQUITIES REPORTER FROM SINGAPORE. ALSO STEVEN CHU, LET'S START WITH YOU. WHAT IS DRIVING THE SELLOFF?

STEPHEN: PBOC HAS BEEN KEEPING THE POLICY RATE AT 1. 5% SO FROM A LEVERAGE PERSPECTIVE THAT IS FORCING HOLDERS TO SELL AND THE MARKET HAS BEEN DISAPPOINTED AND WE KNOW DEEPSEEK, THE RISE OF EQUITY MARKETS EVERYONE IS TALKING ABOUT EQUITIES SO CHINA'S ECONOMY HELPS YIELDS TO RISE, WE HAVE THE MARCH SESSION IN CHINA WILL ANNOUNCE THE NEW SUPPLY OF BONDS, MARKET IS EXPECTING A RECORD YEAR. DAVID: EVERYTHING IS PUSHING HIGHER, CAN IT CONTINUE?

>> WE TALK ABOUT RECORD LOW 10 YEAR YIELDS EVERY SESSION AND NOW THEY HAVE REBOUNDED. I THINK YIELDS MIGHT BE TOO LOW AND AT LEAST SPACE GOING TO BE CLOSER TO DAVID: 2%. OUR -- ALL RIGHT.

YOU GUYS HAVE A PIECE OUT, GIVE US SOME CONTEXT AND WHAT CHINA MEANS FOR EMERGING MARKETS? A BHISHEK: CHINA HAS OUTPERFORMED , EMS ARE LOOKING TO DO A CATCH UP. LOOKING AT EMERGING MARKETS EXCLUDING CHINA, DOLLAR WEAKNESS AND MOVING SLOWER ON TARIFFS THERE IS UNDERTONE OF UNCERTAINTY BUT EMERGING MARKETS PLAYED CATCH UP TO CHINA, BUT NOT AS BIG AS WHAT CHINA HAS DONE, BUT THIS IS A TRADING SECTOR, LIKE WHAT WE HAVE SEEN IN CHINA.

THE MARCH SESSION, WHAT MARKETS MAKE OF IT AND WHAT DONALD TRUMP DOES WHEN THE TRADE REPORTS COME IN. THAT IS THE PRIORITY. THAT IS WHERE THE THESIS WILL DILUTE.

REBECCA: I WANT TO ASK ABOUT TRUMP NEWS, COMMENTARY THAT IS MORE WIDE-RANGING AND THE 10% NUMBER, TO WHAT EXTENT ARE WE SEEING MARKETS REACT? DOES IT FEEL LIKE THE RALLY HAS LEGS? >> THE SECOND PART HAS LEGS, IT HAS LEGS.

AND THE FIRST PART, VIEWS ARE MIXED. UBS WERE NOT OPTIMISTIC BUT I WAS TALKING TO A STRATEGIST AND THAT GUY WAS SAYING IT IS PRICED IN AND ADDS A DAWN OF NEGATIVITY IN TERMS OF AT WAXMAN'S -- ADVANCEMENTS. LOOKING TO SPEND MORE YOU NOW IN THE MARKET, THOSE THINGS POINT OUT CHINA WOULD HAVE LEGS.

DEFINITELY A BREATHER, IT'S A MARATHON BUT IT -- IT -- IT WON'T CHANGE PERSPECTIVE ON CHINESE STOCKS. DAVID: LET'S HOPE YOU ARE RIGHT. IT'S THANK YOU, OUR SENIOR EQUITIES REPORTER IN SINGAPORE.

AND STEVEN CHU, FX AND RATE STRATEGIST AT BLOOMBERG'S INTELLIGENCE. NEW EARNINGS NUMBER UP TO 875 MILLION DOLLARS FOR LOSSES, PATRICK WONG IS HERE SO WE NOW HAVE A RANGE FOR EUROPE, ARE THEY IN A WORSE PLACE? >> THEY HAVE PROBLEM AND BASICALLY THEY APOLOGIZED, IT IS GETTING CHALLENGED AND OFFICE PRICES DEFINITELY IS FALLING DOWN IN HONG KONG SO BASICALLY THE CHALLENGE IS FURTHER INCREASE, BASICALLY WE WILL GET MORE DETAILS.

REBECCA: THERE HAS BEEN OPTIMISM FROM BONDS AND A REFINANCING PLAN WITH COLLATERAL. >> THE CONCERN IS ON ASSETS WHICH POTENTIALLY COULD BE BUYING TIME POTENTIALLY LATER, HONG KONG AND CHINA WE WILL SEE HOW IT GOES, ONE OR TWO YEARS AND THEN THEY HAVE TO BE OK FOR THE NEXT COUPLE OF YEARS SO THE CHALLENGE IS THE LEVERAGE. LOTS OF CONCERN FOR INVESTORS BUT WE WILL SEE IF WE BOUNCE.

DAVID: EQUITY IS EASY BUT THIS IS A CREDIT STORY, YOU HAVE TO LOOK AT THE RISK OF THE CREDIT, WE ARE CLOSER TO A NAME LIKE V ANKA. THEY WOULD NOT PUT THEMSELVES IN THAT BASKET AND SHARES ARE UP, 5% OR JUST UNDER THAT FROM FRIDAY I THINK THE QUESTION, CAN NEW WORLD LOOK TO DEVELOPMENTS ON THE FUNDAMENTAL -- ON THE FUNDAMENTAL BUSINESS? >> I THINK DEFINITELY.

HAPPENING WE SEE STATE OWNED DEVELOPERS BUYING LAND IN THE MARKET TO PAY SOME EXTRA PREMIUM. ALSO TAKE SOME TIME TO SEE HOW IT GOES AND NEW WORLDS IS HAVING ADEQUATE MOMENTUM IN SALES. DAVID: THE -- THE STORY THAT DEVELOPERS ARE BUYING LAND, HOW IMPORTANT IS THAT?

>> SOME OF THEM CAN REALLY SELL SOME OF THE PROJECTS AND SUPPORT FROM THE GOVERNMENT IS IMPORTANT. IT IS A GOOD SIGNAL. REBECCA: ONE POSITIVE SIGNAL WE ARE SEEING IN CHINESE PROPERTY.

PATRICK WONG JOINING US AND ZELENSKYY SAYS HE IS WILLING TO TRADE HIS PRESIDENCY FOR PEACE AND NATO MEMBERSHIP. DAVID: A LOOK INTO DRONE PRODUCTION AT THE FOREFRONT OF THE BATTLEFIELDS OF THE WORLD. SPECIAL REPORT JUST AHEAD.

THIS IS BLOOMBERG. REBECCA: ZELINKSI WILL STEP DOWN IF PEACE IS POSSIBLE. >> I AM READY TO TRADE FOR NATO MEMBERSHIP TODAY.

I'M NOT GOING TO BE IN POWER FOR DECADES. REBECCA: LET'S BRING IN DEREK WALLBANK. WHY IS THIS SUCH A HOT BUTTON TOPIC?

DEREK: ZELENSKYY STATUS IS A TALKING POINT, TRUMP AND ZELENSKYY HAVE HAD A FALLING OUT IN ONE KEY THING IS ELECTIONS IN UKRAINE, SOMETHING RUSSIA HAS BEEN PUSHING FOR. ZELENSKYY HAS LOW POLL NUMBERS EVEN THOUGH THEY ARE HIGHER THAN TRUMP HAS SAID. THEY ARE LOWER THAN WHEN THE INVASION IN STARTED, THERE IS NOT A PROSPECT FOR NATO MEMBERSHIP SO IT'S NOT REALLY ON THE TABLE BUT HE IS WILLING TO TALK ABOUT A UKRAINE THAT HE IS NOT THE HEAD OF.

ZELENSKYY IS TRYING TO SET UP EXPLICIT U. S. SECURITY GUARANTEES, NOT ECONOMIC BUT MILITARY.

AS THE U. S. IN UKRAINE TRY TO COME TO TERMS, GUARANTEEING SECURITY AND THERE WILL BE CONVERSATIONS BETWEEN THE U.

S. AND RUSSIA ON THE CONTOURS OF A PEACE DEAL AND LAND WILL BE IMPORTANT, TOP OF MIND IS HOW WE MAKE SURE THERE IS A PAUSE BETWEEN INVASIONS. DAVID: DEREK IN SINGAPORE.

SPEAKING OF THE BATTLEFIELD WE WILL HAVE SPECIAL COVERAGE INTO THE ARMS RACE FOR DRONES INVOLVING THE U. S. AND CHINA.

IN A CULTURAL -- ANNABELLE DROULERS EXPLAINS. >> NO QUESTION THAT DRONES HAVE ALTERED THE MILITARY. THEY'VE BEEN IN USE FOR DECADES.

ON TODAY'S BATTLEFIELDS IT IS DIFFERENT BECAUSE OF THE SHEER VOLUME IN THE SKIES. >> THE WAR IN UKRAINE IS A DRONE WAR. >> THEY HAVE BEEN DEPLOYED, A SIGNAL OF WHAT IS AHEAD WITH THE U.

S. SPENDING HUNDREDS OF MILLIONS OF DOLLARS. >> A MAJOR WAR WILL VERY MUCH BE A DRONE WAR.

>> TECHNOLOGY MOVES FAST. >> AIR SUPERIORITY IS NOT JUST ABOUT FIGHTER JETS, IT IS ABOUT AI POWERED SYSTEMS. >> MILITARIES NEED LESS ADVANCED DRONES.

>> THEY HAVE BEEN INVESTING , IT IS THE LOWER END STUFF THAT THEY ARE TRYING TO BUILD UP. >> CHINA SUPPLIES 80% OF THE GLOBAL MARKET. >> CHEAP DRONES CAN BE ADAPTED FOR THE MILITARY.

>> CHINA IS PUTTING INTENSE CAPITAL , IT COULD BE THE DIFFERENCE BETWEEN VICTORY AND DEFEAT. >> RIVALS ARE RACING TO CATCH UP. REBECCA: ANNABELLE JOINS US FROM HONG KONG.

CHINA ARE DOMINATING SALES. >> YEAH, JUST GOING BACK TO THE SUPPLY CHAIN, IT IS WELL AND TRULY CHINA. HOW IT CAN BE WEAPONIZED IS THE CHALLENGE.

THEY NEED NO COMPONENTS MADE IN CHINA. THIS IS A TYPE OF DRONE USED IN UKRAINE THAT PUTS THE -- THE -- THE PILOT IN THE COCKPIT THROUGH A VIDEO FEED. TODAY THE MAIN PRODUCER IS CHINA, FOR ALL DRONE COMPONENTS.

EXTRICATING AWAY FROM THE SUPPLY CHAIN IS CHALLENGING AND THAT IS WHAT WE ARE SEEING. IN TAIWAN THEY ARE TALKING TO GOVERNMENT OFFICIALS TO UNDERSTAND THE PUSH TAIWAN IS MAKING. AND DEVELOPING RELATIONSHIPS WITH THE U.

S. AND ALLIES, GOVERNMENT TO GOVERNMENT AGREEMENTS IN RUSSIA, IT IN UKRAINE. QUITE THE BIG CHALLENGE FOR TAIWAN.

DAVID: WE WILL STAY TUNED. LATER ON WE WILL DISCUSS CHINA'S DEFENSE STRATEGY FOR THE SOUTH CHINA SEA. SPEAKING TO A SENIOR FELLOW FOR INTERNATIONAL SECURITY AND STRATEGY.

THIS IS BLOOMBERG. DAVID: WELCOME BACK TO THE CHINA SHOW. LAST FEW MINUTES, ALIBABA REPORTEDLY INVESTING 380 BILLION INTO AI, YOU SIMPLY DO THE MATH, ALIBABA SITTING ON CASH, THEY WILL TAP IT AS WELL BUT THE MARKET IS LISTENING.

ALIBABA AND THE BENCHMARK IT OPENED LOWER, PLENTY MORE AHEAD, COMING OFF A SIX WEEK RUN THIS MONDAY MORNING. >> WELCOME BACK, JUST ENTERING WHAT? THE SECOND HOUR OF THE CHINA SHOW.

WE STARTED OFF FAIRLY. . .

QUIET, THEN THE LATEST ON THE TRUMP STORY, SOMETHING TO TALK ABOUT OUT OF ALIBABA. REBECCA: SPENDING ON AI, WE TALKED ABOUT AI OFFSETTING TARIFF RISKS AROUND THIS AMOUNT OF MONEY FUNNELED OFF THE BACK OF THIS. DAVID: THE REPORT IS ONLY 2.

5 WHYS SO WE DON'T HAVE A LOT OF DETAILS BUT MARKETS LISTENED. COMING OFF HIGHS AND OTHER STORIES, WE HAD INDEX REVIEW ON FRIDAY AND I DON'T NEED TO TELL YOU WHICH STOCKS WERE ADDED BUT THERE WERE SOME CHANGES, HORIZON ROBOTICS AND TENCENT MUSIC. BACK TO THE GEOPOLITICAL STORY, SHIPPING STOCKS ARE DOWN ON THE PROPOSAL OF SHIPPING FEES FROM THE WHITE HOUSE.

NOT A LOT AS FAR AS OTHER NAMES BUT THE OTHER STORY CATCHING ATTENTION IS VACCINE AND TEST KIT MAKER STOCKS, JAPAN IS CLOSED. RESEARCHERS AT THE WUHAN INSTITUTE, THE -- THE -- THE DISCOVERY OF A COVID LIKE VIRUS, IT'S -- IT'S -- IT'S WORTH NOTING THAT THE VIRUS HAS YET TO BE SEEN IN HUMANS TO DOWNPLAY THAT -- THAT BIT, BUT MARKETS ARE REACTING. REBECCA: THE STORY NO ONE WANTS TO READ.

THE OTHER THING WE ARE WATCHING FOR HIS ASIAN CENTRAL BANKS, DECISIONS FROM BANK OF KOREA, BANK OF THAILAND BUT THE FOCUS WILL BE U. S. GDP AND PCE DATER, THE PREFERRED GAUGE.

DAVID: ABSOLUTELY, IS THIS -- CAN WE TRUST THE PRICING AROUND THE FED CUTS NOW? CUTS CHRIST? AND THE NVIDIA RESULTS MIDWEEK AS WELL ON THE AI STORY AND U.

S. EXCEPTIONALISM. MARK CRANFIELD JOINS US NOW AS WE GET UNDERWAY.

MARK: ALIBABA HEADLINE IS IMPRESSIVE. MARKETS WILL LIKE THAT AND THE AI NARRATIVE IS BUILDING UP, SO THROW MORE ONTO THE FIRE. INTERESTING SITUATION, WE'VE SPOKEN ABOUT DECOUPLING VARIOUS TIMES WHEN PEOPLE THOUGHT CHINA COULD DECOUPLE FROM THE U.

S. AND IT NEVER HAPPENED, THE WORLD FOLLOWS U. S.

MARKETS AND WE COULD GET SOMETHING MORE SERIOUS BECAUSE CHINA HAS ITS OWN STORY WITH AI AND SOME GOVERNMENT COMPANIES ADOPTED DEEPSEEK PRODUCTS AND THERE IS POTENTIAL THAT FINALLY CHINESE TECH STOCKS MIGHT BE BETTER THAN U. S. PEERS.

THE STORY IS TIRED. MAYBE CHINA CAN PICK UP THE THEME REGARDLESS OF THE U. S.

AND REST OF THE WORLD. A COMPANY LIKE ALIBABA MAY BE THE DECOUPLING WILL HAPPEN WITH THE BIG OUTPERFORMANCE. REBECCA: I WANT TO ASK ABOUT GERMANY AND THE READ THROUGH'S AND I SUPPOSE THE SIGNIFICANCE OF HOW QUICKLY THIS COMES TOGETHER.

MARK: THAT'S WHAT YOU'RE SEEING WITH THE EURO EXCHANGE RATES, THAT IS RELIEF. TRADERS ARE HAPPY TO SEE A GOOD CHANCE -- THERE WAS FEAR THAT THE RESULT WOULD BE SUCH A MESS, WE MIGHT GET NOTHING HAPPENING IN THE BIG POLICY DRIFT WITH NO LEADERSHIP BUT THAT DOES NOT APPEAR TO BE THE CASE. THAT'S WHAT MARKETS LIKE, NO CONCERN OVER WHO WINS, THEY JUST WANT A MANDATE THAT LOOKS AS THOUGH IT HAS POTENTIAL.

DAVID: OTHER ITEMS ON THE AGENDA IS NVIDIA EARNINGS. WHAT WILL BE MORE CONSEQUENTIAL? >> NVIDIA YEAR -- NVIDIA IS ALWAYS IMPORTANT.

PEOPLE WILL BE LOOKING AT THE OUTLOOK, WHETHER THEY WILL PRODUCE THE RESULTS THEY HAVE BEEN AND THE FED SITUATION WITH INFLATION EXPRESSING CONCERN OVER THE CHANGE OF ADMINISTRATION IN THE U. S. AND POLICIES COULD BE INFLATIONARY.

BLOOMBERG THINKS IT WILL BE A SOFT NUMBER, IT COULD BE BECAUSE WE HAVE NOT SEEN THE POLICIES BUT BOTH EVENTS CAN CAUSE VOLATILITY SO EXCITING WEEK WHICHEVER WAY IT PLAYS. REBECCA: MARK CRANFIELD, I'M SURE WE WILL TALK TO YOU. WE HAVE THE GERMAN CHAMBER OF COMMERCE IN CHINA JOINING US.

THAT IS NEXT SO STAY WITH US. THIS IS BLOOMBERG. >> WE'VE MADE A TOUGH CAMPAIGN THAT WAS NECESSARY AND A DEBATE ABOUT POLICY, MIGRATION, INTERNAL SECURITY, BUT NOW WE WILL TALK TO EACH OTHER AND ESTABLISH A VIABLE GOVERNMENT AS QUICKLY AS POSSIBLE.

REBECCA: JIM CONSERVATIVE LEADER FREDERICK MAERSK AFTER HIS BLOCK WAS PROJECTED TO WIN THE ELECTION AND JUST SEEING REACTIONS IN CHINA, BEIJING IS PROMOTING HEALTHY DEVELOPMENT OF CHINESE AND GERMANIC TIES. THE RELATIONSHIP IS OF SIGNIFICANCE AND CHINA'S GERMANY POLICY WILL REMAIN UNCHANGED. DAVID: CHINA APPRECIATES GERMANY'S RATIONALE ON ELECTRIC VEHICLES.

EXPRESSING HOPE THAT THEY WILL LOVE SOLVE TENSIONS AFFECTING TRADE TIES ACROSS INDUSTRIES. LET'S TALK MORE ABOUT IMPLICATIONS AND GERMAN COMPANIES IN CHINA. JOINING US IS MAXIMILIAN FROM THE GERMAN CHAMBER OF COMMERCE IN EAST CHINA OUT OF SHANGHAI.

THANK YOU FOR TAKING THE TIME TO SPEAK WITH US. HOW DO THESE EVENTS AFFECT COMPANIES UNDER YOUR WATCH ACROSS THE WORLD? MAXIMILIAN: THANK YOU FOR HAVING ME.

IT'S VERY IMPORTANT THAT THE GOVERNMENT RETHINKS CHALLENGES AND TRANSATLANTIC RELATIONS WHICH ARE NOT AS THEY WERE BEFORE SO WE WILL REENGAGE WITH CHINA. REBECCA: WE HAVE HAD COMMENTARY ABOUT CHINA, HOW ARE THE INVESTORS THINKING IN RESPONDING TO THE THINGS THAT ARE PROJECTED TO COME THROUGH? MAXIMILIAN: COMPANIES HAVE CHALLENGES IN CHINA.

THE INVESTMENT CONFIDENCE IS NOT DOING WELL IN CHINA, BUT IMPORTS FROM GERMANY ARE LESS COMPETITIVE BECAUSE OF THE HIGH ENERGY PRICES AND COSTS OF OPERATIONS. THE NEW GOVERNMENT NEEDS TO FOCUS ON COMPETITIVENESS AND ALSO GET INTO A BETTER DISCUSSION WITH CHINA. YOU MENTIONED WE HAVE TARIFFS ON ELECTRIC VEHICLES WHICH CAUSE TENSIONS SO WE HOPE THEY CAN BE TRANSFERRED INTO OPEN DIALOGUE TO TACKLE CHALLENGES AND ENABLE OPPORTUNITIES.

GERMANY CANNOT BE COMPETITIVE IF THEY ARE NOT INVESTED IN CHINA. DAVID: MAYBE JUST TO TIE WHAT IS GOING ON AS GEOPOLITICS TO THE REPORT, GERMAN COMPANIES CAN ONLY BE COMPETITIVE IF THEY BRING RHD INTO CHINA, TIE THOSE TWO THINGS FOR US. MAXIMILIAN: FIRST OF ALL IT IS REMARKABLE THAT GERMAN COMPANIES IN CHINA GET TO FEEL GEOPOLITICAL TENSIONS BECAUSE IN THE PAST THEY DID NOT FOCUS ON TENSIONS BUT WITH TENSIONS NOT ONLY FROM WASHINGTON BUT BRUSSELS IT FORCE THEM TO RETHINK ENGAGEMENT SO WHILE THEY ARE DIVERSIFYING OUTSIDE OF CHINA TO SERVE THE U.

S. AND EUROPEAN MARKET THEY UNDERSTOOD HOW IMPORTANT IT IS TO REMAIN COMPETITIVE AND BUILD SUPPLY CHAINS HERE, THAT'S WHY WE CALLED IT LOCALIZATION 3. 0, BECAUSE IT IS NOT ONLY PRODUCTION IN CHINA, IT IS INVESTING IN RESEARCH AND DEVELOPMENT TO SERVE THE LOCAL MARKET AND NOT MISS OUT ON THE ECOSYSTEM IN CHINA.

WHAT HAPPENED WITH DEEPSEEK SHOWED CHINA IS HIGHLY COMPETITIVE IN THE HIGH-TECH SECTOR AND GERMAN COMPANIES HAVE TO INVEST. REBECCA: UH, WE'VE SEEN THE EXODUS OF FOREIGN FIRMS BOTTOMING OUT EVEN IF INVESTMENT IS REALLY PLUNGING. GERMAN FUNDS AND INVESTMENT MIGHT BE THE EXCEPTION OF LAST YEAR BUT GERMAN FIRMS THAT ARE STAYING, HOW ARE THEY THINKING ABOUT THE RISK OF THE CROSS HAIRS OF U.

S. AND CHINA RELATIONS? NOT JUST FOR EXAMPLE ELECTRIC VEHICLE AND TRADE TENSIONS?

MAXIMILIAN: NO, YOU ARE RIGHT AND THE QUESTIONS IS WILL SOFTWARE DEVELOPED IN CHINA BE IMPLEMENTED IN THE U. S. AND 10 U.

S. TECHNOLOGY DEVELOPED IN THE U. S.

CONTINUE TO IMPORT TO CHINA AND BE USED HERE AT THE MOMENT? IT MIGHT BE CHALLENGING AND WE DON'T LIKE TO TALK ABOUT DECOUPLING BUT THIS IS A SCENARIO WE HAVE TO LOOK AT, GERMAN COMPANIES TRYING TO MITIGATE THE RISK HAS PROVEN THEY INVEST BECAUSE THEY SEE THE MARKET IS RELEVANT AND THEY SEE THEIR OWN COMPETITIVENESS WHILE COMPANIES FROM OTHER COUNTRIES MIGHT NOT SEE A FUTURE. DAVID: UH, CAN I ASK YOU SINCE THE PRESENCE IS STILL, YOU KNOW, INCREASING IF -- IF NOT REMAINING THE SAME, WHAT ARE YOU SEEING AS FAR AS DEMAND FOR FINAL GOODS AND MAINLAND CHINA BECAUSE WE HEAR COMPANIES TALK ABOUT PRICE PRESSURES ACROSS SECTORS, WHAT ARE YOUR MEMBERS TELLING YOU?

MAXIMILIAN: THE SENTIMENT SHORT-TERM IS NEGATIVE BECAUSE THE LACK OF DEMAND LED TO FIERCE PRICE WARS WHERE IS HARD TO MAKE PROFITS WITH COMPANIES UP ALSO SEEING THIS AS A CHANCE AND THEY ARE QUITE SURE THEY CAN SURVIVE AND COME OUT STRONGER BY BEING FORCED TO BECOME EFFICIENT, INCREASE PRODUCTIVITY AND LOWER COSTS, GERMAN COMPANIES WILL BE MORE COMPETITIVE SO THE SENTIMENT SHORT-TERM IS NEGATIVE BUT MEDIUM AND LONG-TERM IT IS NOT. REBECCA: WHAT MESSAGE ARE YOU TAKING TO CHINESE OFFICIALS AND POLICYMAKERS AND HOW RECEPTIVE ARE THEY? MAXIMILIAN: YEAH, YOU KNOW, FOR US, IT IS UNDERSTANDABLE THAT THE CHINESE MARKET PROTECTED THE MARKET BUT CHINESE COMPANIES BECAME SO STRONG, THERE IS NO NEED TO PROTECT LOCAL COMPANIES SO A LEVEL PLAYING FIELD WILL BE CRUCIAL TO INVEST FURTHER AND THE CHINESE TRANSITION TO HIGH TECH, THEY NEED GERMAN COMPANIES AND THE CHINESE GOVERNMENT IS ASKING WHAT THEY CAN DO.

WE EXPECT ACTIONS IN POLICY ETC. , SO GERMAN COMPANIES CAN GROW. DAVID: RIGHT -- RIGHT -- RIGHT.

THEY ARE ASKING WHAT THEY CAN DO TO MAKE LIFE BETTER SO WHAT IS THE ANSWER? MAXIMILIAN: THE QUESTION IS HOW TO INCLUDE US BETTER, THEY NEED TO INVOLVE US AND WE NEED THE SAME SUBSIDIES AND ACCESS TO CREDIT AND UNIVERSITIES. REBECCA: THANK YOU SO MUCH FOR THOSE INSIGHTS.

GERMAN CHAMBER OF COMMERCE IN EAST CHINA. WE WILL HAVE MORE ANALYSIS OF GERMAN ELECTIONS, WHAT IT MEANS FOR CHINA AHEAD. WE WILL HEAR FROM PETERSON INSTITUTE FOR ECONOMICS, WHY CONSERVATIVE OPPOSITION LEADER DID NOT QUIT THE ELECTION IN THE WAY HE WOULD HAVE WANTED.

REBECCA: GOOD MORNING, HERE ARE SOME OF THE TOP STORIES TODAY. THREE OF BYTEDANCE'S MAJOR INVESTORS HAVE MARKED OFF TIKTOK VALUATIONS. SOFTBANK REEVALUATED THE FIRM FACTORING IN POTENTIAL FOR AI BUSINESS.

FIDELITY INVESTMENTS ALSO MARKED UP BYTEDANCE, A SHARP REBOUND. SHEIN'S PROFITS SLUMPED BY 40% LAST YEAR, NET INCOME SLIPPED TO ONE BILLION DOLLARS AS SALES JUMPED 19%. INTERNAL PROJECTIONS WERE TO BE MADE BEFORE ACCOUNTS WERE FINALIZED.

THEY FILED FOR A LONDON IPO AND ARE UNDER PRESSURE TO CUT THEIR VALUATION TO 13 BILLION. BERKSHIRE HATHAWAY CUT THEIR EARNINGS DRIVEN BY HIGHER INTEREST RATES AND RECOVERY IN INSURANCE UNDERWRITING. THEY ARE AT A RECORD $334 BILLION AT THE END OF 2024.

WARREN BUFFETT EXPECTS PRETAX LOSSES OF 1. 3 BILLION FROM THE L. A.

WILDFIRES. DAVID: THE ANNUAL LETTER IS WHAT THEY SAY ABOUT WHERE THE COMPANY IS LOOKING TO INCREASE EXPOSURE SO WHAT THE ORACLE OF OMAHA BUYS IS A GOOD INDICATOR, IT HAS HAPPENED IN JAPAN. REBECCA: THE COMPANY WILL INCREASE OWNERSHIP OF JAPAN'S LARGEST FIVE TRADING HOUSES OVER TIME.

DAVID: AND I THINK THE FIRST TIME THE CHART SHOWS YOU BACK IN AUGUST OF 2020 THAT THEY WERE LOOKING TO DO THIS, SINCE THEN NAMES LIKE MITSUBISHI WHICH BY THE WAY HAVE TAKEN A BACKSEAT AS FAR AS THE GLOBAL FOOTPRINT OF INVESTORS IN JAPAN ARE BACK IN THE SPOTLIGHT. REBECCA: THEY INTENDED TO KEEP THEIR STAKE BELOW 10% BUT THE FIVE COMPANIES AGREED TO MODERATE READ -- RELAX THE CEILING. DAVID: A BAD MASSAGE.

YOU NEED TO RELAX AFTER THAT SESSION. JAPAN IS SHUT FOR THE EMPEROR'S BIRTHDAY. IT'S OTHER STORIES, LET'S START WITH A PIPIT TO SINGAPORE AND HONG KONG, LISTED SHARES ON YOUR SCREEN.

S GX REPORTS AN ANNOUNCEMENT OUT OF SINGAPORE THAT THEY WILL INVEST 5 BILLION IN FUND MANAGERS TO LIFT THE STOCK. HKS IS DOWN. MORGAN STANLEY IS AT FOUR 50.

MORGAN STANLEY RAISING ALIBABA ADRS TO OVERWEIGHT. REPORTING MAY BE MORE POLICY SUPPORT AS IT PERTAINS TO RECYCLING AND REUSE AS FAR AS ELECTRIC VEHICLE BATTERIES. CATL IS GOING THE OPPOSITE WAY.

REBECCA: CLOSELY WATCHED FOR THE LEVEL OF STATE SUPPORT, BUT IT LOOKS LIKE AN EXCEPTION TO THE RULE WHEN IT COMES TO BEIJING AND THE STATE OFFERING TO STEP IN TO SUPPORT THE DEVELOPER. DAVID: WE WANT TO CALL YOUR ATTENTION TO CHINESE DEVELOPERS BUYING LAND AT A PREMIUM, MORE OF THEM ARE DOING THAT WHICH IS INDICATIVE OF GREEN SHOOTS IN THE HOUSING MARKET ON THE MAINLAND. >> WE HAVE BEEN MOSTLY POSITIVE OVER THE LAST 30 MINUTES.

THE JURY IS OUT. INVESTING INTO AI, THE FIGURE IS 53 BILLION U. S.

OFF TO A DECENT START AGAINST THE BACKDROP OF EVERYTHING ELSE. JAPAN IS CLOSED TODAY, SO WE ARE DOWN 51%. WE ARE COMING OFF A BIG DROP ON FRIDAY.

IT IS PERHAPS INDICATIVE OF WHAT THE SESSION MIGHT LOOK LIKE GOING INTO LATER ON MONDAY. >> BACK TO ONE OF OUR TOP STORIES AND LINKED TO THIS THEME OF HOW MARKETS ARE REACTING TO THE TRADE NEWS, IT SEEMS CHINA VERY MUCH OVERTAKEN BY THE ALIBABA NEWS. WE DID HAVE U.

S. TREASURY SECRETARY SCOTT BESSENT AND THE CHINESE VICE PREMIER EXCHANGING COMPLAINTS OVER TARIFFS AND BEIJING'S ECONOMIC MODEL IN THEIR FIRST DISCUSSIONS AS THE TRUMP ADMINISTRATION TOOK OFFICE. WE LEARNED WASHINGTON IS PUTTING PRESSURE ON MEXICO TO STOP TARIFFS ON CHINESE IMPORTS.

DAVID: AMERICA'S FIRST INVESTMENT POLICY THAT LABELED CHINA AN ADVERSARY. >> ANOTHER POTENTIAL FLASHPOINT BETWEEN BEIJING AND WASHINGTON IS EUROPE AND THE ROLE CHINA COULD PLAY IN THE POSSIBLE CEASE-FIRE IN UKRAINE. JOINING US IS RETIRED SENIOR COLONEL OF CHINA'S PEOPLE'S LIBERATION ARMY ZHOU BO AND CURRENTLY A SENIOR FELLOW FOR INTERNATIONAL SECURITY AND STRATEGY.

I WANT TO ASK ABOUT SOME OF THE SPECIFICS OF THE ROLE THAT CHINA CAN PLAY AS A POTENTIAL PEACEMAKER WHEN IT COMES TO MOSCOW'S RULE WITH UKRAINE. DO YOU THINK BEIJING SEES ITSELF AS A POSSIBLE GUARANTOR FOR EUROPEAN SECURITY? >> ACTUALLY I BELIEVE CHINA CAN PLAY A ROLE IN THIS WAR, IF A CEASE-FIRE IS IN PLACE.

WHY IS THAT? UKRAINIANS DEEPLY REMEMBER THE PLEDGES OF THE FIVE NUCLEAR POWERS WHEN THEY DECIDED TO RELINQUISH NUCLEAR WEAPONS. THAT GUARANTEE WAS NOT VERY MUCH SUBSTANTIVE AND THE FIVE POWERS COULD NOT PROVIDE A SO-CALLED POSITIVE GUARANTEE.

GIVEN THE VOLATILITY OF THE SITUATION, I BELIEVE UKRAINE WILL BE AFRAID IF THERE IS NO GUARANTEE. RUSSIA ALSO NEEDS THE KIND OF SECURITY GUARANTEE BECAUSE RUSSIA DOESN'T WANT TO STAND LOOKING ISOLATED. THE WHOLE WEST IS BEHIND UKRAINE.

PRESIDENT PUTIN TALKED ABOUT HOW CHINA, INDIA, AND BRAZIL CAN BE BROKERS. THAT'S THE FIRST THING. THE SECOND IS A BIG IF.

IF PEACEKEEPING IS NEEDED, THEN OF COURSE CHINA AND OTHER COUNTRIES FROM THE GLOBAL SOUTH ARE IN THE BEST POSITION TO PLAY THIS ROLE. RUSSIA WILL SIMPLY TAKE THESE COUNTRIES AS A WOLF IN SHEEP'S CLOTHING. OTHERWISE, WHY WOULD RUSSIA HAVE THIS WAR AFTER ALL?

IT IS BECAUSE OF NATO. WITH EVERYTHING IS MOST OBVIOUS GIVEN -- CHINA DEFINITELY CAN PLAY A CRUCIAL ROLE IN TERMS OF THE WORLD WITH UKRAINE BECAUSE CHINA CAN DO THINGS MORE EFFICIENTLY AT LOWER COST. REBECCA: IT'S INTERESTING YOU TALK ABOUT THE POTENTIAL FOR CHINA TO COOPERATE WITH COUNTRIES FROM THE GLOBAL SOUTH AND SO ON IN TERMS OF THE POTENTIAL FOR PEACEKEEPING.

THE OTHER POINT THAT IS IMPORTANT IS CHINA HAS THE LARGEST BASE OF PEACEKEEPING FORCES WITHIN THE U. N. AND WHEN WE LOOK AT THE YOU AND SECURITY COMMISSIONER.

BUT TYPICALLY CHINA DOES NOT SEND TROOPS IN ANYWHERE WITHOUT AUTHORIZATION AND TYPICALLY HAS NOT PLAYED THE ROLE OF THIS SECURITY GUARANTOR SO I WONDER HOW YOU ASSESS CHINA'S WILLINGNESS TO SEND PEACEKEEPING FORCES INTO UKRAINE. >>>> FOR PEACEKEEPING TO HAPPEN, THE WARRING PARTIES HAVE TO HAVE CONSENT OF THE PERMANENT MEMBERS OF THE UNC COUNCIL. ONE OF THE WARRING PARTIES IS A PERMANENT MEMBER.

IF PEACEKEEPING IS NEEDED AND HAS TO BE AUTHORIZED BY THE U. N. , THIS HAS TO BE A SPECIAL ARRANGEMENT.

BECAUSE OF CHINA'S CONTRIBUTION TO PEACEKEEPING THAT CAN BE SEEN BY EVERYBODY, I THINK CHINA IS BETTER POSITIONED TO PLAY THIS ROLE. AND BECAUSE HE CAN BE TRUSTED, THE IMPARTIALITY IS ONE OF THE PRECONDITIONS FOR PEAK -- PEACEKEEPING. FOR THE FIRST TIME CHINA WILL BE HAVING A ROLE IN THE SECURITY OF FOR EUROPE, THAT IS SOMETHING UNPRECEDENTED.

DAVID: MY QUESTION TAKES A STATE -- STEP BACK. DAVID HERE. YOU HAVE BEEN QUICK TO EMPHASIZE THE ROLE CHINA PLAYS IS POST ANY CEASE-FIRE.

IS THERE ANY ROLE YOU THINK CHINA CAN PLAY THAT BRINGS US CLOSER TO A CEASE-FIRE? >> I HAVE SOME DOUBTS ABOUT THIS. THAT IS A VERY GOOD QUESTION BECAUSE RIGHT NOW RUSSIA AND THE UNITED STATES ARE HAVING DIRECT TALKS.

I BELIEVE UKRAINE SHOULD HAVE BEEN INVITED. OTHERWISE IT LOOKS A BIT LIKE WHAT THE SOVIETS IN GERMANY DID TO HAVE SPHERES OF INFLUENCE. UKRAINE IS THE COUNTRY BEING INVADED.

THIS IS NOT ALSO FAIR FOR UKRAINE I WOULD SAY. AT THIS STAGE I DON'T BELIEVE CHINA CAN PLAY A VERY BIG ROLE. I BELIEVE CHINA'S ROLE WILL COME WHEN THEY HAVE NEGOTIATIONS WITH SHORT-TERM GUARANTEE AND THEN CHINA CAN JOIN OTHER POWERS IN PROVIDING THIS GUARANTY, AND THEN CHINA CAN DO PEACEKEEPING AND POSTWAR RECONSTRUCTION.

SO CHINA'S ROLE CAN COME A LITTLE BIT LATER. REBECCA: THERE HAS BEEN SOME DISCUSSION ABOUT THE SO-CALLED REVERSE NIXON POSSIBILITY HERE, THE IDEA THAT THE U. S.

WILL MOVE TO SPLIT OR CREATE MORE DISTANCE BETWEEN PRESIDENT XI JINPING AND PRESIDENT VLADIMIR PUTIN. HOW CONCERNED DO YOU THINK BEIJING IS ABOUT THAT POSSIBLE SCENARIO? >> THAT IS TOTALLY IMPOSSIBLE.

JUST IMAGINE FOR A MOMENT, AND THE POST-PUTIN AREA, WE DON'T KNOW WHEN THAT WILL BE. GIVEN THAT CHINA AND RUSSIA ARE NEIGHBORS TO EACH OTHER, WHOEVER COMES INTO THE KREMLIN WOULD HAVE TO CONSIDER THIS FACT THAT WE ARE THE LARGEST NEIGHBORS TOWARD EACH OTHER THEREFORE WE MUST HAVE AN AMICABLE RELATIONSHIP. I BELIEVE RUSSIA'S BEST CHANCE OF TILTING TOWARD THE ROAD -- THE WEST, EVEN PUTIN WOULD WANT TO JOIN NATO.

BUT EVEN THAT TIME THAT KIND OF DREAM WAS DOOMED AND GIVEN HOW GOOD THE RELATIONSHIP BETWEEN CHINA AND RUSSIA IS, I DON'T BELIEVE THAT THIS RELATIONSHIP WOULD CHANGE A LOT. OF COURSE I BELIEVE THIS RELATIONSHIP WILL CONTINUE. DAVID: CAN I GET YOUR THOUGHTS AS WELL, THE STAKES DIRECTLY INTO CHINESE-AMERICAN RELATIONS?

WE ARE TRYING TO FIGURE OUT WHERE THE RATIONALE IS AMIDST ALL THE NOISE. FROM YOUR PERSPECTIVE IN BEIJING, AS PRESIDENT TRUMP ACTED IN A WAY WE WERE EXPECTING HIM TO ACT? >> THIS IS AN INTERESTING QUESTION.

I BELIEVE ONE MONTH INTO OFFICE, HE APPEARED QUITE FRIENDLY TOWARD CHINA IF WE COME HERE -- COMPARE HIS ACTIONS TOWARD THE REST OF THE WORLD. SO THE QUESTION IS, WHY IS THAT? I BELIEVE HE HAS LEARNED SOME LESSONS FROM THE FIRST TERM AND SHOULD KNOW THAT HIS SIGNATURE UNPREDICTABILITY WOULD NOT WORK ON THAT.

HE WOULD KNOW THAT HIS TARIFFS DURING THE FIRST TERM ON CHINESE PRODUCTS WILL BE ACTUALLY PAID BY AMERICAN CONSUMERS. AND HE SHOULD KNOW THIS TIME THAT CHINA STILL DEPENDS ON THE UNITED STATES. DAVID: OK, I THINK WE ARE HAVING SOME TECHNICAL ISSUES WITH OUR GUEST JOINING US OUT OF MAINLAND CHINA.

HE SENIOR FELLOW AT THE CENTER FOR INTERNATIONAL SECURITIES. WE WILL TRY TO SEE IF WE CAN GET HIM BACK ON THE OTHER SIDE OF THE BREAK. TALKING GEOPOLITICS, THIS WEEK WE WILL HAVE SPECIAL COVERAGE AND THE ARMS RACE WHEN IT COMES TO DRONES.

COMPETITION THAT INVOLVES THE U. S. , ALLIES AND MAINLAND CHINA.

OUR TECH REPORTER ANNABELLE DROULERS EXPLAINS HOW DRONES ARE SET TO PLAY AND THEY BEEN BIGGER ROLE WHEN IT COMES TO WARFARE. HAVE A LOOK. >> THERE'S NO QUESTION DRONES HAVE ALTERED THE DYNAMICS OF MILITARY OPERATIONS.

UNMANNED AERIAL VEHICLES HAVE BEEN IN USE FOR DECADES INCLUDING IN THE COLD WAR, VIETNAM AND BY THE U. S. TO STRIKE REMOTE TARGETS AFTER 9/11.

ON TODAY'S BATTLEFIELDS, IT IS DIFFERENT. AT LEAST BECAUSE OF THE SHEER VOLUME OF UAVS IN THE SKIES. >> THE CURRENT WAR IN UKRAINE IS VERY MUCH A DRONE WERE ALREADY.

>> THE SITUATION IS BEING MIRRORED IN THE MIDDLE EAST WITH HAMAS AND ISRAELI FORCES DEPLOYING UAVS EXTENSIVELY. IT'S A SIGNAL OF WHAT IS AHEAD WITH THE U. S.

SPENDING HUNDREDS OF MILLIONS TO SECURE A NEW DRONES THROUGH THE SO-CALLED REPLICATOR PROGRAM. >> IF THERE'S A MAJOR POWER WAR, IT WILL BE A DRONE MORE. >> TECHNOLOGY IS MOVING FAST PARTICULARLY AS ARTIFICIAL INTELLIGENCE HAS INTEGRATED INTO UAVS.

>> AIR SUPERIORITY IN FUTURE CONFLICT WILL NOT JUST BE ABOUT FIGHTER JETS. IT WILL BE ABOUT DRONE SWARMS, MUNITIONS AND AI POWERED TARGETING SYSTEMS. >> THERE'S ALSO A QUESTION TARGETING AS MILITARY NEEDS TO PROCURE A LONG -- LARGE FORCE OF DRONES.

>> THE U. S. AND EUROPEAN STATES ACTUALLY FOR A LONG TIME HAVE INVESTED A LOT MORE IN THE MORE SOPHISTICATED LONG-RANGE DRONES THAT HAVE LOTS OF SENSORS TO THEM.

IT IS REALLY THE MID AND LOWER STUFF THAT THEY ARE TRYING TO BUILD UP BECAUSE AS WE HAVE LEARNED FROM THE RUSSIANS, THE NUMBERS DO MATTER. REPORTER: CHINA IS THE LEADER IN COMMERCIAL FIRM -- DRONE PRODUCTION SUPPLYING AROUND 80% OF THE GLOBAL CONSUMER UAB MARKET AND BEIJING HAS SEEN THESE AS A DUAL USE TECHNOLOGY. >> THEY HAVE BEEN REAL PIONEERS IN CHEAP COMMERCIAL DRONES WHICH CAN BE ADAPTED FOR MILITARY USE.

>> IT'S CLEAR THIS IS AN AREA WHERE CHINA IS PUTTING INTENSE CAPITAL, BUT ALSO POLICY FOCUS. I THINK THE CHINESE RECOGNIZED QUITE EARLY THAT DRONES COULD BE THE DIFFERENCE BETWEEN VICTORY AND DEFEAT. REPORTER: NOW BEIJING'S RIVALS ARE RACING TO CATCH UP.

ANNABELLE DROULERS, BLOOMBERG NEWS. DAVID: WE WILL HAVE PLENTY MORE AHEAD HERE ON THE CHINA KEEP IT HERE. ♪ DAVID: WELCOME BACK, YOU ARE WATCHING THE CHINA SHOW.

WE ARE BACK WITH RETIRED SENIOR COLONEL OF THE PEOPLE'S LIBERATION ARMY ZHOU BO, HE'S THE CURRENT SENIOR FELLOW FOR INTERNATIONAL SECURITY AND STRATEGY. APOLOGIES FOR SOME OF THE TECHNICAL DIFFICULTIES BUT I THINK WE WERE TALKING ABOUT RELATIONS IF YOU COULD CONTINUE YOUR THOUGHTS. >> YOU WERE ASKING WHETHER THERE MIGHT BE A NEW ATTITUDE TOWARD CHINA WITH TRUMP.

THIS IS SHEER SPECULATION, I HOPE IT WAS NOT HALLUCINATION. AFTER SEEING HOW HE HAS ACTED IN A DIFFERENT WAY AGAINST CHINA, I THINK THERE IS A POSSIBILITY THAT ACTUALLY DURING HIS SECOND TERM, THE CHINESE-AMERICAN RELATIONSHIP MIGHT IMPROVE CONTRARY TO MOST SPECULATION. HIS LEGACY IN HIS FIRST TERM ACTUALLY IS KIND OF A BIPARTISAN CONSENSUS AGAINST CHINA.

I DON'T THINK HE WANTS THAT HIMSELF BUT HE HAS LONG ELECTED SOME CHINA HAWKS LIKE PETER NAVARRO OR SECRETARY OF STATE POMPEO TO HIJACK THIS RELATIONSHIP. WHO WOULD BE IN THE BEST RELATIONSHIP TO CHANGE IT? HIMSELF.

SO THIS GIVES ME SOME HOPE. WE WILL SEE. REBECCA: WE ALSO NONETHELESS HAVE SEEN THIS FLURRY OF ACTIONS TAKEN BY THE TRUMP ADMINISTRATIONS OVER THE WEEKEND, NOT LEAST THE SHIFT ON CEPHAS, THE CHANGE ON U.

S. INVESTMENT, THE PRESSURE ON MEXICO TO INTRODUCE ITS OWN TARIFFS ON CHINA. DO YOU THINK THESE COMPONENTS AND DIFFERENT PIECES OF NEWS WE'VE HAD, IS THIS A CHANGE IN THE RESPONSE OF THE TRUMP ADMINISTRATION TOWARDS BEIJING?

>> WE HAVE TO WAIT AND SEE, BUT WHAT IS INTERESTING FOR ME IS THAT HIS TARIFF ON CHINA IS LOWERED THAN ON CANADA AND MEXICO WITH HIS 25%. CHINA WOULD SWIFTLY RETALIATE WITH 15% ON SELECT AMERICAN ITEMS. SO BECAUSE HE'S TALKING ABOUT 60%, JUST IMAGINE, AT THE ELECTION, THIS TURNED OUT TO BE MUCH MORE MILD THAN EXPECTED.

THAT GIVES ME A LOT OF SPECULATION. I DON'T KNOW WHERE THE FUTURE WILL GO BUT THE REAL HOPE IS THAT IT COULD BE DIFFERENT FROM HIS FIRST TERM AND COULD BE DIFFERENT FROM HIS PREDECESSOR. ACTUALLY JOE BIDEN WAS QUITE FRIENDLY TOWARD CHINA.

HE WAS EVEN CALLED BEIJING'S JOE. BUT APPARENTLY HE COULD NOT WALK OUT OF THE TRAP LAID OUT BY THE CHINA HAWKS SO HE DOUBLED DOWN ON THE ROAD OF COMPETITION WITH CHINA TO HAVE THIS SO-CALLED -- SO I HAVE SOME HOPE. DAVID: DO YOU THINK THERE'S A CHANCE WE GET A MEETING BETWEEN XI JINPING AND DARE I SAY BEIJING'S DONALD JUST TO USE THAT ANALOGY?

>> ANYTHING COULD HAPPEN BECAUSE THE DIRECT TOP WITH TOP LEADERS WOULD BE MOST USEFUL AND SIGNIFICANT. I'M AWARE OF THE REMARKS BY THE RUSSIAN AMBASSADOR IN CHINA. HE TALKED ABOUT HOW PRESIDENT XI JINPING HAS ACCEPTED RUSSIA'S INVITATION TO GO TO MOSCOW AND ATTEND THE COMMEMORATIONS OF THE SOVIET VICTORIES OVER NAZIS.

THE CHINESE MEDIA DID NOT CONFIRM THAT BUT NORMALLY ON SUCH THINGS, CHINESE MEDIA WOULD ONLY MAKE ANNOUNCEMENTS A FEW DAYS BEFORE SUCH THINGS. BUT HIS -- IT IS INTERESTING THE RUSSIAN AMBASSADOR HAS MENTIONED IT. THE MILLION-DOLLAR QUESTION IS, I BELIEVE RUSSIA HAS ALSO INVITED PRESIDENT TRUMP.

SO WOULD TRUMP GO THERE? IF THAT HAPPENS, THAT WOULD BE REALLY REALLY INTERESTING. REBECCA: THERE IS A QUESTION IN WASHINGTON THAT SOME HAVE BEEN ASKING ABOUT WHETHER OR NOT A POTENTIAL DEAL BETWEEN TRUMP AND PUTIN EFFECTIVELY GIVES PRESIDENT XI A GREEN LIGHT TO INVADE TAIWAN.

HAS ANYTHING REALLY CHANGED ON TAIWAN? WOULD ANY KIND OF DEAL BETWEEN TRUMP AND PUTIN CHANGE HOW TRUMP -- BEIJING THINKS ABOUT TAIWAN? >> I DON'T THINK SO.

PEOPLE HAVE TALKED ABOUT UKRAINE TODAY WILL BE TAIWAN TOMORROW, BUT THIS IS A REALLY REALLY BIG ISSUE. SO IF YOU OBSERVE, YOU WILL FIND THAT THE CHINESE GOVERNMENT IS STILL TALKING ABOUT PEACEFUL REUNIFICATION. THE FACT IS THAT TWO LEADERS OF TAIWAN, BUT STILL TALKING ABOUT PEACEFUL REUNIFICATION.

WHY SHOULD WE LOSE CONFIDENCE? BECAUSE TAIWAN WOULD NOT MOVE AWAY, SO THERE IS NO SUCH A HURRY. I KNOW WE HAVE NEVER ANNOUNCED A TIMETABLE.

THAT'S MOST IMPORTANT. I BELIEVE THAT WE ARE STILL CONFIDENT. A BIG QUESTION FOR CHINA IS WITH THE STRENGTHS OF CHINA MAKE CHINA MORE CONFIDENT ABOUT PEACEFUL REUNIFICATION OR MAKE A CHINA MORE IMPATIENT TO RESORT TO USE OF FORCE.

I BELIEVE THAT THE ANSWER IS THAT WE ARE STILL HAVING CONFIDENCE. DAVID: THANK YOU SO MUCH FOR THE TIME. SENIOR FELLOW AT THE CHAIN WHY UNIVERSITY CENTER FOR INTERNATIONAL SECURITY AND STRATEGY.

PLENTY MORE AHEAD ON THE CHINA AND BLOOMBERG TELEVISION THIS MONDAY. REBECCA:REBECCA: GOOD MORNING. YOU ARE WATCHING THE CHINA SHOW.

RESEARCHERS AT THE WUHAN SEAT OF VIROLOGY SAY THEY HAVE DISCOVERED A NEW CORONAVIRUS THAT ENTERS CELLS AS THE SAME VIRUS THAT CAUSES COVID-19. FOR MORE, LET'S BRING IN OUR CHINA CORRESPONDENT MINMIN LOW. REPORTER: THIS IS A NEW VIRUS THAT IS RELATED TO THE CORONAVIRUS FAMILY THAT CAUSED COVID-19 AND ALSO THE MIDDLE EAST RESPIRATORY SYNDROME THAT KILLED MORE THAN ONE THIRD OF THE PEOPLE IT INFECTED.

ABOUT 2600 PEOPLE UP TO THE MIDDLE OF LAST YEAR MOSTLY IN SAUDI ARABIA. THE GOOD NEWS IS THAT IT ATTACHES ITSELF TO THE HUMAN BODY IN A LESS EFFICIENT WAY THAN THE VIRUS THAT CAUSES COVID-19, SO THE RISK OF THIS BLOWING UP INTO A FULL-BLOWN PANDEMIC AT THE SAME RATE OF COVID-19 IS LESS LIKELY. STILL IT ATTACHES ITSELF TO THE HUMAN BODY BY BINDING TO A PROTEIN THAT'S PRESENT IN HUMANS AND OTHER MAMMALS SO THERE'S THE RISK IT CAN JUMP FROM ANIMALS TO HUMANS DIRECTLY OR THROUGH AN INTERMEDIATE HOST.

THAT'S WHY WE ARE SEEING THESE TALKS OF VACCINE MAKERS AND DIAGNOSTIC MAKERS IN SOUTH KOREA . THE STOCKS ARE QUITE MIXED IN CHINA THOUGH. THE WUHAN INSTITUTE OF VIROLOGY SOUNDS FAMILIAR BECAUSE IT IS THE CENTER THAT HAS BEEN MIRED IN CONTROVERSY OVER THE ORIGINS OF COVID-19.

THE U. S. ACCUSING IT OF LEAKING THE INFECTION THROUGH AN INFECTED WORKER BUT THE CLAIMS ARE STILL CONTESTED BECAUSE THE U.

S. DOES NOT HAVE SUFFICIENT EVIDENCE TO CONCLUDE THAT. THE U.

S. HAS HALTED FUNDING FOR THIS INSTITUTE SINCE 2023. DAVID: THANK YOU.

MINMIN LOW ON THE LATEST ON THIS AND SUFFICE TO SAY WE WILL TRACK THIS ONE A LOT MORE CLOSELY THAN MANY OTHER THINGS BECAUSE OF CERTAIN EVENTS IN THE LAST FEW YEARS OR SO. A COUPLE OF OTHER THINGS, A CHANGE OF PACE. DECLINES RIGHT NOW AND WE ARE TRYING TO FIGURE OUT WHY.

SOME OF THESE AGRICULTURAL STOCKS IN MAINLAND CHINA ON THE BACK OF DEVELOPMENT GUIDELINES TO PROMOTE THE SECTOR. ALIBABA IS OUT WITH A NUMBER CONFIRMING THAT EARLIER REPORT AND IT WILL BE INVESTING MORE THAN $50 BILLION U. S.

IN AI AND THE CLOUD IN THE NEXT THREE YEARS OR SO. WE LEAVE YOU WITH A LOOK AT THE HANG SENG INDEX. SEE YOU ALL TOMORROW.

HAVE A GOOD REST OF YOUR MONDAY.