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First Move with Julia Chatterley
Hong Kong Faces Violent Protests As Beijing Celebrates 70 Years Of Communist Rule With Military Prowess; A Credit Suisse Executive Resigns For Snooping On A Colleague; China Makes Way For PayPal, But Competition Is Fierce. Aired 9-10a ET
Aired October 01, 2019 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:29]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR, FIRST MOVE: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE, and here's
your need to know.
A Tale of Two Cities: Hong Kong faces violent protests as Beijing celebrates 70 years of communist rule with military prowess. I Spy: A
Credit Suisse executive resigns for snooping on a colleague. And payment approved. China makes way for PayPal, but competition is fierce. It's
Tuesday, let's make a move.
Welcome once again to FIRST MOVE. Pinch punch first of the month. Yes, it's the first of October and the first day of course of the final trading
quarter of the year. We've wrapped up what I've seen headlined numerous times as the weakest quarter of the year.
I'll tell you what, weak to some is resilient to others right now. September, typically a pretty volatile month, the Dow and the S&P 500 here
in the United States eking out gains of one percent plus admittedly, the NASDAQ is flat, but I don't think that's bad considering some of the risk
events we've faced in the last quarter -- rising U.S.-Iran tensions; protesters we're going to discuss shortly in Hong Kong; the Saudi oil
attacks, not to mention of course, the developing political crisis in D.C. with the Impeachment Inquiry surrounding President Trump.
Investors politely ignoring this thing for now, and I think and we will continue to do so unless something shifts in the Senate. For now, the most
important thing remains, the trade war, and escalation risks there and a timely warning in fact.
This morning on that front, the World Trade Organization slashing its forecast for global trade going forward blaming the tariff tensions between
the United States and China.
Now, for all the sound and theory on the trade front, I have to say at least in aggregate, and I'm couching myself here, U.S. stocks have well and
truly outperformed. Take a look at what we've seen year-to-date for the Dow, up almost 15 percent.
The NASDAQ in fact, the tech heavy sector up 18 percent that despite all of the warnings from the bond market here, the flight into safety assets in
particular, however, throwing December 2018's performance and you have to deduct a whole chunk of that, but we're still up five percent and eight
percent, respectively. So since the beginning of December.
Looking ahead, though the key here is, and I will reiterate this time and time again, Q4 depends on a resolution, or at least a sustained ceasefire
on trade.
For today at least, I have to say for China, specifically Beijing displaying nothing but confidence about the future. That's what we're
going to pick up the drivers.
Let's get to it. Parades in Beijing; protests meanwhile, in Hong Kong marking the 70th Anniversary of Communist Party rule. You can see the
stark divide between the moods on the Chinese Mainland and that in the Special Administrative Region of Hong Kong. While the flags fly in
Beijing, pro-democracy demonstrators have been clashing violently with riot police throughout the day there. One protesters shot in the chest by
police officer just hours ago.
Let's talk this through. Anna Coren is in Hong Kong for us. David Culver is over in Beijing. Anna I want to begin with you. Protests I believe in
eight out of the 18 districts there. Just talk us through what we've seen over the last several hours and bring us up to date.
ANNA COREN, CNN INTERNATIONAL CORRESPONDENT: Well, Julia, as you can see, there's a fire behind me. It blew up just as you were talking in your
intro. Protesters have set fire bombs to Sham Shui Po Police Station. They're now planning and they have lit the other entrance lot as well.
So there are fires, simultaneous fires going off here in Sham Shui Po. It has just gone 9:00 p.m. here in Hong Kong. It has been a long and violent
day and the violence has not ended. Interestingly, we are only a few blocks from the police station and yet, we are yet to see any police. You
can see here protesters, they've got their bricks, they've got their petrol bombs and we're seeing it all afternoon.
Earlier, we were there as protesters were throwing petrol bombs at police. Police responding with teargas, obviously making numerous arrests, but it
just didn't have the impact, perhaps that you would expect.
[09:05:13]
COREN: But we overheard one of the protesters there a little bit earlier that the aim of today was to humiliate Xi Jinping, China's President. They
believe that they have done that. Their intention now is to set fire to the train station here at Sham Shui Po, the MTR which is used by so many
people.
I mean, this is how people get to work here in Hong Kong. But they have vandalized and set fire to Sham Shui Po Station.
Earlier today, we learned that a police officer fired a live round at a protester. A protester hit the police officer with a pole and the police
officer responded by firing live rounds. They say that their lives were threatened and that they had warned the protesters to back off.
We don't know if there were any warning shots. From what we can see, there were no warning shots. That will no doubt be part of the investigation.
We are yet to learn as well, Julia as to the condition of that 18-year-old man who was shot, but certainly it really is a turning point here in Hong
Kong.
These protests have been going for 17 weeks now, and this is the first time that a protester has been shot. Police officers have fired live rounds as
warning shots. But as I say, the first time that a protester here in Hong Kong has been shot with a live round -- Julia.
CHATTERLEY: Yes, it does feel like a pivotal moment, and there was always the expectation that there was going to be heightened violence today. I
mean, there have been graphic images of that shown on social media. Protesters saying that what the 75th Anniversary of Chinese Communist Party
rule is 70 years of repression for places like Hong Kong, and that's part of what the protest movement represents here.
Can you give us any sense of scale -- you said 17 weekends now of violence in Hong Kong. Is this a heightened response from the police forces and in
terms of sheer scale of the protest? Is this as big as it's been?
COREN: Well, as we know, this has been going on since June. It started of as a protest movement against that Extradition Bill, that very
controversial Extradition Bill that would have allowed to extradition to Mainland China.
Three months in, the city's Chief Executive Carrie Lam finally formally withdrew that Bill, but the movement had morphed into so much more. It was
about fighting for the freedoms that people here in Hong Kong have enjoyed for the last 22 years since the handover from Britain to China back in
1997.
They feel that China has been encroaching here in Hong Kong, even though this is a semi-autonomous region. A special autonomous region (audio gap)
had just gone off.
Interesting (audio gap) in Hong Kong. (Audio gap) these are interesting times. (Audio gap) have become much more aggressive in the last few weeks.
They have (audio gap) that we have seen earlier, and obviously 1,700 people, more than 1,700 people have been arrested. And certainly after
tonight that number will go up even higher.
They wanted to clamp down. They wanted to make sure that there wasn't the unrest that we are seeing now on the first, it's a National Day Celebration
for China, the 70th Anniversary of the Communist Party, yet here in Hong Kong, the shooting of the protester, the violence, the vandalism, the
clashes with police -- that is what is going to make the headline. That is what is going to perhaps overshadow the festivities on the Mainland.
As you can see, the Fire Brigade has turned up now to deal with this --
CHATTERLEY: Step in there because it does appears we have lost Anna there, but as you can see, incredible images coming from Hong Kong there and to
Anna's point as well, an escalation, a clear pivotal moment in Hong Kong and the defiance there as China celebrates 70 years of Communist Party
rule.
David, I want to bring you in here just to compare and contrast it. Clearly, this is the last thing Beijing wanted to see in Hong Kong though,
perhaps clearly was expecting it at the same time.
Defiance from Hong Kong, but defiance from Beijing, too with a huge military display. Talk us through what we've seen today.
[09:10:21]
DAVID CULVER, CNN CORRESPONDENT: Julia, contrast is the word that comes to mind. You mentioned it there. Anna was showing you some of the fires that
were being lit there. We have fireworks here. A mood of celebration. That's what they're trying to get across.
Now, I should point out where we are, in fact, let me just give you a little context here. Now, if we can just show here, the Tiananmen Gate.
This will allow you to kind of see where we are. It's not going to look pretty because we're in the midst of a stand, but this will allow you to
take in the historic setting that we have here and this has been a very secured area. Invited guests only, Julia. So that doesn't mean that the
general public who live here in Beijing can just walk up here and take this all in.
And I say that to point out that it's tough to gauge from where I'm standing the genuine patriotism that we're seeing here versus the highly
scripted choreography that has been rehearsed for weeks leading up to this day.
As you mentioned, the military might. That's how this day started, a massive parade that went down Chang'An Avenue, the main strip just behind
me here and that was China's opportunity to show the world its new technology when it comes to military and defense.
And so you see that and perhaps the suggestion is one that might be threatening. China says, this is not about threatening. It's simply
saying that we will not be subdued, we will not be pressured.
They didn't mention the United States, but alluding to Western countries, and they say more than anything else, it should be perhaps reassuring to
see some of this military might because China believes itself to be a safeguard of global stability and ultimately secured. So that's why they
felt the need to showcase that.
In the meantime, you will look at what is in the midst of really a controversy here in China, really obstacles that they've been facing, many
challenges, Julia, that you and I have been talking about, the economic issues here.
Certainly with the trade war, one that has had deep domestic cuts here. The folks are hesitant when it comes to spending. They've had issues with
pork prices recently, just their staple meat.
And so this is a moment where they're trying to take the unrest in Hong Kong, the economic instability, the U.S. trade war, and they're trying to
push that aside and replace it at least for this moment, with celebration with joy, but you can bet those challenges will simply resurface in the
days to come.
CHATTERLEY: Yes, it's a perfect storm, really. David, fantastic to have you with us. David Culver there and of course, Anna Coren over in Hong
Kong, we want to stay safe. Later in the show, we will head back to Beijing for the latest there
And coming up as well, we'll be speaking to Victor Gao. He is the Vice President for Center for China and Globalization, so we'll be speaking to
him.
All right. Let's move on to our next driver. Over back to the United States, the Impeachment Inquiry widening. RUDY Giuliani has been
subpoenaed for documents related to his apparent role in pressuring the Ukrainians for dirt on Joe Biden. It has also emerged, the Secretary of
State Mike Pompeo was on that July 25th phone call.
In the meantime, a source tells CNN the President recently pressed Australia's Prime Minister to help the Attorney General Bill Barr with his
investigation of the origins of the Mueller-Russia investigation into election interference.
Evan Perez joins us now from Washington. Wowsers is all I can say at this certain moment. Just help us, for our international viewers in particular,
what do we need to understand and what are the important implications of the developments in the last 12 hours or so?
EVAN PEREZ, CNN SENIOR U.S. JUSTICE CORRESPONDENT: Well, there's a number of important parts of this and that one of them has to do with Rudy
Giuliani, the President's personal lawyer, who was traveling to Ukraine going to meet with government officials there to press this idea that they
needed to help with uncovering any new information that they could about Joe Biden and his son, Hunter Biden and their business -- Hunter Biden's
business dealings in Ukraine.
Now, the importance of that is twofold. One of the things that Rudy Giuliani has done is he has gone out front in television and essentially
admitted to all of this.
And so one of the questions will be, you know, if the members of Congress are able to subpoena documents from him, let's say he fights it. Will
courts look at the fact that Rudy Giuliani has been on television. He has actually shown copies of some of his -- what he says were some of his
communications as reason to keep that from the Members of Congress. I think that's going to be very difficult.
But all of this is tied into, as you pointed out, this investigation that's been ongoing here in Washington looking back at 2016 and looking at what
happened with the beginnings of what we came to know as the Mueller investigation.
[09:15:13]
PEREZ: Rudy Giuliani has been very much at the center of that and not and so is the Attorney General Bill Barr, the Justice Department is telling us
that at the urging of the Attorney General, the President recently pressed the Australian Prime Minister to provide some assistance to this
investigation.
Now, let me tell you a little bit of the backdrop of that. The Trump people supporting the President believe that a lot of what happened in the
Mueller investigation came about because Intelligence agencies overseas were providing information to the F.B.I. that they believe were essentially
false.
And so that's one of the things that they are continuing to pursue, the idea that the Mueller investigation should never have been done and to
undermine the legitimacy of that investigation.
So there's two fronts for the Trump administration here, as you just pointed out, there's so many players, including Mike Pompeo, who was on
that phone call now that we've now been discussing that phone call between President Trump and the Ukrainian President.
CHATTERLEY: Wow. Just my main observation here is how quickly this is moving and the investigation is progressing. Evan, fantastic to have you
with us and thanks for that. Evan Perez over in D.C. there.
All right on to our next driver, the Credit Suisse COO, the Chief Operating Officer has resigned over a spying scandal. He ordered surveillance on the
outgoing Head of Wealth Management. Alice Stuart joins me now. Anna, you do get the most interesting stories, at least like a script from a reality
TV show or perhaps a movie, except it's real. What do we know? And what is the company saying?
ANNA STEWART, CNN REPORTER: Well, before we get to car chases, and cocktail parties, which we can get to, let's just get the facts around this
case, because they're pretty thin on the ground if you compare it to all the colorful reporting around this.
The COO resigned as he said with immediate effect and that's after the Board today released their findings on the so-called surveillance scandal.
Now the CEO without knowledge of the CEO, Tidjane Thiam, he ordered an investigation into a former employee, that Iqbal Khan, he was the Head of
the Wealth Management arm of Credit Suisse and he joined UBS, a rival firm and there was some concerns that Khan could poach employees of Credit
Suisse.
However, the Board today said it was wrong, it was disproportionate to order this firm to observe them, and that has resulted in severe
reputational damage to the bank.
But Julia, what has added more I would say to the severe reputational damage to the bank is possibly all the crazy colorful lines we've had
around the story.
CHATTERLEY: Took us through some of them because at this stage, I think this is an important thing. Tidjane Thiam of course, this CEO is being
backed by the Board, but also seems to have some colorful relationship with his former Head of Wealth Management and I thought Switzerland was boring
and neutral, and it turns out to be quite exciting.
STEWART: It sounds very exciting. Let me run you through some unconfirmed Swiss media reports that the CEO and Iqbal Khan were just colleagues. They
were also neighbors in a very exclusive area of Lake Zurich and there was some personal issues and confrontational over their two houses,
particularly a spat about trees as I understand at a cocktail party that also involved their partners.
Secondly, there's a line Khan realized he was being observed by this firm that was following him around and tried to get away from them. He did that
through with erratic car chasing maneuvers around Lake Zurich.
Thirdly, that there was an alleged public altercation between Khan and the firm that was investigating and once he realized that they were tailing
him, now, I won't get to the details of that, because that's actually part of a separate criminal investigation also going on right now.
But you know, Julia, while this is all very embarrassing for the bank, it hasn't really done anything to the share price. And I find it perhaps
surprising because this really raises issues of the culture of Credit Suisse, of corporate governance.
The idea that a COO could call shots all on his own on something so sensitive without the knowledge of the Board, without the knowledge of the
CEO -- Julia.
CHATTERLEY: Yes, the extent you go to, to protect talent, it seems. A "James Bond" movie. Anna Stewart, great job. Thank you for that.
All right. We're going to take a quick break. We're a little bit astonished here, but coming up, a well-oiled machine. Saudi Aramco is
offering ahead of a potential public offering. That's to come. Stay with us.
(COMMERCIAL BREAK)
[09:22:34]
CHATTERLEY: Welcome back to FIRST MOVE. Minutes away from the opening bell this Tuesday. I'm joined by Brian Levitt who is Global Market
Strategist at Invesco. Great to have you with us.
BRIAN LEVITT, GLOBAL MARKET STRATEGIST, INVESCO: Thank you. Great to be back.
CHATTERLEY: You asked a great question in your notes this week saying, is it too late to be defensive in these markets?
LEVITT: And I believe that it is. I mean, the time to be defensive was during this deep concern about the Fed being too tight, the administration
going too far on trade. I mean, that was really the 10-year rate going at 150. That was the time to be defensive.
We're seeing yields up a bit -- a little bit of a steepening of the yield curve that should favor the more cyclical parts of the market.
CHATTERLEY: Does the data need to follow because to your point, the defenses have done really well here. Bond proxies, utilities, real estate
this year have done incredibly well.
LEVITT: Yes, and of course the data does need to follow. I mean, basically what you had was the market and business sentiment really seizing
up amid concerns about a policy mistake, and that's driving the manufacturing data down and that drove yields down.
What 2020 or the end of 2019 hopefully becomes is more of a time of policy clarity and some improvements in sentiment. A little bit of improvement in
growth.
CHATTERLEY: You also asked a great question I felt was does the U.S. administration where -- I'll give you a lot of the policy concern it is
emanating from particularly as far as trade is concerned. Does this administration become intimidated by the economics? By the data? Even by
the markets potentially?
LEVITT: Yes, so that was a great quote from James Carville in 1994, when he said if he can come back as anything in life, he doesn't want to be a
baseball hitter or a baseball player or a Pope. He wants to come back as the bond market so he can intimidate everybody.
CHATTERLEY: Everybody,.
LEVITT: So that's what 150 and 10 year was. That's what the inverted yield curve was. The bond market intimidating policymakers.
Now the Fed has backed off and we're waiting for the administration. I personally think it's going to be very hard for the President to go into
reelection year with a strong dollar, an inverted yield curve, the I.C.E. and Manufacturing Surveys trending lower. I mean, that's a difficult
package for reelection.
So yes, I think the bond market has been intimidating policymakers to change course.
CHATTERLEY: And potentially an ongoing trade war and the battle between the Democrats and the Republicans risks to any form of policy including
signing off things like the Mexican-Canadian-United States Trade Agreement as well.
LEVITT: Right.
CHATTERLEY: I mean, a lot of things are being threatened by the politics. Does the market care about impeachment? House impeachment?
LEVITT: House impeachment? No, I mean, the market doesn't like uncertainty, but you can go back. I mean, you can look at the Clinton
administration, the market initially fell 20 percent when Monica Lewinsky agreed to meet with the Special Prosecutor. The market had recovered all
of that by the time the House voted to impeach. The market was up over 80 percent during Clinton's second term.
[09:25:19]
LEVITT: So a little bit of a different story during Nixon, but that was inflation going from two percent to 15 percent. So this is a different
backdrop.
I would say for the more tactically minded investors, get the big macro story right. It is modest growth, modest inflation and a Fed that's
easing. That should be a good backdrop for risk assets.
By the way, if you invested $100,000.00 on the Saturday Night Massacre in 1973, it would now be worth $10.5 million. So I don't think the markets
worry that much about impeachment. Get the bigger story with it.
CHATTERLEY: The Central Bank is ultimately the backstop here, do you care more about governance of Central Banks, Presidents of Central Banks than
you do about political leaders right now?
LEVITT: No, I do, I do and the thing about Central Banks is the Central Banks aren't going to be able to get us to some new magical level of
growth. They're not getting us three, four percent GDP growth.
But what they can do is help take off some of this pressure on the U.S. dollar. They can ease financial conditions and that should help to start
to reflate the economy, continue to reflate asset price and that's really what the Central Banks are trying to do -- raise some inflation
expectations, get us to shop, get us to invest and that should be -- that should persist, I think for some time now.
CHATTERLEY: And allow the politicians just to fight amongst themselves. Brian, fantastic to have you with us today.
LEVITT: Thank you.
CHATTERLEY: Brian Levitt, Global Market Strategist at Invesco there. We are counting down to the market open this Tuesday. Stay with us. Plenty
more to come with FIRST MOVE.
(COMMERCIAL BREAK)
[09:30:00]
CHATTERLEY: Welcome back to FIRST MOVE. That was the opening bell here for the second session of the week and U.S. stocks seeing a positive open
at this point.
Remember we've got the Chinese and the Hong Kong Stock Markets overnight shot. Europe, the handover pretty positive. I am just looking at the
German markets here actually managing to push into positive territory. A lot going on, of course and the World Trade Organization slashing its
global outlook for a trade going forward.
And as we've discussed throughout the show, again, the risks surrounding this clearly dominant what we see in the fourth quarter of this year.
Let me bring it back to our top story quickly. The massive demonstrations in Hong Kong as China celebrates 70 years of Communist Party rule. The
clashes between police and protesters in Hong Kong turned violent once again today with one of the pro-democracy demonstrators actually being shot
in the chest.
Ivan Watson is on the ground in Hong Kong with all the details. Ivan, talk us through it. It's been an incredibly violent several hours in Hong Kong.
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: That's right, and in this part of Hong Kong now, it's kind of the mess after the protests where
you have a Central Business District still littered with kind of the remnants of what police described as a quote unquote "unauthorized
assembly," what protesters say was their right to come out on what's supposed to be a patriotic holiday for China, and show their opposition to
Communist Party rule in Mainland China; their opposition to the government here in this semi-autonomous region of Hong Kong.
As you pointed out, there was for the first time, a demonstrator wounded with a lethal round, a live round fired from a police officer's pistol.
The police have confirmed that an 18-year-old was shot in the shoulder. The video we have seen illustrates a real melee between protesters wielding
poles and police. And at one point, it appears that a police officer pulled his side arm and fired at very close range at the demonstrator.
To give you a sense of just the atmosphere of the protesters on again, what supposed to be a patriotic holiday, the celebration of the 70th Anniversary
of the creation of the People's Republic of China. Instead here, you have graffiti that says things like Free Hong Kong, and further up here, anti-
Chi-Nazi. Chi-Nazi becoming this derogatory term that the protesters, the position here in Hong Kong have used for Mainland China, the Communist
Party, and by extension, the Security Forces and the government here in this former British colony.
What's very disturbing is that this is nearly four months of this cycle of escalating confrontation, and it seems there is no off ramp from this, no
political solution to bring an end to the turmoil that's really hurting the economy of this city -- Julia.
CHATTERLEY: Yes. Huge challenges. Ivan Watson, thank you so much for bringing us up to date there. And stay safe.
That violence a world away from the pomp and parades that we saw today in Beijing, where Chinese President Xi Jinping has been presiding over a huge
military march down the city's Avenue of Eternal Peace, telling huge crowds, no force can stop at the Chinese people.
Joining us now from Beijing is Victor Gao who is Director of the China's National Association of International Studies. And Victor, fantastic to
have you on the show. Seventy years of Communist Party rule being celebrated in Beijing.
VICTOR GAO, DIRECTOR, CHINA'S NATIONAL ASSOCIATION OF INTERNATIONAL STUDIES: Thank you. Thank you for having me.
CHATTERLEY: The protesters are calling it 70 years of repression, in some cases. What's your response to what we've seen today?
GAO: So today is a day of national celebration. People throughout the country are very happy joining all kinds of celebrations, and the
celebration of the Tiananmen Square just concluded with firecrackers at the fire shows for example.
And I think this is a day of national rejuvenation. People throughout the country are very proud of China's achievements and transformation over the
past 70 years.
I think in Hong Kong, there is a political campaign, very much motivated for bad will and they are designed to do damage to the Basic Law of Hong
Kong to do damage to one country two system principle.
[09:35:10]
GAO: And also to undermine rule of law and law and order. This is very dangerous. No violence in Hong Kong should be expected to last forever.
Something needs to be done to bring law and order back to Hong Kong hopefully as soon as possible.
CHATTERLEY: What is that something? Is there a political solution here or in your mind is now the time for China to step in and stop this? Many
people are surprised that China allowed the violence that we saw in Hong Kong today and didn't do more to prevent it?
GAO: Well, first of all, the fact that such political events took place in Hong Kong for the past four months is a vindication that Mainland China is
not involved in interfering in the situation in Hong Kong.
The primary responsibility of maintaining law and order in Hong Kong squarely rests with the Hong Kong SAR government with the Chief Executive,
Carrie Lam and with the local police force.
However, if they cannot step up and do the job of restoring law and order to Hong Kong, sooner or later, something else needs to be done.
And according to the basic law, the Central Government actually has the right to step in to assist the Hong Kong SAR government or to take actions
in its own discretion to make sure that law and order are restored to Hong Kong.
I would venture to say some of the activities which have taken place, especially more recently are on the verge of treason and justice will have
long arm and eventually justice will be done and justice will prevail in Hong Kong against such violence, atrocities and destruction of rule of law
in Hong Kong.
CHATTERLEY: How long do you think the Chinese government is willing to allow this to go on? To your point, at some point, you feel like the
Chinese government will see it as their right to step in to stop this. How long before that happens?
GAO: Well, if you read very carefully in the Basic Law, then there are very specific stipulations and processes, which would enable the Hong Kong
SAR government to request the assistance of the Central Government or for the Central Government through a standing committee of the National
People's Congress to take a decision to declare emergency in Hong Kong, so that the Central Government can declare part or all the PRC law to be
applicable to Hong Kong for a period of time.
And I hope this will not happen in the foreseeable future. But if violence continues and further deteriorates, if attacks on police officers continue,
definitely something needs to be done, and either the Hong Kong SAR government will need to make a request to the Central Government, or the
Central Government in Beijing will need to make a decision to declare emergency in Hong Kong. Hopefully, one way or the other, the law and order
will be restored to Hong Kong.
No civil society in the whole world will tolerate such duration of unsustainability of violence and atrocities and criminality as which have
already happened to Hong Kong in recent months.
CHATTERLEY: Victor, there are those that look at this situation and actually say China has been backed into a corner here. Growth is
weakening. Hong Kong is financially and particularly strategically important for financial flows in and out of China here.
The risk of the discontent, the revolution spreading from Hong Kong back into the mainland is a huge risk. Is there a danger here for China in
acting, too, for many reasons?
GAO: No, I think the analysis is probably not based on very solid fact. Now, from the Chinese Mainland's perspective, of course, all of us care
about what's happening in Hong Kong.
However, based on the scale and the magnitude of China as a whole, as an economy for example, the situation in Hong Kong, even though it's very
painful and traumatic, can be best described as a storm in a teacup. It is not going to have a major impact on the growth momentum of China as a
country or the Chinese economy as the economy in going forward, for example.
Whatever the Central Government and the Hong Kong SAR government will decide to do together, for example, will definitely achieve the goal of
restoring law and order and please allow me to emphasize the word restoring law and order because Hong Kong and the people in Hong Kong cannot afford
to have long protracted loss of law and order in Hong Kong.
It's bad for Hong Kong. It's bad for China. It's bad for the whole world. Therefore, I firmly believe law and order to be restored is the only right
way for Hong Kong.
[09:40:23]
CHATTERLEY: said very quickly, do you have any sympathy for particularly the young people there that want to enjoy the same kind of freedoms that
people have in the West that they've experienced themselves? And they just want to fight for their rights? Do you understand and do you have any
sympathy for the people and what they're doing right now? What they're asking for?
GAO: I have a lot of sympathy. I have a lot of sympathy for the legitimate requests of the people in Hong Kong, including those who are
engaged in legitimate and lawful demonstrations.
Keep in mind, please that Hong Kong is a democracy, and the Hong Kong law does protect people's legal right to protest and demonstrate.
However, if there is illegal gathering, for example, illegal demonstrations and protests, they will be dealt with by law in Hong Kong.
Hong Kong has a deeply entrenched tradition of rule of law. And people actually should know what is the lawful thing, and what is the illegal
thing, and I hope people in Hong Kong will lean towards abiding by the law rather than attacking rule of law.
And whatever other legitimate requests people may have in Hong Kong, let's talk about it to the Hong Kong SAR government, or to the trade unions, to
the student unions, et cetera.
But the bottom line is that no one in Hong Kong is allowed to resort to violence and atrocities and attacking the police. Police force in Hong
Kong has a job to do. They are paid to do a job. They are constructed, they are institutionalized to do a job and that job is to maintain the
stability in Hong Kong and defend rule and law in Hong Kong and law and order in Hong Kong. That's the bottom line.
CHATTERLEY: Yes, it is how we align those of everyone trying to preserve that democracy going forward. Sir, fantastic to have you with us, and
we'll get you back, please. Plenty more to discuss, I'm sure. Victor Gao, fantastic to have you with us. Director of the China National Association
of International Studies.
After the break, as the U.S. and China fight over trade, PayPal, manages to squeeze its way into China's crowded digital payment system market. We
will assess the chances of success. Stay with us.
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[09:45:46]
CHATTERLEY: Welcome back to the show. PayPal making its first move in China being granted a license to provide a digital payment services. It
has bought a majority stake in GoPay and that makes it the first foreign firm to get that license. Clare Sebastian joins us now.
Clare, very exciting for PayPal. Talk us through the deal here and also some pretty stiff competition in the form of WeChat and Alipay here.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia, yes. This is extremely significant for PayPal, they have bought, as you say, a 70
percent stake in the Chinese local player called GoPay, which essentially does a similar thing to what PayPal does outside of China, which is, you
know, provide the ability for websites and other applications to process payments without you having to input your credit card details or bank
details. Essentially, a go-between.
And this is significant, because of course, it's coming ahead of the next round of trade talks. And for years well before the Trump administration,
the U.S. has been pushing China to open up its payment system, to open up opportunities for the likes of MasterCard, Visa, and other credit card
companies. Those are still basically shut out of China. So this is a significant step.
But as you say, it's a very crowded marketplace. China is dominated by the likes of WeChat Pay and Alipay, they have evolved and grown to dominate
that market place largely because of the protectionist policies enacted by the Chinese government and they are huge players.
So I think the big question here is, will PayPay be able to really make inroads into this market. It looks like they're going to be doing more
kind of e-commerce type transactions, cross border, perhaps.
They say in their statement, "We look forward to partnering with China's financial institutions and technology platforms, providing a more
comprehensive set of payment solutions to businesses and consumers both in China and globally."
I tried to clarify with the company if they're going to just be going through GoPay or whether they'll be able to operate under the PayPal name
in China, and they would not confirm that to me.
CHATTERLEY: Interesting because Visa and MasterCard are still waiting. So is this an even playing field here and the equal treatment for foreign and
domestic firms that China promised or not?
SEBASTIAN: Well, I mean, it's still, you know -- essentially, it's not a direct license even, Julia. They're still doing is through an acquisition,
which is really kind of a side door into this market. And it's not even a full acquisition. It's a 70 percent stake.
And we still, you know, there was another kind of minor concession last year when American Express was granted the license to start building up its
own payments clearing system in China. But again, that was through a joint venture.
So as they say, in the statement where we look forward to partnering with China's financial institutions, you have to partner with local players
still to be able to gain access to this market. So I think that pretty much says it all.
CHATTERLEY: Yes, I think I know what the U.S. administration would say in this case. Clare Sebastian, thank you so much for that.
All right, on to another interesting story here now as well. Saudi Aramco, saying it will issue a dividend as it prepares for its $2 trillion IPO.
The firms say full oil production has been restored, too following the attacks in September.
Matt Egan has more. Well, good news on the former point. Better news also on the latter. Talk us through the two.
MATT EGAN, CNN BUSINESS SENIOR WRITER: Saudi Aramco is flexing its financial muscles here, Julia. The giant oil company is pledging to pay a
$75 billion dividend. Now, this is not a one-time dividend. This is an annual dividend that the company plans to pay for each of the next five
years.
Now, it's a ridiculous amount of money that shows just how large and how profitable Aramco really is. Now, just to put some context around this $75
billion figure, it's more than five times what Exxon Mobil paid in annual dividends last year. It's $16 billion more than Apple's entire annual
profit. And it's more than the combined market valuations of Ford and FedEx. So it's a lot of money.
But I think that there's two big takeaways here. One, the Kingdom is really serious about trying to get as rich of evaluation as possible on
this Aramco IPO and they're doing that by trying to woo investors with something that they love -- dividends.
The other thing here is that Aramco clearly trying to show some confidence in its financial stability even after those attacks that you just mentioned
from last month. Clearly, Aramco feels confident enough to come out and make this promise -- Julia.
CHATTERLEY: Yes, an eagle IPO, now I know I mentioned it was a $2 trillion IPO, and most analysts think it's going to be more like one to one and a
half. It's going to be fascinating to see. Matt Egan, thank you so much for that update there.
All right, coming up on first move, Donald Trump's campaign just spent up to $2 million to make fresh friends on Facebook. We will tell you what he
wants to do with his so called Task Force, next.
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CHATTERLEY: Welcome back to FIRST MOVE. President Trump's reelection campaign just spent up to $2 million on Facebook ads. They focus on the
Impeachment Inquiry in an effort it seems to rile up supporters on the social network and to get them to hand over their details.
Donie O'Sullivan joins us now. Well, we know what ads are all about, and he was straight on Twitter as well presenting his side of the story as far
as the impeachment is concerned. Why do we need to be worried about this, Donie? Don't you talk us through it.
DONIE O'SULLIVAN, CNN BUSINESS REPORTER: Trump really is the master of social media. If you think about how he uses his Twitter, that's where he
broadcasts out messages to the world that he can very often drive the news agenda.
And his campaign unlike any other campaign, you know, the spending and tactics they use on Facebook, it clips anything, any of the Democratic
candidates are doing.
And over just the past week, the Trump campaign has run 1,800 different ads on Facebook, some of which you see there and has spent up to $2 million
trying to attack the Impeachment Inquiry and to recruit people essentially to join what he is calling the Official Impeachment Defense Task Force.
Now, if you think when you hear 1,800 ads, a lot of these ads do look the same. But what 1,800 means is they have come up with 1,800 different
audiences to target.
So some of these ads are targeting people in Virginia, some of them are targeting in Texas, some might be targeting just women in California.
The Trump campaign, of course, has a massive data set of voters, potential voters all across the countries, so they are really mining in on that.
Over the past 18 months or so, Trump has spent $20 million on Facebook ads. So he is a very -- a very important customer for the social media platform.
CHATTERLEY: Okay, so ultimately, there's nothing wrong with this. You can take out ads, couple of questions to me very quickly. Is Facebook fact
checking these ads, whether they're from Donald Trump and the Republicans or from the Democrat candidates as well?
And isn't this a medium that's being investigated for election interference or facilitating election interference in 2016? And yet again, we've got
presidential candidates and the President using it as a medium to promote themselves? I don't know what to say about this.
[09:55:06]
O'SULLIVAN: Yes, to your first question -- sure. To your first question, Facebook is not fact checking these ads. So Facebook, we all know about
the misinformation and fake news that is spread on Facebook throughout 2016. To try and get a handle on that? Facebook is working with third
party fact checkers to fact check videos like the Nancy Pelosi video from a few months ago.
Even though Facebook did not take that down off the platform, their third party fact checkers deemed it to be false and they down ranked it so it
would be seen by less people.
Nick Clegg, the former Prime Deputy Prime Minister of United Kingdom who now works for Facebook announced last week and confirmed an existing policy
where Facebook will not fact check politician's posts. So you can essentially pay Facebook to spread false information.
CHATTERLEY: Cringe. You can pay Facebook to be an echo chamber for false information, and that's the punch line. Donie, fantastic to have you with
us. Donie O'Sullivan there. Wow.
That's it for the show. You've been watching FIRST MOVE. Time to go make yours. I'll see you tomorrow.
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[10:00:00]
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