Walking a tightrope

Germany, like much of the rest of Europe, faces a dilemma: how to deal with an increasingly strident Beijing while maintaining close economi [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( Germany, like much of the rest of Europe, faces a dilemma: how to deal with an increasingly strident Beijing while maintaining close economic ties with a vital ally, the US. The stakes are high for Chancellor Olaf Scholz as he leads a powerful delegation on a one-day visit tomorrow to China, his nation’s biggest trading partner outside the European Union. Berlin risks repeating its failure over President Vladimir Putin’s invasion of Ukraine — economic entanglement didn’t work when it came to influencing Russia. Key reading: - Germany’s Solo Trip to Beijing Exposes Europe’s Dilemma on China]( - [Germany Seeks Cooperation With China, but Acknowledges Disputes]( - [US Warns Germany, Other Allies Against Allowing Chinese Control of Firms]( - [US to Amp Up Pressure on Dutch to Block Chip Gear Sales to China]( - [Xi Says China Can Work With US Before Possible Biden Meeting]( For now, Scholz doesn’t seem ready to give up on that approach of engagement when it comes to China. Even as calls are growing in Washington, other European capitals and within his own coalition to change course, he maintains that decoupling isn’t the answer. The party of senior executives from some of Germany’s largest companies including BASF, Volkswagen and Deutsche Bank accompanying him on the trip are a reminder of the commercial interests involved in retaining access to the world’s second-biggest economy. It’s a snapshot of Europe’s quandary. There’s little consensus within the EU, even as more leaders acknowledge the need to treat China more like a rival, without getting drawn into Washington’s hostile agenda. China is just one of the issues that has split Scholz and France’s President Emmanuel Macron. And an added pressure — President Xi Jinping pledged to stand firm on Beijing’s commitment to an alternative world order as he secured a third term in power at the Communist Party Congress last month. That leaves an increasingly fractured EU dealing with a leader who’s more determined than ever to challenge what he sees as Western hegemony. — [Rebecca Choong Wilkins]( A delegate outside the Communist Party Congress in Beijing on Oct. 22. Source: Bloomberg Listen back to our conversation yesterday about the Israeli election via this [link](. And if you’re enjoying this newsletter, click [here]( to sign up for Balance of Power. Global Headlines Democracy threat | President Joe Biden asked voters to consider the future of US democracy in next week’s midterm elections, urging them to reject Donald Trump’s “[big lie](” denying his 2020 defeat that’s fueled political extremism and violence. Biden also drew a line from Trump’s refusal to accept the result and the attack on the Capitol to the assault on Paul Pelosi, the husband of House Speaker Nancy Pelosi. - Stewart Rhodes tried to get a [message to Trump]( urging him to stop the transfer of power shortly after the US Capitol riot, according to a witness in the Oath Keepers founder’s criminal trial. Holding attention | Ukrainian First Lady Olena Zelenska said her nation could [perish]( if the world gives in to fatigue with the war sparked by Russia’s invasion. “Ukrainians are ready to endure in the dark, in the cold, the most terrible things, so the tragedies we’ve seen don’t happen again,” she said in a Bloomberg Television interview in Lisbon. - The war is creating an [acute]( energy crisis in neighboring Moldova, exacerbated by its dependence on Russian gas and by Moscow’s antipathy toward the nation’s pro-Western government. The EU is hoarding natural gas to make it through the winter, but it’s also trying to solve a [bigger problem](: breaking the link between gas and power prices altogether. Currently, as the most expensive form of generation, gas sets the price for all electricity sold into the market. That means European consumers are bearing the brunt of Russian supply cuts and not feeling much benefit from low-cost renewables. US Midterms latest - Candidates Keep Pushing Election Denial Online Because It Works]( - [US Chamber’s Board Defends CEO in Tensions With Republicans]( - [NJ Governor Murphy Says ‘Weird Economy’ Will Impact Midterms]( Click [here]( to take part in our survey on how the US midterms will impact the performance of stocks and bonds. Show of strength | The US [condemned]( what it said was the test-launch of an intercontinental ballistic missile by North Korea today, as Pyongyang continued a barrage of weapons tests to protest allied military drills. The suspected ICBM launch prompted Japan to issue text-message warnings, known as J-Alerts, for citizens to take cover. Tokyo initially said the missile flew over the country’s territory, although Japanese authorities later retracted that claim. - South Korean officials are growing [wary]( of the potential impact on financial markets of North Korea’s missile salvos. Best of Bloomberg Opinion - [The Global South Shouldn’t Pay for Putin’s War: Clara F. Marques]( - [Borgen Shows the US and UK How to Do Democracy: Andreas Kluth]( - [US Can Contain China With Alliance of Five: Hal Brands]( Drop blockades | Jair Bolsonaro called on his supporters to [dismantle]( hundreds of road blocks, saying these harm Brazil’s economy and aren’t a legitimate form of protest. Some who refused to accept the president’s defeat in Sunday’s election congregated outside army bases, criticizing the voting process and holding signs calling on the military to intervene to overturn the official results. - Despite Bolsonaro’s loss, [Daniel Carvalho]( writes that his brand of right-wing identity politics is now [deeply anchored]( in Brazil. Bolsonaro arriving for a mass at the Cathedral Basilica of the National Shrine of Our Lady of Aparecida in Sao Paulo state on Oct. 12. Photographer: Caio Guatelli/AFP/Getty Images Explainers you can use - [Why ‘Loss and Damage’ Is a Climate Talks Battleground]( - [How Kim Jong Un Keeps Advancing His Nuclear Program]( - [A Practical Way to Make Sense of Shocks Hammering Global Economy]( New truce | Ethiopia’s government and leaders of the dissident Tigray region agreed to [renew a cease-fire]( in a civil war that has claimed thousands of lives, raising hopes an end to the two-year conflict may be in sight. A previous accord lasted five months before fighting resumed in August, when both sides accused each other of staging fresh attacks. Bloomberg TV and Radio air Balance of Power with [David Westin]( on weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online [here](. News to Note - At least 16 high-level Biden administration officials will represent the US at the United Nations climate conference beginning in Egypt on Sunday in a bid to emphasize the nation’s [commitment]( to combat global warming. - China has told women to uphold “[family values](” in an updated gender law, the latest sign females are facing growing pressure to adopt domestic roles in the nation’s economy. - South African President Cyril Ramaphosa’s promises in July to implement [emergency measures]( within three months to tackle record blackouts have only been partially implemented, and outages continue. - Elon Musk plans to [eliminate]( about 3,700 jobs at Twitter, or half of the social media company’s workforce, in a bid to cut costs following his $44 billion acquisition, sources say. - Argentina’s government is trying to rake in more [tourism dollars]( and discourage cash use by offering visitors a more lucrative exchange rate on card purchases, three senior government officials said. And finally … Russia has destroyed and damaged hundreds of buildings and monuments central to Ukrainian identity and heritage since its invasion began in February. This [photo essay]( portrays efforts by Ukrainians to protect cultural sites and to record evidence of destruction to help local governments rebuild. Curators have removed precious collections from museums and hidden them elsewhere, while statues that can’t be moved have been wrapped in sandbags. Volunteers around the world have also helped protect digital records from cyber attacks. Sand bags protect the Monument to Duc de Richelieu in Odesa on Sept. 27. Photographer: Julia Kochetova/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. 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