Shanghai’s Jazz-Era Glamor Sets Mood for Trade

(Bloomberg) --

With trade on their mind, Chinese negotiators couldn’t have picked a more evocative setting for dinner with the visiting Americans.

The waterfront hotel still oozing the jazz-era glamor of Shanghai in the 1920s is a place that has seen history in the making, including U.S. President Richard Nixon’s landmark visit in 1970s.

Yet for all the symbolism, the two sides are further apart than they were three months ago, when talks broke down into mutual recrimination. And trade tensions aren’t the only issue that have the two dominant world economies at odds.

China’s territorial ambitions in the South China Sea will come into sharp focus as diplomats descend on Bangkok for a summit of southeast Asian economies. It’s where smaller countries like Vietnam and the Philippines get to vent once a year — with the U.S. present — about a Chinese power grab in a critical shipping route.

As the longtime guarantor of freedom of navigation in Asia’s waters, the U.S. plays an important role and has decried China’s actions as “bullying.” But words won’t alter China’s strategic thinking on the matter as it settles into a geopolitical long game, hoping perhaps that the U.S. will be too consumed by its presidential campaign to pay attention.

Global Headlines

Detroit debate | Get set for a potential showdown between Bernie Sanders and Elizabeth Warren during tonight’s Democratic presidential debate. Sanders and Warren — who are battling for the role of progressive alternative to front-runner Joe Biden — are the most high-profile candidates scheduled to participate in the first round, with Biden and rival Kamala Harris among those set to take the stage tomorrow. Biden, who will be the other candidates’ main target, has retreated for five days of closed-door debate prep.

• Read more about Warren’s trade policy rollout. Hint: It would be a big break with Trump.

• Democratic hopefuls risk falling behind in “Rust Belt” states like Pennsylvania, Michigan, Wisconsin and Ohio that Trump has assiduously targeted, Matt Townsend and Misyrlena Egkolfopoulou report.

Telling Trump no | Mexican President Andres Manuel Lopez Obrador won’t agree to Trump’s demands for his country to process asylum seeker claims in the type of deal Guatemala signed with the U.S. to stop the flow of undocumented migrants from Central America. The leftist leader known as AMLO sat down with Bloomberg Editor-in-Chief John Micklethwait in his first interview with international media as president to discuss topics including his belief in the need for lower interest rates to revive his nation’s flagging economy.

Tough road | Trump’s choice to replace Dan Coats as Director of National Intelligence faces a difficult confirmation in the Senate. While Democrats have slammed House member John Ratcliffe for his fawning loyalty to the president — he agrees with Trump’s characterization of the two-year probe into Russian meddling the 2016 election as a “witch hunt” — Republicans have remained largely silent on him.

Strait squeeze | Japanese Prime Minister Shinzo Abe finds himself in a tight spot, Isabel Reynolds explains. He doesn't want to anger the U.S. after the country's main ally asked him to join its international call to protect shipping in the Strait of Hormuz. But voters at home are suspicious of overseas military deployments that could undermine Japan's pacifist constitution.

Cleaning house | Fresh from forcing their governor to resign, young protesters in Puerto Rico, mirroring populists elsewhere, are directing their rage on a wide range of politicians who they say have led the island into a grinding recession. As Michael Deibert and Ezra Fieser report, the deepening anger is threatening to crack the U.S. commonwealth’s two-party system.

What to Watch

• Fresh train disruptions by Hong Kong protesters show how unrest once confined to weekend marches through downtown streets is beginning to affect daily life across the Asian financial hub.
• South Africa's beleaguered state power utility is set to announce its second consecutive multi-billion rand annual loss today, deepening a financial crisis that's become a national problem.

And finally...Thanks to years of Brexit insanity, the pound these days can seem as volatile as an emerging market currency, and Prime Minister Boris Johnson’s tough talk has just sent it plunging to a two-year low. Enter Jordan Rochester, or Mr. Brexit as he is known to his clients. The 28-year-old currency strategist at Nomura International has become the go-to guy for analyzing every political twist in the U.K.’s divorce from the European Union. And he puts the chances of a departure with no deal — the scenario businesses fear most — at about 30%.

--With assistance from Kathleen Hunter and Jon Herskovitz.

To contact the editor responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Karl Maier

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