Daybreak Weekend: Nvidia Earnings, G20 Summit, U.S-China Relations
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This is Bloomberg Daybreak Weekend, our global look at the top stories in the coming week from our daybreak anchors all around the world. And straight ahead on the program, a look ahead to some key inflation data in the U.S., how that may impact Fed policy moving forward. I'm Tom Busby in New York. I'm Caroline Hepka in London, where we're looking ahead to a G20 meeting without the United States. I'm Doug Krisner looking at the evolving relationship between Presidents Trump and Xi Jinping.

That's all straight ahead on Bloomberg Daybreak Weekend. On Bloomberg 1130 New York, Bloomberg 99.1 Washington, D.C., Bloomberg 92.9 Boston, DAB Digital Radio London, Sirius XM 121, and around the world on BloombergRadio.com and the Bloomberg Business App. ♪

Good day to you. I'm Tom Busby, and we begin today's program with a look at some key economic data here in the U.S. PCE, a read on inflation as well as personal spending and personal income data, all for the month of January. That is out on Friday. For more on what it all means and how this may impact Fed policy, we're joined by Stuart Paul, U.S. economist with Bloomberg Economics. Stuart, a lot of uncertainty out there.

Possible impact of threatened U.S. tariffs. We've got federal job losses. We've got even Walmart this past week seeing sales growth slow. One constant is stubbornly high inflation.

What's behind it? What do you expect to see in the January PCE report, the Fed's preferred measure of inflation? As you mentioned, the core PCE price index is the Fed's preferred measure. And we estimate that monthly core PCE inflation is going to register 0.3%. That's faster than the 0.1% measured and reported inflation.

in December. So, as you mentioned, stubbornly high inflation. We can estimate PCE with a pretty good deal of precision, because most of its components come from the CPI and from the producer price index. So, seeing those items earlier this month allows us to estimate

the PCE index with a bit more precision. From the CPI, we're able to identify that it's really the price of some discretionary services categories, things like accommodations, recreation services, that are going to be buoying the core PCE measure. From the PPI report, we get things like hospital services. Again, that's going to be boosting the core PCE measure as well. The thing that we now need to consider is,

is whether this January increase is really something that's indicative of persistent price pressures. We see persistent price pressures, for example, in shelter, in auto insurance, some of the categories that take a long time to sort of catch up to past price hikes. For example, if it costs more to replace your car, it's going to cost more to insure that car as

well. So, we're still seeing some persistent price pressures there. But I do think that the January report is going to show some residual seasonality. That's to say, annual price increases that aren't fully accounted for by the Bureau of Labor Statistics and the Bureau of Economic Analysis. I think that we are going to see some of that residual seasonality in the January report.

What about food and energy? Can't ignore those. Everybody has to, you know, eat. Everybody has to heat their home, put gas in the car. A real driver for CPI and PPI in January. And there's not a whole lot of seasonality about it. I mean, except for heating your home. Nice.

That's right. But in the summer, you're cooling your home. That's right. So, for some energy goods and for some energy services, you do have some seasonality. So, for example, there's summer driving season that boosts gasoline prices. Sometimes that's more accounted for than at other times in the seasonal adjustment factors. What we did see with energy prices, so you bring up a really good point about this, is that in January, it was so incredibly cold that

that demand for power and other utilities was exceptional. That is continuing to contribute to headline inflation measures. That's why we saw, for example, the major upside surprise in headline CPI during the month. It was in large part because of energy goods and services.

And so that is something that consumers are feeling. It is hitting their pocketbooks, and it is causing them to rein in spending in some other categories. Well, let's talk about some other data coming out, I think, will tell us a lot. Personal spending and personal incomes for January. The latest monthly jobs report showed that wages still increasing. That's not good for inflation. Holiday retail spending was strong, slowed a little bit in January, but...

What do you expect to see in those reports? It's interesting. I think that the January report is going to show a pretty clunky transmission between incomes and spending. I think that, based on what we saw in the jobs report, wages were accelerating during the month, hiring slowed, so that tempered personal income growth a little bit, and labor intensity, the average number of hours worked per week, actually declined. So that tempered personal income just a little bit.

But in January, we also get cost of living adjustments, 2.5% cost of living adjustments for Social Security recipients. We're going to see a higher Medicare and Medicaid receipts in the personal income report. And we're estimating nearly 1% interest income growth for those who are holding financial instruments.

So, if you factor all of those together, we're estimating nearly 0.4% month-on-month personal income growth. We're a bit higher than consensus. And that's a pretty strong personal income growth reading for the month of January. On the spending side, though, things looked pretty terrible.

So, nominal spending- Don't sugarcoat it. No, I'm not going to sugarcoat it. You know that I'll always shoot straight with you here. So, we estimate that personal income growth declined 0.1% during the month. That's a major retreat from the 0.7% growth that we saw in December. And a big part of that is autos, vehicles, people-

purchased vehicles at a way slower pace during the month of January, an annualized pace of about 15.6 million units down from, I think, nearly 16.8 million units in December.

As I mentioned, weather was so terrible, you don't want to be out walking on an auto dealer's lot in the month of January, especially when there is a polar vortex. But beyond that, it does look like consumers reined in spending on some of the key discretionary goods and services categories, things like furniture, clothing, clothing.

all of those items during the month, even online spending. It looks like they really reined it in in January. Now, here's the thing. Consumers aren't exactly bolstering their balance sheets. We saw that income growth is

pretty high and steady. People are reining in their spending, but we still think that they're going to have a personal saving rate of just about 4.3% during the month. That's still exceptionally low. Personal savings was above 6.5% pre-COVID. So even as consumers reined it in in January, it's still just a lot of spending going on on a monthly basis. January's personal consumption expenditures price index out this Friday. Our thanks to Stuart Paul, U.S. economist with Bloomberg Economics.

We move next to fourth quarter earnings from the artificial intelligence chip giant, NVIDIA. That is out this Wednesday after the close. Now, for more on what to expect, we're joined by Mandeep Singh, Bloomberg Intelligence Senior Tech Industry Analyst. Mandeep, an almost insatiable demand for AI, cloud computing, data center infrastructure. Are there any headwinds for NVIDIA or is it go, go, go?

I mean, I would say they're still in their hyper growth phase so that, you know, triple digit growth will decelerate to maybe, you know, 50% plus growth this quarter. Still very impressive. And it's still all about data centers when it comes to this company. So, yeah.

Look, there were a few things that happened during the quarter, notably the Blackwell shipments. I mean, Jensen said last quarter that Blackwell will be a multi-billion contributor to this quarter's revenue. And then obviously the DeepSeq development was quite interesting because NVIDIA

clearly believes that the scaling laws are intact when it comes to the scaling of these foundational models. And that is the biggest driver of why companies are building massive clusters when it comes to 200K GPUs to 1 million GPUs in a cluster. So that is supposed to be one of the biggest drivers of NVIDIA's chip demand. And it will be interesting to see if those

kind of drivers have changed because of DeepSeek. Now, DeepSeek, when that bombshell hit Wall Street, they say it was using NVIDIA chips, which they got kind of backdoor from Singapore. But let's talk about the losses to NVIDIA when that happened. Almost $600 billion in market share?

Yeah, I mean, look, they have recovered a lot of that market cap. So it's not as if the losses were permanent. I mean, the stock is pretty much back to where it was trading prior to DeepSeek. And I think in the end, it comes down to training versus inferencing. These are the two things that everyone is sort of focused on when it comes to NVIDIA's opportunity, because a lot of these hyperscalers are

are developing their own chips and hyperscalers make up 45% of Nvidia's data center revenue. - And that's Meta and Amazon, Microsoft? - Yeah, Alphabet, yes. And when you think about Nvidia's data center revenue, that's a $125 billion run rate.

every hyperscaler this quarter guided to CapEx going up, and CapEx going up almost 40 to 50% for 2025. So if you extrapolate that guide to NVIDIA's numbers, 45% revenue exposure, that means NVIDIA could very well be doing $200 billion in data center revenue for 2025. And then you layer in the project's target announcement, the EU announcement,

to invest in chips, that's incremental revenue from Sovereign, which is a low double-digit revenue contributor to NVIDIA right now. So when you put all these things together, the drivers are there for NVIDIA to do maybe $200 billion in data center revenue this year. And some of those hyperscalers are doing their own in-house GPUs. And

Is NVIDIA finding new clients, new revenue sources besides them? Yeah, so that's an interesting point because hyperscalers do have their ambitions to use their own chips. I think Google is the furthest along in terms of using their own TPUs for training and inferencing. Other hyperscalers plan to do that. But whether it's going to impact NVIDIA's revenue this year

Or is it more for, you know, three, four years out? I'm more in the camp that this is not going to have a big impact this year. But clearly, that's a big threat when you have, you know, a 45 to 50 percent exposure to four or five customers. There is always that concentration risk.

Well, and that leads to what's next for NVIDIA this year? Because I know that Blackwell line, they've got some new products coming out. What are you expecting to see? I mean, to me, the key KPI is gross margin. Because last quarter, even though they talked about Blackwell, they said gross margins would sort of get compressed a little bit in the near term because of the Blackwell ramp. And they will go back to mid 70% once Blackwell is fully ramped up.

That, to me, determines the supply-demand imbalance. The demand commentary is there because there is still more demand, but supply seems to be catching up when it comes to TSMC adding capacity for manufacturing more GPUs. So gross margins is how you determine what kind of imbalance we still have.

Well, NVIDIA Q4 earnings out after Wall Street's closing bell this coming Wednesday. Our thanks to Mandeep Singh, Bloomberg Intelligence Senior Tech Industry Analyst. Coming up on Bloomberg Daybreak Weekend, we look ahead to a G20 meeting without the United States. I'm Tom Busby, and this is Bloomberg. ♪

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This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. Up later in our program, we'll look at the evolving relationship between Washington and Beijing. But first...

Global finance ministers will descend on South Africa for a G20 summit this week following a G20 foreign ministers meeting just a few days ago. This time, though, it's without U.S. Treasury Secretary Scott Besson attending. Can the talks be productive without such an important global player choosing to be absent? For more, let's go to London and bring in Bloomberg Daybreak Europe anchor Caroline Hepker.

Tom, this year's G20 gatherings are significant for a number of reasons. For one, they're the first meetings to take place under the helm of South Africa. They're also the first multilateral forums of their kind to be held during the new Trump administration, a government that has so far made clear its intention to do things differently.

In terms of the finance ministers' meeting due to take place in the coming days, there couldn't be more on the agenda. President Trump's paradigm-shifting tariffs will surely likely feature, as will growing pressures to ramp up defence spending in the EU, but perhaps elsewhere.

But one leader who won't be participating in discussions is US Treasury Secretary Scott Besant. His decision to skip the event comes as Secretary of State Marco Rubio also foregoes attending the G20 foreign ministers meeting. Now, Rubio said that he was not taking part in those discussions because he did not want to, quote, waste taxpayer money or coddle anti-Americanism.

Rubio's comments echo President Donald Trump's criticism of South Africa's land policy and a threat to cut off future funding to the country.

In response, South Africa's foreign ministry reiterated that no land has been confiscated and that the expropriation legislation announced by South African President Cyril Ramaphosa last month is similar to eminent domain laws elsewhere in the world. It also stressed the South African government's commitment to addressing global inequality. Now, it's unusual for a Secretary of State to skip a G20 summit and Rubio's absence carries further

perhaps some risk that the US is left out of deliberations by some of the world's wealthiest countries. And the same is true for Scott Besant. So can a G20 meeting be effective without the United States? And what are the implications of this edition of the Global Leaders Gathering for South Africa and for the rest of the world? It's something that I've been discussing with Bloomberg's chief Africa correspondent, Jennifer Sabasadja.

It's important in the sense that this is the first convening of the G20 members as part of South Africa's presidency hosting. Right. And especially if you consider that we've seen a changing administration in the U.S., we're seeing changing ties geopolitically with a number of the nations that actually make up

uh, the, the G20, uh, it is important and, and no doubt it will also carry over into the finance ministers meeting next week. Now, as you were just mentioning, uh, Marco Rubio has said, secretary of state, Marco Rubio, of course, from the U S has said he is not attending, uh,

over what he says are focuses on climate change and also DEI. We also got word that Treasury Secretary, excuse me, in the U.S., Scott Bessent, will also not be attending next week. And so you have to wonder, really, how does the U.S. see their role within the G20 moving forward? There are still representatives from the U.S. that are going to be here, but still South Africa

leaders and officials are planning to continue on with this theme of solidarity, equality and sustainability and continue to or at least try to strengthen some of the relationships of the member nations that are attending. And there is a big question about whether discussions can be productive without the United States, whether the G20 is still relevant. I mean, these are slightly perennial questions, aren't they, about G20 versus G7 or other sorts of gatherings?

But it's particularly acute now with the U.S. You know, you do bring up a really interesting point, especially when you look at the first few weeks of the U.S. administration and President Trump choosing to pull from a number of multilateral institutions. What we've heard from at least South African President Cyril Ramaphosa is that

that he is at least trying to get a lot of these more developed countries to the table to try and reform some of these institutions. And so if we see at least a pulling back of the U.S. on the multilateral front, what does that mean for a lot of these reforms that we are going to see? Still, President Ramaphosa does believe that he can get a lot done. There's a number of other issues involved.

on his agenda, including many things that he has talked about before, including talking about debt relief for a number of the nations, a number of the Global South, as he calls it, and also a lot of that being climate finance, right? We talk a lot about

how a number of emerging economies are the hardest hit when it comes to climate change. But of course, it's a lot of the developed economies that were the actual contributors to that going forward. And so there can be some movement on some of these top line priorities. But getting the U.S. to buy into some of them is going to be the challenge for President Ramaphosa, South Africa and the G20 moving forward.

Yeah. And how important is it for South Africa that these meetings actually go well? I mean, they are surely banking on this, as you say, to sort of boost soft power, but also, you know, real things, including aid, for example, may be.

How important is it that these talks go well? We know that South Africa has got very high unemployment. There was a dissipation of the support for Ramaphposa's party at the last election. He's in a kind of coalition government. How important is this forum then for Ramaphposa and for the future of South Africa?

The timing of this is pretty unique, especially you just talked about how the ruling party or the previously ruling party, the ANC, is now in a coalition government. And so really for the first time, we're seeing South Africa take control.

the helm as this multi-party government on the world stage. One person described it to me as potentially this is showcasing that democracy is working at least in South Africa. But, you know, President Ramaphosa is really taking this on to, you know,

progress on a lot of the issues that he believes, not just South Africa, but a lot of African nations, the Global South, as I was mentioning before, they can put forward a lot of the challenges that they've not necessarily been able to because they haven't been at

the table before. Now they can do that. And as the first African nation to hold this G20 presidency, potentially that's an opportunity. And it's not just that. I mean, you take a look at a lot of the partnerships here. The EU is a major investor in South Africa. China

is one of the biggest trade partners here with South Africa as well. And so there is incentive for a lot of the other member countries to also get on board with this. And so, yeah, you know, I think a good outcome is beneficial for most of the members. But you just take a look at the geopolitical divisions that we're seeing in the world right now, and it's surely going to be a bumpy road.

Yeah, and with the absence of Marco Rubio and Scott Besant, do you think that that signals that the Trump administration is actually serious about this row? You know, their accusations against the South African government in terms of the legislation in South Africa. Do you think that they are going to make good then on the threats, for example, to halt aid?

That's the concern here, really, Caroline, because we have seen the back and forth really ramping up. It started, as you were mentioning, just a few weeks ago when Trump was criticizing that land expropriation bill that you were referencing there that President Ramaphosa signed earlier this year. But then, of course, we've seen in the U.S. the retreat from

from DEI. And many people would describe South Africa, at least in its state right now, as an example of DEI. And so you have to wonder what else potentially could

the U.S. administration target. It's not just that. There is also climate financing, which has been very important for South Africa to get on board. We know that we've seen the U.S. administration rolling that back. And also South Africa taking Israel to the ICJ over what

they see as war crimes, right? Which we know President Trump has a cordial relationship, let's call it, with Benjamin Netanyahu. And so the concern is what does this relationship look like? But over the past few weeks, I've been speaking to a number of South African officials about this. And some of them say, on the one hand,

of course it's a setback. If you take a look at something like USAID, which has provided a number of health benefits for South Africa, that could be detrimental to this country and to the African continent more broadly. But it also potentially creates an opportunity for other partners. We take a look at BRICS, which is this block of Brazil, Russia, India, China, and South Africa,

potentially we see them stepping in. We've seen that over the past few years, them trying to make inroads. And if we continue to see this retreat, that opens the door to some of these other countries to then potentially fill the gap. For what it's worth, before I wrap up, we have seen a country like China continue to reiterate its support for South Africa. And so you have to wonder,

whether or not this is a gamble the U.S. actually wants to take, especially because South Africa is the U.S.'s biggest trading partner on the African continent. Yeah. And I suppose finally, then, do you think that there is any possibility that South Africans can try to mend its relationships with the Trump White House?

We've heard President Ramaphosa say he is up for negotiation. And I think that is key. We you know, the expectation was that we were going to see Scott Besson, Treasury Secretary, next week attending the Finance Minister's Summit. But then also later this year.

The expectation was that President Trump was also going to be here. We don't know yet what this relationship looks like. Whether he is physically in attendance or not, though, South Africa needs to pass off the G20 presidency to the U.S. for next year. And so there needs to be discussions of some sort if the U.S. is to remain independent.

in the G20. But yes, we've heard from President Ramaphosa saying he wants to discuss and to talk about some of the critiques that we've heard from the U.S. administration. Many people have criticized what we have heard from President Trump about his disputes over the land expropriation law, saying it is similar to what we see in other countries. And so it's going to take

quite a bit of mending on both parts. And of course, we have to note that President Trump's very close ally, Elon Musk, was born in Pretoria here in South Africa. So and he has some other advisors that are also from South Africa. So definitely one to watch for the next few months.

Well, my thanks to Bloomberg's Jennifer Zawisadja for speaking to me. We'll have full coverage of the upcoming G20 finance ministers meeting here on Bloomberg. I'm Caroline Hepke. You can catch us every weekday morning for Bloomberg Daybreak Europe, beginning at 6 a.m. in London. That's 1 a.m. on Wall Street. Tom. Thank you, Caroline. And coming up on Bloomberg Daybreak Weekend, we'll look at the status of U.S.-China relations. I'm Tom Busby, and this is Bloomberg.

When you have bars in the sky, onboard showers and award-winning in-flight entertainment, it's no surprise that Emirates was recently named the best airline in the world. We fly you to over 140 destinations and with partners across the globe, we connect you to another 1,700 cities across six continents. So when we say we're also the largest international airline, what we really mean is...

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This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Tom Busby in New York. With the threat of even more U.S. tariffs looming over China, this may be a good time to get a temperature check on relations between Washington and Beijing. For more, let's get to the host of the Daybreak Asia podcast, Doug Krisner. Tom.

Tom, in the week ahead, we'll get China's official PMI figures. Now, the PMIs are a great way to understand sentiment in manufacturing and the services economy. Bloomberg Intelligence says early indicators point to weak momentum in both.

Now, the headwinds for the Chinese economy have intensified since President Trump took office. For a closer look, let's bring in Jenny Marsh, team leader for Greater China EcoGov. She joins us from the Bloomberg Studios in Hong Kong. Jenny, thank you for making time to chat with us. I think we have to begin with the tariff story as a way of understanding where U.S.-China relations are at the moment. Is that fair?

Absolutely. It's really the biggest sort of unknown factor, right, that's sort of hanging over the economy this year. We know that the U.S. did hike tariffs by 10% on all Chinese imports in early February. Is it fair to say that that came a little bit before Beijing was prepared for tariffs?

I would imagine Beijing was prepared for tariffs on day one. You know, I remember that first day Trump took office and sort of actually the surprise was there was nothing on China on day one. Then, of course, on day two, he started talking about tariffs.

But, you know, I think despite all of the sort of claims he's made about sort of tariffs on chips and steel and sort of the threats with Canada and Mexico, China is the only country right now that Trump has actually enacted a tariff on since he came into office. And so while it's only 10% right now,

They are sort of actually the first in the firing line. And there's plenty more reason to think that more is to come with that April 1 deadline hanging over them for reviewing the first trade deal that Trump has ordered. Before we address kind of the U.S.-China relationship, how is the impact of these U.S. tariffs impacting sentiment right now in China?

It's actually kind of interesting because the trade war has been there for a long time, but when you speak to economists and people onshore in China, what they're actually talking about right now is deep-seek. This surprise AI breakthrough from deep-seek, which was the consumer platform was unveiled the day Trump came into office, that has given this massive boost to animal spirits.

So, it sparked, I think it was a $1.3 trillion rally in China's stocks. And then Xi is trying to capitalize on that momentum by meeting Jack Ma for the first time since the crackdown on his company back in 2020 and a whole other range of tech luminaries earlier this week. So, I think the negativity from the prospect of tariffs

is built in and people have been very prepared for that for a while and really they were facing a lot of sort of pressures under biden too um so in terms of sentiment it isn't this sort of gloomy worried sentiment permeating china necessarily what actually is capturing the mood right now is the ai breakthrough in the sort of momentum behind tech and finally some hopes that the private sector might be getting back into swing

So I'm understanding that as a way to say that Xi is capturing this moment to maybe make the case that China can be less reliant on its export economy and become a little bit more domestically driven on the demand side, which is something that he has been after for quite some time. Exactly. And the meeting earlier this week, you know, he had...

bosses from byd xiaomi uh deep sea you know jack ma was there it was really a display of like these are all of our national champions which are rolling out world beating innovations

There is plenty of reason to believe in this economy. And they have said that boosting domestic demand is the number one priority this year. You know, and that is the best way they can insulate themselves from these tariffs that are coming by really sort of revving up demand at home. So how would you describe the current relationship between Beijing and Washington right now? I think it's sort of in this holding pattern of wait and see. But on the surface of things, you know, you've got a U.S. president who's

who is very happy to be very sort of dovish on Xi Jinping in public. He calls him a great guy. He said that he thinks he's brilliant. So in that side of things, I think, you know, things are actually warmer than during the Biden administration.

But obviously, you know, they have this trade war that is now underway. And I think for China, they're really just sort of waiting to see exactly what it is that Trump wants. There are all kinds of reports out there sort of citing people who are advising Trump saying that he now is sort of thinking about this as a grand deal that he could strike with Beijing that would go beyond trade. So looking at all kinds of things like nuclear sort of weapons, rolling back those programs. So I think

the silence from Beijing during this first month of the Trump administration has been extremely telling. They're kind of just sitting back and really waiting to see what Trump does, sort of what his big

biggest sort of demands are going to be from China, I think, and being very, very careful not to provoke anything. You know, I think it was JD Vance, who said overnight, sort of, criticizing Trump is one of the worst negotiating tactics that you could ever possibly try to do. And I think Beijing understands that. And you can see from state media, they're being very, very careful not to take any swipes or do anything which could sort of hurt themselves.

One of the things that we've heard from the president is his intention on ending war in Ukraine. Can you imagine a world where China is a part of this conversation? Absolutely. I mean, it's really interesting because a lot of what Trump is actually now sort of saying and agreeing to is kind of what China had put forward in this peace plan years ago that was sort of derided in the West.

But they basically sort of advocated for a frozen conflict, a ceasefire that obviously wasn't acceptable to Ukraine because it would have involved ceding territory. But China's priority is always sort of just to try and stop the conflict. And so the deal that Trump is trying to strike with Putin is exactly that. And Trump himself has sort of talked about having a three-way meeting with Xi, Putin and himself.

So I can see China coming to the table. What China would offer in terms of a peace deal, I think is much trickier. You know, there have been reports that perhaps China could be involved in peacekeeping operations. I think, you know, it does that in other parts of the world as part of the UN framework. I don't see any benefit to China for directly sending in troops.

particularly with the risk looming that this isn't Putin's last rodeo in Ukraine. He came for Crimea in 2014, then he went back in 2022. If you've got Chinese peacekeeping troops on the ground and Putin makes another strike in four or five years' time, that would put China in a very different and difficult position.

with Moscow. So I think, you know, what China can actually offer really remains to be seen. I'm wondering if you look at the Trump administration's approach to Ukraine, and you maybe draw a conclusion on how the Trump administration would deal with China vis-a-vis Taiwan. Is that a fair statement?

I think that is one of the big questions. China sees the Ukraine and Taiwan differently. But essentially, if the message that Trump gives to Putin is there was a free pass to make this invasion, he blamed the war on Zelensky. So if you're Xi Jinping, how do you read that in a Taiwan context? You probably think, OK, you're not going to get so much pushback. But

But I would say there's a lot more holding back the Chinese government from invading Taiwan than just U.S. pressure. You know, when you go to China and you speak to people there who sort of inform the foreign ministry and are in policy circles,

I've never met anybody who thinks that China is on the verge of invading Taiwan. You know, they much prefer this idea of a peaceful reunification. And the way that the government is composed right now in Taipei, you know, the KMT, which is more pro-China, is very, very powerful. So it isn't to say that this is going to give Xi Jinping a free pass to invade Taiwan, but it certainly gives him a lot more space to be bolder. So

So next month in China we'll have the annual plenary sessions. That's when the National People's Congress and the Chinese People's Political Consultative Conference hold their annual meetings. This is known as the two sessions.

Is it likely that the relationship between the U.S. and China comes up for discussion during this period? Well, Foreign Minister Wang Yi will have his annual briefing. And that's actually one of the only times in China that any sort of senior official takes questions from foreign journalists.

Obviously, it's all very scripted and the questions are submitted in advance, but for sure the trade war will come up during that session. I imagine Wang Yi, who is a very, very seasoned top diplomat, he'll be very, very cautious in how he responds.

but it's going to be one of the top talking points, I imagine, behind closed doors as well. I remember when President Xi met with President Biden in San Francisco a while back, and one of the things that Xi aimed to do was try to increase foreign direct investment into China. And some of the latest figures that we have seen on inbound investment

in China, I think it's the weakest start that we have seen in about four years right now. What do you think that China can do that will allow capital, if this is even a possibility, to allow capital from the US to flow into China?

I think if they want to win back the confidence of American investors, they have to stabilize the business environment. I think foreign companies, for a start, have been asking for a long time for a level playing field for their companies.

the same access to procurement and bidding on deals that state-owned companies get, the same preferences, but also just stability. That was really the big signal from Xi meeting Jack Ma earlier this week. Jack Ma was the face, if you like, of the regulatory crackdowns because he was the biggest target. That meeting was taken by economists to signal that era of crackdowns is truly over.

And there's a stable business environment here. The government is going to give private enterprises a freer hand

take his foot off the pedal and sort of really let enterprise flourish. You don't have to worry about raids on foreign consultancies or the rug being pulled under an industry you just invested in. With also the specter of a trade war hanging over by natural ties, it is a hard job that Xi has to convince American investors in particular and American companies they're welcome. I mean, particularly when the retaliation that China took towards Trump's initial tariffs

included an antitrust probe into Google. And that was mostly symbolic because Google doesn't do much business in China right now, but it was a signal to other American companies that if this continues, then they're fair game in the tit-for-tat responses. Jenny, before I let you go, I have to ask you about President Trump's advisor, Elon Musk. We know that Tesla, his electric vehicle company, has a big presence in Shanghai.

What is Musk's relationship with Trump and Musk's relationship with Beijing? How does that kind of come together in understanding the dynamics that may end up playing out as we look to the future? You know, I think Musk is probably one of the most sort of

dovish on China voices in Trump's ear. And it's really notable, actually, that since Trump came to office, Musk has said nothing about China. In the interview with Sean Hannity, there was one question that was put to Musk that was framed in a China context, and he didn't answer. He mentioned the Taliban, I think, in response instead. He has huge business interests

in China, very, very good ties with the Chinese government. When he visits Beijing, they roll out the red carpet. He gets meetings with Premier Li Chang. And I think the Chinese government see him as a very, very useful person in this administration because they have an interlocutor who is directly into Trump's ear, who is a business person with huge interest in China. So someone who has a vested interest in maintaining business ties,

and who actually is aligned with President Xi Jinping on many, many sort of policy points, including their position on Taiwan. So I think for Beijing, Musk is a very useful person. It'll be interesting to see how that sort of plays out. Oh, no doubt about that. Jenny, thank you so much. Jenny Marsh there, team leader for Greater China EcoGov, joining from our studios in Hong Kong. And I'm Doug Krisner. You can catch us weekdays for the Daybreak Asia podcast. It's available wherever you get your podcast. Tom?

Thank you, Doug. And that does it for this edition of Bloomberg Daybreak Weekend. Join us again Monday morning at 5 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. Never settle unless it's in the electrifying BMW i4.

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