Xi wants it both ways

Xi has personally attached himself to the Covid Zero policy. [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( Chinese President Xi Jinping is still trying to have it both ways. How much longer can he get away with it? Xi will be seeking endorsement from the Communist Party leadership later this year for a precedent-breaking third term at the helm. To do so he needs to show two things: His hallmark policies are working (Covid Zero with stringent lockdowns), and that the economy is resilient. Key reading: - [China Lockdowns Wreak Havoc on Economy as Xi Pledges Support]( - [China Contagion Threatens to Derail the World’s Emerging Markets]( - [China’s Xi Vows to Promote Healthy Development of Capital]( - [Scorching Heat in India to Deal New Blow to Global Wheat Supply]( - [Singapore Says World Could Face Recession in Next Two Years]( ​​​Straddling those imperatives is increasingly difficult. Xi has personally attached himself to Covid Zero as China’s way to tackle the pandemic. But economic challenges are spiking, and some of them are outside his control. Within China, Covid Zero-related disruptions to factory activity (a slate of PMI data releases on the weekend were poor) and supply chains are having an effect. On top of that there are global headwinds, some related to Russia’s war in Ukraine, which could go on for months, if not years. Shortages of grains, cooking oils and fertilizer are pushing up prices and risking damage to crop production many miles from the conflict. Europe’s bid to wean itself off Russian energy means it is searching for alternatives. That could see it pushing buyers out of existing markets elsewhere, including in Asia, and raising prices further. Meanwhile the global shift from easy money is set to speed up as central banks reverse their pandemic bond-buying blitz. Economists are already skeptical Xi can maintain his Covid Zero strategy and hit a 5.5% growth target for this year, as he called for last week. Above all he must keep his people happy and believing in China as a success story, in order to sustain his hold on power. Xi’s problem is figuring out a face-saving way to exit Covid Zero before the lockdowns and economic downturn prompt people to lose faith in his leadership.  — [Rosalind Mathieson]( Health workers at a residential area during a Covid-19 lockdown in Shanghai on April 27. Photographer: Hector Retamal/AFP/Getty Images Click [here]( to follow Bloomberg Politics on Facebook and share this newsletter with others too. They can sign up [here](. Global Headlines Energy emergency | European Union energy ministers hold an emergency meeting today to discuss Russian threats to cut off more gas supplies. As [Alberto Nardelli]( and [Nikos Chrysoloras]( report, it comes as the bloc prepares to take a major step forward in its [sanctions]( regime by phasing out oil imports from Moscow, adding to an existing ban on coal. - Energy producers say [red tape]( is thwarting Europe’s attempts to become independent of Russian imports. - Sanctions on Russia will be [lifted]( only after a complete withdrawal of its troops from Ukrainian territory, including Crimea, German Foreign Minister Annalena Baerbock said. - Ukraine said that [evacuations]( of civilians trapped for weeks in the besieged Azovstal plant in Mariupol will continue today, even as Russian forces resumed shelling. Rising tensions | Unexplained explosions in the pro-Russian separatist territory of Transnistria in Moldova and ominous comments from Moscow are raising fears the conflict in Ukraine may [extend]( to its neighbor. Yet as [Marc Champion]( reports, there are signs that neither the breakaway authorities nor the government wants to get dragged into Vladimir Putin’s war. Indian outreach | Chancellor Olaf Scholz plans to [invite]( Indian Prime Minister Narendra Modi to attend the Group of Seven summit in Germany next month. Scholz, who hosts Modi in Berlin today, wants European defense companies to offer an alternative to Russia and reduce a [reliance]( on Moscow for arms sales that has seen India refuse to condemn Putin for his actions in Ukraine, [Michael Nienaber]( reports. The coming global shift from easy money threatens another shock to the world’s economies and financial markets. The dual impact of shrinking balance sheets and higher interest rates adds up to an unprecedented [challenge]( for a global economy already hit by the war and China’s Covid lockdowns. Best of Bloomberg Opinion - [Sanctions Haven’t Made Clear What ‘Russian Oil’ Is: Julian Lee]( - [A Big Win for Italy Over Its Old Boys Club: Rachel Sanderson]( - [Corporate Progressivism Is No-Win Proposition: Adrian Wooldridge]( Red line | Cyberattacks by both governments and private hackers have [exploded]( in recent years, and Russia’s invasion of Ukraine has made the situation more dangerous than ever. [Katrina Manson]( explains while there is broad agreement that at some point a cyberattack would be considered an act of war, no one knows quite where the line is. - Romanian government websites and other institutions were the [target]( of a cyberattack Friday morning that the nation’s intelligence agency attributed to a pro-Russian hacking unit. Explainers you can use - [The Evolution of Sanctions as Financial Warfare]( - [Wall Street Climate Semantics Skew Fossil-Fuel Financing Votes]( - [How a Sanctioned Russian Company Gained Access to Sudan’s Gold]( Solar plea | Nearly two dozen U.S. senators urged President Joe Biden to swiftly [advance]( an investigation into whether Chinese companies are circumventing decade-old tariffs by assembling solar cells and modules in Southeast Asia. The probe is causing “massive disruption” in the industry and “will severely harm” American businesses and workers, the senators said in a letter. Bloomberg TV and Radio air Balance of Power with [David Westin]( weekdays from 12 to 1 p.m. ET, with a second hour on Bloomberg Radio from 1 to 2 p.m. ET. You can watch and listen on Bloomberg channels and online [here]( or check out prior episodes and guest clips [here](. News to Note - Violence [broke]( out at the traditional May Day rally in Paris as tens of thousands of people took to the streets to demand that French President Emmanuel Macron do more to help the working class. - Former Philippine Senator Ferdinand Marcos Jr. [retained]( his lead in the presidential race over closest rival, Vice President Leni Robredo, ahead of the May 9 vote, according to a new survey. - The U.S. immigration system will come under intense [pressure]( if the end of a fast-track deportation policy triggers a surge of as many as 18,000 migrants at the southern border, Homeland Security Secretary Alejandro Mayorkas said yesterday. - Kenya’s Deputy President William Ruto [lashed]( out at his boss in a public spat, showing deep discord in Uhuru Kenyatta’s administration ahead of elections in August. And finally ... For the first time, farmers across the globe are testing the limits of how little chemical fertilizer they can apply without [devastating]( their yields. The outlook is bleak. Soaring prices for synthetic nutrients — due to a myriad of factors from rising natural gas prices and broken supply chains to Russia’s invasion of Ukraine — will result in lower crop yields and higher grocery-store costs for everything from milk to beef to packaged foods for months or even years. A worker moves a sack of freshly harvested rice near Naujan town in the Philippines. Photographer: Veejay Villafranca/Bloomberg Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( [Ads Powered By Liveintent]( | [Ad Choices]( Bloomberg L.P. 731 Lexington, New York, NY, 10022