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QUEST MEANS BUSINESS

Amid Impeachment Drama, Investors Focus On Trade; Senator Calls For Transcript Of Trump-Xi Call To Be Released; U.S. Markets Are Falling Under Pressure And Amid Growing Concerns About Those Chinese Trade Tensions; U.K. Prime Minister Boris Johnson Blames E.U. For Failure To Negotiate New Brexit Deal; U.S. Republicans Turn To Impeachment As Fundraising Tool. Aired 3-4p ET

Aired October 8, 2019 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[15:00:10]

PAULA NEWTON, CNN INTERNATIONAL HOST: Oh gosh, never a dull moment in this market. There's been a lot of activity just in the last few minutes.

It is the final hour on trading on Wall Street and what happened? Guess what? Jay Powell, the Fed chair is still talking and that is moving

markets right now.

A new U.S. blacklist sends stocks into the red as new talks with Beijing loom large. Chinese censors meantime, turn up the heat on the NBA over one

executive's tweets on Hong Kong.

And the U.S. Ambassador to Europe is getting subpoenaed after he snubs the host Impeachment Inquiry.

Live from the world financial capital, New York City. It's Tuesday October the 8th. I'm Paula Newton, in for Richard Quest, request and this

sincerely is QUEST MEANS BUSINESS.

Good evening. Tonight, as new developments in the Impeachment Inquiry rock Washington, Wall Street is focused on trade and the Fed. Now we're off the

lows of the day. That's good news, right? Dimming expectations for talks between China and the U.S. pushed down stocks early in this session.

In the last few minutes, though investors have reacted to comments from the Fed Chair, Jerome Powell. He has said the Fed will start growing its

balance sheet again.

Now remember, this has nothing to do with crisis financing or anything like that. It has to do with a technical adjustment. And we will get more on

that later.

But right now we turn to Washington where a last minute no show on Capitol Hill has dramatically raised the pressure in the Impeachment Inquiry into

President Trump.

House Democrats say they will issue a subpoena for the U.S. Ambassador to the E.U., Gordon Sondland. Democrats want information about text messages

he exchanged involving President Trump's efforts to pressure the Ukrainian President.

Sondland's attorney says his client is disappointed that he couldn't testify. The Chairman of the House Intelligence Committee meantime says

preventing Sondland's testimony amounts to strong evidence of obstruction.

(BEGIN VIDEO CLIP)

REP. ADAM SCHIFF (D-CA): The failure to produce this witness, the failure to produce these documents we consider yet additional strong evidence of

obstruction of the constitutional functions of Congress, a co-equal branch of government.

(END VIDEO CLIP)

NEWTON: President Trump has accused Democrats of running what he calls a kangaroo court. Jeremy Diamond, Alex Marquardt are following all these

developments from Washington.

Jeremy, I go to you though first. You have new reporting that aides to the President scrambled apparently after this telephone call on July to

Ukraine's leader because they wanted to alert lawyers, they wanted to try and contain the damage.

So clearly, even aides at the time knew they were on dangerous ground.

JEREMY DIAMOND, CNN WHITE HOUSE REPORTER: That's right. And that is the primary thing that we're learning. My colleagues and I spoke with six

sources familiar with this call and with the fallout that happened afterwards.

And what we've learned is that there was clearly a sense of concern among some of the National Security officials who are aware of the call, who had

read the transcript of the call between President Trump and the President of Ukraine back in July.

And in fact, we're told that one National Security Council official actually raised concerns with the lawyers for the National Security

Council. Now those are the same lawyers, who ultimately decided within a few days, we believe of that call, to actually store that call away in a

highly classified server that's typically reserved for code word classified material.

This call did not contain any of that code word classified material. This was all -- and what's most significant about this is that this is all

separate from the whistleblower complaints that he lodged with the Director of National Intelligence's Inspector General, as well as with his

Intelligence agencies General Counsel.

So all of this is new information that we're learning about some of the scramble inside the White House, which again, clearly tells us how early on

officials recognized that this call was problematic.

NEWTON: That which obviously begs the question after the President saying, it was a beautiful call. There was nothing wrong with that call. Why were

his lawyers and aides scrambling.

And now to you Alex on Ambassador Sondland, who apparently has some information about this. We have to point out he is not a career diplomat,

right? He's a political appointee. He says he claims he is profoundly disappointed, you know, Alex, it probably doesn't begin to cover how he is

going to feel now that he is Exhibit A in what is going to be a legal fight, right, between the President and Congress about him testifying?

[15:05:01]

ALEX MARQUARDT, CNN SENIOR NATIONAL CORRESPONDENT: Yeah, that's right, Paula. He was set for a real grilling on Capitol Hill today. He was going

to be deposed by not one, but three different congressional committees: Foreign Affairs, Oversight and the Intelligence Committee, about his role

as essentially the go between, between President Trump and the new Ukrainian President, President Zelensky.

But Sondland was informed at 12:30 this morning, so just after midnight, when he was already in the States, he had come back to the U.S. from

Brussels where of course he is the Ambassador to the European Union, he was informed by the State Department, by his bosses that he was not allowed to

be deposed today. That order, of course, coming from the White House.

Now, we understand from sources at the White House that there have been lots of discussions over how much Sondland should be cooperating with these

Democratic-led committees.

And essentially, what the White House decided was because there has been no formal vote in the House about the Impeachment Inquiry that they shouldn't

be going out of their way to be cooperating.

So then they issued that edict essentially that Sondland should not be deposed. And as an employee, as a staffer of the State Department, he has

to follow that. And as you mentioned, Paula, his lawyer says that he was profoundly disappointed in a statement that the lawyer put out.

He also said that Sondland believe strongly that he acted at all times in the best interest of the United States. And he stands ready to answer the

committee's questions fully and truthfully, adding Sondland hopes that their issues raised by the State Department that preclude his testimony

will be resolved promptly. He stands ready to testify on short notice whenever he is permitted to appear.

Now, Paula, the reason that these committees are so interested in speaking with him is because there was this whole trove of text messages released

last week that show that he was very much in the middle of the relationship between the U.S. and Ukraine, that he was fully aware that you, U.S.-

Ukrainian relationship was very much intertwined with the President's interests in having Ukraine investigate Joe Biden and his son, Hunter.

So for now, we don't know when or if we will be hearing from Sondland. He will be subpoenaed, House Democrats say, but of course, Paula, in the past,

we have seen the White House defy subpoenas and tell people not to follow them, not to appear in front of Congress -- Paula.

NEWTON: Yes. And that's the clear point. I'm sure the White House wants to say we have only begun to fight Alex Marquardt there in Washington at

Jeremy diamond as well in Washington for us. Appreciate the update on all of that.

Now, the Democratic Chairman of the House Intelligence Committee, says today's moves from the Trump administration are strong evidence of

obstruction.

Joining me now Ross Garber is a CNN Legal Analyst and has worked on investigations involving governors who have faced impeachment. Now you

tell me which side is on more solid legal ground here, the State Department and the Trump administration or Congress?

ROSS GARBER, CNN LEGAL ANALYST: Right now, this is actually not a legal issue. Right now, it is a big old PR fight. You know, the House --

NEWTON: And that is important context, right? Because everyone is using the subpoena and everything else to kind of prove as we will -- you know,

go ahead.

GARBER: Yes. So yes, it's a PR fight. It's going to be a political fight. And maybe, maybe, although I don't think so, maybe it'll be a legal

fight. And what I mean by that is right now, Sondland, the Ambassador was invited to testify voluntarily before the committee. The White House said,

no, this process isn't fair. We don't like how this is going. You should decline this invitation. And that's where things are right now.

So Sondland is going to get a subpoena. That's a command to appear. But that's when things get political, because then the question is, all right,

so he has got a subpoena. What is the House going to do if he still doesn't show up?

And it's been, you know, many, many years, I think the 1930s was the last time the House actually locked somebody up for not complying with a

subpoena. So then the options are, you know, does the House go to court and try to enforce the subpoena, or as Adam Schiff, the Chairman of the

Committee is threatening, do they actually pass an Article of Impeachment that includes instructing Sondland not to come and testify.

NEWTON: Yes. And they know the Democrats, even though that that's treacherous territory there. And I'm glad you put some perspective on it,

because so far these committees that have tried to negotiate with the people they wanted to interview and thought that was a better path forward.

I have to ask you, though, is the danger here that Americans actually tune out? I mean, constitutionally, is there a danger of that? This

administration continues to rewrite the rules of governance and all those checks and balances that we've studied for so many years -- is there a risk

here?

GARBER: It's a big risk. The House Democrats have to decide where to place sort of the limited amount of public's attention that this process

gets. And the further from sort of the fundamental issues they go, the more likely it is that the public actually does turn out.

So I think the House Democrats have to be careful about, you know, following or leading folks down these rabbit holes of obstruction. And,

you know, they're throwing out legal terms like adverse inference. I think that becomes dangerous for the House Democrats.

[15:10:11]

NEWTON: Yes, absolutely. And as you said, it will be a very strategic thing to see who moves the next piece on this chessboard. Ross, thanks so

much for being with us. Really appreciate it.

Now, President Trump is facing a world of controversy beyond his dealings with Ukraine. One Democratic senator is calling for the transcript of

President Trump's call with Xi Jinping in June to be released.

Senator Markey says he wants to know whether President Trump promised to stay silent about the pro-democracy protests in Hong Kong while trade talks

have been going on with China.

President Trump is also facing pressure from members of his own party who criticized his decision to strike a deal with Turkey over U.S. troops in

Syria. Now, in a tweet, President Trump insists the U.S. isn't abandoning the Kurds.

Joining me now, Fareed Zakaria is the host of Fareed Zakaria GPS on CNN. Really, thank you for being on set with when we have so much to discuss.

My gosh and we thought the Mueller inquiry was a lot for this administration to deal with.

He is dealing with so much. Let's start though with that threat of impeachment. I mean, at this point, do you think -- how strategic is it?

The President will continue to say that it's about Nancy Pelosi and those crooked Democrats. And yet, how much do you think he is paying attention

to the polls? "The Washington Post" poll now says that 58 percent of Americans actually say that at least the inquiry is justified.

FAREED ZAKARIA, CNN HOST: That's right. Now, of course, he is paying attention to the polls. His base remains remarkably solid. And this is a

point he has often made. In fact, it probably riles up his base. The fundraising numbers are off the charts.

The problem for him longer term, not just over the next few weeks or months, you can't get elected with his base. He has always needed more

than his base. He has always needed independents. He needed undecided voters. He needs, you know, suburban moms.

You can describe that group, however you will, but there is a group in the middle, whom he needs in addition to the 40 percent of his base. Those

people seem to be moving. That's what the shift in "The Washington Post" poll you see as. So it's bad news for President Trump.

On the other hand, this is a long story and as you were questioning out, I thought it was just perfect because it's exactly the problem. This is

going to be a long, complicated story, as Lindsey Graham might start his own hearings about Joe Biden that might have an effect. The public might

tune it all out. And at the end of it all, you still have peace and prosperity, how will they react? We don't know.

But for now, if you just ask yourself, Trump's reelection prospects, because I think impeachment is, you know, conviction by the Senate is

highly unlikely. But will this all net out in his favor or against? It's looking bad. The independents are turning more and more strongly against

him on impeachment. And it's because you know, unlike Mueller, this is easy to understand. It's not about candidate Trump. It's about President

Trump.

NEWTON: And more as expected, normally, when you're in office that way, I want to talk about the China trade issue. You know, we just had the

blacklisting of those 28 companies, right? An ego project really for China, but significant in terms of the kind of technology that they want

going forward in terms of AI.

This hit them hard. Some people are suggesting that at this point in time, this is what shows the dichotomy between the U.S. approach and the Chinese

approach, which is why we're in for a much rockier road ahead on U.S.-China trade. What do you think?

ZAKARIA: Oh, yes, it's much rockier, and it's not -- the trade issues, the technology issue, I think, exactly, as you highlighted. So if you think

about it, the Trump administration is simultaneously going down two paths with China. The one is the trade path, which is actually a path suggesting

what we need is more interdependence between America and China.

After all, what is the American trade position was saying, the Chinese should buy more American stuff. They should let American companies into

China to sell more goods.

So in other words, we want more interdependence. You know, the Chinese aren't buying enough. They're not letting us sell enough to them. The

technology path is a totally different path. We are saying, we don't want interdependence. We want decoupling. We want to create a Chinese zone,

you know, a technological supply chain and American technology, and we want to force the world to choose one or the other.

That's a much more complicated, much more difficult one. It's tough for China. It's also tough for the United States. Look, we've asked 63

countries to enforce the Huawei ban, the ban on Huawei, China's biggest tech company. I believe publicly three out of 63 have said yes. So it's -

- you know, this is a tough one.

NEWTON: Yes. And if you think there's -- having this spat now, just wait. You know, I'm out of my depth in terms of trying to discuss this issue. I

will be completely honest of U.S. troops pulling out of Syria.

I think it is extraordinarily complicated in terms of what's going on now. The people in the Republican Party themselves are speaking out loudly about

the fact that President Trump has made this move. Are we starting to see the real essence of a Trump doctrine here with what he has decided to do in

the Middle East this week?

[15:15:11]

ZAKARIA: I think honestly, but then I'm not a very partisan person, but this is about as big a fiasco as I've ever seen. It's almost like a case

study in how not to do foreign policy.

Look, serious and complicated, there are no good answers. But at the end of the day, rather than intervene directly in Syria, the Obama

administration decided what we're going to do is try to support some forces out there that, you know, in the land of the blind, the one-eyed man is

king, but these are the good guys.

And particularly the Kurds have been very zealous fighters in sort of advancing U.S. interest. The linchpin of our strategy really was these

Kurds. Trump reinforced that strategy for the first two and a half years in office. He has sent his Ambassador out there saying, these are our

guys. We support them.

And then all of a sudden, who knows why he, at the end of a phone call with President Erdogan of Turkey, he abandoned them. He tweeted that he was

abandoning them. And then, you know, announced that it was all over.

When he got a furious reaction from Republicans, he then tweeted, well, if the Turks decide to do anything, because the fear is now that we've gone

away that the Turks will have their fight with the Kurds because of a long standing dispute. He says, I'll obliterate the economy of Turkey.

So first he abandons the allies. Then he threatens to obliterate another ally -- Turkey is a NATO country -- then he faces all this criticism from

the Republicans. And now he says, no, no, no, Turkey is our best friend. They're great. But why were you threatening to obliterate the economy if

they're such a good friend of yours?

The whole thing is a fiasco. You know, all one can say is that the end of the day Syria is currently somewhat peripheral to American interest. So

the direct impact is low.

But look, you've abandoned an ally. You've insulted another ally. You've created instability in the Middle East. And for what? There were 50 --

count them -- five zero American soldiers in this operation. For 50 soldiers, he has wrecked international havoc.

NEWTON: And perhaps caused a lot more problems for Europe that they didn't need as well at this time. Fareed, thanks so much. Always great to see

you. Really appreciate it on what has been a headline filled day, minute by minute. Appreciate it.

Now, U.S. and China trade officials head back to the negotiating table this week. But as a Chinese tech blacklisting looms over the talks, we were

just talking about that, traders are waiting for Beijing's retaliation.

And the NBA is risking billions of dollars as China starts blacking out its games over an executive support for Hong Kong. Hear our interview with the

league's Commissioner who says it's worth it to uphold American values.

(COMMERCIAL BREAK)

[15:20:28]

NEWTON: All right, as you can see U.S. markets are falling under pressure and amid growing concerns about those Chinese trade tensions. Now talks

resume between American and Chinese officials this week in Washington. But investors are worried about the chances of getting that expansive deal that

they wanted.

Now, the U.S. blacklisted 28 Chinese companies over their alleged role in human rights abuses against the Muslim minorities in China. China denies

the allegations and is promising retaliation.

Now reports in the last few minutes have that the U.S. is putting new visa restrictions on Chinese officials and that is also hurting stocks at the

moment.

Now Deutsche Bank Securities Chief Economist says that all of this uncertainty that markets are reacting to is now moving from trade to

politics. Earlier, at the New York Stock Exchange, Torsten Slok told me traders have started to consider what will come after those 2020 elections.

(BEGIN VIDEO CLIP)

TORSTEN SLOK, CHIEF ECONOMIST, DEUTSCHE BANK SECURITIES: The issue and most of my conversations with clients at the moment is that it's sort of

shifting the conversation from, well, if there is a trade deal, everything should be fine. Right?

Well, the problem is that we might be shifting from trade uncertainty to election uncertainty. Now, there's more uncertainty about what's coming in

a few quarters in November 2020. What are the implications of different types of candidates and what they're saying for businesses? What does it

mean for taxes? For regulation? What is the overall business environment?

And that uncertainty shifting the cloud, moving maybe a little bit from trade eventually, but there's another cloud coming in and that is certainly

becoming a huge conversation topic.

So therefore, even if the details of a trade are say skinny in the sense that there might not be too much meat, or something that says, hey, we have

this behind us. The fear is that we have some other things down the road that the people are beginning to worry about that potentially also could be

holding back CapEx and holding back business investments from companies.

(END VIDEO CLIP)

NEWTON: William Foster is Vice President of Moody's Sovereign Risk Group. He joins me now. First up, we have to say it, right, Fed Chair, Jay Powell

talking in Denver saying that, look, we're not managing a crisis here. He is saying very clearly this is a technical issue, was it the right time to

do this and and be very transparent about what he was doing?

WILLIAM FOSTER, VICE PRESIDENT, MOODY'S SOVEREIGN RISK GROUP: Transparency is a very good thing. Removes uncertainty and the market is looking for

some just surety that this liquidity issue in the retail market will not happen again. So I think that's, you know, positive step in that

direction.

NEWTON: And in terms of that Fed again, and how much it can actually influence things. You know, some people have argued that look, the Fed and

the ECB alongside them, and the Bank of Japan that these Central Bankers are doing a very good job, and that they can hold things together, at least

into 2020 and 2021 when you have perhaps the political change in the United States.

And yet other people argue that the Fed is really impotent at this point. That its fiscal policy is where we need to be turning our attention. What

do you think?

FOSTER: Well, you know, it's an interesting critique and fundamentally, the U.S. has more capacity to cut interest rates than some of the Central

Banks you just mentioned. You have negative rates in Japan. And, you know, the ECB is dealing with the same challenge. So the firepower that

the Fed has actually is more sufficient.

So I don't think that's necessarily the case. But certainly all Central Banks are dealing with less tools than they had a prior to the financial

crisis. Interest rates are lower across the board and it's a more complicated environment. So that's certainly true.

NEWTON: You guys have been noticing that on trade, you argue that there is a very high risk now, in terms of this really, in your words, amplifying

any downturn that we see in 2020 or 2021. Do you think that that risk actually could turn into a full blown recession in the United States?

FOSTER: So the risk is rising that we could have a recession. That's certainly our base case. We still think that the U.S. will grow by about

2.3 percent this year and slow toward about 1.7 next year.

With the longer of this, you know, the trade tensions persist and the more measures that are put forward and higher the tariffs go, that's going to

start to just, I think, you know, basically push on anxiety and ultimately weigh in business confidence, which could eventually lead to, you know,

negative feedback loops in the financial markets. And that's the catalyst by which you might have potentially a recession. But we don't think that's

going to happen.

NEWTON: It's not likely. Possible, but not likely, is how you'd --

FOSTER: Yes, that's not our base case, so it's not -- it's not what we think will happen. But certainly, the more this goes on, the higher the

likelihood that there will be.

NEWTON: Yes, and speaking about how we will go on, I mean, as I was just saying with Fareed, I mean, every minute is like a new headline on China.

You know, just most recently, we had this NBA controversy. And no Bill, I'm not going to ask you to talk about basketball, but in terms of how you

navigate, if you're a corporation and corporate America or even in that case, European companies just trying to navigate all of these trade

tensions and you see what is at risk, right? You see how these tensions can escalate very quickly, whether it's one tweet or one headline.

Do you think we're witnessing a shift here, though, that in the sense that in terms of the way business was done with China before, and the way

business will be done with China post whatever happens with this trade deal?

[15:25:25]

FOSTER: Absolutely. I mean, this is a very different landscape than we had before the tariffs were put in place, but this is not -- you know, this

just makes it very clear, this is not just about trade. This is not just about tariffs. This is about trade, technology, investment, and

geopolitics. It's a much, much bigger picture.

And what we've seen the last few days is testament to that, right? We're seeing what -- you know, where tariff issues now spilling over into the

blacklist for technology companies, and how that technology is used, basically for geopolitical means with regards to in Xinjiang and the and

the Uyghur.

And now the NBA is getting drawn into, you know, which is -- you know, they should have nothing to do with this, really.

NEWTON: Yes, do they ever.

FOSTER: So it's a much more complicated environment, and certainly it makes it much more complicated for businesses to operate in what's the

biggest growing market in the world.

NEWTON: Yes, and can't be ignored one way or the other. Yes. Bill, thanks so much, especially for explaining to us those new Fed decisions.

We will continue to keep an eye on Jay Powell and see what he says and we have minutes -- Fed Minutes tomorrow which will also be a lot more news.

Bill, thanks so much, really appreciate you coming in.

FOSTER: My pleasure.

NEWTON: Now, as I mentioned, the backlash is growing in China against the NBA. We were just talking about that. Those preseason games will no

longer be broadcast there. Now after the general manager of course, with this one tweet, the Houston Rockets tweeted his support for protests in

Hong Kong.

We want you to join the conversation. Get out those phones and go to cnn.com/join. Whose reputation will be most damaged by this scandal, the

NBA? Or China? Go to cnn.com/join and vote now. You'll see the results on your screen now, any moment now.

Now, earlier at the New York Stock Exchange, I raised that question with Eurasia Group Director Michael Hirson. He believes the friction between

China and the NBA could end up leaving Beijing worse off in the long run.

(BEGIN VIDEO CLIP)

MICHAEL HIRSON, DIRECTOR, EURASIA GROUP: I think of this as something of a learning experience, to be honest. I think this is -- you know, the

initial response to this in the media, I think was this is going to be a world of pain for the Houston Rockets and the NBA. There's an element of

that that's true. But I think actually the blowback is going to be much bigger on the Chinese side.

This really reveals some of the vulnerabilities that China has from the way that Xi Jinping has politicized the media environment in China, and think

about what this will do in the short term. This is going to strengthen the response in Congress and the administration to push back that much harder

on Hong Kong.

It's going to strengthen the argument of hawks in the U.S. system who say this is a Chinese regime that's not only disadvantaging us on trade, but

also stifling free speech.

So I think this is going to be damaging for China in the short term. And it also, you know, again, over the long term, I think reveals the

challenges that happen with Xi Jinping, China's President politicizing all aspects of the political environment in China.

(END VIDEO CLIP)

NEWTON: Okay, now, in the meantime, keep voting on that question. Later this hour, you're going to hear from the NBA Commissioner Adam Silver as

that backlash grows in both China and the United States.

When we return, as the U.S. House continues its Impeachment Inquiry, Republicans are getting a financial boost. A party spokesperson talks to

us. That's after the break.

(COMMERCIAL BREAK)

[15:30:00]

NEWTON: Hello, I'm Paula Newton, and there's more QUEST MEANS BUSINESS in a moment. When the NBA commissioner tells us why some values in the

league's DNA as China's critics take action over one executive's tweet.

And Republicans say the Democrats impeachment probe may be boosting Donald Trump's coffers when it comes to fundraising. Before that though, these

are the headlines at this hour. Sources now tell CNN at least one U.S. National Security Council official raised concerns about Donald Trump's

controversial call with Ukraine's president.

And we've learned White House national security lawyers were alerted and worked to contain any damage. Now, ordering the transcript of the call to

be moved to a highly classified server. With just weeks until the latest Brexit deadline, relations have soured between Britain and the EU. A

senior government source tells CNN that during a phone call with German Chancellor Angela Merkel, Boris Johnson accused the EU of failing to engage

with his latest proposals. The European Council President Donald Tusk accused the Prime Minister of playing a quote, "stupid blame game".

Some new information about the 2018 poisoning of former spy Sergei Skripal and his daughter. Now, European officials telling CNN that a secretive

unit of the Russian intelligence was behind that attack in Salisbury, England. The official added that two of the agents were linked to an

assassination in Bulgaria three years earlier. The Kremlin has repeatedly denied involvement in that attack.

OK, so you would think U.S. Democrats would be riding a fundraising wave from impeachment proceedings. I mean, they are, but it's actually the

Republicans who are raking in substantial sums. Now, the president and his party raised $125 million this past quarter, but there's more. Mr. Trump's

campaign manager claims 50,000 new donors, they got that in just two days after the impeachment inquiry was launched.

Now, that's likely what led Mitch McConnell to post this re-election ad on Facebook.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY): The way that impeachment stops is when the Senate majority with me as Majority leader. But I need your help. Please

contribute before the deadline.

(END VIDEO CLIP)

NEWTON: That was pretty blunt. Liz Harrington is the national spokesperson for the Republican National Committee and she joins me now

from Boston. Thanks for being with us. So, you say in 24 hours of that announcement, the RNC got $5 million in donations, $50,000 new donors. I

mean, the impeachment inquiry as far as I can see has been good for business for the RNC.

LIZ HARRINGTON, NATIONAL SPOKESPERSON, REPUBLICAN NATIONAL COMMITTEE: Well, Americans across this country are fed up with what they've really

seen where baseless attacks from Democrats before this president was even inaugurated and the money is absolutely evidence of that. We launched a

new small dollar donation platform called Win Red.

We've seen a huge surge by using that tool in small-dollar donations. And it's not just the 50,000 new donors who came out in support of this

president after Nancy Pelosi caved to the radical left last week.

[15:35:00]

We have over 300,000 new donors just in this last quarter who were already energized to come off the sidelines to support this president who's been

working for them, and they want to fight back against an establishment that has been working to undermine this president since day one.

NEWTON: And I can certainly see that. Of course, striking the right chord with your base, with the Republican base. But polls show that, you know,

the Republican base is increasingly at odds with the rest of the American people, 58 percent of whom, you know, now say that it's right to proceed

with this inquiry. Even if they haven't made a decision on whether or not the president should be impeached.

How do you counter that? Like at what point is this good for campaigning and good for money raising, fundraising, but bad for actually trying to get

President Trump re-elected?

HARRINGTON: Well, I think we've seen a lot of bias skewed polls throughout this process for months and months --

NEWTON: That was a very rigorous poll, I have it -- I have it here --

HARRINGTON: You saw the American people --

NEWTON: It's a rigorous poll and it actually since July shows an increase of 20 percent in the American people who say they want this kind of inquiry

is right and a 9 percent increase from even when the Mueller inquiry was in its heyday.

HARRINGTON: A lot of the underlying data in that also shows that Americans see exactly through what the Democrats are doing and they see impeachment

as a way to try to damage President Trump politically going into re- election. We know the facts, we know the numbers. We've seen on the ground people are tired of Washington and house Democrats who have failed

to work for them, who have failed to close the asylum law loopholes on the border.

Who have failed to work with the president on infrastructure, on issue after issue. And they're voting with their wallets. It's not just our

base that is donating. It is new donors for the first time coming off the sidelines, because they see this for what it is. Adam Schiff working with

the CIA informant, a Democrat, a registered Democrat working --

(CROSSTALK)

NEWTON: There's no -- there's no -- I just want to get away from that, because in terms of characterizing the whistleblower, whistleblowers are

supposed to be, you know, protected under American law. And I just want to get away, move away from that because that's part of the inquiry.

But as to that inquiry, do you see then more and more fundraising, the Republicans of President Trump will be able to do from this as this inquiry

escalates, since it surely will?

HARRINGTON: We're already putting all this resources right back into the ground. We're active in 19 states, holding house Democrats accountable for

-- to their voters for what they claim they were going to do. A lot of these Democrats ran in 2018 as moderates, they said they wanted to work

with President Trump.

And now they're kowtowing to a radical far-left base who wanted -- who called for impeachment before they ever even see -- saw the transcript of

this phone call. Who wanted to sabotage his presidency from day one. All of these so-called moderates were on the ground where they are holding them

accountable --

NEWTON: So, but --

HARRINGTON: To their voters --

NEWTON: If I read you --

HARRINGTON: Because they said they wanted to work for the --

NEWTON: Right --

HARRINGTON: With the president.

NEWTON: But if I read you correctly, you're telling the Democrats, bring it on. The more, the deeper you get into this impeachment inquiry and more

votes on the house, the more money we're going to raise.

HARRINGTON: We have the facts on our side. We really -- President Trump has nothing to hide, he released a transcript -- what I would like to know,

and I think what --

(CROSSTALK)

NEWTON: But they're keeping Ambassador Sondland from testifying.

HARRINGTON: Why was there an 18-day gap -- why was there an 18-day gap between this so-called whistleblower complaint and the phone call which he

had not even heard? We don't need more smears and leaks from a deep state that's been trying to undermine this president since day one.

NEWTON: You know, Mitt Romney --

HARRINGTON: We can read the transcript for ourselves.

NEWTON: But Republican Senator -- Republican Senator Mitt Romney --

HARRINGTON: And there was absolutely no quid pro quo, there was no pressure whatsoever.

NEWTON: Republican Senator Mitt Romney has said that there was definitely some impropriety in this call, and how do you deal with that? Because we do

see on the margins of the Republican Party from even people like Mitt Romney saying that look, there was something wrong with that phone call.

HARRINGTON: The vast majority of Republicans are what they're concerned about is Adam Schiff and the house Democrats lying and keeping us in the

dark about this process. They did not release the full transcript of the interview with Kurt Volker. Why did they not release that? Because Kurt

Volker said there was absolutely no quid pro quo whatsoever, and we can also just ask President Zelensky of Ukraine who also said there was no

pressure, there was nothing wrong with this call.

The vast majority of Republicans want to get to the bottom of what happened in 2016. Which is exactly what President Trump said on this phone call, he

said nothing wrong. All he said was, let's find out about the election meddling in 2016 --

NEWTON: Well, actually, I have to -- I have to leave it --

HARRINGTON: Where we know the DNC solicited --

NEWTON: Yes --

HARRINGTON: Dirt from Ukraine against Paul Manafort --

(CROSSTALK)

NEWTON: Even Republicans, even your base would say that they weren't looking for dirt on Joe Biden if there was any to find. That was not their

priority and what the president should have been doing in that phone call.

[15:40:00]

Liz, I will leave it there, but I hope you come back to talk to us especially about these fundraising efforts as they continue through the

2020 campaign, appreciate it.

HARRINGTON: Any time, thanks for having me. Now, the NBA commissioner says American values come before profits as China moves to block NBA games

from its air waves after a tweet about Hong Kong. Adam Silver says he's willing to live with the consequences.

(COMMERCIAL BREAK)

NEWTON: Demand for Craft Beer is brewing in South Africa. Now, it's believed the industry has doubled since 2014 and is expected to grow 3

percent a year until 2024. Now, as part of our series "IN THE MAKING: SOUTH AFRICA", Eleni Giokos visited one of the few women in the country

trying to tap into some of that growth.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: I want to celebrate women in brewing because women in brewing are the ones historically we've been making beers.

ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT (voice-over): And that's exactly what Apiwe Nxusani-Mawela is doing, making beer in a male-dominated

industry in South Africa.

(on camera): So, how much money did you need to get this off the ground?

APIWE NXUSANI-MAWELA, FOUNDER & BREW MASTER, BREWSTERS CRAFT: A lot of --

GIOKOS: Amazing, this is an incredible infrastructure you've got here --

NXUSANI-MAWELA: It cost a lot of money, 8 million in total, so --

GIOKOS: Eight million rand?

NXUSANI-MAWELA: Yes.

GIOKOS: Apiwe's facility can produce up to 20 thousands liters a month. Like now however, she's only at 50 percent capacity. But her ability to

execute the perfect recipe has caught the eye of her former employer and the biggest beer player in South Africa, South African Breweries.

(on camera): You've worked for them and now you've worked with them. You know what is that like?

NXUSANI-MAWELA: For me, initially, it was a star-struck moment where you're like, oh my God, this big giant is coming to the mere mortal. But

working with the guys, with the team and their marketing team, actually, it was quite fine.

GIOKOS: Apiwe works with a range of craft brewers across the country. Brendan Hart contracted Apiwe to produce three of his beers or about 6,000

liters a month.

(on camera): It's not too early to drink some beer, so should we try it out?

BRENDAN HART, FRONTIER BEER CO.: Yes, we should.

GIOKOS: OK.

[15:45:00]

HART: So, you might smell a little bit more floral.

GIOKOS: That's lovely.

HART: And you know, it smells --

GIOKOS: It's really good. The after-taste is fantastic.

(voice-over): While more consumers are looking down the glass of specialty beers, cost of production is still high, squeezing margins.

(on camera): So, how much more expensive are your craft beers versus, you know, the commercial stuff that's done at mass scale by the big guys?

HART: You know, probably our retail pricing is probably twice the price. The cost of production per liter is probably somehow ten times.

GIOKOS (voice-over): For Apiwe, a competitive environment means she needs to steam ahead with her plans to scale up.

NXUSANI-MAWELA: My five-year plan is obviously to grow capacity, grow the brewery, as you can see there's a little bit of space. So the plan is to

become a leader within the contract manufacturing of beverages as a whole.

(END VIDEOTAPE)

NEWTON: Now, Beijing forces international companies to jump through all sorts of hoops for access to its markets. The NBA commissioner says he's

OK sacrificing profit in China to uphold the right to free speech.

(COMMERCIAL BREAK)

NEWTON: The National Basketball Association's controversy over an executive's tweet supporting democracy in Hong Kong, it is of course,

escalating. Speaking to CNN, the NBA commissioner launched a staunch defense of the league's values and said, its employees who are supported to

exercise their freedom of expression.

China's state broadcaster responded by blocking the NBA's pre-season games. So, a reminder of our question tonight on cnn.com-slash-join. Whose

reputation will be most damaged by this scandal? The NBA or China? Go to cnn.com-slash-join and vote now.

And now we go to Alex Thomas who in fact spoke to the NBA Commissioner Adam Silver in Tokyo. Take a listen.

(BEGIN VIDEO CLIP)

ADAM SILVER, COMMISSIONER, NATIONAL BASKETBALL ASSOCIATION: We are at the end of the day an American-based company, of course, we do business all

around the world. But those values, those Moreys travel with us.

ALEX THOMAS, CNN SPORTS REPORTER: How concerned are you that China will not accept that position?

SILVER: I, otherwise wouldn't be that concerned because we've been doing business in China for so long. I will say I'm a bit surprised that CCTV

canceled the telecasting of pre-season games, and specifically named me as the cause. It's interesting while at the same time in the U.S. media,

there's some suggesting I'm not being protective enough of our employees.

[15:50:00]

Clearly, they're seeing it the other way in China. But I think at the end of the day we've been pretty consistent. And it's not our role to

adjudicate these types of disputes, but certainly to provide a platform, and I'm hopeful that as I said earlier that by using sports, people will

have the ability to talk more openly about these issues and make decisions for themselves.

(END VIDEO CLIP)

NEWTON: Our thanks to Alex Thomas for getting that on the record. Now, the NBA's Los Angeles Lakers and Brooklyn Nets are set to face off in

Shanghai on Thursday. World Sports Don Riddell is with us now. And Don, listen, you and I knew this story would continue to have legs, right? It

was not a leap for us to think about that.

You know, this NBA franchise, it has cultural cache right around the world. How do they preserve that on the back of this controversy especially given

the fact that well, Adam Silver just said what he said. Some said that he really should have come out with that sooner.

DON RIDDELL, CNN WORLD SPORTS ANCHOR: Well, it's an incredibly fine tight- rope that Adam Silver has to walk, right? I mean, on the one hand, he's trying to protect the business development and investment that they have

from China which is worth an awful lot of money, billions and billions of dollars, and the NBA has been growing that market for decades now versus

the league and what it actually stands for.

And you know, we've heard this point mentioned so many times this week. The NBA is notable for the way it encourages its players to speak their

minds. And they've done it very effectively, certainly in the United States speaking out on matters of social injustice, racism, gun violence,

police brutality.

Both the players and the coaches have been very outspoken in that regard. And now we have this kind of culture clash, these meeting of these two

worlds and the NBA can't have it both ways, they tried to kind of make it so on Monday, but that wasn't going to be sustainable.

It's interesting to see the position that Adam Silver has now taken. But at what cost? To what extent are China going to be prepared to make sure

that they're well represented in this? And you've already seen how they've escalated this way beyond the rockets and their general manager by taking

all of these NBA pre-season games off the air this week, in a week where basketball and the NBA in Asia was supposed to be celebrated. I mean, it's

just an extraordinary moment for the NBA.

NEWTON: Yes, and no easy way around it as you point out. This isn't going to blow over, at least not any time soon. What does it say though about a

franchise like this, the NBA going forward here in terms of the way they try and navigated this? I mean, this is a global brand. At the end of the

day, I was so interested to hear what just two other executives, basketball executives.

But they did kind of insinuate that, look, the NBA should stick to basketball and stay away from politics.

RIDDELL: Well, that sounds an awful lot like the phrase just shut up and dribble which is what the players were told to do in this country, and that

caused an absolute storm when that line was uttered. But is -- the NBA is going to have to figure this out if they're going to do business in China,

they're going to have to watch what they say.

And you suspect that whilst Adam Silver has made his position clear this week, and that is going to appease basketball fans and politicians in this

country, it's going to be a different story with China and what they have to say about it.

NEWTON: Yes, it's so interesting as well just the way as you said, he's walking that tight-rope and he will continue to have to walk it, right? He

has not stepped off of it yet. Don Riddell, thanks so much, really appreciate it --

RIDDELL: All right.

NEWTON: Now American corporations regularly stomach moral concessions and jump through hoops for the privilege of doing business with Beijing. Now,

the lower profit in the Chinese market is just too great as we were discussing, and the country has become vital for many top brands. China is

now worth $600 billion a year to U.S. companies that is second only to Canada.

The lucrative Chinese middle class is now larger than the entire U.S. population, think about that. And while GDP growth might still be slowing,

it's still much more reliable compared to many other markets around the world. Now, the NBA is walking an incredibly tight line as we were just

saying, a conundrum faced by any foreign company that wants to do business in China using history as a guide, profit motive often trumps principle.

(BEGIN VIDEOTAPE)

NEWTON: The NBA is hardly the first U.S. business to find itself in sticky territory over Chinese politics.

UNIDENTIFIED MALE: Everyone needs to be clear that if you are doing business in China, your political views will be sanitized in favor of the

Beijing government.

NEWTON: Beijing often publicly reprimands companies that run afoul of its political preferences. The unspoken thread that they could lose access to

China's giant consumer market. Major U.S. airlines and the Marriott Hotel chain changed their websites after China complained that they listed Taiwan

as an independent country.

[15:55:00]

China considers Taiwan which is governed separately as an integral part of its territory. The Gap issued a sincere apology after it left Taiwan off a

map of China printed on a T-shirt. Just a few of the more visible examples of U.S. companies complying with the Chinese government's request which can

also include working with a local partner, storing cloud data inside China and abiding by censorship rules.

ISAAC STONE FISH, SENIOR FELLOWS, ASIA SOCIETY: They feel like in order to succeed in their fable Chinese market with its 1.4 billion customers that

they have to follow both the stated dictates of the communist party and the unstated dictates. There's these set of ever-shifting norms that a lot of

American companies feel like they need to really just get a handle on in order to succeed.

NEWTON: On rare occasions, companies have decided China is just asking for too much. Google had shut down its China search engine in 2010, which had

abided by China's censorship laws after it discovered a hack targeting Chinese human rights activists. In contrast, LinkedIn owned by Microsoft

continues to censor its Chinese site in accordance with local government guidelines.

And as Hong Kong's protests continue, more and more U.S. businesses may face the dilemma, stand behind freedom of speech or risk the ire of China.

FISH: It would be really nice if U.S. companies found a way that they could work together so that when people wanted to speak out, they could.

And Beijing realized well, we can't pick them off and punish them and make examples of individual companies because they're standing strong.

NEWTON: How the NBA handles the situation going forward could determine a path for future U.S. businesses choosing between profit and principles in

China.

(END VIDEOTAPE)

NEWTON: OK, there are just moments now left to trade on Wall Street. It's getting kind of ugly out there, we'll have those final numbers all for you

with the closing bell right after this.

(COMMERCIAL BREAK)

NEWTON: OK, there, just moments to go, and as you can see there, yes, it's ugly. I can tell you, U.S. markets are trading lower across all three

indices. Investors are losing optimism about the hopes of a trade deal. Tensions escalated after the U.S. black-listed 28 Chinese companies over

alleged human rights violations.

China says stay tuned, they will retaliate, and just in the last few moments, U.S. Secretary of State Mike Pompeo has added new U.S. visa

restrictions to Chinese officials trying to come into this country. As this market continues to go down, we told you before, stay tuned especially

on this issue of China and trade. That is QUEST MEANS BUSINESS. I'm Paula Newton in New York.

END