U.S., India Missteps Leave Xi in Driver’s Seat

(Bloomberg) --

Chinese President Xi Jinping is suddenly sitting pretty in Asia, thanks largely to missteps by two of his biggest rivals: U.S. President Donald Trump and Indian Prime Minister Narendra Modi.

Modi abruptly pulled out of a 16-nation regional trade deal yesterday, removing a key counterbalance to China. That’s bad news for Japan, which urged India to stay in.

U.S. influence also took a hit from Trump’s no-show at a regional summit in Bangkok. Southeast Asian leaders responded by snubbing a meeting with National Security Adviser Robert O’Brien.

What’s more, China’s asking price is becoming clear for Xi to head to the U.S. and sign a deal centered on agricultural purchases that Trump is seeking ahead of next year’s election. You can read our report here about how Beijing wants tariffs scrapped on as much as $360 billion of Chinese imports before Xi gets on the plane.

The Chinese leader made a pledge to a trade expo today that the phase-one deal would lead to other measures to open China’s markets. But investors are doubtful: The European Chamber said many agreements reached last year saw “no follow-through.”

Still, with Trump and Modi on the sidelines, Xi may not need to worry.

Global Headlines

For the record | House Democrats will release closed-door testimony from two central players in Trump’s back-channel effort to influence the Ukrainian government, a key step as the impeachment inquiry shifts to a new, public phase.

• Already released: Marie Yovanovitch, the former U.S. ambassador to Kyiv, told House investigators she felt threatened by the way Trump spoke about her on a July 25 call with Ukrainian President Volodymyr Zelenskiy, according to a transcript of her private deposition made public yesterday.
• How accurate is Trump’s contention that there was something untoward about 2020 rival Joe Biden’s diplomatic efforts at the time his son Hunter was on the board of a Ukrainian energy company? Ryan Teague Beckwith takes a closer look.

Ascendant Democrat | Exuding new confidence as a top-tier Democratic 2020 presidential candidate, Pete Buttigieg is seizing on Biden’s stumbles in Iowa and questioning Senator Elizabeth Warren’s electability to pitch himself as: a) the alternative to both; and b) the candidate best-positioned to lead the party against Trump.

• Trump’s 2020 campaign announced it’s creating “Black Voices for Trump,” a coalition aimed at bolstering the president's support among African-Americans. Vice President Mike Pence will address the group Friday in Atlanta.

Snatching power? | U.K. Labour leader Jeremy Corbyn may be able to wrest control of the government from Prime Minister Boris Johnson’s Conservatives in next month’s election, thanks to support from the Scottish National Party after its leader, Nicola Sturgeon, hinted she’d never help the Tories stay in power.

• Corbyn, who has avoided being pinned down on Brexit, will attack Johnson’s strategy head-on today after the prime minister wrote an open letter saying the Labour party offered more uncertainty and delay.

Salvaging a legacy | Time is running out for 83-year-old Mahmoud Abbas. Foreign aid to Palestinians has dropped nearly 80% over the past decade, Israel’s half-century military occupation remains firmly in place, and the campaign for statehood has stalled. So the Palestinian Authority president has called for the first national elections since 2006. The tactic could backfire if the Islamist group Hamas wins again — or it could prove another sign of Abbas’s weakness if the vote doesn’t go ahead.

‘Eat the rich’ | The graffiti scrawled on the wall in front of the upmarket Cumbres hotel in central Santiago, the Chilean capital, underscores the damage to the reputation of a country President Sebastian Pinera described as an “oasis” of calm in Latin America only a month ago. As Philip Sanders reports, three weeks of civil unrest over living costs and social services have forced the cancellation of two global conferences and rocked the tourism industry.

What to Watch:

Here are the highlights of today’s off-year elections in the U.S., via Bloomberg Government.

• Two U.S. states that Trump won by large margins in 2016 — Kentucky and Mississippi — will elect governors. Both races are competitive and winning either would be a coup for Democrats. Trump has campaigned for the Republican contenders.
• Voters in Tucson, Arizona, which is about 60 miles from Mexico, will decide whether or not to become a “sanctuary city“ that restricts interactions between local police and federal immigration enforcement.
• Uber has a stake in elections in its home town. San Francisco voters will decide whether to impose a special rideshare tax to raise money for transit services and transportation-improvement projects.
• And Amazon has donated an unprecedented $1.5 million to try to fill a Seattle council seat.

Tell us how we’re doing or what we’re missing at balancepower@bloomberg.net.

And finally ... To Hindus, it’s the revered birthplace of the god Ram. To Muslims, it’s the site of a 16th-century mosque that was razed in 1992 by Hindu extremists. After a long legal fight — and much bloodshed — India’s Supreme Court is set to rule on which of the country’s biggest religions owns the site. Either way, the ruling on Ayodhya is likely to inflame tensions at a time when hardliners are feeling increasingly empowered under Prime Minister Modi.

--With assistance from Karl Maier and Kathleen Hunter.

To contact the editor responsible for this story: Ruth Pollard at rpollard2@bloomberg.net, Michael Winfrey

©2019 Bloomberg L.P.