Xi’s balloon dilemma

Chinese President Xi Jinping’s disjointed response to the balloon is an indication of his competing pressures. [View in browser]( [Bloomberg]( Twelve days after the US announced the discovery of a Chinese balloon lingering over its airspace, it’s still not quite clear what President Xi Jinping wants us to make of the saga. Washington jumped to paint the incident as one more example of what it calls a global surveillance program spanning more than 40 countries. In an apparent push for transparency, there have been near-daily briefings to lawmakers, other nations and reporters. Key reading: - [China Warns of Retaliation Against US Entities in Balloon Saga]( - [China’s Phantom UFO Shows Xi Struggle to Find the Right Message]( - [US Says Three Mystery Objects Likely Private, With No China Link]( - [Japan Suspects China Sent Three Spy Balloons Into Its Airspace]( Beijing’s response, by contrast, has been far more scattershot. It moved from contrite to confrontational, taking responsibility for what it maintains is a civilian airship and later threatening to retaliate. And while it partly resorted to an old playbook of castigation and distraction — bashing the US over domestic failures and accusing it of sending at least 10 balloons over China — officials have avoided stoking too much outrage on social media. They sidestepped questions on a report claiming the Chinese military was preparing to shoot down an unidentified object flying near a naval base. The article went viral on social media but later disappeared from top trending charts despite accruing more than 630 million views. The disjointed response is an indication of Xi’s competing pressures. After a spate of protests over his handling of Covid-19 and health insurance, he needs to manage public opinion while paving the way for a possible meeting between US Secretary of State Antony Blinken and China’s top diplomat, Wang Yi, in Munich later this week. That challenge would only increase if there were a deeper crisis: Xi must weigh precisely what mollifying the US may cost him at home if that cannot be wrapped into a politically palatable message. — [Rebecca Choong Wilkins]( US sailors secure material from the balloon recovered from the Atlantic Ocean on Feb. 10. Photographer: Petty Officer 1st Class Ryan See/US Navy [Tune into]( our weekly Twitter Space today at 6am ET for a conversation about the US-China balloon drama. And if you are enjoying this newsletter, sign up [here](. Global Headlines Just in: Scottish First Minister Nicola Sturgeon [plans to resign](, the BBC reported. Sturgeon has been head of Scotland’s semi-autonomous government since 2014. Assets accounting | The European Union is poised to force banks to [report]( information on Russian central bank assets as part of its latest sanctions package targeting Moscow over its war in Ukraine, [Alberto Nardelli]( reports. Getting a handle on the scale of Russian state-backed assets frozen by the EU is seen as a first step to exploring potentially using those funds for Ukraine’s reconstruction. - The Iranian-made [drones]( Russia is using to strike Ukrainian targets are the same type that hit an oil tanker in 2021, killing two people, according to the Pentagon’s Defense intelligence Agency. - Russia has placed thousands of Ukrainian children in [camps]( where they’re subjected to propaganda and forcible adoption, a US government-backed report from Yale University found. Post-quake detentions | Turkish security forces detained almost 80 people for [social-media posts]( about the earthquakes that killed at least 40,000 people in Turkey and neighboring Syria. Police said more than 600 accounts had been identified as spreading “fear and panic” among the public. The detentions come amid growing anger over the government’s response to the quake, which critics say led to thousands of unnecessary deaths. Russian nuclear fuel and technology exports have surged since the invasion of Ukraine, boosting the Kremlin’s revenue and cementing its influence over a new generation of global buyers, as the US and its allies [shy away]( from sanctioning the industry. Gun gamble | The push by Florida governor and expected presidential contender Ron DeSantis to ease restrictions on gun ownership [highlights a risk]( for Republicans in general elections. As [Akayla Gardner]( reports, while popular among the GOP base, the stance threatens to cost them votes with an electorate that backs tougher controls after a rise in mass shootings. - Former South Carolina Governor and United Nations ambassador Nikki Haley joined the race for the Republican presidential nomination, becoming the first [to challenge]( her former boss Donald Trump’s comeback bid. Coming Soon: Understand power in Washington through the lens of business, government and the economy. Find out how the worlds of money and politics intersect in the US capital. [Sign up now for the new Bloomberg Washington newsletter](, delivered Mondays, Wednesdays and Fridays. Best of Bloomberg Opinion - India’s BBC Raid Is Just Its Latest Attack on Press: Bobby Ghosh]( - [The OPEC+ 2023 Plan Brings New Inflationary Risks: Javier Blas]( - [Who Is Actually Weak on China? The GOP: Minxin Pei]( Deepening crackdown | Former judges, veteran politicians and the head of a major broadcaster have been arrested as Tunisian authorities step up a crackdown on critics of President Kais Saied that’s sparked criticism from the UN. The [suppression]( comes amid a worsening economic crisis and growing opposition to Saied as he prepares to swear in a new parliament after elections that recorded one of the world’s lowest voter turnouts. Explainers you can use - [Why a Plan to Rework Poor Nations’ Debt Isn’t Working]( - [Social Media Case Tests Limits of Supreme Court’s Tech Savvy]( - [How EU Wants to Stop Deforestation in Your Coffee]( More clout | The BRICS group of nations plans to decide this year whether to admit new members, with Iran and Saudi Arabia among those that have formally asked to join. Enlarging the group that includes Brazil, Russia, India, China and South Africa would [benefit Beijing](, as the world’s second-biggest economy tries to build diplomatic clout to counter the dominance of developed nations in the UN, International Monetary Fund and World Bank. 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 - Four Florida businessmen are facing charges that they helped plan, support and finance the 2021 [murder of Haitian President Jovenel Moise]( in the hope of winning contracts from the coup leader who would take over from him. - The UK and US breached human-rights laws by evicting the inhabitants of the [Chagos Islands]( in the 1970s in the Indian Ocean to make way for an American air force base and denying them the right to return, Human Rights Watch said. - President Gustavo Petro said he’s preparing a bill to [overhaul]( Colombia’s pension system, which he said is enriching private sector banks at the expense of workers. - ASML Holding, the leading maker of lithography machines for producing semiconductors, said a former employee in China [stole data]( about proprietary technology and export controls may have been violated as a result. - Prime Minister Ulf Kristersson [signaled]( that Sweden is preparing for the possibility of neighboring Finland joining NATO first, after comments from the defense alliance’s chief that a joint entry “isn’t the main question.” And finally ... It’s been a [tricky 12 months]( for central bankers across the world, given inflation and the threat of recession. But that turbulence barely registers compared with having to flee a city under siege, assess interest rates from safe houses and secure a loan from a bomb shelter. [Volodymyr Verbyany]( and [Michael Winfrey]( explain how, a year into a war that has killed tens of thousands of people and driven millions from their homes, officials at the National Bank of Ukraine tried to keep the economy running. The central bank after working hours. Photographer: Julia Kochetova/Bloomberg Follow Us 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 Bloomberg Politics newsletter. If a friend forwarded you this message, [sign up here]( to get it in your inbox. 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