US and China meet in an attempt to ease tensions

This is an audio transcript of the FT News Briefing podcast episode: ‘US and China meet in an attempt to ease tensions’

Josh Gabert-Doyon
Good morning from the Financial Times. Today is Tuesday, June 20th, and this is your FT News Briefing.

[MUSIC PLAYING]

The US and China attempt to smooth tensions. Swiss bank UBS will inherit hundreds of millions of dollars in regulatory fines. And the aerospace industry says that flying taxis could soon be on the horizon. I’m Josh Gabert-Doyon, in for Marc Filippino, and here’s the news you need to start your day.

[MUSIC PLAYING]

US secretary of state Antony Blinken has met with Chinese president Xi Jinping and other top Chinese officials as part of a long-awaited state visit to Beijing. Ties between the countries have been rocky. The US is concerned about China’s increasing military activity around Taiwan and its refusal to condemn Russia over its invasion of Ukraine. Both Blinken and Xi appear keen to indicate that the two countries were now preparing for a thaw in relations. James Kynge, the FT’s global China editor, gave us a readout from the trip.

James Kynge
We need to separate the messaging that came out of the meeting from the underlying tensions that still undoubtedly exist between the US and China. On the positive side of the ledger, this is the first visit by a US secretary of state to China since 2018. So that’s a pretty big moment in itself. The other positive signalling was that both sides really seemed to praise the talks that had taken place. Xi Jinping said that progress had been made and agreement had been reached on some specific issues. He also said that China respected US interests and would not challenge or replace the United States. This type of signalling is very different from what we’ve become used to with the US-China relationship over the last several years, which is basically a situation of freefall, lurching from one crisis to another, very poor relations in terms of trade and investment. A profoundly suspicious, mutually suspicious security relationship and some big security issues such as the future of Taiwan and the US-China strategic competition around Taiwan.

Josh Gabert-Doyon
Did the positive mood music surprise you?

James Kynge
To be honest, it didn’t really surprise me. This is exactly what I imagined would emerge, you know, some very measured language, diplomatic language, both sides really straining to put the relationship on to some kind of a more stable footing. But none of the really big issues being addressed, at least certainly not being communicated to the outside world as yet.

Josh Gabert-Doyon
What do you think the real impact of this meeting is gonna be going forward?

James Kynge
We’ll really have to see whether or not the substance of the relationship changes at all. What is clear is that there are several challenges coming down the track. The Taiwan presidential elections is scheduled for January 2024. That will undoubtedly be a moment of tension between the US and China. And then the US presidential elections are in November 2024, and as we know, the run-up to any US presidential election is the time of tension for the US-China relationship, because in recent years at least, all US presidential candidates have sought to criticise China quite harshly. The other thing that is very clear is a division in what the big US corporations would like their relationship with China to be and what the administration is saying and doing. In the last few weeks we’ve had very clear representations of this. Elon Musk, the boss of Tesla and Twitter, was in China recently. Jamie Dimon, the chief executive of JPMorgan Chase, was there recently. And previous to those two, the boss of Apple, Tim Cook, was there. The way in which these corporate leaders are feted and get very superior access in China is something I think that shows the way in which China prioritises its relationship with corporate America. And I think that is, you know, one of the sources of tension between corporate America and political America that we always see being played out.

Josh Gabert-Doyon
James Kynge is the FT’s global China editor.

[MUSIC PLAYING]

The banking giant UBS faces a massive regulatory bill running into hundreds of millions of dollars as a result of its takeover of Credit Suisse. UBS will have to cough up the penalty because Swiss, UK and US regulators are poised to fine Credit Suisse for its mishandling of Archegos Capital. Archegos Capital, you might remember, is the family office that imploded in 2021. The FT reports that Credit Suisse had set aside only $35mn to cover the potential fines.

[MUSIC PLAYING]

This week is the Paris Air Show, the world’s biggest aviation industry event.

[CLIP OF A FLYING PLANE PLAYING]

And that is the sound of a Boeing 777X performing an exhibition flight. But one of the displays the industry is excited about at the show is actually much quieter: flying taxis. This could be a crucial year in the development of the small, battery-powered aircraft as they prepare for early test flights. Regulators, though, may not be so keen. The FT’s Chicago correspondent, Claire Bushey, has written about the technology. She joins us now. Hey, Claire.

Claire Bushey
Hi, how are you?

Josh Gabert-Doyon
So what would these air taxis be used for? Would we be flying to work in them?

Claire Bushey
We would not be flying to work in them, not next year anyway. My colleague Sylvia Pfeifer and I got interested in this niche of aerospace because we wanted to get a sense of like, to what extent this is gonna change our life or not, because obviously there’s a lot of hype there. And what is being proposed right now is largely doing these routes between an urban centre and an airport. So like downtown Manhattan to Newark, New Jersey, and the company that would fly this route is saying it will take 10 minutes and cost $100 per person to make a route that in traffic takes about an hour, also takes about an hour on public transit and that will be, you know, much more efficient if you can pay $100 per seat.

Josh Gabert-Doyon
So people have been trying to build air taxis like this for a while now. What are some of those more sceptical voices saying about the future of air taxis?

Claire Bushey
Among the most scepticism is how are these actually going to fit into the national airspace? Because in the United States it’s already real crowded. We already don’t have enough air traffic controllers for the amount of planes that are going around as it is. And so the idea is that there will be corridors that these air taxis will use. But then that raises the question, OK, you’re flying over some dense areas. What if you need to divert? What if everybody needs to divert all at once? Is there enough places for people to actually land because these batteries, they can’t fly that far. And also there’s the noise issue. The manufacturers say that these will be very quiet. But there is the question, as one of the people I talked to raised of the bee versus the beehive. You don’t hear the bee, but when there’s many together, you hear the beehive, you hear the hum. And so that, too, is going to need to be addressed.

Josh Gabert-Doyon
Do they think they’re gonna be able to pull it off? I mean, I know some of these companies have struggled a little bit.

Claire Bushey
Of course, all these companies say they’re gonna pull it off. It’s this question of the steps on the way to real as one of the people I spoke with described it. And he compared it to when Uber launched in San Francisco with their black car service, you know, sort of this high-level service in this one city in the United States. And this service proved that the underlying concept worked. This will be like a long slog to make this part of people’s daily commute, but individual steps moving forward, like that all matters and it all sort of brings the industry forward.

Josh Gabert-Doyon
Claire Bushey is the FT’s Chicago correspondent. Thanks, Claire.

Claire Bushey
Thanks so much.

[MUSIC PLAYING]

Josh Gabert-Doyon
Before we go, Amazon has pledged to hire at least 5,000 refugees across Europe over the next three years. Dozens of other companies, including Hilton and Starbucks, are joining the initiative to mark World Refugee Day. It’s part of a growing movement towards corporate social responsibility as activist shareholders demand companies take measures to support wider societal goals. Amazon says they’ve had applicants from Ukraine, Venezuela, Syria and Turkey and that most of the roles will be in retail fulfilment and distribution.

[MUSIC PLAYING]

You can read more on all these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

[MUSIC PLAYING]