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00:00Stephen Engel joins us now. He's our North Asia correspondent. He has been in Washington for the course of this
00:04state visit.
00:04Stephen, it's great to speak with you, and I guess I should start here.
00:07The president giving President Xi Jinping a statue of an eagle, a photo album summarizing the trip that they had
00:13together in Washington, D.C.
00:15There's the prospect of pandas going to the zoo in Atlanta.
00:18What beyond that, what other deliverables did we learn about here?
00:21Oh, the pandas. Do you know how many times I've had to cover the pandas in my Washington, D.C.?
00:23Sorry, go ahead.
00:24We love them. We all love the pandas, I should say.
00:26Stephen, what do we know? What don't we know right now?
00:28Yeah, what's not to like about pandas, no doubt.
00:31Look, this was a—going into this, we had low expectations for the so-called State Department parlance of deliverables, right?
00:39Xi Jinping was coming across here to Washington. He wasn't bringing a business delegation.
00:45I never thought he would bring a big business delegation, especially Wang Chuanfu, the chairman of BYD, the big EV
00:52maker, or others.
00:53Because, again, I think Xi Jinping was dipping his toes in the water to gauge the temperature in Washington ahead
00:59of those midterms that you're just talking about.
01:02What is going to be the investment climate for Chinese investment in the United States right now?
01:06And also alluding to the fact that they both had agreed that they were going to probably meet a couple
01:11more times.
01:12And we got that news already, that they're going to meet in two months' time at APEC in southern China,
01:18in Shenzhen, just across the border from Hong Kong.
01:20They're also going to meet in December at G20 in Florida.
01:24So they have more time, more runway to kind of test the temperature.
01:29And that's why there wasn't a lot of business deals done, even though that gala dinner at the White House
01:36a couple of nights ago
01:37essentially was just a big collection of America's big tech companies, whether it was Elon Musk and Mark Zuckerberg and,
01:46of course, Jensen Huang, but no Chinese business leaders.
01:49They have—of course, the readouts are starting to come out now.
01:51It's all saying all the right things about a new era of U.S.-China relations, et cetera, et cetera.
01:57But they're also starting to flesh out, putting some meat on the bones of this Board of Trade.
02:01I think there's a deal that has been announced about China buying about 10 metric tons, 10 million metric tons
02:07of coal from the United States next year and again the following year.
02:12There's, you know, agreements on continuing talk about agricultural products.
02:17And as far as these like-for-like $30 billion worth of non-sensitive goods that can be—can see either
02:24most favored nation status or reduce tariffs, you know, on things like car seats, toys, and non-sensitive goods from
02:31China and also from the United States.
02:34Going to China, seafood, timber, cosmetics, medical devices, agricultural products.
02:38But again, coming out of it, there wasn't a lot for Midwest farmers or the like to really hang their
02:45hat on and say, hey, this was a successful summit.
02:48Yeah, the president said there's going to be something for farmers or good news for farmers, but we haven't really
02:52seen that come to fruition yet.
02:53Also, you mentioned the midterms, which is interesting to me because especially this week up here with everyone talking about
02:58Iran,
02:58people were openly saying that the president and the midterms were playing into how Iran thinks they can pressure the
03:04administration,
03:05the timeline for these negotiations, how they're trying to use that to their advantage.
03:08It's interesting for you to tell us that Xi, obviously, is watching that as well.
03:13And those two conflicts are also related.
03:15We had the U.S. ambassador to China talking about what Trump reportedly asked Xi to help with in Iran.
03:21We've got some sound for you.
03:22We made it very clear to them weeks ago that, you know, any help that they would give Iran, whether
03:27it be direct or indirect,
03:29whether it be intelligence or parts or military equipment, was totally unacceptable.
03:34President Trump made that very clear again yesterday.
03:37What has China's level of support been for Iran?
03:40There's some reporting they were helping them with satellites, possibly targeting.
03:44And are they likely to agree to this?
03:46What would they want in return if they agreed to help with this conflict?
03:50Well, I've been covering China for 36 years, 23 with Bloomberg.
03:54I know this.
03:55The Chinese keep their cards very close to their chest on these kind of diplomatic, you know, objectives.
04:01And no doubt that Beijing is offering at least moral support, most likely financial support.
04:10Military support is very questionable.
04:12But you mentioned those satellite imageries that possibly were used by the Iranians in attacks on American soldiers that killed
04:20American soldiers.
04:21That's a very contentious point, no doubt.
04:23But before the war, the Chinese were buying, you know, the bulk.
04:28I don't know the exact figure, but the bulk of Iranian oil exports were going to China.
04:33So there is an economic and diplomatic relationship there that is fairly strong.
04:41So I can't latch on to it and say how much they're still doing it, but they have not backed
04:46away.
04:47Donald Trump has talked about maybe having some dialogue about Taiwan as it relates to, you know,
04:54maybe negotiating some gains in the, you know, pushing China to back off on its support of Iran if they
05:04could give something to Xi Jinping on Taiwan.
05:07Now, David Perdue, who you just saw there, the U.S. ambassador to China, essentially saying there's no change in
05:14the position,
05:15the Trump administration's position on Taiwan, even though, you know, Donald Trump and Xi Jinping talked about it at length.
05:24And Xi Jinping is pushing the Trump administration to oppose independence instead of the longstanding statement of not supporting independence.
05:33It is something Xi Jinping wants. And, of course, in May, at that summit in Beijing, Donald Trump said the
05:39Taiwan issue is a negotiating tool.
05:42That's not something that sat well in Taipei, I can tell you that.
05:46But, again, there is some jockeying of positions there behind the scenes that the cameras were not filming.
05:50Stephen, talk a bit more about that, this very important semantic point there, that difference between opposes and does not
05:56support.
05:56And the degree to which the Chinese leadership sees an opening here with President Trump, we're still waiting on the
06:02approval of this weapons package, this sizable weapons package.
06:04And I'm curious how important that is, if you could put that into some context and sort of what this
06:09delay has meant, yes, in real terms,
06:11but also more broadly just about the level of support Taiwan feels like it has from the United States right
06:16now.
06:16Yeah, there's so many moving parts here because, again, there's that $14 billion weapons package that is pending.
06:23It's, you know, kind of figuratively speaking, sitting on the president's desk, but it's not his bill to sign, per
06:30se.
06:30But, again, it's being held up, apparently, at the White House.
06:33They're going to get through this diplomatic period through December.
06:36Then we'll see if it's going to be given the go-ahead, which it likely will,
06:41because there was another arms package in December 2025 that was approved, already starting to fulfill $11 billion.
06:48So there's two arms packages.
06:50It's definitely something Xi Jinping wants to influence Donald Trump to not go ahead with,
06:56because, again, they can have—they can manage their differences on Taiwan
07:01as long as they have a mutual understanding about the issue of independence in Taiwan.
07:07And opposing independence is much stronger than not supporting independence.
07:11But it's complicated by the upcoming midterms because the mood could change dramatically if, you know, Congress flips and new
07:21lawmakers come in.
07:23It might not be as conciliatory towards China in regards to the Taiwan question.
07:28I also want to ask you what's going on with this trade truce.
07:32Treasury Secretary Besson has said it's going to get extended until next year.
07:35But last I checked, that hasn't been confirmed by China.
07:39Are you hearing anything from Beijing?
07:40Do we think that's likely?
07:41And is this a sign of a possible trade detente going forward,
07:46because both of these economies, frankly, could use the help right now?
07:49I think China would welcome any extension of the trade truce.
07:54What I've been hearing in Beijing, and I've been to Beijing quite a few times already this year,
07:59is that they want a much longer runway, if you will.
08:02They would like to see upwards of a two-year trade truce extension.
08:06Jameson Greer earlier this week essentially said,
08:09we're looking at three months max.
08:11Okay, maybe six months.
08:13Turns out to be two months.
08:14What that two-month extension does is gets us through these next two summits,
08:18if you want to call them that,
08:19between Xi and Trump to work out their differences
08:23and to build some sort of consensus on the more sticky and complicated issues.
08:30AI, for one, I can't believe I've been talking to you for 10 minutes.
08:33I haven't talked about AI yet.
08:35It's next. We promise it's next.
08:37You know, AI.
08:39Also export controls by China on rare earths and rare earths magnets.
08:43There's lots of things to be discussed.
08:46So this two-month extension to January 10th
08:50buys time through the next two meetings.
08:53And I would expect more announcements over that time
08:57on some of those stickier issues.
08:59Because the two sides do have different opinions about AI.
09:02Rest easy. We're going to get to AI now.
09:04He's going to walk off our set.
09:06You better ask him an AI question.
09:07Let's play a bit of sound here from the press,
09:09and I believe speaking at the United Nations earlier this week
09:11on the subject of AI in China.
09:12Whoever wins AI, you have to remember this.
09:16And now I say, whoever wins SI, whoever wins superintelligent, wins.
09:24That's the group that wins.
09:25And we're leading now over China by a lot and everyone else.
09:30And we're going to keep it that way.
09:32We're going to keep it very, very straight and very strong.
09:36I'm not going to stifle growth of something
09:39that will be bigger than the Industrial Revolution.
09:42Many say bigger than the Industrial Revolution or the Internet itself.
09:47Very keen to use that phrase, superintelligence.
09:49Anyways, Stephen, let me ask you.
09:51We hear there from the president about how he sees the balance
09:53between business opportunity, technological advancement on the one hand,
09:56and humanity on the right.
09:58How does President Xi think of it?
10:00He talked about humanity in his brief remarks that he made in Washington.
10:03Yeah, he said the two nations is the two biggest nations in the world
10:07and also building sort of, you know, their own competing AI infrastructures
10:12in sort of isolation.
10:15But Xi Jinping, who, you know, and the Chinese do not have the access
10:18to the most powerful GPUs and CPUs from the likes of NVIDIA.
10:22They do get access to the H200.
10:24That was a concession by Donald Trump following the May summit.
10:30But still, they don't have as much processing power,
10:32but they are building out quite comparable large language models.
10:37They have thrown billions and billions of dollars
10:40at indigenous innovation and self-sufficiency.
10:44So there's going to be rivalry there.
10:46And I think Donald Trump sees the, you know, the commercial side of it
10:49as being an advantage to the United States.
10:51But I can guarantee you, I've been to a lot of these AI companies.
10:55I've talked to a lot of them in China.
10:57They are gunning for equality, if not surpassing in some areas.
11:01So, you know, Xi Jinping talked about we have a responsibility
11:05and we have a capability to jointly work at managing the risks,
11:12you know, sort of the fate of mankind kind of discussion on AI.
11:17That's not something Donald Trump is necessarily top of mind on his agenda right now.
11:23He said some of those concerns were a bit of a hoax.
11:27So there's divergent opinions on that front.
11:30I did find it interesting that in the U.S. readout,
11:32one of the things they highlighted was that the Chinese have agreed to refer to it as super intelligence.
11:37But when you look at Chinese AI models and even attitudes towards AI in Asia,
11:43it's much more positive.
11:44Public sentiment is much more positive.
11:46But the Chinese are taking a slightly different approach
11:48in that their models are cheaper, they're more readily available, and they're more open.
11:53But part of that is because they are coming up behind the U.S., right?
11:56They're catching up, but they are still lagging.
11:58What benefit would it possibly have for the Chinese government
12:01that's trying to compete to agree to guardrails at this point?
12:05Well, guardrails are good for mankind as a whole, right?
12:08And that's something, you know, OpenAI and Anthropic did mention.
12:12And I think the Chinese are looking at AI very differently than the United States,
12:18which is, in the United States, controlled by a very select few main companies.
12:23Where in China, they're doing more of a nationalistic approach
12:27to help productivity on the factory floor,
12:30to help, obviously, boost the Chinese domestic economy,
12:34which is still sputtering because of a lack of domestic consumption.
12:38So they're taking a much more holistic approach to that.
12:42And putting in those guardrails, I think, is a pretty easy negotiating point for the Chinese
12:47to be on equal footing on that AI dialogue with the United States
12:52only can boost their capabilities.
12:55Stephen Engel, our North Asia correspondent, joining us from Washington.
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