Transcript: Biden and Xi meet in San Francisco

This is an audio transcript of the FT News Briefing podcast episode: ‘Biden and Xi meet in San Francisco’

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, November 15th. And this is your FT News Briefing.

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Xi Jinping and Joe Biden meet today and will only be the second time they’ve met face to face as presidents. And US inflation is headed in the right direction. Plus, the war in Ukraine is doing serious damage to Russia’s labour market. I’m Marc Filippino and here’s the news you need to start your day.

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US President Joe Biden and Chinese President Xi Jinping are meeting in San Francisco today. Right now, the US and China aren’t exactly on the best of terms, so there’s a lot of pressure on this summit. Here to tell us what we can expect is the FT’s Washington bureau chief James Politi. Hi, James.

James Politi
Nice to be here. Hi.

Marc Filippino
James, can you give us a sense of just how tense things are between the US and China right now?

James Politi
Well, things have been very tense over the past few years between the US and China. China is seen as one of the main, perhaps the main strategic competitor for the US. There’s a growing feeling in Washington that we’re headed towards a period of strategic confrontation, if not conflict, definitely competition with China on a variety of fronts, both military, economic, diplomatic. And I think that’s the backdrop to this summit. President Biden has been trying to stabilise relations with China and with Chinese President Xi Jinping, and this summit is one of the main pillars of that effort.

Marc Filippino
So then are we expecting any concrete agreements to come out of this meeting?

James Politi
So it looks like we’re gonna get an agreement on a crackdown on the export from China of ingredients to make fentanyl, which has caused a lot of deaths in the US. We might also get an agreement on the reopening of military-to-military communications between the two sides, which had lapsed over the past year. That is very important in terms of setting a floor to the relationship. It means that senior military officers will be able to speak to each other in the event that things get tense, particularly over Taiwan.

Marc Filippino
Yeah, and speaking of Taiwan, that has been one of the most contentious issues between the two countries lately. How are the US and China tiptoeing around it?

James Politi
I don’t think that anything big is going to get resolved on the Taiwanese front. I think the US is going to stick by its long-standing policy towards Taiwan. I think that China will want the US not to interfere in the Taiwanese elections, which are happening next year, which I think will be very important for the Chinese. But there’s a clear sense that, in both Washington and Beijing, that they don’t want a conflict to erupt over the next year over Taiwan. But certainly, I don’t think that anything can be really ruled out for the years ahead.

Marc Filippino
So, James, just put this into context for us: just how big of a deal is it for Biden then for this summit to go right?

James Politi
Well, I think it’s very important for the White House, at least from Biden’s perspective. We have, you know, a war that just broke out between Israel and Gaza. There’s a stalemate of sorts in Ukraine. He does not want to see conflict flare up with China before his reelection campaign next year. And I think that the purpose of this summit is clearly, sort of, aimed at that.

Marc Filippino
James Politi is the FT’s Washington bureau chief. Thanks, James.

James Politi
Thanks for having me.

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Marc Filippino
The US released its consumer price index for October yesterday and inflation is settling down. The rate last month fell to 3.2 per cent. It’s the first decline in four months. And the bottom line from economists is that inflation looks like it’s getting under control. And investors share that sentiment. We saw a pretty big dip in US Treasury yields yesterday, especially the yield on 10-year bonds, which hit a three-month low. And equities, well, the S&P 500 ended the day up nearly 2 per cent.

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Russia’s workforce is shrinking and it is shrinking fast. The country’s war in Ukraine is mostly to blame and it’s drastically changing the economy. Polina Ivanova covers Russia for the FT, and she joins me now. Hi, Polina.

Polina Ivanova
Hi.

Marc Filippino
OK. So, Polina, why is this happening?

Polina Ivanova
Well, there are lots of factors. A key one which is affecting a lot of industrialised economies is the creation of a tight labour market as a result of demographic change. So you have an ageing population and more people of retirement age. But this is compounded in Russia by the fact that many men have been mobilised for the front line. That is usually young men who are productive participants in the workforce. Also, there’s been a large wave of people fleeing Russia. So a similar number to the amount of men who’ve been mobilised have simply fled, and that’s often highly skilled workers. But in the context of that labour shortage, you also have a burgeoning defence sector, you know, with Moscow gearing up for a long war which is attracting workers, sucking in the workforce away from a lot of civilian companies.

Marc Filippino
Yeah. So explain that, Polina. Industries are being starved of workers because of the needs of the defence industry? Is that it?

Polina Ivanova
Exactly. So Russia has moved onto a kind of a war footing across its economy and the defence sector, the military production sector is growing substantially and as a result recruiting a lot of workers. Wages are rising in that sector because the government is focused on it and it wants to be producing more artillery, be producing more equipment and things like that for the front line. As a result, defence sector industries are actually able to attract more people over at the moment. We spoke to several tycoons of industry who have factories across Russia in metals, mining and it’s a very labour-intensive economy. So those industries are really feeling the pinch in the context of this war.

Marc Filippino
You had also mentioned that a lot of workers have left Russia in order to avoid being drafted. What industries have been affected by that?

Polina Ivanova
Yeah, there was a particularly acute brain drain triggered by the announcement of conscription towards the end of last year, and that’s still a simmering problem. A lot of highly skilled labour fled the country, especially, for example, IT workers who are able to work from abroad, you know, able to work remotely. The minister for digital development in August this year said Russia is short by at least 500,000 IT workers.

Marc Filippino
Wow. Half a million?

Polina Ivanova
Half a million to 700,000 IT workers short. Junior roles are still quite easy to fill. That’s what people in the telecom sector, for example, told us. It’s senior roles that they’re really struggling to fill at the moment. One telecoms director described it as just a shit show.

Marc Filippino
Oh, strong words. So what are economists saying then about the risks of an economy that is just so dependent on war?

Polina Ivanova
Well, I think as Russia moves towards the election next year, presidential election next year, the government will want to, well, and has been already increasingly presenting this very rosy picture of the economy. What the labour shortages reveal, according to the economists that we were speaking to, it reveals some structural issues of an economy that is effectively supported by war spending, by the government pumping cash into the production of ammunition and the production of tanks and other things, which ultimately is quite short-lived. You know, what those industries will be doing after a war effort, you know, that doesn’t create development potential for Russia in the long run.

Marc Filippino
Polina Ivanova covers Russia for the FT. Thanks, Polina.

Polina Ivanova
Thank you.

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Marc Filippino
Before we go: the competition between regular supercomputers and artificial intelligence is heating up, and AI just won another round. This time it’s over weather forecasting. Google’s DeepMind for the first time did a much better job of predicting the weather than conventional methods. DeepMind scored higher in several categories, like temperature, humidity and pressure. The conventional method — known as numerical weather prediction — involves supercomputers crunching a lot of intense equations and it can take hours. DeepMind, on the other hand, can do it in a fraction of the time and can predict weather events sooner.

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You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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