tv Bloomberg Daybreak Australia Bloomberg September 30, 2019 6:00pm-7:00pm EDT
paul: welcome to daybreak australia. i'm paul allen. shery: i'm shery ahn. we are counting down to asia's major market open. ♪ paul: here are the top stories we are covering the next hour. the impeachment inquiry widens. rudy giuliani's order to hand over all communications with ukrainian officials. the reserve bank of australia meets later with most economists predicting the rates will be cut to a new low. years as the0
people's republic and communist party rule. we are live from beijing and hong kong. shery: let's get you quick started on how the markets are trading. u.s. futures gaining one quarter of a percent, this coming off the back of gains we saw on this u.s. session with the s&p 500 gaining .5%. the s&p 500 gaining ground for the third quarter in a row, managing to rebound in the month of september after the losses we saw in august. when it comes to today's session, we saw every sector in the green except for financials and energy. we have 10 year yields paring back some of the earlier gains to train around 1.67%. wti fell below $55 a barrel. tech fueling the gains in this session as the trump administration partially refuted some of those reports that it may potentially target chinese capital. the nasdaq gained .8%.
we are looking ahead of the asian open with a couple of markets on holiday. paul: that is right. we do have new zealand trading, currently looking kind of flat right now in new zealand. we have nikkei futures trading out of chicago looking pretty flat. quite a lot of data coming out of japan and south korea today. we will have cpi and exports numbers for the month of september from south korea. japan jobless numbers for august, as well as the third quarter survey. we are bringing all of those stories to you live as they break. in australia, sydney futures ever so slightly higher as we of course await the reserve bank of australia's decision later this afternoon. for now, let's get to the first word news with jessica. jessica: a new warning about global growth. expansion in the world economy will decline next year to the
slowest rate since 2012. that is because of a deteriorating effect of the trade war. growth is seen at 2.6% this year from.5% next, down 3.2% in 2018. the downgraded forecast for 16 countries for june. china has repeated a pledge to further open the economy, adding it will act to safeguard multilateral trade. the premier spoke ahead of revised negotiations in washington this week. he reports he said the government will work on cooperation and innovation and will protect intellectual property. liu also said measures will be taken to make it easier for foreign companies to work in china. tax rises in japan tuesday. a fundamental government policy, but one that may cause the economy to stumble. the levy climbs from a percent to 10% in an attempt to rein in the world's largest public
debt. previous hikes has triggered a slowdown enter railed political careers. shinzo abe's will become japan's longest-serving prime minister next month and has twice the highest sales tax hike on the way. forecast for growth in vietnam being upgraded after the latest data shows the economy expanded more than 7% in the third quarter. citigroup is revising its full-year projection by 2/10 to 6.9%, while 7% full-year growth. vietnam is the beneficiary of the escalating trade war with exports and manufacturing. unrest in honge kong continues to cloud the future for pathay pacific. calling on the carrier to explain why dozens of staff have been dismissed, accusing them of what they call political cleansing at the behest of beijing. the federation puts the number of cathay officials at 32,
including pilots, since the middle of august. global news 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. shery: china is marking the 70th anniversary of the people's republic and communist party rule. president she's in pain is set to speak -- xi jinping is set to speak later today and a military parade will show the country's growing military might. selina wang. joins us. what are we extending on this day that state media says will be a day for mass pageantry? selina: we are expecting a massive military parade today with at least 100,000 people taking part. we will be watching for a morning address that president xi jinping will be issuing. fireworks will be displayed over china's capital.
there has been preparation for this for months. this entire previous month of september, there has been massive security, parade rehearsals. many major streets are closed and huge issues getting into even the bloomberg building with lots of security everywhere. during the military parade, we may get a display, a glimpse of some of china's most advanced military hardware. it may be the first time we see an intercontinental ballistic missile. what is on display is what former pacific command or harry harris called the largest and most o diverse missile force in the world. this parade comes with growing concerns from the u.s. and china's neighbors that this is a powerful demonstration of force that may represent a threat to u.s. presence and the threat to some of its neighbors. jinping sayingi ahead of today's events? selina: we heard him give a
brief speech to a banquet in beijing ahead of the parade today, saying hong kong and macau will look to develop together with the motherland interior. adding that tomorrow will be even better. she's in pain -- xi jinping has not said much on the protest of hong kong. the most verbose he has been about the protest. he is hailing for a future and better relations. he speaking after a weekend of violence in hong kong. we have ahead of this very important anniversary seen the censorship crackdown become much tighter in china as the government tries to control the narrative in hong kong. and wants to make sure on this very important day where they want to celebrate 70 years of rule that nothing in hong kong overshadows the military parade celebrations happening. shery: let's bring in tom mackenzie who is on the ground at tiananmen square area.
tom, selina was telling us all of the challenges with hong kong protests going on. how big of a chance is this for the president to showcase how much the communist party has done for the people of china so far? tom: this is really about trying to communicate that vision, that image of not just the party and the country, but of course, president xi himself. you have outlined some of the challenges selina has been talking about. whether they of the economic challenges, geopolitical challenges, the trade war. this all of government approach that some analysts have described from the u.s. -- to curtail china's rise. this is an opportunity for china and its leader to show off its military might, but of course built on a foundation of economic strength. the second largest economy on
the planet. getting to this point where we are now, just to give you some background, we are just in front of tiananmen square. we are behind the gate of heavenly peace where president xi will get up and give a speech later this morning. people on effective lockdown. we have been through three layers of security to get here. security has been intense. the military parade will really be the focus. an 80 minute display of some of china's most cutting edge military technology. selina was pointing out the missile technology. that will be the focus, including potentially unveiling the ballistic missile. that will be unfocused as well. military might, economic might but of course the challenges china focuses on are very much being highlighted. they are the backdrop as the
events are unfolding in beijing for the rest of the day. paul: in terms of those challenges, are we likely to hear any discussion or speeches about them? or is this strictly a day of celebration? tom: no, this is strictly about celebrating what the communist party and its leadership sees as its successes over the last 70 years. mao zedong stood up and proclaimed the people's republic of china. the focus is on the achievements as they see them over the last 70 years. many would argue the last 30 years have been correcting 40 years of mistakes prior to that. we did have a report of open progress. the question now is it china will continue to open up the economy or the strength of the
state owned enterprises will pose a challenge to the private sector. that is on the economic front. beyond china's borders, there are concerns about the continuing anti-china protests in hong kong and the pushback that china is facing from the u.s. and some of its allies on a number of fronts. paul: all right, tom mackenzie and selina wang, thank you for joining us. in hong kong, the city is bracing for another wave of massive protests in response to china's anniversary. sophie kamaruddin is live on the streets of hong kong. what can we expect today? sophie: it is calm and the city right now but it will not be a quiet national day even with scaled-back official activities. i'm across the hong kong convention center which has barricade set up around the pruner with police on guard. a patrol ship on the water as well. this as dignitaries will be here
to observe the official flag raising ceremony from endorse while the ceremony takes place outdoors at the square. chief executive carrie lam is not in attendance. she is in beijing but is due to return to the city later. a very different celebration for carrie lam compared to last year when she spoke of better integrating with the mainland with initiative like the greater bay area and belt and road project. overshadowing official ceremonies will be unauthorized rallies planned for six district across hong kong island and territories that are due to start later this afternoon. large numbers of protesters are still expected to gather in defiance of a police ban on the march along the route that was planned by the pro-democracy civil rights fund. they organized the march as we saw earlier. shery: you mentioned some of the celebrations will be pretty muted in hong kong so what are some of the security measures
that are being taken right now? recall that during the july 1 anniversary. protesters attempted to disrupt the ceremony that took place here, clashing with police. later that day, a group broke away from the larger peaceful ones to force their way in. there is heightened security here and across the city. 6000 police have been deployed. water cannons on standby. this especially after police warned of intelligence flagging very dangerous plans by protesters, allegations of which have been rejected by pro-democracy activists, lawmakers and protesters. precautions are being taken across the city. malls have been shut. the subway operator has closed several key stations including here and prince edward. given those stations have been battlegrounds for confrontations between hardline protesters and police. plus, travelers, the airport
express services is being reduced. paul: sophie kamaruddin in hong kong, thank you. plenty more still to come. 70 years of about the people's republic of china and the opportunities and challenges that lie ahead. richard mcgregor will join us later in the show. shery: up next, to ease or not to ease. can the rva surprise as equitation's of a rate cut increase? this is bloomberg. ♪
shery: i am shery ahn in new york. paul: i am paul allen in sydney and you are watching daybreak australia. the reserve bank of australia meets later on. markets and most economists expect policymakers to cut interest rates for the third time in five months. our next guest agrees with that. the jp morgan timing for another rate cut today.
the chief economist for australia and new zealand joins us now. thank you for coming. you're expecting another cut. many economists are but phil low last week said let me see if the australian economy has a different turning point. >> that is right. we have to remember that was the narrative they represented on the august statement for monetary policy. he spoke of that when he spoke before the parliamentary committee. the forecast actually assumes a rate cut before the end of the year. when i read that last week, i thought that sounds a little more optimistic than you would normally expect for a central bank who you think is about to cut rates. we need to remember we have to assume another rate cut. it feels like it is a question of when rather than if. we thought october, just on the view the minutes in the september meeting were quite dovish. and when we look at what has played out globally, we have had
weaker pmi's. a number of central banks will be in action in the fourth quarter of 2019. we know the rba things that is relative input into the monetary policy decisions. it tells us they will be cutting today. paul: there is a popular oxymoron going around when we talk about central banks and that is the hawkish cuts. we have seen some of the old concerns reserving in australia. the housing market has been rekindled. is that a risk the rba needs to be conscious of? sally: it is probably something on their radar but the governor was asked about that last week. he made it pretty clear that cities have come up 15%. up a couple of percent is not something you want to get too excited about. he did say he started to see credit growth accelerate strongly and that would present more of a constraint to monetary policy. we are clearly not there yet. yesterday's credit numbers from subdued.ere very
i thought that was quite a point from the governor and made me think at the moment housing is no constraint to lower rates in australia. shery: subdued. the rba back to back cuts recently we saw match to the fed's cuts as well. when we have no certainty where the fed is going in the next meeting, i was that being factored in by the rba? sally: that is right. at jp morgan, we expect to cut again this month in december. another 50 basis points cut by year-end. the rba, all of this matters because in a world where other central banks are easing and our shows 42 central banks will cut rates in the fourth quarter it is difficult for a central bank and smaller economy to do nothing. by adopting that strategy, you risk your currency appreciating which for australia and rba right now would be highly counterproductive.
i think they feel when the impetus globally is deftly towards lower rates -- definitely towards lower rates, the path of least resistance to mystically also has to be towards lower rates. i think that will be a factor in their decision-making today. shery: when we going to see the june and july rate cuts going through the economy especially as we have seen the unemployment rate pick up in august? sally: that is right. we do think the next set of retail numbers that will come showater this week should some signs of better consumer spending. we are looking for a forecast of number the retail sales later this week. that would be consistent with a couple of rate cuts and the fiscal stimulus with the income tax is starting to flow through the economy. i think that would be a significant warning sign that the household sector is proving to be much less responsive to
lower rates than fiscal stimulus. that would overwhelm the narrative of a gentle turning point that has to be let in the first instance by the household sector. paul: interesting point because consumers see lower rates and assume something bad is happening and don't spend. what sort of phenomenon do you see that happening in australia? sally: some commentators have pointed to the fact consumer confidence has not lifted in a meaningful fashion since the rba started rate cuts. that maybe does talk to the point that people like to get more worried rather than less worried when rates go down because they think something is not quite right with the economy. that is where the battle for the rba, cutting rates but also trying to have a reasonable story like good long-term prospects for the economy and a gentle turning point. they are cutting rates on one hand and trying to reassure on the other hand. paul: all right, sally auld,
thank you so much for joining us. you can get a roundup of the stories we need to know to get your day going in today's edition of daybreak. bloomberg subscribers can go on their terminal. it is also available on mobile on the bloomberg anywhere app. you can customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪
paul: i am paul allen sydney. shery: i am shery ahn in new york. president trump's personal attorney rudy giuliani has been subpoenaed to provide documents on his communications with ukraine as the impeachment inquiry into the president accelerates. let's go to our congress editor, joe. development.t this we continue to see more out of washington, including from the wall street journal now saying secretary pompeo took part in the infamous july 25 call.
it is a story that keeps on giving. joe: yes, it is. a series of rapid developments that has washington -- happened in washington, starting with the subpoena of rudy giuliani for some records that he even talked about on television. things like texts, phone records, other documents of communications dealing with his interactions with ukrainian officials. giuliani for his part has promised he would defy any subpoena so it will be a character -- a court case that is coming up. now we found the wall street journal is reporting that the attorney general -- sorry, secretary of state was actually on that call with ukrainian trump.nt and president whereas previously, he has put some distance between him, himself and that call. paul: joe, the new york times
also reporting that president trump pressed australia's prime minister scott morrison to help the attorney general with an investigation that could undermine the mueller inquiry. what is the story there? joe: the president and his allies are trying to denigrate the mueller probe as being origins and partisanship and possibly corrupt. began actuallyon with an australian diplomat who informed u.s. authorities that one of trump's campaign aides, george papadopoulos, told him prior to the leaking of the democratic party emails that the russians had information on the clinton campaign. this is an extension of that as they try to discredit the molar report -- mueller report. shery: joe, thank you so much for that. a quick check of the latest
business flash headlines. a contractor for credit suisse who hires private detectives to follow an executive has committed suicide. a swiss financial blog reported the death, identifying the man only as "p." credit suisse hired detectives because of fears it would encourage other bank staff to move to the rival ubs. the board met monday to discuss the issue. paul: the initial hearing into goldman sachs latest involvement in malaysia's scandal has been postponed as prosecutors seek to move the case to the high court. no further details were given but it is seen as an indication of the seriousness. they face serious charges of misleading investors where they arrange more than $6 million in bond sales while allegedly knowing the funds will be misused. goldman says it wants to resolve the case. plenty more to come on daybreak australia.
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paul: 8:30 a.m. tuesday morning here in sydney. market open 90 minutes away. futures looking pretty quiet after a day of gains on u.s. equities markets. i'm paul allen. newy: i'm sherry ahn in york where it is 6:30 p.m. let's get the first word news with jessica summers. jessica: the wall street journal says secretary of state mike pompeo also took part in the phone call between president trump and the ukrainian counterpart that has prompted an impeachment inquiry. state department officials have not commented on pompeo's role. president trump's first no attorney -- personal attorney rudy giuliani has been ordered
to provide documents over his communication with ukraine. scott morrison told president trump he was ready to help shed light on matters after an investigation in washington amid reports the white house sought its help with a justice department inquiry. trump asked morrison to help the attorney general gather information that might discredit the mueller investigation. the british government has completed the draft text of a new brexit deal and will send it to brussels this week. sources say the draft includes a proposal that will let the u.k. avoid the so-called backstop of irish border. one of the biggest sticking points in the brexit negotiations has been the eu's insistence that northern ireland would have to remain part of the single market customs union. saudi arabia's nonoil growth accelerated in the second quarter. a sign the economy is surviving
the austerity measures that follows the collapse of crude prices five years ago. 3%,il gdp expanded almost the fastest pace since 2015. to production due cuts as opec seeks to stabilize prices. that cost over all growth to slow to half of 1%. north korea has used the u.n. general assembly to decry the lack of progress in nuclear talks with the u.s., saying the fault lies with washington's political and military provocations. the ambassador says that a movement has followed the first historic summit in singapore and it is up to the u.s. to decide whether it will be a window of opportunity or a further crisis. global news 24 hours a day on air and on tictoc on twitter,, by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. shery: a quick check of the
markets. we are seeing aussie futures not doing much at the moment but we did get the latest numbers when it comes to september manufacturing data. 54.7%.1.6 points to firmly on expansion territory. futures not moving much ahead of the rba rate decision we are expecting this morning. the excitation is for a rate cut from the record low -- the equitation following rate cuts. kiwi stocks under a little bit of pressure after gaining for the last two sessions. we did get this week, business confidence sinking to the lowest in more than a decade. 1%.res down 1/10 of paul: just a little bit of breaking news to get you. the oil search managing director is to retire. peter botten stepping down and will be replaced by keiran wulff as the new managing director.
an internal appointment. wulff is currently the cfo. peter botten has announced his retirement. let's get some more on what we should be watching as trading gets underway in asia. we are joined by garfield reynolds. u.s. stocks capping three quarters of straight gains. sitting on double-digit gains for the year but we were hearing this this time last year. a lack of exuberance? garfield: one of the things that is different from last year, the positioning is very similar, but last year there were some level of confidence in the third-quarter that the trade wars could be coped with and there was going to be movement towards resolution. we've sort of got something like that but we don't have the exuberance that there was. there is a feeling that maybe last year we were looking at coming towards the end of the cycle, coming towards the late cycle.
now some people are feeling like this is the end of the cycle. if we look, we have a chart here that highlights this concern where you can see -- the blue line is what the msci world index did last year. the white line is what we have done so far this year. a lot of stock traders will be hoping that there is a divergence of the end of the year relative to last year. the trade war is still grinding on. month income a month out -- month in, month out, we are getting some pretty dire industrial numbers and outlook and a lot of consumer sentiment definitely -- difficulties. the impeachment inquiry and what that might cause. there are a lot of reasons for nervousness. i think the positioning is adding to that nervousness. we are leaving on the edge -- living on the edge of another meltdown. shery: no wonder we are seeing
markets and economists expecting the rba to cut rates today. but what is the risk of a hawkish cut? garfield: yeah, the risks are pretty high for a hawkish cut or even a hold. governor lowe last week played his cards very close to his chest and did not sort of signal a rate cut was coming but the markets have assumed one anyway. as you can see from the chart we have up now, if you are looking at the economic surprise index for australia, it has jumped up to some of the highest levels in a couple of years. yet, everyone is still expecting a cut. very strongly priced in. that means if we do get a cut by -- there is some language that signals this might be it for a thee -- the risks are for upside of the australian dollar, upside for australia neil.
australia has a long tradition of looking past what just happened from the rba to what's going to happen going forward. if i think -- if the markets are thinking what is going to happen going forward of the rba stance pat, that could stead off some extreme reactions in the aussie dollar and in the rate space. even potentially for the australian stock market. shery: garfield reynolds, thank you for that. garfield's commentary on the market blog on bloomberg. you can get the market rundown and one click. there is commentary and analysis from bloomberg's expert editors so you can find out what is affecting your investments now. the japanese government finally raising the national consumption tax to 10% after twice postponing the move over concerns about its impact on the economy. our reporter joins us from
tokyo. tax hikes rarely popular anywhere in the world, so how are japanese consumers reacting to it so far? weekend, stores and restaurants put up signs enticing customers to come in, big-ticket buy the items ahead of the tax hike. one of the hottest selling items -- toilet paper. customers were buying up, stocking up on toilet paper ahead of the tax hike and local shops were saying they are completely sold out. a sign consumers are thinking about the tax hike in some way or another. economists expect the burden on consumers to be less compared to 2014 when the tax hike rose from 5% to 8%. inquiry,terms of that it does not cover everything, does it? what is getting hit with a higher 10% tax?
kurumi: that is right. the first time ever in japan that the tax rate will depend on goods. different tax rates on different items of goods. for example, most foods like groceries and take-out foods will remain at 8%. if you are by alcoholic beverages or eating inside a restaurant, that will increase to 10%. when it comes let to daily goods like tissues and diapers, that increases to 10%. but subscription newspapers will remain at 8%. all of this uneven tax rate could be a bit confusing, causing some customers to not really know whether it is a percent or 10% so we will see how that fairs. ,aul: all right, kurumi mori thank you for joining us on a day where japan implement the higher sales tax. the people's republic of china is marking its 70 at anniversary today with a military parade and
mass pageantry including at least 100,000 people. president xi will speak later. let's take a quick look at china's economic development. zedong declared the people's republic of china in 1949 after years of civil war. the 70 years since has seen the nation struggle to extreme poverty, to become the world's second-largest economy. with a political reach far beyond its borders. socialisme 1970's, with chinese characteristics kick started china's remarkable economic growth. that led to milestones, including the wto in 2001. .n. joining the elite club of imf global reserve currencies. china gdp today is about 90 times bigger then in 1978. the 21st century has been marked
by an increasingly assertive china on the world stage, leveraging economic power, building alliances through initiatives like its belt and road program. as the people's republic turns 70, it is dealing with a trade war. a slowing economy and unprecedented political protests in hong kong. and president xi's urged the communist party to brace for long-term struggles, extending even beyond the prc's 100 year anniversary. paul: we will be following china's landmark anniversary throughout the day. to help us do so, that's bring in our first guest. richard mcgregor is the author of "the party." and senior fellow. thank you very much for joining us. we are going to hear from president xi later on. he will outline his vision of a strong china but can we really expect to hear anything on the big issues of the day?
the trade war and the like? will he sticks trickling to the celebratory nature? richard: i think it is ceremonial. there will be a lot of coded language that may be give you an idea of the leadership thinking about the trade war. in the report you just heard, we had a lot of big speeches by xi jinping where he talked endlessly about struggle. that is an important word for the communist party and certainly one he applies to the trade war. i don't think it has any major market moving announcements. mao and usea fan of the few lines in the context of the trade war, including the long march. do you get a sense that if things do not go china's way, they are prepared for a war of attrition? richard: absolutely. it is interesting what you say about mao. the 70th anniversary of the communist party saving china from foreign predators, as it
were. tradition is very important. for all the terrible things that have happened under mao, xi won't disavow mao. he won't disavow any chinese part leader. in terms of the long march and so forth, that is a sort of language they use when they are settling in for a long battle. i think it is pretty clear right pinthe chinese -- little and trying to make a big deal because it will come back to week later to ask for some thing else. they are settling in for the long haul. shery: does that battle include against hong kong protesters? how do you break this impasse? richard: it is truly difficult. i think it is the long game. how long, we don't really know. there is a lot of speculation about whether china might physically, militarily, or police intervene in hong kong. that is still a long shot. if they physically intervene, right now, it is hong kong's
problem to solve. if they intervene, it is their problem to solve. i think we will see a grinding campaign by the hong kong police against the rioters. they will try to isolate the more radical elements. they will jail a lot of people. they will use physical force where necessary. i don't think the ugliness in hong kong goes away for quite some time. shery: the understanding in china for the longest time has been there will be a trade-off, freedoms,individual party control in order to get economic prosperity. but the economy in china is slowing down. you have this ongoing violence in hong kong. you head into the trade talks next week with the u.s.. who has more leverage? richard: well, i still think that china is able to absorb pain and cover up a lot of the blemishes. look at the chinese economy right now. it is slowing down naturally. it is slowing down because of a deliberate deleveraging to attack debt.
it is slowing up because of the u.s.-china trade war, and it feeds on itself because it spreads around the world. i think the chinese economy is still growing. not growing at the official rate, never a good indicator. but if we only really get to the point where the social contract gets really under stress, i think 5, 10 years down the road when other factors come in like the demographic crunch china is facing in coming years. shery: right. richard mcgregor, thank you so much. you are sticking around. of the lowy institute. we have some live pictures coming from the peruvian parliament. the president there saying right now he will dissolve congress. now calling for parliamentary election, as we continue to see more and more idiosyncratic turmoil in emerging markets. eruvian president
paul: i am paul allen. shery: i am sherry ahn. you are watching daybreak australia. today's celebration in china illustrates what president xi as aas its proper status strong country that will not be beholden to the capitalist west. xi has brought the communist party to this moment. richard mcgregor is still with us from sydney. becoment xi jinping has the strongest chinese leader since mao zedong. how will his influence change to become oneads of the biggest role powers the world has ever seen?
richard: as you say, the point of this parade is to sort of display to the world strength, unity and confidence. xi is very much part of that because it is also all built around the image of him as a strong leader. ishink for the moment, xi all-powerful. he has a lot of critics at home. it is difficult for somebody in his decision of power for people to organize against him. as you said, he made himself president indefinitely. not president for life. the thing i am looking for with respect to that is in coming years, whether the issue of succession comes back. right now, there is nobody else for the people to look to when they think about chinese politics. i think xi will be under a lot of pressure in coming years, maybe before the 2022 party congress to go back to that issue of succession because many people in china are still furious he abolished the
process. shery: on top of that, a slowing chinese economy, trade tensions with the u.s., violence in hong kong. what is the risk all of that will be blamed and the blame will fall squarely on president xi? richard: i suppose there is that risk, but politics seems to work quite different in china. you could argue that xi's policies have helped create what we have now in hong kong. it's certainly the case in taiwan. xi's hard-line in taiwan has worked very negatively for china and taiwan. but what we don't see is the feedback mechanisms internally in china where people say xi jinping, it is your fault. that happens in the west very quickly. so i think in that respect, it would require something really calamitous to happen. the people could then be able to point the finger at xi personally. paul: as you say, chinese politics extremely different to
western democracies, but xi is looking over his shoulder as he may is not there for the 80th anniversary. who would be the heir apparent and how does a replacement come about? richard: there has been a paper going around the internet about what happens if xi jinping dies. it is a little bit scary because there is no actual process to choose a successor. for the communist party, that is scary as well because one of the big things they fear is divisions at the top among top leaders, because that could spread out through the system quite rapidly. if you ask who is going to replace xi right now, it is impossible to know. the most immediate candidates, ones we would be thinking about in the next two to three years, have basically missed out. paul: let's talk more broadly about the communist party. 70 years in power which is a record-breaking run in terms of communist parties, but it is hardly communist. it has evolved.
how do you see it evolving into the future? richard: the chinese will persuade you that you are wrong on that count because they are very concerned they are communist. let me explain it like this. the chinese ambassador once said this to me -- china is not a commonest country, but it has a calming is government -- coo mmunist government. the hardware china runs on was built for the second. they have adapted it to a market economy. for the moment, managing to bring it off. there has always been a lot of speculation that they would change the name from the chinese communist party to the china national party, or something like that. but they will never do it because the party is absolutely central to the way they see themselves. shery: president xi came into power valving to abolish all corruption within the party. how successful has he been so far? richard: well, nobody ever abolishes all corruption, that is for sure. it is the extent, the
durability, the long -- long activity of the anticorruption campaign has been outstanding. many people will tell you that it is just to get political enemies. it has play that role at different times, but the anticorruption campaign has been more far-reaching than any such campaign in china since 2949 -- 1949. literally, millions of people have either been jailed, lost their jobs. the top 400 of the most powerful officials, and along with them, leading families have been pushed out of the system. about 100 generals have been jailed. it is a really big deal. it's also one way that xi has kept control of the system, because if you got something on you at this time, you want to be pretty scared. paul: richard mcgregor, thank you so much for joining us. later on, we will speak to abco worldwide senior counselor and
former chamber of commerce for more about china-u.s. relations and how hong kong can rebuild its image. shery: if you missed any part of our conversations this morning, tv is your function. catch up on past interviews, watch us live and dive into the securities or bloomberg functions we talk about. do send us instant messages during our shows. this is for bloomberg subscribers only. check it out. this is bloomberg. ♪
with china's national petroleum and malaysia. aramco has tapped up china's sovereign wealth fund. shery: boeing says it is almost ready to return the 737 max to the commercial market after two deadly crashes prompted a global grounding more than six month ago. the ceo says the plane is fine-tuning a software upgrade and it's preparing for final evaluation by test pilots and a certification flight with u.s. officials. paul: trade tensions are not stopping chinese tech companies trying to list in the u.s. 6kr is planning to join the nasdaq and has filed an offering at $100 million. pushing an ipo for its learning company that could raise at least $300 million. shery: plenty more in the next hour. we will be joined by ig market analyst kyle, for his outlook on the rba and more live from
good morning. i'm paul allen and sidney. we are under one hour away from the market open in australia and south korea. shery: good evening from bloomberg's world headquarters in new york, i'm shery ahn. welcome to "bloomberg daybreak: asia." paul: here are the top stories we are covering in the next hour. the impeachment inquiry widens. rudy giuliani order to handle -- and over all communications with iranian