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Quest Means Business
Biden, Xi Hold High-Stakes Meeting; Israel Raids Gaza's Biggest Hospitals; Egypt: Working To Transfer Babies From Al-Shifa To Egypt; Union Members May Reject Deal To End GM Strike; Biden And Xi Meet; Etihad Hopes For Growth By Building Strong Network. Aired 3-4p ET
Aired November 15, 2023 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:40]
RICHARD QUEST, CNN INTERNATIONAL HOST: An hour to go of trading on Wall Street. The economic data in the United States showed retail spending
slowing less than expected. That's given another boost to the market, not as solid as yesterday, but the market is sharply up 0.5% the markets.
And now, the main event of the day. A face-to-face meeting between President Biden and Xi is underway at the moment, a pivotal moment for the
fractured relationship between the United States and China.
Israeli forces are raiding Gaza's biggest hospital, where officials say hundreds of doctors and patients remain inside.
And the deal that ended the US auto strike, that deal could be in trouble. We'll explain.
Live from London, Wednesday, November the 15th, I am Richard Quest, and I mean business!
Good evening. As you and I are meeting, President Biden and Xi are meeting in California. Both leaders say that the US and China cannot turn their
backs on each other. This summit, which is being closely watched, is taking place south of San Francisco. It's taking place on the sidelines, if you
will, of the gathering of Asian-Pacific leaders. But perhaps this bilateral meeting, this summit, is the main star event.
It is the first time in a year they have held a meeting or they've met face-to-face, one-on-one. And easing tensions between Washington and
Beijing is the key goal.
A short time ago, President Biden acknowledged the disagreements and said the world needed the two leaders to avoid conflict.
(BEGIN VIDEOTAPE)
JOE BIDEN, PRESIDENT OF THE UNITED STATES: I value our conversation, because I think it's paramount that you and I understand each other
clearly, leader to leader, with no misconceptions or miscommunication. We have to ensure that competition does not veer into conflict. We also have
to manage it responsibly with competition. That's what the United States want and what we intend to do. We also -- I also believe it's the world
wants from both of us.
(END VIDEOTAPE)
COOPER: David Culver is with me in San Francisco. David, good to see you, sir.
The meeting -- I mean, the two men know each other of old from vice presidential days. So one would expect, at a personal level, this is going
to go rather well.
DAVID CULVER, CNN SENIOR US NATIONAL CORRESPONDENT: You would expect that, Richard, yes. And as soon as those doors closed, you know, it's very likely
a very different tone than when our cameras are facing the two men, particularly from President Xi Jinping.
I mean, the transparency level from the US is something that is obviously not acquitted in China. I mean, you don't have going into these discussions
President Xi sharing what he hopes to accomplish. It's just not part of the culture.
But when you look at what President Biden has entered this, he has told us that he hopes things go back to normal between the US and China. Not really
sure what that would look like after all of these years of so much damage between the two countries, but that he also hopes, on a very specific
level, that communications between the two countries' militaries are able to be reestablished. Obviously, that's crucial given tensions in the South
China Sea .
QUEST: Right.
CULVER: . and around the Taiwan Strait.
But it's interesting to see this now playing out, and you heard President Biden there. Also, I just want to read this to you, just translated from
President Xi, what he had to say in that quick exchange. In part, "Planet earth is big enough for the two countries to succeed."
And, Richard, he goes on to say, "China-US relationship has never been smooth sailing over the past 50 years or more. And it always faces problems
have one kind or another, yet it has kept moving forward amid twists and turns." And maybe I'll add to that, a downward spiral at this point, but
perhaps they can level that off.
COOPER: But, David, you -- as a student of China, having lived there yourself, David, are the issues simply intractable? You know, the Taiwan
One China policy of the US and other countries is, at best, a fudge so as not to offend China. The reality is that they can't find common ground
other than to fudge.
[15:05:08]
CULVER: It feels like, Richard, and it's interesting you say that, because it does feel like in some of these issues, and there are a long list, and
so much so that you don't even really understand how convoluted it can become, but it feels like it's just going to have to be let's agree to
disagree. And perhaps on some of these, they'll walk away doing just that.
I mean, over the course of four hours, which include some of the translation time, too, you're not going to able to go into all these at a
real deep level. I mean, this has been likened to a divorce. Well, if, you know, we're near that point, this is .
QUEST: Right.
CULVER: . perhaps part of the healing process and therapy to keep it from that. You're going to need multiple sessions, right? And that's what we'd
be looking at with a situation like this between these two world leaders.
But yes, I mean, at this point, it does feel though China is just as invested in wanting to bring some sort of resolution .
QUEST: Right.
CULVER: . instability here as much as the US and for different reasons, but ultimately hoping to reach some sort of .
QUEST: Well .
CULVER: . stable moment.
QUEST: . let's delve into those other reasons. Economics. The Chinese economy is not performing well at the moment. The US is .
CULVER: Yes.
QUEST: . performing better than expected. Both sides want investment without it becoming unfair competition. How far is Xi's economic
difficulties driving the debate?
CULVER: This is everything for China, and you hit right on it. I mean, it's a housing crisis that they had not seen before. It's youth unemployment at
record levels.
And I can tell you even at the time of the Shanghai lockdown when I was a lead in China in May of 2022, companies were looking at each other saying,
how is the sustainable? And now lockdowns and pandemic aside, they're seeing the crackdown from Beijing and police in Shanghai raiding US
corporations. So that's an issue, and that's one that President Xi is here in San Francisco, trying to figure out and navigate.
He's even going to have a meeting, Richard, with some of these US business leaders to try to woo them and try to perhaps convince them to come back
into China if they left or to expand their reach within China if they're currently there. But the concern from these businesses, is hey, we have
seen what can happen. We're also concerned about getting our profits out of China back into the US. So how can we trust you?
Nonetheless, these conversations are underway, and this is that setting to do that. And it's interesting. This dinner that they're expected to have
for these businesses, welcoming Xi, if you will, to the US has already become really controversial here.
The chairman of the House Select Committee that focuses on the CCP has called it "unconscionable" that some businesses will be paying up to
$40,000 for a seat at the table with President Xi -- Richard.
QUEST: We'll be talking to Raja Krishnamoorthi in just a moment on this. Thank you, David Culver. I'm grateful.
The summit is not expected to produce a large number of agreements. The two are likely to announce efforts to crack down on fentanyl and to restart
direct communications between their militaries. Some major differences though, the fate of Taiwan, and uncertainty that's led US companies to turn
away from China de-risking, if you will. And the two countries are also engaged in a bitter trade war over computer chips.
Congressman Raja Krishnamoorthi is a Democrat from Illinois, the ranking member of the US House Select Committee on China's Communist Party. He's
with me now.
And, sir, you've been -- I've read your latest comments about this meeting, and you're walking a fine line between the stick and the carrot, saying we
can't let this thing fall apart, but actually, we've got to take a much harder line. So which is it, stick or carrot?
RAJA KRISHNAMOORTHI, US HOUSE DEMOCRAT: I think it's a little bit of both. We have to walk and chew gum, to use another metaphor.
I think that the issue here is that, at the same time that we take steps to protect our interests, protect our values, equip our friends and allies
with what they need to deter aggression, we need to have an open dialogue. And that means, for instance, establishing military to military
communications. It means establishing a working group to deal with the problem of fentanyl, which you alluded to. So I think that we have to do
all of these things in order to try to stabilize this relationship.
QUEST: But that is the -- if you will, that's sort of the housekeeping bit in a way. I mean, the fentanyl is extremely important, but it doesn't get
to the heart of it. It doesn't get to the heart of US concerns over unfair competition. Chinese now believing that Chinese companies unfeign, unfairly
penalized in terms of reporting in the United States. And those -- and then as we go up the list, you start to get to the geopolitics, whether it be
Ukraine and China's position with Putin, or the way at the apex, you've got Taiwan.
[15:10:16]
KRISHNAMOORTHI: I think all of those topics have to be discussed today, and I think that they will be.
With regard to the economic aggression that the CCP practices, I think that will be uppermost in the discussions, because that's what I hear from my
constituents all the time, Richard. I hear about the incessant cyber hacking, the theft of intellectual property. I hear about the dumping of
economic goods that basically destroy American businesses and jobs.
And I think that that is something that's going to come on the agenda. And I think the president will probably tell Xi Jinping, look, I know that you
have economic problems yourself internally. Those problems don't become easier to deal with by increasing economic aggression against other
countries .
QUEST: Right.
KRISHNAMOORTHI: . because they're going to follow our lead in protecting their interests as well.
QUEST: How relevant do you think it is the prospect of a return of Donald Trump after next year? In a sense, the Chinese -- I mean, bearing in mind
the tit for tat trade barriers that were put on by both sides, many of which were never reversed, by the way.
But the Chinese surely will be doing what the Europeans are also saying when Biden first met them, which is, hang on, how do we know and how long
you're going to be here? How do we know what comes next? And we're back to square one.
KRISHNAMOORTHI: Well, I think last night, Donald Trump actually called Xi Jinping, in a speech, "a piece of steel, strong and smart." So I'm not
really sure how Xi Jinping thinks about Donald Trump at this point. And I think that type of statement, by the way, probably gives our allies and
friends pause and gives comfort to our adversaries, including folks in Russia and elsewhere.
But the bottom line is this. President Biden is, in my opinion, going to get reelected, but his policies .
QUEST: Right.
KRISHNAMOORTHI: . are ones that have commanded a lot of respect and support across the aisle. And I think that whether it comes to increased
restrictions on exports .
QUEST: Right.
KRISHNAMOORTHI: . or increased restrictions on investments, I think those will stay regardless of who's president.
QUEST: And you see, I wonder, Congress, whether you're trying to have it both ways, which wouldn't be the first time a politician to cover that.
KRISHNAMOORTHI: A congressman to have it both ways, Richard, I don't know what you mean.
QUEST: You say the United States needs to aggressively use its trade tools to protect itself among fair economic (inaudible). But then you admitted .
KRISHNAMOORTHI: Yes.
QUEST: . it's a contest over competing values, economic models, and visions for the world. In that scenario, at best, you end up with only being able
to do the housekeeping, the fentanyl, which is important. You do the stuff sort of that just keeps the train on the tracks, if you will, which I'm not
saying isn't important, but it doesn't get to a deeper relationship.
KRISHNAMOORTHI: It all depends on this, Richard. It depends on whether Xi Jinping is going to change course or not.
QUEST: He's not!
KRISHNAMOORTHI: Now, I think the -- you're right that he's not, okay? The odds are that he's not going to change course. In which case, we have to
protect our interests and our values and take countermeasures against aggression.
However, I will respectfully point out that when his zero COVID policies utterly failed, he turned his policies on a dime, 180 degrees, and did the
very opposite the next day of what he was doing the previous day. And that is, in part, what I hoped there's a modest chance might happen with at
least some of his policies going forward, especially given his economic woes at home.
QUEST: Congressman, it's always good to see, always grateful when you give us time on QUEST MEANS BUSINESS. Thank you, sir. It's appreciated.
KRISHNAMOORTHI: Thank you.
QUEST: QUEST MEANS BUSINESS tonight from London. Chaotic scenes at the Al- Shifa Hospital after the IDF launches a ground raid. Israel says it's evidence Hamas is using the hospital for military activities.
(COMMERCIAL BREAK)
[15:17:01]
We have been told of fierce fighting in recent hours outside of Gaza's largest hospital. A Palestinian reporter inside Al-Shifa Hospital says
explosions have been shaking the building. The facility is besieged in all directions.
Hospital officials say thousands of people have taken shelter there. Both Israel and the US are accusing Hamas of using Al-Shifa Hospital for
military purposes, a claim denied by its doctors and Hamas.
Nada Bashir has the latest on the situation. And yes, you may well find some of these images in this report disturbing.
(BEGIN VIDEOTAPE)
NADA BASHIR, CNN INTERNATIONAL REPORTER (voice over): Weeks of bombardment had already left Gaza's largest hospital in what has been described as a
catastrophic situation, doctors at Al-Shifa working under impossible circumstances, caring for hundreds of patients as Israel's military
incursion moves inside the hospital.
(MOHAMMAD ZAQUOT speaking in foreign language.)
MOHAMMAD ZAQUOT, DIRECTOR GENERAL OF HOSPITALS IN GAZA (through translator): The occupation soldiers are still on the ground floor. They
are searching employees, civilians, even the injured and patients. Some were stripped and placed in dehumanizing in miserable conditions.
BASHIR (voice over): Israel's raid on Al-Shifa has been described as "precise and targeted," focused, they say, on claims of a Hamas command
center beneath the hospital. But it is civilians, including medical staff and patients, that have been caught in the center of this unrelenting
battle.
AHMED EL MOKHALLALATI, SENIOR PLASTIC SURGEON AT AL-SHIFA HOSPITAL: We can't look through the windows or doors. We don't know what's happening
with the tanks moving within the hospital. You can hear continuous shooting. We hear now. But again, it's totally a scary situation.
BASHIR (on camera): So what are these sounds, doctor? I'm hearing sounds.
MOKHALLALATI: It is continuous shooting from the tanks.
BASHIR (voice over): Israeli defense officials say soldiers found concrete evidence that Hamas used Al-Shifa Hospital as what they have described as a
terror headquarters. There are no further details were provided on the nature of this evidence. Both Hamas and healthcare officials have long
denied a military presence within Al-Shifa. CNN cannot verify either side's claims.
With over 1,000 patients and medical staff still inside the hospital, many have expressed alarm over the civilian impact of the Israeli military's
operation.
MARTIN GRIFFITHS, UN EMERGENCY RELIEF COORDINATOR: Our concern on the humanitarian side is for the welfare of the patients of the hospital which
is, of course, in great peril at the moment. We have no feel to run in. The babies have no incubators, newly-born. Some are dead already. We can't move
them out. It's too dangerous.
BASHIR (voice over): On Wednesday, the Israeli military said their troops have delivered incubators and medical supplies to the Al-Shifa Hospital.
CNN cannot independently verify this claim and has not been able to reach the hospital for confirmation.
[15:20:01]
However, the director general of Gaza's hospitals has warned that babies at Al-Shifa are in severe danger as conditions in the hospital deteriorate
further, adding that there is no place to move dozens of incubators outside of the hospital under current circumstances.
But even as Israel tightens its grip on Al-Shifa, now said to be under the complete control of the Israeli military, according to Hamas, doctors say
they will continue to do whatever they can to save the lives of those wounded in this devastating war.
(END VIDEOTAPE)
QUEST: So, is the hospital being used for military purposes? Well, as Nada Bashir said in her report, we are unable to confirm one way or the other
that Israel's claim that it is or Hamas claims that it is -- Hamas and the doctors claims that it is not. Whichever way it is, you have got hundreds
of people in a building, in a hospital, that is now being searched and is under attack.
Ed Lavandera is in Tel Aviv and joins me now. Now, this is really tricky, in a sense, because it's a he said, he said. Israel says one thing, the
Hamas and the doctors say another. And we're none the wiser.
ED LAVANDERA, CNN SENIOR CORRESPONDENT: Well, and I think it speaks to the magnitude of this moment, how crucial it is as Israeli military officials
have not just been saying for days but for weeks and years that they believe that the Hamas military operation, in large part, operates in a
command-and-control kind of structure in and around this hospital area and also below it. So the significance of what is discovered here will have
massive ramifications for Israel as it goes forward in this military campaign inside of Gaza.
So we just heard a short while ago, Richard, from the defense minister here in Israel that the -- in some of the initial searches that were conducted
today, this is a raid that started just less than 24 hours ago inside the hospital. But there had been a collection of weapons and military
equipment, technological equipment and that sort of thing.
But there hasn't been any evidence so far that points to this bigger picture of a command-and-control structure. So far, military officials say
that the operation inside that hospital continues as we speak.
QUEST: Ed, I mean, just like -- your last phrase there, you know, military operations continue as we're speaking. How on earth do you do military
operations in a hospital without harming those other people who are in the building?
LAVANDERA: Well, that's the incredibly painful question and why Israel's tactics in here have been criticized from many organizations. As you heard,
several UN officials, the country of Jordan criticizing, and how all of this is being carried out.
Israel military officials saying that they called ahead, for example, in the hours before this raid urging the civilians and the medical staff to
retreat to safer areas at the hospital, away from windows, and that sort of thing. But obviously, you know, this is no place for any kind of civilian
to be engaged and caught in this kind of situation. It's a -- there is no easier delicate way to handle this.
QUEST: And this final question -- final point, the Israeli provision of incubators and medical equipment, we can't confirm that, but I guess this,
you know, we have seen the pictures of it going in.
LAVANDERA: Right, you know, and that's what we have at this point. You know, we are getting sporadic communication with .
QUEST: Right.
LAVANDERA: . hospital staff inside of that hospital. And oftentimes, they paint very disparate pictures of what exactly is -- or contradictory
pictures, I should say, of what is unfolding inside of that hospital. But, you know, we report what we can and try to verify it as much as possible.
QUEST: Ed, I'm grateful for you tonight. Thank you. It's late -- it's getting late in Tel Aviv. Ed Lavandera in Tel Aviv.
Newborn babies at Al-Shifa are said to be in severe danger as conditions deteriorate. The chief of Gaza hospitals has told Al Jazeera that Egypt's
health minister has told CNN they're working to transfer the infants out of the territory. Eleni Giokos with this exclusive report from Cairo.
(BEGIN VIDEOTAPE)
ELENI GIOKOS, CNN ANCHOR AND CORRESPONDENT (voice over): In a command center in Cairo, Egyptian authorities working against the clock.
(UNIDENTIFIED MALE speaking in foreign language.)
GIOKOS (voice over): Egypt's health minister on-call to receive some of the most vulnerable patients. He is expecting over 13 neonatal babies to enter
Egypt, new to the world, but caught in the crossfire as the IDF begins its raid inside Al-Shifa Hospital.
[15:25:12]
KHALED ABDEL GHAFFAR, EGYPTIAN MINISTER OF HEALTH: Time is important and every single minute that we are not getting them in, the incidence or the
chances of losing their life is very high.
GIOKOS (voice over): Since November 1st, injured Palestinians have crossed through the Rafah Border into Egypt, the only lifeline to leave Gaza.
GHAFFAR: We dedicated 37 hospitals with more than 11,000 beds for that purpose and more than 1,700 ICU units, together with the incubators for
kids and other facilities for renal dialysis, and so on and so forth.
GIOKOS (on camera): Would you say that the number of injured Palestinians that are in Egypt right now are in the hundreds?
GHAFFAR: Approaching more than 200.
GIOKOS (voice over): In an exclusive, Minister Ghaffar takes us to visit patients.
GHAFFAR: This is the champ. This is Abdul Rahman (ph).
GIOKOS (voice over): Here, at the Nasser Medical Institute in Cairo, finally safe, but haunted by what brought them here. Guilt, heartbreak,
utter despair, Mohammed Wadir (ph) blames himself for his children's injuries. He says he listened to the IDF 's warning and moved south from
the north, only to be part of an airstrike in Khan Younis on October 16th.
(MOHAMMED WADIR (ph) speaking in foreign language.)
GIOKOS (voice over): He went to buy food, and when he got back, everything was gone, he tells me. His son, Abdul Rahman (ph), just nine years old and
fighting through seven war injuries. His 14-year-old sister, beside him, both had shrapnel in their tiny bodies and broken bones.
UNIDENTIFIED MALE, EGYPTIAN DOCTOR: For me, I'm an orthopedic consultant -- orthopedic surgical consultant, and other team is plastic.
GIOKOS (voice over): They say no physical wounds can compare to the mental scars.
UNIDENTIFIED MALE: Can you imagine a child -- you have a child. He's scared -- he should be scared from a cat, a dog, a dark -- so we find that scared
from losing his family. It's really shocking.
GIOKOS (on camera): Did you get a warning? Did someone (inaudible) evacuate?
(MOHAMMED WADIR (ph) speaking in foreign language.)
GIOKOS (voice over): He tells me, "No, no warning." On his knowledge of Hamas in his building, he says, no.
We meet the next family, and they recalled the strike. 2 PM, 31st of October, Jabalya camp, Elham Magyar (ph) was praying when her husband, Rami
Mahmoud (ph) went out to get food. And when he returned, his house, gone. He found Elham (ph) by seeing one finger sticking out from the rubble. She
survived, but two of her children did not.
(ELHAM MAGYAR (ph) speaking in foreign language.)
GIOKOS (voice over): The 15-year-old daughter called a friend before she died, predicting something would happen to her. Rami (ph) shows me a video
of his son. He got a haircut three days before the strike. They tell me he wanted to look good if he died.
(ELHAM MAGYAR (ph) crying.)
GIOKOS (voice over): For all the survivors we met, one wish binds them all -- to return home to Gaza. Eleni Giokos, CNN, Cairo.
(END VIDEOTAPE)
QUEST: We'll be back in just a moment.
(COMMERCIAL BREAK)
[15:31:57]
QUEST: Hello, I'm Richard Quest. Together we will have much more QUEST MEANS BUSINESS. The auto workers, now if you thought the strike was over,
well, it was but it might not be now.
Apparently the members are looking to reject the deal that their own union made. We will talk about it just after the headlines.
And the chief executive of Etihad Airways says the airline will keep flying to Israel as long as it's safe. We will get to that after the headlines.
This is CNN and, here, the news always comes first.
(MUSIC PLAYING)
QUEST (voice-over): Britain's plan to deport asylum seekers to Rwanda has been ruled unlawful by the U.K. supreme court. It was a unanimous decision
against the government. The judges said Rwanda is not a safe country to send asylum workers and could pose additional risk to refugees, who could
be returned to their country of origin.
U.K. inflation has eased to its lowest level in two years. Consumer prices rose 4.6 percent a month ago. That is down sharply from 6.7 in September.
But that is largely because of a drop in household energy bills.
A new study suggests that microplastics might be able to influence the weather. Scientists have now discovered these tiny pieces of plastic in
coral (ph) samples from a mountaintop in China. With these findings, researchers believe microplastics could affect cloud formation and impact
future forecasts.
(MUSIC PLAYING)
QUEST: The tentative deal between the autoworkers' union and GM, that ended the strike, now appears to be in trouble. Workers at GM's plant in Fort
Wayne, Indiana, are the latest to vote no on the deal. Only a narrow margin of GM workers overall are in favor.
Workers at several large factories have yet to weigh in. Vanessa Yurkevich is with me.
Now, let's think about this. Think about this logically. The more workers who still got to vote see their colleagues reject the deal, will embolden
them, arguably, to do the same. And the whole thing will collapse.
(LAUGHTER)
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Well, there is certainly a lot of outstanding votes at General Motors. And a lot of plants
that have a lot of people working at them. So at General Motors, there are only 10 plants so far that have voted no out of close to 50.
Remember, at these 10 plants, these are assembly plants, that is where you have the majority of these workers. Right now our totals are changing every
hour. So you have about 54 percent in favor of the deal. That is actually quite a high margin.
Every single vote will count here. At Ford and Stellantis, they're doing a little bit better; 66 percent in favor at Ford; 73 percent in favor at
Stellantis.
The question is why?
Why is such a large share of the membership voting no?
[15:35:00]
YURKEVICH: What we are hearing, Richard, is some of the legacy employees, people who have been there a lot longer saw slimmer wage increases than
some of the folks who are newer to the job.
But you have to remember that some of these newer workers were making $16 an hour, not the $30 or $40+ that some of these older workers were making.
But they still feel like, within the contract, they did not get as much on the wage front.
We are also hearing, Richard, the union promised a lot here, right?
They promised 40 percent in wage increases. They promised a return to traditional pensions. They promised retiree health care. They did not get
that in this deal. They got a lot, certainly a lot. But not everything. That is, maybe, where some people are upset.
QUEST: Stick with GM for a minute with me. If the numbers continue as they are, it might be narrow but it might be a squeak year over the line.
YURKEVICH: Right. If you have 50.1 percent of folks voting in favor, that deal is ratified. It could be a matter of 100 votes at this point.
QUEST: Vanessa, you won't be counting them but you will be counting the counting, if you get what I mean. And you'll come back to me and let me
know what the result is. Thank you very much.
Later this month I will be in Zanzibar for QUEST'S WORLD OF WONDER. There you, are you see it on the map off the eastern coast of Tanzania. Zanzibar
is known for natural beauty. The economy is driven by exports of abundant spices. I cannot wait to try them all.
Entrepreneurs there are looking to diversify and unexpected resource to drive exports. Eleni Giokos explains in today's "CONNECTING AFRICA."
(CONNECTING AFRICA)
QUEST: Spectacular. I'm looking forward to seeing. It and we will bring it to your attention when I do. Coming up in a moment, President Biden is
meeting with president Xi of China. The Chinese leader is hoping cooperation can help his country's economic slowdown and a healthy economy.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
[15:42:12]
(MUSIC PLAYING)
QUEST: Returning to our top story, President Biden and president Xi met for the first time in more than a year. The meeting took place in San Francisco
on the sidelines of APEC. The two are seeking to ease tensions as China faces major economic headwinds.
The property sector is struggling under the load of debt. Youth unemployment is so high the government no longer bothers publishing the
figures. And deflation has arrived, again. President Xi says the world has moved on from the pandemic but he is still facing its effects.
(BEGIN VIDEO CLIP)
XI JINPING, PRESIDENT OF CHINA (through translator): The global economy is recovering but its momentum remains sluggish. Industrial and supply chains
are still under the threat of interruption and protectionism is rising. All these are grave problems.
(END VIDEO CLIP)
QUEST: William Lee is the chief economist at the Milken Institute and he joins me now.
Always good to see. You it is always excellent. Look, Xi's economy is not doing well at the moment. He wants investment from the U.S. He needs U.S.
consumers and others to continue to buy his goods.
Who has the whip hand in this negotiation?
WILLIAM LEE, CHIEF ECONOMIST, MILKEN INSTITUTE: Well, Richard, the most important meeting at these is not the one with Biden but it is the one with
the CEOs. Because China absolutely needs foreign companies.
Foreign companies are only about 3 percent of all Chinese companies but they account for 10 percent of urban employment, 40 percent of trade, 16
percent of its tax revenue. So that 3 percent is really huge.
And right now a lot of investors and CEOs are asking the question, is China investable?
Should I stay or should I go?
Should I go into China or should I go somewhere else?
That is what Xi is trying to convince people, that China is not only investable, they really welcome people. And then convincing people that
China is welcoming investors in the environment that we have, with new securities laws and restrictions, it's going to be a tough job.
QUEST: But doesn't Xi also have to convince Biden not to make it unfavorable?
Because the U.S. has made it quite clear with its own regulatory regime that, in certain cases, you can't invest. In other cases, there will be
restrictions on technology transfer. And companies like Nvidia and the chip industry have certainly felt the U.S. side of that equation.
LEE: Absolutely, Richard. It is a charm offensive on both. Sides Secretary Blinken's now reformulated the tensions. Instead of calling it risk
management, he is calling it competitive cooperation, right?
Competitive interdependence. That gives you a sense that the U.S. really thinks that things have gone overboard. The rhetoric has gotten to a point
where it is not productive anymore and they need to tone it down.
[15:45:00]
LEE: So you are absolutely right. You have to set the geopolitical risk down a tone and so the business can actually do business.
QUEST: Let's put this to one side. There is so much economics at the moment going on. And I suppose that Xi and Biden will do what they wish anyway.
If we look at what is happening along the global economy, we had interesting numbers on inflation now both in the U.S. and in the U.K. And
the suggestion that peak rate has arrived and been.
LEE: Absolutely. In fact, the bond markets have been betting on a recession for how long?
How long we've been talking to one another, for years now?
The bond markets have been wrong so many times. Yet they continue to believe the Fed is going to have drastic cuts in interest rates, even
though Chair Powell has been saying, core is still at 4 percent. We need to be convinced that inflation is going back to 2 percent in a convincing way,
especially core inflation.
And yet the bond market completely ignores that. And that is partly because the Fed has been so ad hoc and not provided markets with a framework that
tells them, this is how we make our decisions.
Instead, Chair Powell is going, we're flying by the seat of our pants. And we are going to shift around as much as we can because we are going to be
so data dependent. We will let you know when the data comes in.
QUEST: And the U.K.?
The number is falling but I am hearing -- I'm in London tonight. I'm hearing contradictory messages from officials. On the one hand, they say,
yes, it is coming down nicely. On the other hand, don't expect us to take down rates anytime soon.
LEE: Precisely. And that message, I, think it's coming from both the Bank of England and the Fed, which says, look, we know rates have to be high. We
need to bring inflation down to the level that we think is acceptable.
But how long that is going to take is something we really don't know. Maybe, we need to scrunch up rates even more if inflation does not come
down.
Now the Bank of England, I, think is caught in a even more difficult position. Europe itself is not doing well. Europe is also in that place
where the ECB is trying to decide what to do with the duration of high rates.
QUEST: Lovely to see, you as always. I'm grateful.
QUEST MEANS BUSINESS. Etihad Airways will continue to fly to Israel as long as it is safe, the chief exec tells me. Antonoaldo Neves and I discuss the
war. How much more, it's all at the Dubai air show.
(BEGIN VIDEO CLIP)
ANTONOALDO NEVES, CEO, ETIHAD AIRWAYS: Books soften a little bit. We got a little bit but we're committed to the market. And we cannot turn our backs
to the market when demand softens.
(END VIDEO CLIP)
(MUSIC PLAYING)
(COMMERCIAL BREAK)
[15:50:09]
(MUSIC PLAYING)
QUEST: The chief executive of Etihad Airways says it will keep flying to Israel as long as it's safe. Antonoaldo Neves says the war has had a
minimum impact on booking so far. I was talking to him at the air show in Dubai, where I was, of course, earlier in the week. (INAUDIBLE) explain how
Etihad plans to compete in the market that grows fiercer by the day.
(BEGIN VIDEOTAPE)
NEVES: I believe in Etihad efforts. So the growth can only be done because we believe that there is a space to strengthen the network. So adding a lot
of double (INAUDIBLE) Europe, a lot of double (INAUDIBLE) to Southeast Asia. And we believe again that 3-4 flights between CCC and Europe a day.
QUEST: That will clearly be growth for everybody at one. Level because aviation is booming in one sense.
But if I just look here, you have got Emirates, you have got Qatar, you have got yourselves and you've got new player, Riyadh Air, which will be in
'25. This is going to be fierce.
NEVES: It is amazing to be in a region that, with four hours we can get to 2 billion people, right?
I mean who has that benefit right?
I mean, India is a three hour flight, right?
I mean, think of all the U.S. You have four big airlines in the U.S.
Why can't the Middle East have four or five big carriers?
QUEST: Let's just take an obvious one, London to Sydney. You will all do it.
What is the fighting ground for who you go with?
Emirates, Qatar, yourselves and, in future, Riyadh.
Is the fighting ground going to be price?
Will it be quality?
Or, is it going to be, for instance, alliance?
NEVES: I think it will be a combination of all of those. You have to have the right price, you have to have a great product, you have to have the
ability to feed and refeed and you have to have scandal (ph).
QUEST: But you need -- but at the moment you are having to feed yourself.
NEVES: Yes, we just signed a partnership not in London specifically but in France and in Amsterdam. We just signed a big partnership with our friends,
(INAUDIBLE). They are helping us a lot. And we have culture partners with - - partnership with Lufthansa, for instance. So we got good feeling in Europe.
QUEST: Would you do an alliance?
NEVES: I mean, not now. Not now, I mean, I've been there. When I was in public Portugal, I was part of (INAUDIBLE), you know. A lot of value taken
out of the partnership.
When I was in (INAUDIBLE) Brazil, we're not affiliated. I mean, 25 million passengers per year. I mean, right now we are dating. We are dating a lot.
We are trying to see who are the partners we will stick to. And then eventually we can join an alliance.
QUEST: What is your time scale on that?
NEVES: First, we are doing our network. That is number one.
Second, sourcing aircrafts in the very short term. We need planes. We are in the market for planes (INAUDIBLE). We had 16 planes this year. I would
love to add an additional 10 to 15 planes next year.
We have great positions for the first quarter of 2025. We are going to be bringing 321 of ours with two-way cities, two pence and amazing business
class seats. The same configuration that you have flying the North Atlantic today. So we, I think we are in good shape to get there.
QUEST: What do you think -- what are you seeing in terms of the effective global crises at the moment?
The effect of, obviously, the war in Ukraine means everyone is flying some very long routes, particularly from here. And now you have got Israel and
Hamas. Again, very difficult route structures. Networks and bookings are softening.
NEVES: A little bit, a little bit. We -- I mean, it is unfortunate, right, that we have the situation. But we had only seven flights a week to Tel
Aviv on one cycle day. Now we have four a week. So we got books soften a little bit. We got a little bit but we're committed to the market.
And we cannot turn our backs to the market when demand softens, right.
QUEST: Why are you continuing to fly?
NEVES: First of all, it is safe. Second, because we have a commitment to our customers. We won't stop flying. As long as it's safe, we will be
flying.
QUEST: You see, other airlines say it is not. You say it is. El Al has a special case in a sense. It's an (INAUDIBLE) airline.
NEVES: (INAUDIBLE).
QUEST: Fly Dubai.
NEVES: Yes.
QUEST: But the other globals --
NEVES: Yes, they could -- the challenge they have, I believe, so is because we do not have overnight there. We don't have to overnight. That makes a
big difference. So my people are not there. We touch and go. The dome is extremely good at the airport. I mean, we -- I actually follow up that
every day.
QUEST: You're filling the plane?
NEVES: We would love to fill the plane. Maybe not.
QUEST: But is it important to continue to fly the route, even if you cut back frequency?
NEVES: Yes.
QUEST: Fly the route, keep your flag, if you --
(CROSSTALK)
NEVES: (INAUDIBLE). I want people to understand that this airline is going to be consistent. That is really important.
(END VIDEO CLIP)
[15:55:00]
QUEST: The CEO of Etihad.
Now you are looking at live pictures coming to us from the United Nations. The U.N. Security Council has passed a resolution calling for a series of
humanitarian pauses in Gaza. The wording is important here.
Humanitarian pauses -- highlighting the need for aid groups to have unhindered access to the enclave. The resolution also calls for the
immediate and unconditional release of all hostages, approved by 12 members of the Security Council.
The U.S., Britain and Russia abstained. But nobody voted against it. A Profitable Moment after the break.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: Tonight's Profitable Moment: are the markets trying to tell us something about what's happening at the moment?
If we take a look at the Dow, you will see it's up quite sharply and, yesterday, it was up even more sharply. The S&P is up some 8 percent since
the end of last month.
And the reason, of course, is pretty simple to divine. It is the market believes that the interest rate hikes are over, that monetary policy will
settle and will fall, probably next year.
And thereby hangs the tale.
Is inflation at 3.X percent in one country or 4 percent elsewhere, will it be pushed down to 2 percent with the use of crushing interest rates?
Now the market is pretty much saying they don't believe that is going to happen, that central banks -- the Fed, the ECB, the Bank of England, the
Swiss -- will all push, pull back at the last moment and content themselves with rates or inflation rate falling over the medium to longer period and
term.
Some economists say that's exactly what should happen, bearing in mind the asymmetric nature of inflation over the last five years. Others say that
will be a mistake; you have to crush it now.
The market and particularly the bond market is giving their view. But then whoever listens to the bond market, which has been right as often as it's
wrong and, in any case, can't really take into account the geopolitical situation.
Pull it together, we are no closer, really, to understanding whether rates will go much higher than we were before. You basically pays your money, you
takes your choice.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Whatever you are up to in the hours ahead, I hope it's profitable.
END
