A positive meeting

In January 2020, about six months after the last face-to-face meeting between the leaders of the world’s two biggest economies, Donald Trump [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( In January 2020, about six months after the last face-to-face meeting between the leaders of the world’s two biggest economies, Donald Trump described the US-China relationship as “the best it’s ever been.” Ever since that moment, when the former president signed a trade deal with China, ties have spiraled downward. The outbreak of Covid-19 prompted Trump to relentlessly attack Beijing, while targeting Chinese companies and referring to the pathogen as the “China virus.” Key reading: - [Biden Meets Xi as Asia Allies Look to Lower Temperature]( - [Biden to Meet Xi With US-China Ties Headed Toward Rupture]( - [Eight Things to Watch for as Global Leaders Meet in Bali]( - [China Plans Property Rescue in Latest Surprise Policy Shift]( - Follow our rolling coverage of the summit [here](. When Joe Biden became president, ties somehow got worse: He’s repeatedly said US troops would intervene to defend Taiwan and banned the sale of advanced chips to China, a move National Security Advisor Jake Sullivan said was necessary for the US “to maintain as large of a lead as possible” in key technologies. Analysts in both countries have begun contemplating the prospect of a hot war between the predominant global powers. Against that backdrop, even the fact Biden and Chinese President Xi Jinping are meeting face-to-face today on the sidelines of the Group of 20 summit in Bali is a positive. Both leaders have an incentive to ease tensions. The American president, fresh off a surprisingly good performance in the midterms, wants to reassure Asian security partners in particular that the US doesn’t simply want to provoke China into a military conflict with its moves on chips and Taiwan, both of which have been met with skepticism in the region. Xi, who set himself up potentially to rule for life at last month’s Communist Party congress, also wants stability after a turbulent year that has seen rare flashes of social unrest in China. He recently warned about China’s concerns at the potential use of nuclear weapons in Europe, showing his government is much more focused on securing a benign international environment to start shoring up an economy battered by Covid Zero and a property crisis. With relations brought to the brink, neither Biden nor Xi appears ready to push them over the edge. — [Daniel Ten Kate]( Xi and Biden meet in Bali. Photographer: Saul Loeb/AFP/Getty Images Sign up [here]( for The Readout newsletter from Allegra Stratton and if you’re enjoying this newsletter, click [here]( to sign up for Balance of Power. Global Headlines Victory visit | Ukrainian President Volodymyr Zelenskiy [visited]( the newly liberated city of Kherson and addressed troops, local media reported today. Russian forces retreated last week from the southern city and regrouped on the other side of the Dnipro river under pressure from a Ukrainian counteroffensive aimed at retaking the only regional capital seized during Moscow’s invasion. - Russia [denied]( an Associated Press report that Foreign Minister Sergei Lavrov was taken to a hospital in Bali after suffering a health problem while attending the G-20 summit. Leveraging influence | Turkish President Recep Tayyip Erdogan comes to the G-20 increasingly [confident]( of his place at the table. His burgeoning reputation as a power broker comes from his continued ties to President Vladimir Putin and the role he’s played in securing global grain supplies during Russia’s war in Ukraine. However miserable the year has been for the global economy, things could [get worse](. An extreme downside scenario for 2023 could include recessions in the US and Europe, while the double whammy of Covid Zero and a property slump threatens to bring China’s economy to a near standstill. That could wipe out some $5 trillion in global output, according to Bloomberg Economics. Pain delay | Chancellor of the Exchequer Jeremy Hunt will [unveil]( measures to bring the UK’s national debt under control in his budget this week. But as [Philip Aldrick]( reports, Hunt may delay much of the £55 billion ($65 billion) of savings until after the next election, as he seeks to balance the need to show fiscal credibility to financial markets with his party’s dismal poll ratings. - London has [lost]( its crown as Europe’s biggest stock market to Paris as economic growth concerns weigh on UK assets. Best of Bloomberg Opinion - [Xi’s Policies Are Making China Less Secure, Not More: Minxin Pei]( - [Democrats in Array? It’s Hard to Deny: Francis Wilkinson]( - [Will Sunak Test the Love of Britain’s Top 1%?: Therese Raphael]( Climate change | Brazilian President-elect Luiz Inacio Lula da Silva is seeking to [return]( to the forefront of global climate negotiations in a major foreign policy shift for Latin America’s biggest nation. He has chosen the COP27 conference in Egypt as his first international trip and will present his vision for the Amazon basin on Wednesday. Forest cleared near Boca do Acre in Amazonas State in 2019. Photographer: Lula Sampaio/AFP/Getty Images Explainers you can use - [What Trump Investigations Mean for a Trump Candidacy]( - [This Is How Tourism Must Shift to Reach Net Zero by 2050: COP27]( - [Climate Debt Trap Risks Pushing Emerging Markets to the Brink]( New chapter | A lawyer and LGBTQ advocate won Slovenia’s presidential [election]( to become the European Union member’s first woman head of state. Natasa Pirc Musar, who once served on the legal team of former US first lady Melania Trump, won 53.9% to defeat ex-foreign minister Anze Logar, an ally of ousted nationalist leader Janez Jansa. 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 - Moscow’s refusal to describe Vladimir Putin’s [invasion]( of Ukraine as a war is the biggest sticking point in getting a communique from this week’s G-20 summit. - The EU is “ready to go” with an effort [to impose]( a price cap on Russian oil, European Commission President Ursula von der Leyen said in a Bloomberg Television interview today. - Turkey [blamed]( Kurdish militant group PKK and its US-backed affiliates in Syria for a bomb attack in Istanbul’s popular tourist district yesterday that killed at least six people and injured 81. - Biden met the leaders of Japan and South Korea yesterday to [rally]( support in the face of increasingly brazen North Korean missile tests. - Hong Kong officials [criticized]( the mistaken playing of a pro-democracy protest song instead of China’s national anthem at the final of a rugby tournament in South Korea. - Thousands of people [marched]( in Mexico City yesterday to protest plans put forward by President Andres Manuel Lopez Obrador to overhaul the nation’s electoral system. Thanks to the 32 people who answered Friday’s quiz and congratulations to Marc Houdek, who was the first to name Turkey and Hungary as the two countries yet to approve applications by Sweden and Finland to join NATO. And finally ... Sweeping US curbs announced last month on the sale of semiconductors and chipmaking equipment to China mark a step change in the Biden administration’s approach to its chief geopolitical rival, and go further than Trump ever went in confronting Beijing. Yet as this [exclusive]( story reveals, the measures are not just riling China but are asking some difficult questions of key US allies, some of whom are pushing back against Washington’s demands.  The latest US export controls on semiconductor technology are the most far-reaching yet. Source: Lam Research Corp. Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. 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