Tariffs, trade and AI.
Presidents Xi and Trump have a busy 48 hours ahead.
This is going to be a very exciting trip.
A lot of good things are going to happen.
China's view about the US is obviously unstable.
So China is trying to avoid a conflict.
It's World Business Report from the BBC World Service.
I'm Will Bain, and we'll be looking at what impact the meeting might have on the direction of global trade, supply chains and the prices we all pay.
Also today, the boss of chat GPT maker OpenAI, Sam Altman, is in court in the trial, fixating the world of tech and throwing back the curtain on the secrets of Silicon Valley.
I'll have the very latest.
President Trump descending the stairs of Air Force One there as he arrived in Beijing on Tuesday the first visit by a US president to China in almost a decade flanked too, by some of the biggest names in global business, including the likes of the outgoing Apple boss, Tim Cook, the Tesla chief executive, Elon Musk.
Two of the biggest investors in the world, BlackRock's Larry Fink and Blackstone's Stephen Schwarzman, as well as, a last-minute addition, the boss of the 5 trillion chipmaker Nvidia, Jensen Huang.
President Trump declared.
I will be asking President Xi, a leader of extraordinary distinction, to open up China so that these brilliant people can work their magic and help bring the People's Republic to an even higher level.
But some in China don't think their economy needs the US.
This is the BBC's Laura Bicker talking to a saleswoman for a Chinese EV maker a little earlier this week.
Whether or not the US needs Chinese electric vehicles, our development and sales won't be constrained by that.
We mainly export to the Middle East, Asia and South America.
We don't rely on the U.S. markets.
So is that a changing dynamic for this meeting?
For more on how Chinese business sees it this time around, with tariffs, of course, still hanging over many sectors.
We spoke to Andy Xie, independent economist in Shanghai.
And Andy started by telling us about what felt different from the President Trump's last visit to China in 2017.
Trump was a superstar and Trump became the most famous American replacing Michael Jordan.
Michael Jordan was the most famous American in China forever, until Trump came along is totally different.
I think that people become very wary after all these ups and downs, trade war, tech war.
In the last year or so, we have all these hot wars.
And obviously, very disruptive for everybody.
People can see the gas price.
He's got his own nickname right now in Chinese as well.
Nation-building Chinese.
Yeah, yeah.
川建国 means building the nation.
The reason people are saying that is that Chinese didn't believe they could do all that stuff before Trump came along.
When Trump basically blocked the access to all these tech products, China had to do it on their own.
And over the last few years, Chinese have become more and more successful in terms of chip designs, chip equipment materials, jet engines and now AI.
So the confidence level in China is very, very strong.
With that said then, and stripping aside the big geopolitics issues that are going to be key talking points around the Iran war and around Taiwan as well, from a purely business and economics perspective, then what does China want out of these talks?
China has always insisted on one thing, stability.
Now, the US basically has been taking actions just based on what they could do.
Like a couple of weeks ago, when Micron told the government to ban certain equipment sales to Huahong, the Chinese chip company that was coming up very fast competing against Micron.
And the US government just did that two weeks before Trump's visit to China.
China has always been insisting on stability, but I doubt the US is capable of delivering something like that.
I hear what you're saying about stability lots of the areas shifting.
You know that deep seek moment in AI, for example, the company showing that it could do it without some of those chips, all that kind of stuff.
But at a fundamental level, if that's the sort of future of Chinese businesses, they're still sort of the past too.
These exporters that we've heard from lots of times on our program, dotted around the country, who are still reliant on selling relatively cheap goods, not just to the US, but to Europe as well.
But obviously, the US being a big importer of those as well, clearly a lot of jobs still dependent on that.
Yeah, there are over $460 billion of exports to the United States last year.
Most of that actually are electronics products.
Trump actually reduced the tariff on these electronics products, I think to something like 15, maybe 20.
He understands that US consumers really need these cheaper electronics products like, let's say, a TCL big screen 80 inches for like a thousand dollars.
You could never get it from anywhere else.
And US consumers are really tight in their budget.
So I'm not sure that the US government will totally block that.
People are suffering. especially in the old export areas like in Guangdong.
In Zhejiang province, there's this area where they sell all kinds of trinkets like keychains.
These people are suffering partly due to domestic situation in the United States.
The low-income groups that consume their products are really under stress.
Is that not true in China too, though?
Those people who are working in those jobs, they're also at pressure at home domestically.
So that slowdown in that trade, they're sort of being squeezed on both sides of quite a significant portion of the population, right.
There's an impact.
China's retail sales have been around 3%, I think.
That is not a strong number by Chinese standards.
It's been around that for quite a while.
The economy is driven by investment.
Certainly the tech pivot that China is doing is a lot of money is going there.
The increase is like a trillion dollars over the last five years or so.
And also the infrastructure investment is still going according to the pace.
I suppose one of the big questions all the rest of the world have got looking on to all of this is How much do these two sides need each other now?
Or are they both looking for other partners all around the world?
China's view about the US is that the US is obviously unstable.
So China is trying to avoid a conflict.
So how to manage the United States is really important.
And your overarching hopes.
Then, from a business perspective, over the next few days, what do you think realistically could be achieved?
What would be a good outcome?
I think China is going to kind of agree to some commercial transactions, give Trump a face.
So looking like they've bought loads of American products, for example.
Yeah, but I'm not sure they are important if you buy a few hundred Boeing jets or, let's say, 10 million tons of soybean.
These are temporary transactions.
They don't mean much in the long run.
China still views the US as untrustworthy.
Andy Sheer in Shanghai there.
We're listening to all of that.
That was our markets guest today Susan Schmidt, Portfolio Manager at Exchange Capital Resources, joining us from Chicago in the United States.
Susan, always great to have you back on the program.
Thanks for being with us.
My pleasure.
What did you make, first of all, of Andy's take, I suppose?
That seems to be quite a broad view from lots of economists and business leaders that we've heard from in China this week.
The rules of the game have changed a little bit for this visit compared to the past one.
They have indeed.
And I think that's right on point from investors' perspectives is they don't expect a lot out of this visit.
Maybe some one-time deals.
They really are hoping that the trade truth stays in place and that there just isn't a big shift one way or the other.
I think investors are taking this in stride.
You're seeing that in the market.
Once again, this trip to China not really impacting the market.
The market's still being dominated by news out of the tech companies.
Yeah, and we'll come to them in just a moment.
But just in terms of that tension, I suppose those tech companies you're talking about interesting, wasn't it?
The Jensen Huang was sort of a last minute pickup in Alaska. on the way there, the boss of NVIDIA.
And yet at home you've got this bipartisan bill on the move at the moment, which is almost unheard of in the US at the moment.
Right,
Republicans and Democrats working together to try and block Chinese car makers from coming to the US.
That's the kind of tension that actually President Trump's going to have to try and navigate in this deal right.
Not giving up too much to upset any of his industries at home.
That's right.
So President Trump's in an interesting spot here, because he does have a global conflict on his hands in the Middle East and, at the same time, elections for his party coming up in November.
He wants to make sure that he balances that.
He needs to be shown as a trusted trade partner.
And he wants to come out as again, saving face potentially, but with headlines that are positive on deals being done between business.
I think Trump was very political in his choosing his guests to take with him on the trip to China.
And so that was very astute on his part, trying to show that he is working on trade and moving those things forward.
The extent of those deals is yet to be seen.
And I think that's where we're seeing investors just wait and sit back without any big moves in any of the prices in those industries.
And AI, we know that they're going to be talking about.
We'll pick up some more thoughts from you, Susan, on the rest of the market news later.
But how closely have you and the rest of the investment community been watching this?
Sam Altman, Elon Musk trial back at home?
Well, we're certainly watching it.
Always interesting.
Two interesting characters in the industry.
You never know which way this is going to go.
I think investors now are looking at it just as a data source to find out how each of them is thinking and what has been going on behind the scenes to see.
Remember that AI is changing the landscape on many fronts for investors and we're trying to figure out how these companies eventually shift the market and what place for OpenAI, what place they themselves will hold in the market if they eventually go public.
Well, for sure.
Well, let's bring in our North America technology correspondent, Lily Jamali, at that point, because Lily, you've been in the courtroom, what, pretty much every day in Oakland of this trial so far?
Yeah, pretty much every day.
It's been quite a spectacle.
Has that been part of it?
Exactly what Susan was talking about, just what it's revealed the kind of secrets of all of these guys and actually not even people who were necessarily directly involved in this case but what they kind of made of the future of AI, Mark Zuckerberg from Meta, Satya Nadella from Microsoft, etc.
?
Yes, a lot of secrets are being spilled.
How much, you know, various people own in terms of their stake in OpenAI.
Greg Brockman, it turns out, owns a lot more than I think a lot of people were expecting.
$30 billion worth is his stake at this point.
He's Sam Altman's number two, right?
Exactly, the president of OpenAI.
And today there was the chief futurist at OpenAI.
There was a lawyer going back and forth to extract from him exactly how much money he has made by selling off his shares into the secondary market.
So that was quite amusing.
But yeah, I think you know more than anything we're learning.
You know how these people relate to each other, their interpersonal dramas, and there's just so much there to pick at really.
Yeah, and I know it was a slightly quieter day, you were telling the guys a little earlier.
A bit of a quieter day in court today, but we thought it was good to drop back in on the case again because of all the news yesterday.
We didn't really do a lot of Sam Altman's.
And we've done, I'm sure regular listeners will know on the podcast as well, lots of Mr. Musk.
So just sort of run us through again.
I guess where Mr Altman ended up at the end of his sort of submissions to the court.
Yeah, it was a really interesting day.
And today's actually a great day time to talk about this, because it's the end of evidentiary material.
No more testimony after today.
Yesterday, Sam Altman talked about Elon Musk's hunger for control. over OpenAI.
So the very quick background is that they co-founded OpenAI together in 2015 and Musk ended up leaving in 2018.
It was supposed to be a non-profit.
He now says that, you know, wait a minute, you changed the mission on me.
It's now a for-profit that's worth more than $800 billion.
How did that happen?
So his claim is that they reneged on turn their back on the mission of of, a nonprofit aimed at creating AI for humanity.
Sam Altman saying Musk was so eager to control it that the co-founders kind of got worried about letting him do that.
And he at one point actually said, according to Sam Altman, he wanted his children to have control over open AI, were he to die.
And then Musk's lawyers really trying to question Altman's trustworthiness and really drawing attention to his side investments which have ended up doing business with OpenAI even though he has no direct stake in the company.
How much damage do you think it's done to both Mr. Altman and Mr. Musk, I suppose, here, Lily?
Just the amount of dirty laundry that's come up from ex-partners to, as you say, previous business dealings.
Sometimes they're extracurricular activities, supposedly, what they got up to at music festivals.
I mean, there's been a crazy amount of stuff that's just come out of this case.
Yeah, and neither of them is going to emerge from this unscathed from a reputational perspective, in my opinion.
It was really interesting getting to watch Elon Musk be asked questions about Siobhan Zillis, the mother of four of his children.
To hear him actually have to address it and answer questions about the nature of their relationship, sort of started bumbling his way through his response because they think he was a little embarrassed.
They do live together evidently, but we were just learning this on the fly because we've seen them holding hands together in various forum.
It wasn't clear if they're actually romantic partners.
And he, of course, has had children with other women while they've been together, from what we understand.
But both of them have suffered reputational damage.
Leading up to this trial there was this big New Yorker magazine profile about Sam Altman and just how many people really think of him as not being an honest broker.
And so you know, I think there was a lot of table setting that took place in the run up to this trial.
And now there's an opportunity to question them and make them answer questions about make them answer for some of these accusations.
And briefly, then, Lily, what happens next?
What's the timetable for where we go next now that the submissions are done?
Big day tomorrow with closing arguments.
And it is possible that the jury of nine Californians will get this case handed to them tomorrow.
More likely on Monday, but they will begin deliberations within just a couple of days here.
Well, we'll get you back on the programme and talk us through it again.
It's as much soap opera as it is great business drama as well, isn't it?
Lily, always appreciate your time.
Lily Jamali there, our North America technology correspondent.
You're with World Business Report on the BBC World Service.
Now, gold is something of a cultural touchstone in India.
So the fact the government is more than doubling import tariffs on both it and its fellow precious metal silver, has more than just economic significance in a country that, according to the World Gold Council, accounted for more than a third of global gold jewellery demand.
It comes as the Indian government is trying to shore up its currency, the rupee, and try to mitigate some of the continuing economic damage caused by the war in Iran.
Well, Adrian Ash joins us.
Adrian is the Director for Research for Bullion Vault, a precious metals investment platform.
Adrian, thanks for hanging on late into the night for us here at UK Time.
Great to have you on the programme.
Thanks, Will.
What's your take then, on this and the move from India and the significance, I suppose, of it being such a big gold buyer?
India has struggled.
Indian governments have struggled for a very long time with the sheer quantity of gold that Indian households buy.
As you say, India has got a huge affinity, cultural, religious, with gold.
Weddings, obviously also Diwali, the world's heaviest gold buying festival until China's Chinese New Year overtook it a couple of years ago.
And the problem that India has here is that, whilst being a huge consumer of gold, it actually doesn't have any domestic gold mine production.
So every time that Indian households, Indian investors, buy a new ounce of gold net, they have to import it.
And that means sending foreign currency abroad.
So the drag that this puts onto the balance of trade, the drag that it puts on the current account deficit for India with the rest of the world, It's just a perennial problem for Indian governments.
Flip it the other way, Adrian.
What does it mean in terms of prices, gold prices and for gold producers and big gold producing countries where a lot of our listeners may be, in West Africa, for example?
India's impact on the cold market is, I mean really prices and certainly over the last 12, 18 months during the return of Donald Trump to the White House, has really been driven by investment demand globally, of which India is part, but really been driven particularly by China and, I think, the return of US investors and also by central bank demand.
And that's included the Reserve Bank of India.
It's been a heavy and consistent gold buyer in recent years, diversifying its reserves away from the dollar only and spreading its risk.
India's consumer demand is historically pretty stable.
It dropped a little bit in weight terms last year.
It was down about 20% by weight in terms of new imports.
But it was up by 25% in value terms because of last year's huge rise in the gold price.
So I don't see India's demand.
You know, we've had import duty at these rates before.
In fact it's two years ago this summer that the BJP government and Narendra Modi kind of surprised the market.
Globally, by suddenly reversing exactly the change in duty that it's now put back in place.
So, you know, that was a move to try and particularly to try and alleviate smuggling.
I mean, the bottom line is well, you know, if you move duty, import duty rates like this from six up to 15,
Will at the margin obviously hurt new jewelry demand and also investment demand, which is increasingly a bigger part of India's picture.
You are actually increasing the potential margins to smuggle it.
So what's your sense then here?
Short term hit rather than a long term trend?
I think for the global gold price, I mean, it's interesting.
The global gold price in dollar terms today did not move as a result of this news.
It's a little bit softer in dollars so far this week, but it's actually up in terms of other currencies.
I think the India Bullion and Jewelers Association.
I mean they're projecting maybe a 10 hit to India's gold demand on a result of this.
But they are also predicting there's going to be a rise in smuggling.
Adrian, always appreciate your time.
Thanks so much for it.
Adrian Ash there, Director for Research for BullionVault.
Well, let's turn back to Susan Schmidt, again Portfolio Manager at Exchange Capital Resources in Chicago.
And Susan, just before we came on air, the United States Senate confirming Kevin Walsh as the new head of the Federal Reserve, the central bank.
Looked like it would be a bumpier ride than that.
What's your take?
Absolutely.
It's official.
Kevin Walsh will be the next Fed Reserve Chair.
Jay Powell stays on the board.
I think investors are looking at this to make those Fed meeting minutes even more interesting now as we see tension rise between the members.
And I guess pressure again going to be come on straight away about.
You know, in his Senate hearings people were calling him, asking whether he was President Trump's sock puppet.
We're going to see a lot of that when it comes to interest rate decisions almost immediately, right?
Absolutely that's what investors expect, even though, despite his claims that he might be neutral, people expect Kevin Walsh to be pushing on President Trump's desire to have interest rates lowered.
The rest of the members of the Federal Reserve don't necessarily think the same way.
It doesn't sound like the easiest job in the world, this.
Definitely not, particularly when you've got inflation going the other way, because the price of oil continues to increase.
Yeah, and do go back to yesterday's programme.
Download the podcast World Business Report wherever you get yours from.
You can hear a long discussion about exactly what was going on with the US inflation rate on yesterday's programme.
Susan, always appreciate your time.
Thanks so much for being with us.
Thank you.
Susan Schmidt there, Portfolio Manager at Exchange Capital Resource in Chicago.
You're listening to World Business Report on the BBC World Service.
Hi.
Can I come in?
So that was me, just a couple of months ago, stepping in the door of a new maternity clinic in Sierra Leone, in West Africa.
Who's it?
We have no name for him yet.
No name yet.
Very, very handsome.
And that's me meeting the clinic's latest arrival, a beautiful two day old baby boy.
This facility, which is in a village in a remote hilltop area in the east of the country, has only recently been built and its staff receive their wages thanks exclusively to international donor money.
The midwife, Judith Sia Lameen, says that the clinic demonstrates the dramatic difference that aid money can make.
In the past, women are dying in labour during childbirth.
They will die on the road.
60 out of 1,000 were dying during childbirth.
60 out of every 1,000 were dying?
Yes, of every 1,000 childbirth.
The mothers or the children.
That's tough.
Yes, very, very tough by then.
Now it's much better.
That was one small project in Sierra Leone, improving maternal health, which doesn't get funding from USAID.
But some studies have predicted that there could be hundreds of thousands of unnecessary deaths following USAID's effective closure.
To get different perspectives on how these drastic cuts to aid budgets are affecting different parts of the African continent and what the new era of development funding could mean.
I've been speaking to Dr Amy Jadasimi.
She runs LADL, a port and enterprise zone in Lagos, Nigeria.
When you talk about the individuals who work for these agencies on the ground, who are, for the large part, professionals who add a lot of value, I have a lot of support and time for them.
On the other hand though, I don't think any aid organization or any NGO can say that they have been responsible for for lifting a country out of poverty or creating a great number of jobs on the ground.
I think in very specific acute situations, aid makes sense.
I think as a long-term palliative that in some ways alleviates governments from their responsibilities to their people, I think aid can become very damaging.
I've also heard from Reverend Dr Peter Bujari.
He oversees public health programmes to help young people living with HIV, AIDS and TB.
I lost staff, but also the young people who we were supporting to transition into adult clinic are no longer being supported.
They're likely to get lost in the system.
And same as the children who were supporting, to understand why they are taking medication.
But also it was an abrupt, in a way that you do not know what to do.
I had to lay off staff, and many organizations had to lay off staff.
The funding is cut in a month or two, and there's nothing you can do.
You cannot raise money. in a month or two, not even a year sometimes.
You need time to make those adjustments.
I do think we have begun talking to our government, thinking about what can we do by ourselves to maximize the impact of little resources that we have.
OK, Peter, let's just go to the broad big picture now.
Whatever we think of these aid cuts, we are simply, are we not at a point where they have become inevitable?
We have had decades and decades.
Tens of billions and billions of dollars pumped into Africa.
It has not seen the growth levels in Africa that were perhaps forecast by the people giving that aid.
No US or European administration right now is going to reverse them, it would seem.
I mean the politics of high income nations suggests that this money is not going to be coming back at the levels that we saw before.
Africa is one way or another just going to have to adjust, isn't it?
Yes, it's going to have to adjust.
I think there was a problem the way the aid is structured in itself to allow local priorities to be scaled up.
Amy Jadasimi.
We're talking about potentially hundreds of thousands, maybe millions of lives lost in the short term.
Are you basically saying that may just be a price that has to be paid for a transition that you think is inevitable and necessary?
One life lost is too many.
But this wake-up call was always going to come.
What matters now is what we do.
And there are many things we could do different to the Western solutions that have basically been imposed upon us by these aid agencies.
Another podcast plug, but a worthwhile one.
Much more of Ed's excellent reporting on the Business Daily podcast.
If you don't subscribe already, please do subscribe to ours too.
World Business Report while you're there.
Just about it from us tonight.
Big thanks to our team, Jay, Rob, Barbara.
Lindsay's been driving the program this evening.
Thanks so much for your time.
Thanks so much for listening.
Thank you.
