Xi’s existential crisis

Balance of Power From FOLLOW US SUBSCRIBE   Xi Jinping's biggest challenge at home may actually come from the outside. The Chinese president has amassed unprecedented power since taking office in 2012. The Communist Party is central to politics, security and the economy. But Xi now faces a major dilemma, courtesy of U.S. President Donald Trump's tariff barrage. As Matthew Campbell and Peter Martin report, the U.S. trade war is not only damaging the Chinese economy but threatens the very core of the model that's underpinned both growth and the party's authority for decades. Most of Trump's demands entail liberalization at the expense of state-owned enterprises. Xi sits down with Trump this week in Japan at the Group of 20 summit in what could be one of the most consequential meetings of his tenure. He needs to end the dispute with the U.S. president and will be relying heavily on their personal rapport to do so. The party's mystique lies in its unquestioned grip. Weakness shows up as, well, weakness. Some say Xi should instead be asserting himself and demanding to be treated with more respect. But can he compromise on control? That's risky. "It's like if a boy is performing too well in class," says Henry Wang, an adviser to the cabinet-like State Council. "It creates jealousy." - Rosalind Mathieson Among Xi's biggest headaches is the continuing unrest in Hong Kong, where activists raised $858,000 in nine hours in a bid to plaster global newspapers with ads demanding the withdrawal of a controversial extradition bill ahead of the G-20 summit.  Photographer: Feng Li/Getty Images AsiaPac All eyes on Miami  | Democratic presidential contenders face off tonight in the first debate of the 2020 campaign. The nationally televised session will feature 10 candidates, with 10 more — including front-runner Joe Biden — taking the stage tomorrow night in Miami. Senator Elizabeth Warren is the only strongly polling candidate on stage tonight, giving the liberal firebrand a chance to showcase her mastery of policy details without her main competitors available for rebuttal. Pressure cooker | U.S. sanctions are proving even more devastating to Iran's economy than when then-President Barrack Obama used "maximum pressure" as leverage ahead of the 2015 nuclear deal. But as Marc Champion and Golnar Motevalli explain, a different political cycle in Tehran, distrust and the lack of any carrot with the U.S. stick means it's less likely that tactic will work again. A U.S. drone shot down last week was found four miles inside Iranian territorial waters, a semi-official news agency reported.   An RQ-4 Global Hawk drone. Photographer: U.S. Air Force photo/Navy Office of Information Changing voters | Climate change is creeping higher in opinion polls, yet a Bloomberg collation of surveys around the globe found glaring disparities in the way environmental concerns are viewed against bread and butter issues. As Alan Crawford reports, that presents problems for politicians: If they burnish their environmental credentials they could fall out of favor with those worried about job security or economic growth. Mueller's moment | Special Counsel Robert Mueller's agreement to testify publicly July 17 before two U.S. House panels is set to reinvigorate the debate over his findings on election interference by Russia and possible obstruction of justice by Trump. Mueller's inquiry is likely to be a prime topic at tonight's Democratic debate, as some candidates remind viewers they support an impeachment inquiry into the president.  South Africa's meltdown | An intensifying crisis at some of South Africa's biggest state companies is threatening the nation's finances and frustrating President Cyril Ramaphosa's efforts to attract investment and revive the economy. As Mike Cohen and Rene Vollgraaff report, the firms' debt burden could lead to the loss of the country's last remaining investment-grade credit rating and trigger a massive fund outflow from Africa's most industrialized economy. What to Watch NATO Defense ministers meeting in Brussels are set to urge Russia to return to a nuclear missile treaty. The U.S. Supreme Court's conservative majority could overturn a longstanding precedent for the third time in recent weeks — perhaps foreshadowing the vulnerability of its rulings on abortion rights. French President Emmanuel Macron makes a two-day official visit to Japan where he'll meet with recently crowned Emperor Naruhito and Prime Minister Shinzo Abe. And finally...Top White House economic adviser Larry Kudlow got a doctor's recommendation from an unlikely source for his back pain: Federal Reserve Chairman Jerome Powell. The two men might be mistaken for adversaries — Kudlow's boss Trump has repeatedly castigated Powell over the interest-rate policy — yet they are friends and have been seen lunching together, Jennifer Jacobs and Saleha Mohsin report. Trump and Powell. Past presidents have occasionally applied pressure to lower rates. Former Chairman Paul Volcker recounted in a memoir that in 1984, Ronald Reagan ordered him not to raise rates before elections. And George H.W. Bush urged Alan Greenspan to trim interest rates in June 1992. Photographer: Andrew Harrer/Bloomberg   You received this message because you are subscribed to the Bloomberg Politics newsletter Balance of Power. You can tell your friends to sign up here.   Unsubscribe | Bloomberg.com | Contact Us Bloomberg L.P. 731 Lexington, New York, NY, 10022