Daybreak Weekend: Disney Earnings, BOE Meeting, Xi in Europe | Bloomberg Daybreak: Europe Edition
[Music] Bloomberg audio Studios podcasts radio news this is Bloomberg Daybreak weekend our Global look at the top stories in the coming week from our Daybreak anchors all around the world straight ahead on the program a look at some of the big announcements we can expect from Apple’s latest product event on May 7th and a look at earnings from the world’s biggest entertainment company I’m Tom Busby in New York I’m Steven Carol in London where we’re thinking about vote splits and inflation Dynamics ahead of the bank of England’s upcoming meeting I’m Brian courtesy in Hong Kong we look ahead to Chinese president xiin Ping’s trip to Europe what does he hope to get from the EU that’s all straight ahead on Bloomberg Daybreak weekend on Bloomberg 1130 New York Bloomberg 991 Washington DC Bloomberg 1061 Boston Bloomberg 960 San Francisco daab Digital radio London Sirius xm119 and around the world on Bloomberg radio.com and via the Bloomberg business [Music] app good day to you I’m Tom Busby and we begin today’s program with Tech Giant Apple its latest product event this Tuesday May 7th for more on what we can expect we’re joined by Mark German Bloomberg Chief correspondent on global technology so Mark thanks for being here what do you expect to see on Tuesday from Apple thank you for having me so it’s been about a year and a half since the last time Apple released new iPads right that was October 2022 so they went the full calendar year of 2023 without a new iPad that was the first time since the iPad was unveiled by Steve Jobs in 2010 where the company went a full calendar year without a new model on Tuesday that’s going to change the company is going to be updating its two highest in iPads the iPad Pro and the iPad Air these are going to be quite significant updates the iPad Air for the first time is going to get a larger screen size option that’s a 12.9 in model much bigger than the current 11-in model and for the first time the iPad Pro is going to get an OLED screen that’s a crisper more efficient screen technology it looks much better that they’ve been using on the iPhone and the Apple watch for years so that’s finally coming to the company’s iPads well that’s big how what what kind of role will artificial intelligence Hardware play in this so the new iPad Pro at least is expected to have an updated processor that will set the stage for AI enhancements that the company will roll out at the end of this year so the iPad won’t come out the gate with these new AI features but it’ll have Hardware inside to be able to support uh a new slate of artificial intelligence enhancements when those are ready towards the end of the year with their operating system update okay so with the iPads we’re seeing a big change we know that iPad small compared to like sales of the iPhone but still a significant change for apple and let’s talk about what it means to Apple for the iPad IP ad and is it a launching point for future iPhones what works in the iPad well five six years ago the iPad was really peing and then it increased in sales again during the covid pandemic when people were just sitting at home buying a bunch of stuff thinking they need these things uh but now what you’re seeing are bigger sales for the mac and you’re seeing more people buying iPhones instead of iPads because the iPhone screen sizes have become so big and by the way they’re going to make the iPhone screen size even bigger in September with the iPhone 16 Pro Line but the iPad certainly does have place for some people the problem is is that Apple’s veered from the original Vision the original vision of the iPad under Steve Jobs was all the features and goodness of the iPhone with a larger screen better for viewing photos better for watching movies and then you know about a half decade ago they did this odd thing where they tried to make it a quasi laptop replacement they added support for trackpads they added support for more Pro applications they release their own keyboard they have that apple pencil stylus and it’s sort of this in between device right it’s past the point of being the simplistic future of the computer and it’s nowhere near a true laptop replacement and that’s problematic being somewhere in between that’s probably the place you don’t want to be and so what they really need to do with these new iPads is pick a direction we’re long gone from the idea of these things just being a bigger iPhone we no longer want them to be these inet our devices we want them to be true laptop Replacements and with the improved Hardware the better screens the larger displays in the iPad air faster processors a new version of the keyboard and trackpad case I’m expecting it makes a lot of sense that these things are going to be better for people who want to replace their laptops is there also going to be a new IOS operating system that is included in these new iPads well the the version of iOS that’s coming with these new iPads is going to be a version of iPad OS 17 which came out last year that’s the current operating system the next operating system for the iPad that’s going to be iPad OS 18 that won’t be announced uh until June June 10th actually at their developers conference that will be the update that includes all those new artificial intelligence features but that won’t be released until sometime around September of this year and September also when we should see the iPhone 16 you said iPhone 16 launch should be in September as well and those will be the larger displays uh as well as a new button on the higher-end models that you can control the camera zoom moving between video and photos from the side of the phone itself versus within the software now let’s talk about the iPhone for a minute because that that sounds great but you’ve reported the need to maybe have a more affordable Mass market phone to compete against all these rivals in China and really grow the base of the iPhone H how close is that to a reality well I personally don’t think that’s going going to happen under Apple’s current management you know they’re so strong in their principles uh there’s no belief internally from at least the management team that they should release a cheaper phone this is something they’ve considered over the years personally I think this would be a way to gain market share and push back against the issues they’re having in China it would help them grow in India potentially build a business in Eastern Europe other developing markets such as those in Africa and Southeast Asia VI Thailand Malaysia but I don’t think they’re going to do it at least anytime soon there certainly isn’t one in development right now the idea would be you go to gain market share make probably no profit on the phone itself make up for that on apps and other services subscriptions and then as the middle class expands in those developing markets you’re able to pitch those people who are already in the Apple ecosystem on more expensive price your iPhones where Apple could ultimately make its profit oh but this Tuesday May 7th Apple’s latest product launch all about new iPads and our thanks to Mark Gman Bloomberg Chief correspondent on global technology well we move now to the entertainment and Media company Walt Disney with Disney reporting second quarter earnings this coming Tuesday and for more on what to expect we’re joined by Gea ronathan Bloomberg intelligence analyst On Us Media so Gea what are you expecting to see in Tuesday’s earnings thank you so much Tom so Disney actually is just fresh after winning a very very contentious proxy battle if you remember that whole Showdown that they had with Nelson pels uh they’ve gotten through that and now they are really ready to focus on execution uh so there is a whole range of initiatives that they’ve been working really hard on which is cost cutting increasing Financial visibility uh and also really working hard on kind of reintegrating their content engines and we look at this as catalysts there’s already been a change in sentiment and we’re going to continue to see that change sentiment play out as they report their fiscal um second quarter earnings uh there’s a lot of things to kind of look to I think the two major things are of course going to be the parks business uh where you know they’ve kind of gu guided to uh low teens growth in operating income as well as the streaming business where we are almost Tom on the brink of profitability and that should really get investors excited well that’s a big change how has the return of Bob Iger really helped Disney in in this direction whether stream Ling operations more cost effective or just taking charge yeah I mean he’s been instrumental Tom and kind of uh really writing the ship if you will here so obviously when he came back things were uh pretty messy especially with regards to kind of the whole content Pipeline and just you know the whole series of missteps with with their content whether it was on the film side or even on the TV series side obviously those things take a little bit of time but I think what he has really managed to do quickly is to articulate a strategy uh a strategy with you know the streaming business front and center cost cutting initiatives you know they first started out with about 5 a half billion in cost savings per year they’ve kind of been up that to 7 and a half billion and then just overall kind of making sure that the business is on a really strong footing so if you kind of look at Disney yes we we tend to focus a lot on on you know the the TV networks ESPN and you know maybe some movies and then the studio but if you actually look at the business profile 70% 65 to 70% of Disney’s profit comes from its theme park business and so what you know Bob has done obviously is they’ve kind of articulated a plan now to really reinvest in that uh business it’s it’s $60 billion that they’re going to spend over the next 10 years and then with regards the rest of the segments kind of again make sure that you know content uh content of course is kind of the lifeblood here at Disney so just kind of make sure that they have a strong content pipeline which will then feed into everything else well that 70% of Revenue at the theme and those theme parks never seem to be without tons of people so that’s good news but let’s go back to what you said about the streaming services and being close to being profitable I know that Disney just made a deal with Kroger the nation’s biggest supermarket chain for Disney plus what can you tell us about that yes so I mean they are doing all these deals and again the main objective here Tom is to make sure that you know subscriber momentum is maintained but as you know streaming is no longer just about subscri subscribers it is also about being profitable uh we know Netflix has kind of really uh established the narrative here uh turning out about you know8 n 10 billion dollars in profit Disney is going to be next so they have lost tons of money almost close to about 8 billion do or so on their streaming business since launch uh but the the good news and and this is this is something that investors are excited about is that this is really just on the cusp of turning profitable it could very well have been in the quarter that they’re about to report or if not it’ll be in the next quarter uh and the idea here is that it is going to keep getting more and more profitable and we have a lot of catalysts on the horizon so yes you have subscriber growth but I think more important than that is you know price increases which they are definitely going to implement going forward and that will be bolstered by a really good content pipeline they are also cracking down on password sharing Alla Netflix uh and then of course they have the ad tier and then with the integration of Hulu you know you have multiple positive elements that are really kind of going to get this virtuous cycle going do you think you’re there’s going to be any update on the sports streaming partnership with Fox and Warner Brothers that was talked about a few months ago yeah that is actually supposed to come out sometime in the fall uh there have been you know a couple of regulatory issues surrounding that uh you know yeah probably I mean I think they are definitely going to be asked how far along they are in terms of the infrastructure and the setup and you know if they’re ready to kind of show a test version of of that which I’m I’m sure they are given that upfronts is is coming up pretty soon now one last thing I want to ask you about is the studio division uh still suffering like all of Hollywood from those twin strikes last year what can we look forward to I mean they really had a pretty bad year last year but the good news is they they’re really kind of back on track in terms of executing on Creative they’ve improving their Studio output so as you look forward to 2024 uh you know we do have kind of this refreshed content slate we’re looking at Inside Out 2 and Deadpool both of which promise to be really big summer movies but what we’re really excited about is 2025 you have a whole array of you know what we think would all be blockbuster movies whether it’s Captain America Snow White so Disney is really getting its mojo back yeah a lot of twos a lot of threes after those movie titles but uh give the people what they want well Disney second quarter earnings out after the close this Tuesday May 7th and our thanks to G the Ragan Bloomberg intelligence analysts On Us Media coming up on Bloomberg Daybreak weekend to look at the bank of England’s upcoming policy meeting I’m Tom Busby and this is [Music] Bloomberg this is Bloomberg Daybreak weekend our Global look at the top stories for investors in the coming week I’m Tom Busby in New York up later in our program Chinese president XI Jin ping visits Europe will it help repair relations between China and the continent but first in the UK recent hotter than expected inflation figures coupled with a strong labor market may have put the breakes on hopes that the bank of England is poised to begin cutting interest rates in the coming days thread needle streets decision makers will vote once again so will they stick with elevated borrowing costs or take the plunge for more let’s go to London and bring in Bloomberg Daybreak Europe anchor Steven Carrol Tom stop me if you’ve heard this one before but since the start of the Year Traders have scaled back their expectation for interest rate Cuts okay that’s been the situation facing many central banks around the world in the UK it’s a mildly hawkish run of data that’s giving some pause for thought on top of what’s been happening with Central Bankers elsewhere CPI inflation came in at 3.2% in March in the UK down from 3.4% in February that was slightly ahead of the bank of England’s forecast though but Boe Governor Andrew Bailey didn’t seem phased and assured markets that things were still on track we’ve been getting the market view of the rate path ahead for the UK with Hugh gimber Global Market strategist at JP Morgan Chase Bank and I think really what the market is grappling with here is does the UK look more like the Euro zone or more like the us because I go back 12 months ago and the answer to that was categorically that the UK looked a lot more like the US economy where you had the tightness of the labor market you you had much stronger inflation pressure um whereas today I think arguably it’s a lot more Eurozone like where yes inflation is still higher but inflation is coming down it’s going to come down significantly further over the next couple of months as that energy household price cap reset kicks in uh and so I do think the bank will be able to follow the path more like the ECB than the FED I personally think they start the rate cutting process in August but again we’re talking about relatively modest adjustments to interest rates and so for Bond investors the main message here is that you’re playing for really clipping the coupon in Government Bond deals today with the potential for capital appreciation if the economy slows much more quickly but I don’t see a kind of straight line lower for bond yields until we get much weaker economic data than what we have at the moment do you think that Andrew Bailey is in a position to be able to give clear signals uh given the the sort of uncertainty that exists elsewhere no but then let me if I may flip your question the other way and say well should he be giving clear signals no he shouldn’t because all Central Bankers are struggling to read the inflation data just as markets are trying to predict over the next one two months are we going to get 3es or Point fours is n on Impossible in this current economic environment and so I think the right approach for Central Bankers today is to take stock of the incoming data that they’ve seen but try to keep that medium-term view because they’re trying to set policy here over the next 12 24 36 months they shouldn’t be swung around by just what the last one or two weeks of data has been telling them the banki reviewer missed opportunity yes or no uh not a politician Lizzy could could they have gone further yes I think that it could I mean there is some useful points there in terms of trying to communicate more clearly I think everyone would welcome more guidance from the bank of England in terms of how they’re seeing the the economy but do you want a Dot Plot in the UK for example I would argue no that was you M Global Market strategist at JP Morgan Chase it’s worthwhile to thinking about how the bank of England behaves versus its peers members of the monetary policy committee have an advantage in that this meeting is coming just a week after the feds when Jerome Powell signaled that they were further away from cutting rates than before the European Central Bank has signaled strongly that it’s planning to cut rates at its June meeting as it grows more confident that inflation is continuing to slow so how will the Boe fit in to what happening elsewhere I’ve been discussing the outlook for the upcoming meeting with Bloomberg’s Chief UK Economist Dan Hansen I started by asking him what’s changed for the Boe since its last meeting on the 21st of March I don’t think a huge amount has changed to be honest with you we’ve had a few upside data surprises but they were very very small and if you look atly the most important thing what happened to inflation over the first quarter it came in at 3.5% the bank of England’s forecast in February the last time it put a forecast together was 3.6% so we’re a little bit below but for me actually what’s been most interesting is what policy makers have been saying which is what you alluded to there and we’ve had remarks from certainly Bailey Andrew Bailey and Dave ramsten that are very much sort of moving in I would say the doish direction there’s a little bit of uncertainty I think about what hu pill did or didn’t say in his speech but I think the thing for us that we took away at least is that there he said that there’s been little news in the data which is obviously clearly very important so I think to answer your question directly what have you believe sort of following the March meeting the bank would do at least looking domestically and we’ll probably get onto the FED in a second there isn’t much reason to change your your thinking about the when the first cut will come okay well let’s deal with the FED issue and we’ll come back to the the split on the the committee in a moment how much does the signals that we got from Jerome Powell that Great Cuts look further away than they did before how much does that affect the Boe so markets think it affects the Boe quite significantly if you look at the way Boe pricing has moved if you look at the way fed pricing has moved they’ve they’ve essentially moved in lock step so what’s interesting is I think the comments that Bailey made about that that the UK’s inflation problem is more like a European inflation problem so the problem facing the ECB then it is like the US’s demand Le inflation problem and I I sort of am inclined to agree with that particularly this year I think there’s going to be this quite big Divergence uh between the UK and US inflation story mainly driven by energy but that sort of spills through into the rest of the CPI basket so I don’t think the FED going later is an impediment to the Boe I think it can go before the fed and actually one thing that the boe’s got to be really quite careful about is that it doesn’t allow what’s happened recently so there tightening of financial conditions to spill into the UK economy and we’ve seen that affect some metrics in the economy already if we think about house prices and and the like and mortgage rates you know the bo needs to be wary of that everyone talks about the exchange rate impact of going earlier than the FED but actually what you need also need to be worried about is allowing tighter Financial conditions to affect your domestic economy when your domestic economy is already very weak what is your expectation now in terms of the inflation trajectory I mean when when does the 2% Target look likely to be hit I think in the next few months I mean it might not quite get there in April I think May or June a pretty good bets for when we’ll get to two or even below two in fact so I mean what one really important consideration I think when you when you think about that is that the bank will have the May CPI print before the June meeting and I think that will it’ll be very hard if you have a two or even particularly if you have a sub 2% CPI inflation print in your hand not to do something so I think that for us is sort of the next few months of data after this after we get past this meeting the the data between the May and the June meeting are basically key and I think that will set the tone for the rest of the year in terms of what the bank thinks it can or can’t deliver we talk a lot about the f influence over other central banks what about the European Central Bank if the bank of England has a similar inflation problem in Andre Bailey’s eyes to the ECB does that mean actually the ECB decision which is widely telegraphed for June is likely to influence the Boe decision well I think it will help that the ECB just chronologically goes first so in June their meeting is before the banks so I think there will be a bit of cover there as you say Bailey has made that comparison to Europe more than to the US and you take that along IDE the fact that you will potentially have a very favorable CPI print in hand I think the sort of cards are aligning for you know we think it’s June a lot of other economists think it’s August but sometime in the summer for them to move so I think yeah the ECB is sort of I think it’s an important thing for the bank to have a bit of cover there the ecb’s gone there’s no sort of reason for the bank to sort of sit on its hands what about the rest of the year then after the the kind of first cut that we’re looking at in that summer period is it going to be kind of stop start depending on the data do you think or once once we get a first cut we look like we’ll be on a a steady trajectory so we I mean it goes back to my answer to the first question is that whatever you believed following even the February meeting but certainly the March meeting it feels like you should probably still believe something pretty close to that now so we still have meeting by meeting at least for a time and that’s a lot more aggressive than market pricing I think for market pricing to be borne out you would have to have quite some bumps in the road but if if you’re sitting at two sub 2% headline CPI inflation and services inflation continues to fall albeit slowly and you have to sort of expect it to fall slowly it’s not going to drop like a stone like the headline rate has I don’t see any reason why they can’t move as I say at least initially meeting by meeting I think they’ll come a point and I think it’s around about the 4% Mark where they get a little bit concerned about where what we call the neutral rate is so the rate that neither speeds up nor slows down the economy but I think there is room between sort of where we are now and around 4% to potentially take out what they’re calling restriction in the policy stance um and sort of basically ease the squeeze on the economy what are the risks to the inflation Outlook that you’ll be watching I mean you mentioned energy we had that spike in oil prices which is sort of receded now so that seems to be a little bit out of picture but is it still energy the thing you’d worry about yeah I mean I think I think it’s energy and to without wanting to sort of T the speech too much how how Dave Ramon sort of characterized the whole thing is that I just feel there’s not enough weight being placed on the downside risk here you know the way inflation surged in the UK If you sort of go through the the sort of mechanism headline inflation surged people saw that they pushed up they bid up their wages because the lab Market was tight and that is eventually fed through to Services inflation and high energy prices have pushed up services inflation as well now energy price inflation is we in fact we’re in disinflation the headline rate is falling you have to put some weight on the the idea that that mechanism goes into reverse and quite quickly and I think Bailey and Ramson at least certainly in their comments are sort of alluding to this that you have to look forward a little bit more and not just be completely data dependent and I think that actually goes to the Crux fit a little bit where the bank’s reaction function has shifted a bit not just being completely on every CPI print and hanging on that but looking forward to say look this thing could unwind quite quickly so we probably need to take a little bit of insurance out to ensure that we’re not caught on the downside on the way down because we don’t want to make the mistake of being too slow coming out of this having arguably been too slow getting to it in the first place so that that for me is the risk at the moment and that’s why it’s probably sort of when we see what they say in their May meeting they’ll probably say the risk of broadly balance to the Outlook which is sort of a big shift again because they’ve been constantly emphasizing the upside and just coming back to to that vote split idea what what would get you excited in terms of a vote blit if you saw this meeting any vot split um no I I mean I we’ve put our preview out and in that we say that we think Ramon will join dingra in voting for a cut I think that or any more going for a cut would get people excited I think if you if you had an 81 again which is what we had in March and similar guidance it wouldn’t feel like we’ve moved closer it might feel at that point it had been pushed away a bit so I think there needs if if it’s going to happen in the summer it needs to feel like it’s coming closer and a a more doish vote split or even a tweet to the guidance would be the things to look for on that thanks to Bloomberg’s Chief UK Economist Dan Hanson I’m stepen Carol in London you can catch us every weekday morning here for Bloomberg Daybreak Europe beginning at 6:00 a.m. in London and 1:00 a.m. on Wall Street Tom thank you Stephen and coming up on Bloomberg Daybreak weekend Chinese president xiin ping set for a trip to Europe what could this mean for relations between Europe and China I’m Tom Busby and this is Bloomberg [Music] I’m Tom Busby New York with your Global look ahead at the top stories for investors in the coming week relations between China and Europe have been chilly as of late but with Chinese president Xi Jinping set to visit Europe in the coming days can we expect to see a thaw in that relationship let’s get to Daybreak Asia hosts Brian Curtis and Doug krisner Tom Chinese president xinping heads to Europe in the coming week he’s expected to deliver the message that China has more to offer Europe than the US cares to admit she will be traveling to France Serbia and Hungary on a 5-day trip those nations are seeking investment from China even as tensions Mount relations have cooled over a range of issues including trade allegations around spying and beijing’s support for Russia even with Tai slipping of L it appears that both sides will probably try to woo the other sources tell us that French president franois macron will take shei to a corner of the Pyrenees where he used to visit his grandmother as a child and she will likely again make this point affordable clean energy from China will help Europe fight both inflation and climate change here’s danant tan Kate Bloomberg Asia eov executive editor from China’s perspective they’re like look the world needs a bunch of EV so there’s no problem with us investing in these and and we can provide cheap cars for your people so you know the visit to Hungary is important in that because you have Chinese companies looking to set up factories there and you know governments that are happy to kind of have this investment from China to to gain jobs locally and to have cheaper electric vehicles in their Market Bloomberg’s Dan 10 Kate joining us now in our Studios for further discussion on this is Jenny Marsh the team leader for greater China GV and Rebecca Chon Wilkins Bloomberg Asia government and politics correspondent so as we heard there from Dan it’s going to be a little give and take Jenny let me go to you first as Doug said relations have gotten a little testier of late here than before we have these EU probes on Chinese made EVs and also medical devices procurement so it might be tempting to say that this will be a tougher trip for she than usual but after all this is the president and he’s not going to face a lot of press and the meetings will be at a very high level what are we expecting exactly and you can add to that list that he’s picked three countries in Europe which are already considered to be some of the more friendly ones so you know going to Serbia and Hungary these are not two countries which are big critics of China’s policy quite the opposite they’re sort of big fans of beijing’s investment into their countries and he can use those countries to sort of show case this is what engagement with China can offer to you France is going to be sort of the most important stock and in France he’s also going to have this trilat um with L andion from the European commission and so I think you know that meeting I think is macron’s way of saying that yes Xi Jinping is coming and we’re throwing this big banquet for him and taking him sort of this very personal childhood Retreat um but at the same time they’re not going to shy away from some of the tougher questions and you know she sort of is the architect of this drisking narrative um language which the us then adopted so I think in that trilat in France on the first St with macron and V Delan you’re going to expect the the toughest probably conversations he’ll have during that trip on China’s industrial policy on XI jinping’s continued support for President Vladimir Putin despite you know um the war in Ukraine grinding on and sort of you know this propping up um Russia’s War Machine something which has been really pivotal in changing the shape of the China uh Europe relationship in a way I think that people and officials in Beijing didn’t really grasp at the beginning how consequential that was going to to be so you know I think yes he’s going at a time when probably relations between Europe and uh China have never been or in decades haven’t been quite so testy and distrust is growing but he’s carefully curated this itinerary I think obviously to serve his interest best and sort of promote the narrative that he wants to tell on this trip what about what she may be attempting to do in terms of us EU relations and whether or not there’s an opportunity for him to maybe insert a bit of a wedge here Rebecca and and try to exploit some Division I mean we know there’s a tremendous amount of unity but there are disagreements and would she use this trip to try to capitalize on some of that yeah I I think that’s right and just to take a step back briefly the broader context here is that Europe and the European Union in particular has for a long time viewed itself as this sort of middle path it has wanted to resist automatically siding with the US not just because of its policy on China but also because how the European Union historically has viewed the US itself it has not wanted to just automatically throw its weight in um but the Biden Administration has worked hard to get its allies and partners on side to try and build consensus when it comes to taking a firmer stance on China including for example picking up that drisking language moving a little bit was showing at Le at least a little bit of give and take with the European Union stance there um but we have seen this steady drum beat of probes and investigations into uh Chinese Industries via the EU and that has essentially taken EU policy much closer to the US well the inroad on cars too by China seems to have made a big difference uh you know you’ve got this probe that’s underway and byd has a plant coming in Hungary we understand that it will take about 3 years to be completed and a lot can happen between now and then I mean you’ll get the the result of the probe in in the EU and you know that could be quite damaging uh and this kind of uh three years out for a plan it shows how difficult planning can be a lot can change in three years Rebecca a lot can change but we do for example also have um another Chinese automaker Cherry taking over an old Nissan factory in Spain um we think potentially there could be announcements of more such uh car factory plans in Europe during this trip so while China is still waiting to see the results of that probe a probe which was actually backed by France it’s worth mentioning um you know China is still working very hard to try and at least prove that there are benefits um as Jenny points out if you do engage and the fact of sort of going and opening factories in European countries creating jobs driving some economic growth may try and sort of or may ease some of those tensions uh and some of those an anxieties but it certainly is hanging over um I I I think many Beijing companies heads at this moment it’s worth saying too though that Beijing has very actively engaged in the debate over overc capacity with the Europeans so for example these long comments from Lee leang and and uh president SI Jinping when uh German Chancellor Schulz was in the country quite different from the more sort of standard and sort of briefer comments that we had um when us officials have visited Beijing and discussed the same topic well it’s interesting you make that point because recently uh German Chancellor Olaf scholes was in China and addressing the issue of things like unfair competition dumping overc capacity Jenny are these perspectives that are uniquely German because of the German manufacturing economy or do they expand more broadly across the European Union they they expand more broadly across parts of the European Union and Beyond as well you know Schultz’s visit to Beijing came uh just a few weeks after Yellen had been in Beijing also carrying the same message um and the US Treasury secretary warned uh Chinese leaders at the time that the concerns that the US has on Chinese overcapacity are shared by lots of countries around the world and so Schulz coming and sort of he really echoed her message um you know almost to the word just a few weeks later really sort of hammered that home and that’s sort of part of a broad assign too you know that the European Union and the US their China policies kind of now sort of coalescing into into one joined up policy obviously the big thing on the horizon is the US election you know and if we do see President uh Donald Trump coming back into the White House later this year he could take China policy in a whole different direction he’ become much more hawkish you know um much more sort of unpredictable and then I think the Europeans are going to have to sort of think if they still want to walk in lock step with the US on their China policy but for now you know the two sides are very much in sync and how they’re presenting their concerns to the Chinese and that must be worrying I think for China you know two of these huge economic blocks both presenting the same concerns yeah let’s go back to Dan tenkate we talked with him briefly about how she might be appealing to the EU to pursue a more pragmatic policy toward Beijing she views mcon as someone he can do business with uh someone that is not um inherently reflexively um anti-china that can stand up to the US um and kind of Forge a middle path and is kind of key to um China’s long-standing strategic aim you know to kind of drive a wedge essentially and not being lockstep with the US particularly when it comes to export controls on key chips and other advanced technology that China would need to grow its economy so Jenny what are some of the bargaining points that she will bring to the four it’s going to be all about what China can offer France you know particularly I think this is where the Chinese like to sort of they like to sort of work to the advantage they have which which is you know they can offer different countries different carrots um within the European Union so I think for France you know it’s going to be um sort of what their companies can bring in terms of job creation and investment um we know from sources uh that mcon is specifically going to be asking she for investment in the EV battery sector so you know if she can say he’s going to steer some of their um their sort of world leading companies in that sector towards investing in France you know that’s very appealing um for mcon and I think if what they can then do is sort of work out these deals where it’s much more of a of a JV and so rather than you know importing Chinese cars into France if some of these Chinese cars or Goods can be made in France by French workers then that helps to ease these tensions but of course you know there’s kind of an irony here too in that there’s been some research showing as well that you know these European companies now which are actually behind the Chinese in terms of this type of new tech they’re now looking for Tech transfer so when the Chinese companies do set up base in European nations there’s also this idea and a risk on the Chinese side of sort of Technology leak where the Europeans are now trying to learn from the Chinese companies which are ahead and that’s just something which is quite fascinating to think about for a second because you know just a few decades ago the complete opposite was true where it was you know European companies in China and the Chinese trying to sort of learn from that Tech and you know steal it even perhaps to get ahead now everything everything sort of swung and the imbalance is so great in some ways that you have these European firms that potentially want to learn from the Chinese and that’s something I think that you know she has to sort of work out how to balance thanks to the two of you for helping us set up the meeting this week between the heads of state in Hungary Serbia and France with Chinese president Xi Jinping Jenny Marsh Bloomberg team leader for greater China Eco goov and Rebecca Chung Wilkins Bloomberg Asia government and politics correspondent I’m Brian Curtis along with Doug krisner you can catch us every weekday here for Bloomberg Daybreak Asia beginning at 800 am in Hong Kong and 8:00 pm on Wall Street Tom thank you Brian thank you Doug and that does it for this edition of Bloomberg Daybreak weekend join us again Monday morning at 5:00 a.m. Wall Street time for the latest on markets overseas and the News you need to start your day I’m Tom Busby stay with us top stories and Global business headlines are coming up right now [Music]
loomberg Daybreak Weekend with Tom Busby takes a look at some of the stories we’ll be tracking in the coming week.
In the US – a preview of Apple’s latest product event and earnings from Walt Disney.
In the UK – a look at next week’s Bank of England meeting.
In Asia – a look ahead to Chinese President Xi Jinping’s visit to Europe.
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