Return to Transcripts main page

CNN Newsroom

Pentagon Tracking Suspected Chinese Spy Balloon; Blinken Prepares for First China Visit as Top U.S. Diplomat; At Least 7 Wounded in Russian Strike on Kramatorsk; Adani Fails to Calm Investors, Company Losses Top $100B. Aired 12-12:45a ET

Aired February 03, 2023 - 00:00   ET

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

MICHAEL HOLMES, CNN INTERNATIONAL ANCHOR: Hello, everyone, I'm Michael Holmes. Appreciate your company.

[00:00:12]

Coming up here on CNN NEWSROOM, tensions between Beijing and Washington threaten to go sky-high after a suspected Chinese spy balloon is found floating across the United States.

Russia launches another round of rockets targeting Ukrainian civilians, just meters away from where a CNN team was about to film.

And Pope Francis prepares to wrap up his historic visit to the Democratic republic of Congo before moving onto another war-torn African nation.

ANNOUNCER: Live from CNN Center, this is CNN NEWSROOM with Michael Holmes.

HOLMES: The Pentagon is tracking a suspected Chinese spy balloon flying over the Northern U.S. The balloon is the size of three buses and entered Montana via Canada.

The U.S. has been aware of it for days, and there has been debate over whether or not to shoot it down. The Pentagon deciding against that for now.

We're told that, while the balloon's flight path does bring it near sensitive sites, it's not considered a major risk.

But its presence did cause Chinese -- cause authorities to ground flights in Billings and the state capital, Helena, for about two hours on Wednesday.

CNN's Oren Liebermann with details from the Pentagon.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: What is that?

OREN LIEBERMANN, CNN PENTAGON CORRESPONDENT: Now, the U.S. as been tracking this surveillance balloon over Northern U.S., specifically over Montana. The U.S. says they believe -- they're very confident, in fact -- that it's from China, a balloon that drifted in or came in over Canada and has been over sensitive sites, the Pentagon admits, over Montana.

Now, they haven't specified what those sites are, but Montana is home to several ballistic missile fields, ballistic missile silos and perhaps, that's what this surveillance balloon was going after.

The Pentagon says when this first came over, and they started watching it, they did launch F-22 fighter jets. In the end, the decision was made not to shoot this down.

President Joe Biden asked for military options, for the possibility of what it would take to shoot this down. In the end, senior military leaders, including the chairman of the joint chiefs of staff, General Mark Milley, the top U.S. officer, recommended against shooting it down for a number of reasons.

First, there is a risk to what's on the ground: facilities and people there on the ground. Even if it is Montana and isn't densely populated.

More importantly, though, the Pentagon says they don't believe this has intelligence-gathering capabilities: what satellite communications above what Chinese spy satellites already have.

In the end, a decision was made not to shoot it down. But the Pentagon emphasized that, should they determine this is a high-risk, they do retain that option of carrying out a military option against this. Essentially shooting this surveillance balloon down.

The Pentagon will keep watching this. It's important to note that the Pentagon did bring this up through diplomatic channels, both in Washington and in Beijing. And it comes at a time of incredibly high tensions with China.

Oren Liebermann, CNN, at the Pentagon.

(END VIDEOTAPE)

HOLMES: The top House Republican is sounding off on the balloon. Speaker Kevin McCarthy tweeting, quote, "China's brazen disregard for U.S. sovereignty is a destabilizing action that must be addressed, and President Biden cannot be silent. I am requesting a Gang of Eight briefing."

The Gang of Eight is a group of top Congressional leaders and top lawmakers on the House and Senate Intelligence Committees.

Now, adding to the strain in U.S.-China relations, Beijing is condemning a new agreement to give U.S. forces more access to military bases in the Philippines. It means American troops could potentially be deployed just a couple of hundred miles from Taiwan.

At the same time, the U.S. Marine Corps will be opening a new base in Guam. Here's how China's foreign ministry reacted. (BEGIN VIDEO CLIP)

MAO NING, CHINESE FOREIGN MINISTRY SPOKESPERSON (through translator): Out of its own self-interest, the United States continues to strengthen its military deployment in the region, which raises tension in the region and hurts regional peace and stability.

Regional countries should exercise vigilance and avoid being compromised by the United States.

(END VIDEO CLIP)

HOLMES: The deal to expand U.S. access to Philippines bases was announced as the U.S. defense chief, Lloyd Austin, visited Manila. It builds on a previous defense pact between the two countries and gives the Pentagon access to a total of nine military bases in the Philippines.

Now, this is all happening as Antony Blinken gets ready to visit China for the first time since becoming U.S. secretary of state. And a number of contentious issues are on the table.

CNN's Marc Stewart explains.

(BEGIN VIDEOTAPE)

MARC STEWART, CNN INTERNATIONAL CORRESPONDENT (voice-over): Antony Blinken's next stop on his world tour, China.

MATTIE BEKINK, CHINA DIRECTOR, ECONOMIST INTELLIGENCE UNIT: It is a big deal. And I think it's really important, not just for the U.S. and China and their own kind of economic/political interests but for the entire world, to see these two superpowers find a way to get along.

[00:05:07]

STEWART (voice-over): But that may be a lofty goal.

In March 2021, talks between Blinken and China's then-top diplomat got off to a heated start, a meeting described as tough and direct.

Yet, the tone was more cordial when President Joe Biden met with Chinese leader Xi Jinping at the G-20 in November, setting the stage for Secretary Blinken's upcoming visit.

JOSH LIPSKY, SENIOR DIRECTOR, ATLANTIC COUNCIL GEOECONOMICS CENTER: The fact that the meeting is happening, in and of itself, is a success. This is the continuing of a thawing of the relationship that started in Bali between President Xi and President Biden.

STEWART (voice-over): Among the stress points to tackle: semiconductors, the war in Ukraine, human rights, Taiwan and trade.

But experts argue, don't anticipate any tangible results just yet.

ALFREDO MONTUFAR-HELU, THE CONFERENCE BOARD: I don't think there is a big expectation there would be huge positive outcomes of these meetings but mainly about defining what both countries can do to not deteriorate the relationship.

STEWART (voice-over): If anything, the meeting sets to establish guardrails in a competitive relationship.

LIPSKY: What you need to do is be able to create trust. So these two gentlemen can pick up the phone anytime, day or night, if there's a flash point or a conflict, and reach each other. And understand what's happening in the other countries.

STEWART (voice-over): A visible effort toward diplomacy amid political, social and economic challenges.

Marc Stewart, CNN, Hong Kong.

(END VIDEOTAPE)

HOLMES: John Delury is a Chinese Studies professor at Yonsei University, and he joins me now from Seoul.

Thanks for doing so, Professor.

Given the U.S.-China tensions already, firstly, what do you make of this apparent Chinese spy balloon flying across the United States?

JOHN DELURY, CHINESE STUDIES PROFESSOR, YONSEI UNIVERSITY GRADUATE SCHOOL OF INTERNATIONAL STUDIES: Well, it's strange timing, for one thing, isn't it? It's a bit awkward for the secretary of state to fly over there, Secretary Blinken, and obviously, we'll have to add this to his agenda.

I wouldn't be surprised if the Chinese respond with their list of surveillance activities that the United States carries out, if not over the sky of the PRC, but in the waters and the areas surrounding it.

So this might actually be a chance to open up that discussion about, as you mentioned in the report, you know, what are the guardrails in terms of mutual surveillance.

It's quite interesting that the -- according to the Pentagon, they didn't feel the need to actually shoot this down.

HOLMES: No.

DELURY: So apparently, the Chinese satellites can already capture with this -- what this balloon sees. But that raises the question of why are the Chinese doing it in the first place?

HOLMES: Yes, yes. Well, as it continues its flight across the U.S., as you say, Antony Blinken heading there. What might he be hearing when he gets there, more broadly? How -- how low are expectations for this visit, in terms of deliverables or a relationship reset?

DELURY: Yes. Modest, if not low, especially when you talk about deliverables. I mean, I don't think there's been much effort to get the community of those of us who watch these things closely ready for -- for tangible deliverables.

I think it is very much about ensuring that the dialogue exists. You know, because the relationship is still frosty. It's coming out of a kind of deep freeze.

And so it's true that simply doing the trip, simply you know, seeing what's the Chinese list and for the Chinese to hear what's the American list of top concerns, that in itself, really is the deliverable. So I think the dialogue is the deliverable in this case.

HOLMES: Yes, and when it comes to the expanded U.S. troop access to those four more bases in the Philippines, what does that represent in terms of messaging, force posture and so on, given the proximity to Taiwan?

DELURY: Well, you know, there's quite a bit, when you add up even just recent events in terms of the U.S. military stepping up its presence. But also, all of the work that's going into alliances and partnerships. You know, with the Philippines. There's, of course, a lot going on in terms of Japan, strengthening its security muscles. But doing it with the alliance structure with the United States.

And of course, you've got the ongoing issue of Taiwan and what's next. This would be something, for example, that I would expect the Chinese to be very worried about. Are they going to face more visits, you know, from U.S. Congress people to Taiwan?

So I mean, if you're standing in Beijing, you are definitely seeing an architecture of containment that, brick-by-brick, is being built around you in the region.

If you're standing in Washington, it looks like the region wants this kind of proactive presence from the United States. You know, this doesn't look to be forced down the throats of the Filipinos or the Taiwanese or the Japanese.

[00:10:03]

And the problem, then, is we run the risk of increasing tensions that then, you know, run out of control, which really no one wants. And so that's the dilemma of the situation.

HOLMES: Yes. I guess because, I mean, quite apart from the Philippines, there's a new base for Guam, close to military ties with Japan and the Marines there.

Defense Secretary Lloyd Austin, he held talks with his South Korean counterpart recently and, you know, reasserted commitment to that relationship.

I mean, when you look in a regional sense, as you say, you don't want anybody making any missteps, but what can China do about it? It makes -- it's making its own presence felt in the region, of course. DELURY: Well, I think that, you know, for the Chinese, they have to be on good behavior. I mean, if they can do the math here, they can see that this is just -- it's not one isolated country that's moving a bit closer toward Washington.

We are seeing a bit of a wave here of many countries in the region, including where I am in South Korea, you know, sending these signals to the United States that they want to strengthen that security relationship because of their concerns.

And so, if you're smart about this in Beijing, it means that you pay better attention to your backyard, to the region and to getting along with folks here. You know, that's the game, insofar as there's a competition between the United States and China. It very much has to do with the Asia Pacific.

HOLMES: Yes. Fascinating analysis. Professor John Delury, thanks so much. Appreciate it.

DELURY: My pleasure.

HOLMES: Turning our attention now to the war in Ukraine, where at least seven people were wounded, one critically, in the latest Russian attack on Kramatorsk.

Local authorities say most residents had already left the city's center for temporary shelters after missile strikes killed three civilians on Wednesday.

Kramatorsk is in the Donetsk region in Eastern Ukraine but not in an area where Russian troops are holding territory.

CNN's Fred Pleitgen and his team were headed to the scene of the first strike when the second missile hit.

(BEGIN VIDEOTAPE)

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice- over): Two missile strikes on the city Kramatorsk in Eastern Ukraine.

UNIDENTIFIED MALE: Let's go.

PLEITGEN (voice-over): Right at the location we were about to film.

PLEITGEN: There were just too massive missile strikes right in our vicinity. You can see it's just a couple of yards away from where we are.

We're not exactly sure what kind of missiles it was. But this is a residential area. We're right in the middle of town.

PLEITGEN (voice-over): Photojournalist Matia Sum (ph) films the damage caused by the impact. Ukrainian authorities later said they believe the missiles were S-300s, normally used to shoot down planes, devastating when launched at urban centers.

As medics tended to the wounded, producer Tim Lister checks in with our headquarters.

TIM LISTER, CNN PRODUCER: Extremely large detonations, really, really close. We're going to stay in shelter.

PLEITGEN (voice-over): As we take cover, residents are clearly traumatized by the violence.

"It is terrifying," Natalia (ph) tells me. "But what can we do?"

The strikes came as search-and-rescue efforts were ongoing in exactly the same neighborhood after a Russian missile leveled an apartment block on Wednesday night, killing at least three and wounding eight.

The Russians seem to be bringing the cities of this region into their war, regardless of the consequences.

And Russian president Vladimir Putin is saying there is worse to come.

Putin spoke Thursday at events commemorating the Battle of Stalingrad, where Soviet forces defeated Nazi Germany 80 years ago, openly threatening the U.S. and other countries supporting Ukraine.

"Clearly, they don't understand that modern war with Russia will be quite different for them," he said. "We won't send our tanks to their borders, but we have the means to respond, and it won't be with the use of armored vehicles."

Cities like Kramatorsk already know that the Kremlin is ready to escalate its war on Ukraine. Largely quiet just weeks ago, they are now in the eye of the storm, as Russian forces seek to grind their way through Donetsk.

UNIDENTIFIED MALE: Now, we've got to make (UNINTELLIGIBLE) That's it.

UNIDENTIFIED MALE: (UNINTELLIGIBLE), you're with me.

PLEITGEN (voice-over): When the coast seemed clear, we left Kramatorsk.

PLEITGEN: We're going to get out of here as fast as possible, just in case there's more missile strikes coming, but it certainly seems to us as though the Russians are making Kramatorsk a front line in this war.

PLEITGEN (voice-over): A grim prospect for the thousands of civilians here and in other towns in Eastern Ukraine.

Fred Pleitgen, CNN, Kramatorsk, Ukraine.

(END VIDEOTAPE)

HOLMES: The European Commission president, Ursula von der Leyen, says that Russia must be held accountable in court for its, quote, "odious crimes" in Ukraine.

She announced that the E.U. will set up an international center in the Hague to prosecute the crime of aggression. Top E.U. officials are in Kyiv for a summit with the Ukrainian president, Volodymyr Zelenskyy, who is demanding more punitive sanctions against Russia.

(BEGIN VIDEO CLIP)

[00:15:05]

VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT (through translator): Now the pace of sanctions has somehow slowed down in Europe, and the terrorist state, on the contrary, is adapting to the sanctions. We need to catch up. We need to correct this.

URSULA VON DER LEYEN, EUROPEAN COUNCIL PRESIDENT: Today, Russia is paying a heavy price as our sanctions are eroding its economy, throwing it back by a generation. The price cap on crude oil already costs Russia around 160 million euros a day. And we will keep on turning up the pressure further.

(END VIDEO CLIP)

HOLMES: Tymofiy Mylovanov is the former Ukrainian minister of economic development and trade, now the president of the Kyiv School of Economics. He joins me now.

It's good to see you again, sir. We just heard Ursula von der Leyen saying that the E.U. will, quote, "deepen further support and cooperation" with Kyiv.

Not a whole lot of specifics. What is Ukraine wanting from this E.U. summit Friday? And how likely is it to get what it wants?

TYMOFIY MYLOVANOV, PRESIDENT, KYIV SCHOOL OF ECONOMICS: We would like to get a commitment to start negotiations about the admission of Ukraine to the E.U. We understand these negotiations may take decades. We're hoping, of course, for shorter, faster track. But much work has to be done.

So that's the specifics that we would like. The commitment to start negotiations.

HOLMES: The E.U. has long demanded moves on corruption, and we've seen Ukrainian authorities conducting anti-corruption actions across the country. And Volodymyr Zelenskyy has been promising new reforms.

How important is this issue? How bad has the level of corruption been in Ukraine, and what impacts have corruption had?

MYLOVANOV: The peak of corruption in Ukraine was, you know, around 2013 under then-President Yanukovych, who later fled to Russia after the Revolution of Dignity.

So corruption is really a fundamental and very political issue for the Ukrainian people. We're trying to get rid of it. And we have done a lot of progress. There's been an entire infrastructure of anti- corruption law enforcement set up. And they are working now.

The corruption, pockets of it, remain. There are areas which are unreformed, and it's in our best interest to get rid of the corruption as soon as possible.

HOLMES: Yes. Because of course, Viktor Yanukovych, that was a long time ago now. How strongly entrenched are the oligarchs and the other vested interests within the Ukrainian system? Because obviously, donor countries don't want their contributions stolen, do they?

MYLOVANOV: Some -- some vested interested remain. Others not. For example, in the banking system, it all is cleaned up. In non-defense procurement, it's cleaned up.

But judicial, for example, especially at the lower-level courts, they continue to operate judges who were appointed long ago and who are notoriously corrupt. There are fewer of them, but this -- this is -- this is an ongoing battle.

HOLMES: Your prime minister, Denys Shmyhal, said in the last couple of days that Ukraine has an ambitious plan-- I think those were the words he used -- to join the European Union within the next two years.

How much of an issue will that be at these talks? Do you think it can happen in that timeframe? What are the challenges?

MYLOVANOV: Well, I -- it will look historically. You know, we know of Slovenia would join the E.U. in five years. And we know of several countries, immediately after the collapse of the Soviet Union.

But even for Poland, it took 20 years.

So you know, it depends on how fast and how much and well we do our homework. And I think Ukraine has surprised people in the world about our ability to get things done. So it's good motivation for us. But let's be realistic.

HOLMES: We've been reporting on what's going on in Bakhmut; Kramatorsk, as well. When it comes to the battlefield, how likely do you think a Russian offensive is, and soon, and how prepared is Ukraine to counter a Russian offensive?

MYLOVANOV: Well, Russia will try definitely. And Ukraine is prepared. That also is true.

Of course, it helps to have better military equipment, weapons, all kinds of support. Ukrainian military is being trained everywhere. In Ukraine, and outside of Ukraine. So we thank for that support.

We are prepared. We are ready to defend. It's a very simple battle for us: Evil against good.

HOLMES: Tymofiy Mylovanov, always a pleasure to speak with you, sir, there in Kyiv. Thanks so much.

MYLOVANOV: Thank you.

[00:20:02]

HOLMES: Now, sources tell CNN the U.S. will be sending longer-range missiles to Ukraine as part of a soon-to-be-announced military aid package. The ground-paced [SIC] -- ground-launched small-diameter bomb, as they're called -- It's a guided missile with a range of about 90 miles -- will be part of a new $1 billion security package.

The bombs will effectively double the range of Ukrainian weaponry, but the package will not include even longer-range missiles that Ukraine wants.

Sources say the details could be announced as soon as Friday.

Still to come here on the program, tech giants report their fourth quarter earnings. And it underlines worries about slowing growth and global economic uncertainty, particularly in that sector.

Also still to come, shares of a company headed by Indian billionaire Gautam Adani plunge further, even after he posted a video message aimed at reassuring investors.

We'll have all of that and more when we come back.

(COMMERCIAL BREAK)

HOLMES: Some tech giants reported earnings Thursday that disappointed Wall Street.

Apple posting its first revenue decline since 2019, with sales falling 5 percent in the final three months of the year, significantly worse than analysts expected.

Shares of Apple fell more than 4 percent in after-hours trading.

The Google parent, Alphabet, reporting its profits fell by a whopping third in Q4, along with nearly flat revenue growth. Alphabet shares also dropped about 4 percent immediately following that report.

And despite beating estimates with a 9 percent increase in revenue, Amazon's stock fell nearly 5 percent after the company reported slower growth in certain closely-watched segments.

Europe's two largest central banks raised interest rates sharply on Thursday, opting for bigger increases than the U.S. Federal Reserve. The Bank of England and the European Central Bank hiking rates by half a percentage point. Benchmark rates for both are at their highest levels since 2008.

Across the Atlantic, the Federal Reserve eased up on rate hikes on Wednesday, delivering just a quarter-point increase, saying it is making progress against inflation.

But the banking chiefs of the U.K. and E.U. say there is still a ways to go there.

(BEGIN VIDEO CLIP)

ANDREW BAILEY, GOVERNOR, BANK OF ENGLAND: It's too soon to declare victory just yet. Inflationary pressures are still there. We can see that in the data, and e hear it from our agents. And we need to be absolutely sure that we really are turning the corner on inflation.

CHRISTINE LAGARDE, PRESIDENT, EUROPEAN CENTRAL BANK: In view of the underlying inflationary pressures, we intend to raise interest rates by another 50 basis points at our next monetary policy meeting in March. And we will then evaluate the subsequent path of our monetary policy.

(END VIDEO CLIP)

[00:25:00]

HOLMES: The Bank of England has a particularly rough job on its hands. Prices are rising rapidly, and the International Monetary Fund expects the U.K. will be the only major economy to shrink this year.

Turning now to the financial melt-down that's led to Gautam Adani losing his status as Asia's richest man.

On Thursday, the billionaire businessman spoke out for the first time since an American research company accused his conglomerate of fraud and stock market manipulation and has sent his fortunes plummeting.

CNN's Vedika Sud reports.

(BEGIN VIDEOTAPE)

VEDIKA SUD, CNN INTERNATIONAL CORRESPONDENT: For over a weak, top billionaire Gautam Adani's fortunes have been hit by a fraud claim made by a small American research firm and short-seller.

The Hindenburg report has led to a massive market meltdown in India, wiping out more than $100 million of the value of Adani's conglomerate, and the setback continues.

The share plunge forced Adani to abandon a $2.5 billion share sale. Here is more on the controversy and the man in the midst of it.

UNIDENTIFIED FEMALE: Sustainable cities for tomorrow.

SUD (voice-over): Protests by opposition lawmakers in India's Parliament on Wednesday highlighting concerns of the finances of an Indian billionaire.

On the same day his conglomerate, Adani Enterprises, called off its $2.5 billion share sale after a significant drop in share price.

GAUTAM ADANI, CHAIRPERSON, ADANI GROUP: For me, the interests of my investors is paramount, and everything is secondary.

SUD (voice-over): Even a statement from the low-profile businessmen, Gautam Adani, wasn't enough to calm India's stock market.

It all started after U.S. research firm and short-seller accused his business of fraud and stock manipulation.

The Adani Group has denounced the allegations as baseless and malicious. It called the report a calculated attack on India; the independence, integrity and quality of Indian institutions; and the growth story and ambition of India.

The Adani Group, founded about 30 years ago, controls power stations, ports and airports, with huge stakes in the energy and logistics sector; has long been linked to the wider success of India.

TIM BUCKLEY, DIRECTOR, CLIMATE ENERGY FINANCE: The Indian economy has been growing as one of the fastest-growing emerging markets in the world for a decade now. And that profound success story in India has certainly been a cornerstone of the Adani Group, because they are investing in infrastructure in India.

SUD (voice-over): This decent (ph) growth has often been flagged by detractors.

Adani is seen as a close ally of Indian Prime Minister Narendra Modi. Critics say Adani's rise rested heavily on crony capitalism, which Adani has repeatedly dismissed.

ADANI: Prime Minister Modi and myself, both are coming from the state of Gujarat. And that makes me the easy target of such business allegations.

SUD (voice-over): Analysts caution that the fallout of the report by Hindenburg Research not only poses a risk to the Adani Group but to the Indian economy.

HEMINDRA HAZARI, INDEPENDENT BANKING AND ECONOMIC ANALYST: In a normal case of events, the regulator would have stepped in and announced an investigation. But sadly, in this case, the regulator, at least for the public, has chosen to remain silent.

SUD (voice-over): The immediate impact has been obvious. More than $100 billion wiped off of the value of his business empire. The wider challenge now, for India's market regulator and the Modi government, will be to try and cap the market chaos and regain the trust of nervous investors.

SUD: Until last week, Gautam Adani was the fourth richest person in the world, but after the market rout, he's no longer in the top ten. As the Adani crisis continues to unfold, opposition lawmakers in India are demanding a probe into the Hindenberg report.

(END VIDEOTAPE)

HOLMES: Vedika Sud reporting there for us.

Now, a suspected Chinese spy balloon hovering over the U.S., creating a new flash point ahead of a very important meeting between the two superpowers. We're going to have a live report from our Steven Jiang in Beijing when we come back.

(COMMERCIAL BREAK)

[00:31:56] HOLMES: You're watching CNN NEWSROOM. I'm Michael Holmes.

For several days now, a suspected Chinese spy balloon has been flying over the Northern U.S. It entered via Canada and is currently floating above Montana.

The Pentagon closely monitoring the balloon. But for now says it will not shoot it out of the sky, even though the balloon is close to a number of what they describe as sensitive sites.

A brief ground stop was ordered at local airports. Fighter jets were mobilized.

And of course, the timing of all of this is pretty terrible. The apparent provocation coming as the U.S. secretary of state gets ready for his first official visit to Beijing. Tensions were already pretty high.

China furious over U.S. plans to expand its military presence in the Pacific, for example. The Pentagon chief was in the Philippines earlier this week, where the U.S. is getting access to four more bases.

Beijing says that the deal will endanger regional peace and stability.

I want to bring in CNN's Beijing bureau chief Steven Jiang now.

I guess, Steven, what is the trust level right now between the two nations? Especially as this spy balloon flies over the U.S.?

STEVEN JIANG, CNN BEIJING BUREAU CHIEF: Yes, Michael. Interestingly, just a few minutes ago, Chinese state media finally broke its silence and actually reported the story, citing U.S. outlets, including CNN.

But their opening line of the story, of course, is accusing the U.S. of hyping up the so-called China threat.

Now, as you mentioned, the timing is really interesting. Because of that high-stakes visit by Blinken in the coming days. This obviously makes this a very delicate situation and potentially consequential matter, because in a way, this complicates things. Because at least publicly, both sides have said they want to stabilize, if not somewhat reset, this increasingly contentious relationship.

And incidents like this one obviously plays right into the hands of the hard-liners on both sides.

Already in Washington, we've seen some members of Congress, especially on the Republican side, calling for stronger actions, new hearings, and portraying this as yet another proof of President Biden's China policy being too weak.

And on the Chinese side, this could potentially stir up nationalistic feelings and sentiment, as well.

But it's worth remembering this doesn't take place in a vacuum. As you mentioned, there has been a flurry of activities ahead of this high- stakes visit, especially from the U.S. side. Not only on the technology and economics side, but also in the military spheres, including that newly-signed agreement with the Philippines, very much targeting China.

And that's why expectations are already very low out of these talks between Blinken and his Chinese counterpart even before the spy balloon allegation being revealed.

And -- but both sides very much seem to be not changing how they view themselves and each other fundamentally. That's why it's worth remembering, from the U.S. perspective, the key of this visit is to keep communication channels open at all levels; to prevent miscalculation; to prevent disputes from escalating into a real conflict.

[00:35:00]

And that includes military to military communication, which has been suspended by the Chinese after that visit to Taiwan by then-U.S. House Speaker Nancy Pelosi last year.

So that's why, Michael, some U.S. experts seem to think this revelation of the spy balloon is deliberate by U.S. officials, trying to put the Chinese on the back foot heading into these meetings with Blinken, to allow him to address this issue more directly with them; to let them know what the U.S. knows and what the U.S. wants the Chinese to do -- Michael.

HOLMES: Yes, that's a very plausible thing, that they deliberately, you know, leaked this information. I mean, these balloons have happened before, according to the Pentagon. And we've not heard about it.

It's curious. The Americans admitted this ahead of this visit.

What would a -- what would a successful meeting between the two look like for China, then?

JIANG: I think, at this point, as I've mentioned, because expectations are so low, anything in terms of a change of tone may be considered a success. Because neither side seems to be expecting a lot of so-called deliverables out of these talks.

The key is really to have these communication channels open and to have these working-level groups really keep talking on different issues, on concrete issues. To -- somehow to have cooperation on issues that they can see eye to eye, including on the economic front, as well as on things like climate change -- Michael.

HOLMES: All right. Good to see you, Steven. Thanks. Steven Jiang there in Beijing.

All right. Quick break here. When we come back, Republicans are being accused of political revenge after Democrat Ilhan Omar was formally booted off of the Foreign Affairs Committee. We'll have those details after the break.

(COMMERCIAL BREAK)

HOLMES: In the coming hours, Pope Francis bids farewell to the Democratic Republic of Congo and heads to South Sudan.

The pontiff has a full schedule on his first day in Juba, with plans to meet at the presidential palace with South Sudan's president and vice president, along with members of the diplomatic corps.

This all comes after a warm reception in the DRC. On Thursday evening, he held mass in Kinshasa and met with members of the clergy, religious women and seminarians.

Earlier in the day, he addressed a crowded stadium of 65,000 young people, urging them to reject political corruption.

Now, one of Italy's most wanted mob bosses has been arrested in France, where he was working as a pizza maker. Edgardo Greco was convicted in absentia for the murder of two brothers in the '90s and had been on the run for 16 years after escaping police custody in Italy.

Under his new identity, Greco was even featured in a local French newspaper as a, quote, "authentic Italian pizza maker."

[00:45:02]

The 63-year-old will likely be extradited to Italy.

U.S. House Democrats are accusing the Republican majority of political revenge after the GOP blocked three Democrats from key committee assignments.

Representatives Adam Schiff and Eric Swalwell were officially denied seats on the Intelligence Committee, even though Schiff had been chairman of that committee in the last House.

And now House Republicans voted Thursday to keep Democratic firebrand Ilhan Omar off the powerful Foreign Affairs Committee.

CNN's Manu Raju with our report.

(BEGIN VIDEOTAPE)

REP. ILHAN OMAR (D-MN): -- like I was.

MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT (voice-over): House Republicans, in one of their first moves in power, ousting Democrat Ilhan Omar from a seat on the Foreign Affairs Committee over past remarks condemned as antisemitic.

UNIDENTIFIED MALE: She has brought dishonor to the House of Representatives.

RAJU: By a 218 to 211 vote, a response to 2021, when Democrats booted Republicans Paul Gosar and Marjorie Taylor Greene from all of their committees over their rhetoric.

REP. KEVIN MCCARTHY (R-CA): Thank you all for coming.

RAJU (voice-over): But Speaker Kevin McCarthy claims this is different, since Omar can serve on other committees, just not Foreign Affairs.

RAJU: Is this the message you want to send to voters as you come into power here?

MCCARTHY: No. That's the clear part, how it's not tit-for-tat.

We're not removing her from other committees. We just do not believe, when it comes to Foreign Affairs, especially the responsibility of that position around the world with the comments that you make.

RAJU (voice-over): Then-Speaker Nancy Pelosi set the precedent in 2021 but told CNN at the time she was not concerned the GOP might retaliate.

REP. NANCY PELOSI (D-CA): We would not walk away from our responsibilities for fear of something they may do in the future.

RAJU (voice-over): Now Democrats say the vote was an act of pure political vengeance.

REP. HAKEEM JEFFRIES (D-NY): But what's going to take place on the floor today is not a public policy debate. It's not about accountability. It's about political revenge.

UNIDENTIFIED MALE: It's not justified.

RAJU (voice-over): But Omar has apologized, even signing onto a resolution recognizing Israel as a legitimate U.S. ally. And today, defiant.

OMAR: I am an immigrant, and interestingly, from Africa. Is anyone surprised that I am being targeted?

RAJU (voice-over): Even some Republicans, uneasy about the vote.

REP. TONY GONZALES (R-TX): I'm not excited about the direction that we've -- the direction that we've kind of taken this place is tit-for- tat.

RAJU: How, you know, you feel about this being one of the first major actions of the new Republican majority, to kick Ilhan Omar off the committee?

REP. NANCY MACE (R-SC): Well, certainly, I am concerned, representing a swing district, that we're distracted from the real issues facing Americans who are struggling. Talking about inflation.

RAJU: Now, those last two Republican members did end up voting to kick Omar off of the committee. Nancy Mace, in one, said she had gotten some assurances that, going forward, there will be a different process for removing committees -- members off of committees for bad behavior. For conduct that looks dishonorably among the House.

Kevin McCarthy did indicate that that would be his plan also going forward. He plans to have talks with the Democratic leader, Hakeem Jeffries about this issue as the Republicans appear eager to put this behind them amid concerns within the ranks.

Manu Raju, CNN, Capitol Hill.

(END VIDEOTAPE)

HOLMES: I'm Michael Holmes. Thanks for spending part of your day with me. I will be back at the top of the hour with more CNN NEWSROOM. But first, WORLD SPORT after the break.

(COMMERCIAL BREAK)

[00:45:26]

(WORLD SPORT)