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Date: 2024-10-31 Page is: DBtxt001.php txt00023168
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BLOOMBERG BIG TAKE

The Big Take newsletter ... September 16, 2022


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Peter Burgess COMMENTARY

Peter Burgess
Bloomberg ... The Big Take newsletter. The Globe Is Barreling Toward $1 Trillion in Weather-Disaster Damages By Danielle Balbi September 16, 2022 at 8:33 AM EDT You're reading The Big Take newsletter. The story you'll want to talk about. Get The Big Take in your inbox, every day. Pakistan's Deadly Floods A man carries furniture through flood water in Sindh province, Pakistan. Photographer: Asim Hafeez/Bloomberg Deadly floods in Pakistan. Scorching heat and wildfires in the US West. Torrential rains in Australia and Indonesia. A megadrought in Brazil and Argentina. As climate change pushes weather disasters to new extremes, it’s La Nina, an atmospheric phenomenon, that has been the driver behind the chaos since mid-2020. And now the planet stands on the cusp of something that’s only happened twice since 1950 – three years of La Nina. Another year of La Nina means the world is hurtling toward $1 trillion in weather-disaster damages by the time 2023 wraps up. The floods, droughts, storms and fires will destroy more homes, ruin more crops, further disrupt shipping, hobble energy supplies and, ultimately, end lives. Read The Big Take. The Globe Is Barreling Toward $1 Trillion in Weather-Disaster Damages $1 trillion The estimated cost of global weather damage should La Nina extend to a third year, according to Aon ICYMI: From the Rhine to the Danube, waterways are failing at the worst possible moment. Hydrogen, considered a miracle fuel, can actually make climate change worse. An inside look at how looted statues are ending up in major museums. Read more from The Big Take. Up Next There’s an Unusual Thing Happening in the Housing Market Have a confidential tip for our reporters? Get in touch Before it's here, it's on the Bloomberg Terminal Learn more LIVE ON BLOOMBERG Watch Live TV Listen to Live Radio Subscriber Only Markets Odd Lots There’s an Unusual Thing Happening in the Housing Market Residential homes in San Francisco, California, US, on Thursday, Sept. 8, 2022.  Residential homes in San Francisco, California, US, on Thursday, Sept. 8, 2022. Photographer: David Paul Morris/Bloomberg ByTracy Alloway September 16, 2022 at 10:15 AM EDT Listen to this article 2:10 Share this article Follow the authors @tracyalloway + Get alerts forTracy Alloway In this article MS MORGAN STANLEY 87.43USD-0.83-0.94% It’s no secret that the US housing market has been softening as interest rates rise at the fastest pace in decades. Higher mortgage rates mean the dramatic growth in home prices that we’ve seen over the past two years is beginning to slow. Sales of new homes recently came in at the weakest monthly level since 2018. Meanwhile, purchase applications are down 20% year-on-year, and so on. But the rapid pace of rate hikes has also resulted in an interesting statistical anomaly. Months of supply — or the number of months it would take for the existing inventory of homes on the market to sell at the current sales pace — has jumped to 4.1 from a record low of just 2.1 back in January of this year. And, as Morgan Stanley strategist James Egan notes, rarely have we seen an increase of this size. To some extent, the jump in inventory is to be expected. It’s maths. As sales volume falls while inventories rise, months of supply naturally increases. But such a jump is intuitively striking, and the key question for housing-watchers is whether the absolute level of inventory — which is still low by many measures, even as homebuilders have ramped up construction since last year — will turn out to be more important than its rate of change. A housing market that is structurally undersupplied is going to be a lot less vulnerable to fewer sales. Here’s Egan: “Months of supply has rarely increased as quickly as it has over the past six months. While we have a limited sample size of this kind of volatility, the size of this increase is normally associated with falling home prices 12 months forward. In fact, in the 34 instances in which months of supply increased by more than one month over any six-month period, [year-on-year Home Price Appreciation] was negative 12 months forward 88% of the time. While there have only been nine instances where months of supply have increased by more than two over a six-month period, home prices were always lower 12 months later.” relates to There’s an Unusual Thing Happening in the Housing Market Source: Morgan Stanley The team at Morgan Stanley still expects home prices to rise this year, estimating a 9% increase for 2022 and more moderate 3% in 2023. But much of that forecast is predicated on inventory slowing. If it fails to do so, the team predicts a bear case of house prices falling 3% next year. Up Next Russia’s Secret Gem Sales Are Dividing the Diamond World Have a confidential tip for our reporters? Get in touch Before it's here, it's on the Bloomberg Terminal Learn more LIVE ON BLOOMBERG Watch Live TV Listen to Live Radio Most Read Markets There’s an Unusual Thing Happening in the Housing Market Markets Stocks Exact Harsh Toll on Would-Be Market Timers Business FedEx Has Biggest Drop in Over 40 Years After Pulling Forecast Markets Stocks Sink in Worst Week Since Bottoming in June: Markets Wrap Technology Adobe Near Deal for Online Design Startup Figma, Sources Say Business Diamond Trade Russia’s Secret Gem Sales Are Dividing the Diamond World A handful of buyers are snapping up large volumes at lucrative terms. Diamond jewelry in the window of a store in the Diamond District neighborhood of New York. Diamond jewelry in the window of a store in the Diamond District neighborhood of New York.Photographer: Stephanie Keith/Bloomberg Bloomberg News September 17, 2022 at 2:00 AM EDT Listen to this article 6:01 Share this article In this article ALRS ALROSA 77.99RUB+0.23+0.30% SIG SIGNET JEWELERS 56.90USD-1.19-2.05% WMT WALMART INC 133.19USD-0.28-0.21% 0671472D SHREE RAMKRISHNA EXPORTS PVT Private Company IIB INDUSIND BANK 1,227.35INR+31.50+2.63% Open Sign up here to get the latest updates on the Russian invasion of Ukraine. You can also follow us on Telegram here. The secretive sale of Russian diamonds, worth hundreds of millions of dollars every month, is fracturing the global trade that stretches from cutting factories in Mumbai to luxury stores on New York’s Fifth Avenue. Many in the industry refuse to deal in Russian gems following the invasion of Ukraine and after mining giant Alrosa PJSC was hit with US sanctions. But there’s a handful of Indian and Belgian buyers who are snapping up large volumes at lucrative terms, getting to pick and choose the diamonds they need while others stay away. The deals are happening quietly, even for the famously secretive diamond world. And while they’re not breaching sanctions, there are other risks to consider — heavyweights like Tiffany & Co. and Signet Jewelers Ltd. don’t want Russian diamonds that were mined since the war began, and suppliers say they are worried about losing crucial contracts by dealing in Alrosa gems. The sales present a problem for any attempts at a boycott: once stones enter the supply chain they can become near-impossible to track. Diamonds are sold in parcels of similar sizes and qualities — there are about 15,000 different categories — and can be retraded and remixed multiple times before ending up in an engagement ring or pendant. Read: Russian Diamonds Are Quietly Flowing Again After Sanctions Chaos Western retailers trying to avoid Russian gems are also concerned about securing enough diamonds, especially the small and cheaper types that Alrosa specializes in. The company accounts for about a third of rough diamond supply, and any Russian stones mined before the war are essentially all used up. Some big European luxury brands have asked Alrosa’s rival, De Beers, to increase sales to suppliers they trust, according to people familiar with the matter who asked not to be identified discussing private information. The company has made some efforts to do so, but has little extra to sell, the people said. As Russian supplies divide the diamond world, much of the tension is focused in the “midstream,” a vast network of mostly family-owned businesses that cut, polish and trade the world’s precious stones — many of them in India — and provide the link-up between mining companies and jewelry stores. Diamond Industry In Surat as Global Diamond Trade Fractures Under Russia Sanctions Pressure Diamonds at a diamond market in Surat, Gujarat, India.Photographer: Dhiraj Singh/Bloomberg Before Russia’s invasion of Ukraine, Alrosa sold to more than 50 such customers every month. Sales froze up initially after the invasion but have now returned to near-normal levels. But it’s happening very quietly. Before the war, the company ran 10 sales a year out of its Antwerp, Belgium, sales office based on a set calendar, and published the results afterwards. Alrosa has now stopped publishing any information on its sales or financial performance. Most of the Indian midstream is still avoiding Russian purchases because of the risk that they lose western customers as a result, according to people familiar with the matter. The US in particular is a crucial market — 50% of all polished diamonds are sold in the country, ranging from luxury pieces worth tens of millions to stones that sell for less than $200 at retailers like Walmart Inc. Read: The Diamond World Is Scrambling to Keep Buying Russian Gems While diamonds are a discretionary luxury for the people who buy them, the business itself is an economic bedrock for the major cutting and trading hubs. The diamond trade roughly supports an estimated one million jobs in India, where the government has pushed to keep business flowing. Belgium’s Prime Minister has also reiterated the country’s position that Russian stones should not be sanctioned — more than 80% of rough diamonds are traded through its port city of Antwerp at some stage. For now, the vast majority of Russian stones are going through about 10 buyers. Indian companies Kiran Gems and Shree Ramkrishna Exports Pvt are the two largest buyers, according to people familiar with the matter. Kiran and SRK did not respond to emails and calls seeking comment. Spokespeople for Alrosa and De Beers declined to comment. After the Russian diamonds are cut and polished, the assumption is that they will end up in jewelry for markets like China, Japan and India. Those three countries together account for about 30% of global demand and — unlike western retailers — are happy to receive Russian production. However, the opaque nature of the diamond trade with its long and convoluted supply chain means that Russian stones are likely to end up in western markets as well. A diamond’s origin is clear at the start of the chain when it is issued a certificate under the Kimberley Process, which was designed to end the sale of “blood diamonds” that financed wars in the 1990s. But after that, things can get murky. Parcels of gems are often intermingled at trading houses, and the original certificate will be replaced with “mixed origin” documentation, making it near-impossible to keep track of where Russian diamonds are eventually sold. Alrosa PJSC Reveals Its Largest Pink Diamond And Main Sorting Center Rough diamonds on a sorting table in Moscow.Photographer: Andrey Rudakov/Bloomberg While the fear of alienating western companies is the biggest obstacle for most in the industry, the practical difficulties in buying from Russia are also a deterrent. Following the US sanctions, most European and Middle Eastern banks have withdrawn from funding purchases from Alrosa, which previously sold almost all its diamonds in US dollars. That leaves a few Indian banks that have become more comfortable in recent months with how to facilitate transactions in other currencies, primarily euros and rupees. In one sign of ongoing wariness, IndusInd Bank Ltd., one of the biggest financiers of India’s diamond buyers, has been requiring customers in those deals to sign waivers acknowledging they’re responsible if any transactions are frozen, according to people familiar with the situation. A spokesperson for IndusInd said the bank “is compliant with domestic as well as international trade sanctions inter alia not undertaking transactions with sanctioned entities/individuals.” For those who are still willing to buy, Alrosa is offering perks including unusual flexibility, although it’s kept pricing overall on par with De Beers. Normally, customers are expected to take a pre-agreed assortment of diamond parcels. Now, the company is allowing buyers to handpick their packets, which means they can select diamonds that are in short supply or the ones that are likely to yield the best profit. In a reflection of the shifting structure of the industry, it’s also looking at establishing more permanent sales offices in India. Up Next Putin Threatens New Military Strikes on Ukraine Infrastructure Have a confidential tip for our reporters? Get in touch Before it's here, it's on the Bloomberg Terminal Learn more LIVE ON BLOOMBERG Watch Live TV Listen to Live Radio Most Read Markets There’s an Unusual Thing Happening in the Housing Market Markets Stocks Exact Harsh Toll on Would-Be Market Timers Business FedEx Has Biggest Drop in Over 40 Years After Pulling Forecast Markets Stocks Sink in Worst Week Since Bottoming in June: Markets Wrap Technology Adobe Near Deal for Online Design Startup Figma, Sources Say Politics Putin Threatens New Military Strikes on Ukraine Infrastructure Russian leader says ‘in no rush’ with military operation In first public comments, Putin dismissive of counteroffensive Vladimir Putin at the SCO leaders' summit in Samarkand on Sept. 16. Vladimir Putin at the SCO leaders' summit in Samarkand on Sept. 16.Photographer: Sergei Bobylyov/AFP/Getty Images Bloomberg News September 16, 2022 at 12:43 PM EDT Listen to this article 2:23 Share this article In this article TWTR TWITTER INC 41.45USD-0.69-1.64% Russian President Vladimir Putin threatened to step up attacks on Ukraine’s civilian infrastructure, vowing to continue his invasion after his forces suffered some of their worst reverses in the seven-month-old campaign. In his first public comments on the issue since Ukraine said it retook as much as a tenth of the territory Russia had seized, Putin was dismissive of the counteroffensive. “We’ll see how it goes,” he said, noting that Russian forces are continuing to advance in other areas. “Just recently the Russian armed forces hit some sensitive targets. Let’s consider that warning strikes,” Putin told Russian media reporters Friday in Samarkand, Uzbekistan, where he was attending a summit of the Shanghai Cooperation Organization, a China-led bloc. “If the situation develops further in this direction, our response will be more serious.” Putin said Russia’s military campaign was “proceeding at a slow pace, but consistently” and claimed Moscow was using “only part” of its army. “Bit by bit, the Russian army is taking control of more and more territory,” he said. Ukraine wrested control of a large swathe of the northeast of the country occupied by Russia in a lightning offensive this month that forced Russian troops to flee, abandoning their equipment. The sudden losses dealt a major blow to the Kremlin’s efforts to seize eastern Ukraine. In response, Russia fired missiles that plunged large areas of Ukraine into darkness and attacked elements of the water system in a city behind the front lines, causing severe damage and flooding. The Russian leader, who accused Ukraine of targeting civilian infrastructure as well as assassinating pro-Moscow officials in Russian-controlled territories, said the Kremlin is “in no rush” to complete its invasion. Ukraine denies striking civilian facilities and killing collaborators. Putin’s comments came just hours after he told Narendra Modi that Russia would “do everything to end this as soon as possible.” The Indian prime minister chided the Russian leader, saying, “today’s era is not one for war.” In his comments to reporters, Putin reiterated his claim that he’s ready to negotiate with Ukraine but blamed Kyiv for being unwilling to talk. Ukrainian officials have demanded a full Russian withdrawal as a condition for diplomacy. Earlier Friday, Ukrainian President Volodymyr Zelenskiy said authorities had discovered hundreds of graves in territory retaken from Russian occupation and demanded that the Kremlin be held accountable for war crimes. — With assistance by Benjamin Harvey Up Next A Weakened Putin Is No Use to Russia Have a confidential tip for our reporters? Get in touch Before it's here, it's on the Bloomberg Terminal Learn more LIVE ON BLOOMBERG Watch Live TV Listen to Live Radio Most Read Markets There’s an Unusual Thing Happening in the Housing Market Markets Stocks Exact Harsh Toll on Would-Be Market Timers Business FedEx Has Biggest Drop in Over 40 Years After Pulling Forecast Markets Stocks Sink in Worst Week Since Bottoming in June: Markets Wrap Technology Adobe Near Deal for Online Design Startup Figma, Sources Say Opinion Leonid Bershidsky A Weakened Putin Is No Use to Russia As military reversals erode his domestic legitimacy, Russia’s president faces an ever-darker road, and more drastic choices, in order to retain power. The darkness around him is growing. The darkness around him is growing.Photographer: Contributor/Getty Images Europe ByLeonid Bershidsky September 15, 2022 at 3:00 PM EDT Listen to this article 7:07 Share this article Follow the authors headshot of Leonid Bershidsky Leonid Bershidsky, formerly Bloomberg Opinion’s Europe columnist, is a member of the Bloomberg News Automation Team. He recently published Russian translations of George Orwell’s “1984” and Franz Kafka’s “The Trial.” @Bershidsky + Get alerts forLeonid Bershidsky As Ukrainian troops probe Russian defenses along the entire front and only the Wagner Group mercenaries continue a small-scale offensive operation in the Donetsk region, the initiative in the Russo-Ukrainian war is firmly in the hands of the invaded, not the invader. While that can still change, perhaps more than once, it’s a good moment to consider whether the man who got Russia into this mess retains any legitimacy — domestically or internationally. To put it even more bluntly, who, if anyone, still needs a weak Vladimir Putin? Putin’s claim to power has evolved over his nearly 22 years atop the Kremlin. In 2000, he was President Boris Yeltsin’s chosen successor, then the president elected in a vote that, while not problem-free, reflected the will of Russian voters. By the end of the first eight years of his rule, he was the architect of a corruption-plagued, but broadly beneficial economic upsurge; because Russians credited him for that, they cared little about the erosion of electoral democracy as he consolidated power. After the intermission of Dmitry Medvedev’s presidency, he briefly struggled to find a new source of legitimacy until he seized on the annexation of Crimea, an event so inspiring to a large majority of Russians that even a harsh pension reform four years later didn’t appreciably dent his popularity. More from Bloomberg Opinion Can Trademark Law Stop a Racist Role-Playing Game? Whatever Happens Next in Ukraine, Russia Loses Don’t Want Later Abortions? Make Early Ones More Accessible Gen Z Looks to Bring Its Impatience to Congress Putin went into the Covid pandemic riding an ebbing Crimea wave of support while relying increasingly on a swollen, well-fed security apparatus — a full-fledged dictator now, with elections a joke and all major issues, and lots of minor ones, requiring his personal intervention. The pandemic, when most visitors had to quarantine for weeks before being admitted to Putin’s presence, seems to have shrunk his trusted entourage to a handful of yes-men. The Kremlin’s erratic policies made Russia one of Covid’s biggest victims, and only the disease and increasing oppression kept Russians from looking up too much. By then, Putin’s legitimacy rested on the general impression of undefeated, unbeatable strength, backed up by a military success in Syria and the steamrolling of domestic opposition. As in the tough streets of any big city, however, be it St. Petersburg or Sao Paolo, the reputation of a strongman as the head of a country needs constant reinforcing by further feats of strength. For his next one, Putin chose Ukraine again, launching what he clearly thought would be a blitzkrieg ending with the swift fall of Kyiv and the annexation of a large swathe of Ukrainian territory. Even though the outcome of the war is far from decided, this show of force has failed spectacularly. Russia has revealed itself to be vulnerable militarily after years of bravado that deceived even the experts. Russia’s weakness is not lost on foreign leaders, from once-cautious Western adversaries shipping increasingly deadly weaponry to Ukraine to neighbors like Azerbaijan’s leader Ilham Aliyev, who appears to see a new opportunity to improve his country’s position in Nagorno-Karabakh while Putin is bogged down in Ukraine. Putin may have hoped for more active support from China, but he’s not getting anything beyond discounted energy purchases; were he winning, China would doubtless be more forthcoming. The domestic audience, too, appears to be shedding its illusions of Russia’s greatness, no matter what one might say about the efficiency of Putin’s propaganda. His media mouthpieces Vladimir Solovyov and Margarita Simonyan no longer own the narrative. Even on state television, not to mention nationalist Telegram channels with hundreds of thousands of readers, Russia’s defeats are engendering much bitterness and hurt. The hard-core propagandists look lost, sometimes downright bizarre, with Simonyan retreating into sentimental memories and poetry and Solovyov appearing on the air with bruises and scratches on his face. Putin himself, stubbornly maintaining a business-as-usual program of meetings of little relevance to the Ukrainian elephant in the room, looks like a denizen of “Pink Pony Planet,” as far-right commentator Igor Girkin (Strelkov) calls the distant realm of the Russian elite. And what of Putin’s suppression machine, his vaunted FSB domestic intelligence and more than 300,000-strong Rosgvardia riot police? Despite its extensive network, the former failed to predict Ukraine’s stiff resistance. A large part of the latter was sent across the border, initially to police the conquered territories, but ending up in the meat grinder of trench warfare, something for which its personnel never trained. Whether they will return from the war with any respect for Putin is questionable; even the dictator’s faithful servant, Chechen leader Ramzan Kadyrov, whose fighting force in Ukraine is part of Rosgvardia, has doubted the campaign’s conduct, if not (yet) Putin’s leadership and goal-setting. If a strong Putin was widely tolerated, often appeased, and, in Russia itself, feared and obeyed, what could be the basis of a weak Putin’s power? Certainly not sympathy: Russians aren’t known to respect weak leaders — witness the political fate of the last Soviet President, the late Mikhail Gorbachev, and many a Russian czar before him. A Ukraine-style popular revolution in Russia is unlikely, even if Western sanctions begin to bite in earnest: The new leaders needed for something like that will not emerge overnight from Russia’s thoroughly purged civil society. But you can at least expect popular indifference in the face of top-down change. Despite appearances, an unquestioning pro-Putin majority doesn’t exist, according to a recent report by the Carnegie Endowment for International Peace — and the number of the dictator’s diehard backers won’t increase with more defeats. Internationally, what might prop up Putin even if he loses the war is a fear that what comes after him may be far worse. The far right, inspired by the same ideals of imperial greatness as Putin himself, can be much more ruthless when it comes to its choice of means to that end. Someone of Strelkov’s ilk with a finger on the nuclear button is indeed a scary thought. Domestically, though, Putin risks losing control as soon as the fear subsides. Military and police commanders, spies, even the timid oligarchs will be scheming — and likely already are, as a matter of contingency planning — to put forward a figure who could maintain their positions while pulling out of the Ukraine nosedive and offering a calming alternative to the rest of the world. The tightening of Putin’s close circle during the pandemic has, as an unintended consequence, shortened his reach and provided more opportunity for plots and intrigues behind his back. None of this means, of course, that Putin is about to be toppled. Speculation concerning potential replacements is being dribbled into Telegram and foreign media mostly as a way to damage specific figures. For now, the dictator is still in control: All his years in power have earned him the benefit of the doubt among Russia’s powerful, a group moth-eaten by negative selection. He must, however, realize that if military defeats continue, retaining his clout will require surprising, even drastic moves. The world might yet be treated to a re-enactment of the tired cornered rat metaphor from Putin’s childhood — something to keep in mind but not to fear: All dictatorships end someday, and few go out in a blaze of glory. More From Other Writers at Bloomberg Opinion: Ukraine’s Army Is Winning But Its Economy Is Losing: Niall Ferguson How the Ukraine Offensive Will Shift the Market Narrative: John Authers Ukraine May Become More Successful Than Biden Wants: Hal Brands Want more Bloomberg Opinion? Terminal readers head to OPIN . Web readers click here. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. To contact the author of this story: Leonid Bershidsky at lbershidsky@bloomberg.net To contact the editor responsible for this story: James Gibney at jgibney5@bloomberg.net Up Next Putin Discovers the Limits of Xi’s Limitless Friendship in Samarkand Have a confidential tip for our reporters? Get in touch Before it's here, it's on the Bloomberg Terminal Learn more LIVE ON BLOOMBERG Watch Live TV Listen to Live Radio Popular in Opinion Clara Ferreira Marques Putin Discovers the Limits of Comrade Xi’s Friendship Leonid Bershidsky A Weakened Putin Is No Use to Russia Tim Culpan Wisconsin Is Coming to India and Not in a Good Way Thomas Black FedEx’s Problems Are About FedEx, Not the World Marcus Ashworth Jerome Powell to the Rest of the World: Drop Dead Opinion Clara Ferreira Marques Putin Discovers the Limits of Comrade Xi’s Friendship In his first meeting with his Chinese counterpart since the invasion of Ukraine, Russia’s leader got mostly hot air. Don’t mention the war.   Don’t mention the war. Photographer: Alexandr Demyanchuk/AFP via Getty Images ByClara Ferreira Marques September 15, 2022 at 7:15 PM EDT Listen to this article 5:04 Share this article Follow the authors headshot of Clara Ferreira Marques Clara Ferreira Marques is a Bloomberg Opinion columnist and editorial board member covering foreign affairs and climate. Previously, she worked for Reuters in Hong Kong, Singapore, India, the U.K., Italy and Russia. @ClaraDFMarques + Get alerts forClara Ferreira Marques In this article CL1 WTI Crude 85.11USD/bbl.+0.01+0.01% There were “no limits” to their bonds, declared the leaders of Russia and China earlier this year. More than six months, one messy invasion and a plethora of Western sanctions later, it turns out that perhaps there were a few. The slogan didn’t even appear to surface in the comments by Chinese President Xi Jinping and Russian leader Vladimir Putin at their encounter on Thursday in Central Asia. Since Russia’s invasion of Ukraine, China has been in an uncomfortable spot, attempting to balance its ideological alignment with Moscow with an act of aggression by Putin that violates Chinese diplomacy’s cardinal principles of territorial integrity and non-interference. In Uzbekistan, meeting the Russian president for the first time since February, Xi showed clearly that he has no plans to resolve that ambiguity in Putin’s favor. Russia’s leader could have done with a few more strong words and a lot more economic support. He got little more than the bare minimum. More from Bloomberg Opinion Can Trademark Law Stop a Racist Role-Playing Game? Whatever Happens Next in Ukraine, Russia Loses Don’t Want Later Abortions? Make Early Ones More Accessible Gen Z Looks to Bring Its Impatience to Congress The two men met without masks — no small deal for Xi, who’s been in Covid-19 isolation since early 2020 — around a large circular table. (Doors were open to allow for circulation.) All affable enough. And Putin worked hard, acknowledging the other side’s “questions and concerns” about the invasion, noting Beijing’s “balanced position” and taking a swipe at the US over Taiwan. He talked up bilateral trade and referred to a Russia-China “foreign policy tandem.” By contrast, Xi avoided mentioning Ukraine at all and pointedly said he would work with Russia to “inject stability and positive energy to a world in chaos.” He promised deeper practical cooperation, but gave his “old friend” — in need of export revenue, technology imports and military support — nothing to take home. In fact, specific figures were almost entirely absent. Putin should not have been surprised. In military terms, his needs for manpower and materiel are now acute. For their part, the Chinese are happy to hold joint naval patrols with Russia, as they did on Thursday in the Pacific, but Beijing has never signaled a desire to go further. Diplomatically, the Kremlin surely noticed that Xi agreed to meet on neutral ground, on the sidelines of a Shanghai Cooperation Organization summit, a grouping with wide geographic reach intended to counter US-dominated alliances — but with no track record of achieving much of import. That should have been a hint. Not to mention that Putin appears to be losing in Ukraine. That’s a problem for Xi. He doesn’t want Putin defeated, but weeks away from a Chinese Communist Party Congress at which he is to be anointed for an unprecedented third term, he’s not about to associate himself with failure. There’s quite enough going on at home. Trade is where Putin might have been excused for being more hopeful. He cited bilateral statistics in his comments, and the government had signaled that a deal on a long-discussed gas pipeline — Power of Siberia 2, crucial to the eastward pivot — was close. Not even that appeared to make significant progress. As Indra Overland, who researches energy politics at the Norwegian Institute of International Affairs, put it to me, now was not the optimal time for China to strike a deal. Russia has further to fall. Energy revenue is already under pressure from discounts, and further sanctions, an oil price cap and a cooling global economy won’t help, as their impact filters down. As the economy weakens, Moscow’s dependence on a shrinking pool of large hydrocarbon buyers, mainly China, will only grow. There was also no hint that China would move to balance an increasingly asymmetric relationship: Russia pours raw materials into China but struggles to import what it needs. Chinese foreign direct investment in Russia, always paltry, is likely to stay that way because the country is simply not an attractive market for private companies, says Iikka Korhonen of the Bank of Finland Institute for Emerging Economies. It is a risk not worth taking. The Global Times, China’s often hawkish, English-language state publication, caught the dichotomy underpinning the entire encounter. China and Russia’s ties are “at their best in history,” the paper wrote, in one of several hyperbolic accounts of the day’s events. But make no mistake, it followed up, “China has many friends in the world.” It “needs to prevent the West from propagandizing China and Russia as a political and military bloc.” No matter. Putin can — and will — still make much of the encounter, and indeed of the entire summit in the Silk Road city of Samarkand. He has just suffered his worst strategic defeat since the start of the war, and even pro-Kremlin nationalists are furious. So it’s helpful to be pictured alongside leaders like Xi, Indian Prime Minister Narendra Modi and Turkey’s President Recep Tayyip Erdogan. Headlines will still trumpet that China sees ties “as stable as a mountain.” The message, directed back home and at the Global South, as much as at the collective West, is that Russia is not isolated — it’s in business. Just don’t check the small print. More From Other Writers at Bloomberg Opinion: How to Limit Putin and Xi’s ‘No Limits’ Friendship: Editorial Punishing Russians Won’t End Ukraine War: Ian Buruma China is Winning the Post-Ukraine Game: Clara Ferreira Marques Want more Bloomberg Opinion? Terminal readers head to OPIN . Web readers click here . This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. To contact the author of this story: Clara Ferreira Marques at cferreirama@bloomberg.net To contact the editor responsible for this story: James Gibney at jgibney5@bloomberg.net Up Next SCO Summit: Xi Jinping and Putin Meet in Uzbekistan, Discuss Ukraine and Taiwan Have a confidential tip for our reporters? Get in touch Before it's here, it's on the Bloomberg Terminal Learn more LIVE ON BLOOMBERG Watch Live TV Listen to Live Radio Popular in Opinion Clara Ferreira Marques Putin Discovers the Limits of Comrade Xi’s Friendship Leonid Bershidsky A Weakened Putin Is No Use to Russia Tim Culpan Wisconsin Is Coming to India and Not in a Good Way Thomas Black FedEx’s Problems Are About FedEx, Not the World Marcus Ashworth Jerome Powell to the Rest of the World: Drop Dead Politics Putin Acknowledges Xi’s ‘Concerns’ on Ukraine, Showing Tension Chinese, Russian leaders hold first meeting since invasion Beijing and Moscow earlier declared a ‘no limits’ friendship 1:08 Russia's Putin, China's Xi Hold Talks in Uzbekistan Unmute Russia's Putin, China's Xi Hold Talks in Uzbekistan Sarah Zheng and Philip Glamann September 14, 2022 at 10:48 PM EDTUpdated onSeptember 16, 2022 at 6:09 AM EDT Listen to this article 6:03 Share this article In this article CHCETZ CHINA CENTRAL TELEVISION Private Company Russian President Vladimir Putin told Chinese leader Xi Jinping he understands Beijing’s “questions and concerns” about his invasion of Ukraine, a rare admission of tensions between the diplomatic allies. In their first in-person talks since the war began, Putin hailed “the balanced position of our Chinese friends on the Ukraine crisis” and offered to “explain in detail our position” on Ukraine. In short televised comments at the start of the meeting, the Russian leader also blasted what he called “provocations by the US and its satellites in the Taiwan Strait.” Calling Putin an “old friend,” Xi said “China is willing to work with Russia, display the responsibilities of the major powers, and play a leading role to inject stability and positive energy to a world in chaos.” The remarks are the latest indication that Xi will continue to withhold material support as Putin suffers humiliating battlefield losses, and opposes any escalation that could further disrupt food and energy supply chains now roiling the global economy. Investors had been concerned that China would step up support for Russia and potentially face US sanctions, particularly after the Asian nation’s No. 3 official, Li Zhanshu, recently told Russian lawmakers that leaders in Beijing “fully understand the necessity” of Putin’s actions. While China has provided Russia with diplomatic support since the war began, and accused the US of provoking Putin into action by pushing to expand NATO, Beijing has stopped short of doing anything concrete to help Russia’s military. TOPSHOT-UZBEKISTAN-RUSSIA-CHINA-DIPLOMACY Vladimir Putin, left, and Xi Jinping during the SCO leaders’ summit in Samarkand on Sept. 15.Photographer: Alexandr Demyanchuk/AFP/Getty Images Ned Price, a US State Department spokesman, said Putin’s remarks about Xi’s worries were “striking.” “It’s not surprising that the PRC apparently has such concerns,” he said, referring to China by the initials of its formal name. “It is somewhat curious that President Putin would be the one to admit it so openly.” Putin’s admission that China is playing a delicate balancing act was an effort to curry favor with Beijing, Andrey Kortunov, head of the Kremlin-founded Russian International Affairs Council, said in a phone interview. “It’s an awkward topic for China but Putin wanted to underline he is getting some support,” he said. Chinese Foreign Ministry spokeswoman Mao Ning avoided questions about what concerns her nation has raised with Russia when asked about the issue at a regular briefing Friday in Beijing. Read more: Putin Finds Limit of Xi’s Limitless Friendship Xi’s comments show that China still sees Russia as an important partner in its broader struggle with the US. Xi said that China would continue to support Russia on its core interests, even as neither leader mentioned the “no limits” friendship they declared in February at the Beijing Winter Olympics just weeks before Putin’s invasion. Both Russia and China face growing pressure from the US and its allies over the war in Ukraine and Beijing’s increased military activity around Taiwan. Xi in particular thanked Putin for his support on China’s position over the island, saying “no country is entitled to act as a judge on the Taiwan question.” relates to Putin Acknowledges Xi’s ‘Concerns’ on Ukraine, Showing Tension Xi Jinping in Samarkand on Sept. 15.Source: Uzbekistan Government “China has never approved of the Russian invasion, and it will not sacrifice its interests by violating US sanctions,” Eurasia Group analysts led by Zachary Witlin said in a note. “However, Beijing remains committed to expanding economic cooperation and deepening strategic ties with Moscow as a counterweight to Western influence in the international order.” The two leaders met on the sidelines of the Shanghai Cooperation Organization, a Beijing-led group seen as a counter to US-dominated alliances. Xi’s presence in Central Asia marks his return to the world stage after nearly 1,000 days at home, after he became the only Group of 20 leader to avoid leaving his country since the first Covid lockdown began in January 2020. The tour began on Wednesday in Kazakhstan, where the 69-year-old held talks with President Kassym-Jomart Tokayev. Xi was originally expected to make his inaugural international trip in November for the G-20 summit in Bali, which will be attended by President Joe Biden as well as Putin. Why Taiwan’s Status Risks Igniting a US-China Clash: QuickTake Xi has appeared wearing a mask for most of his meetings on the central Asian trip, but wasn’t when he met Putin, who has almost never appeared in public with a face covering. Most of the members of the delegations seated at the large oval table were masked. The Chinese leader’s decision to visit Central Asia first has put the focus on meetings with leaders from Russia, India, Pakistan and Iran -- countries more aligned with Beijing’s efforts to push back on the US and its allies. The Chinese leader is expected to use the SCO summit as a platform to promote his vision of a world where Beijing can expand its interests without US economic or military pressure. Xi is a month away from a twice-in-a-decade Communist Party congress where he’s expected to clinch a precedent-busting third term, and push his agenda for a multipolar world. China’s ties with the US have worsened recently over Taiwan, after Nancy Pelosi became the first House Speaker in 25 years to visit the democratic island. Beijing responded with unprecedented military drills around Taiwan, including launching ballistic missiles directly over the island. On Wednesday, the Senate Foreign Relations Committee approved a bill to boost ties with Taipei and give it more military hardware to deter a Chinese invasion, a development that is likely to further strain ties. Xi Unlikely to Throw Putin a Lifeline as Ukraine Struggles Mount Prior to his meeting with Putin, Xi also sat down with leaders from Tajikistan, Uzbekistan, Turkmenistan and Kyrgyzstan on Thursday, pledging closer ties with the Central Asian nations. The Chinese leader told Kyrgyzstan’s President Sadyr Japarov construction should start soon on the China-Kyrgyzstan-Uzbekistan railway, according to state broadcaster China Central Television. The route will reduce Beijing’ dependence on Russia and Kazakhstan to transit goods. Putin’s Options Narrow After Ukraine Scores Battlefield Rout In a separate meeting with his Turkmenistan counterpart, Serdar Berdimuhamedov, Xi said the two countries should scale up cooperation on natural gas, the official Xinhua News Agency reported. Xi also held talks with Tajikistan’s President Emomali Rahmon, pledging to import more agricultural goods from the central Asian nation and deepen cooperation in areas including transit and anti-terrorism, CCTV reported. — With assistance by Jing Li, and Rebecca Choong Wilkins (Updates with comments from China’s Foreign Ministry and analyst remarks.) Up Next Putin’s Options Narrow After Ukraine Scores Battlefield Rout Have a confidential tip for our reporters? Get in touch Before it's here, it's on the Bloomberg Terminal Learn more Most Read Markets There’s an Unusual Thing Happening in the Housing Market Markets Stocks Exact Harsh Toll on Would-Be Market Timers Business FedEx Has Biggest Drop in Over 40 Years After Pulling Forecast Markets Stocks Sink in Worst Week Since Bottoming in June: Markets Wrap Technology Adobe Near Deal for Online Design Startup Figma, Sources Say Politics Putin’s Options Narrow After Ukraine Scores Battlefield Rout Russian army bolsters defenses as Ukrainian advance presses on Criticism of Kremlin’s handling of foundering invasion grows Russian Forces Outmatched in Ukraine, Cohen Says Unmute Russian Forces Outmatched in Ukraine, Cohen Says Bloomberg News September 14, 2022 at 12:34 PM EDTUpdated onSeptember 15, 2022 at 6:30 AM EDT Listen to this article 5:58 Share this article Humiliated by lightning Ukrainian gains on the battlefield, Russian President Vladimir Putin faces narrowing options as he seeks to turn the tide in his struggling nearly seven-month-old invasion. Criticism in Russia of the sudden retreat in the northeast Kharkiv region over the last week has spread from nationalist bloggers to mainstream political figures. But its forces are still holding key positions in Ukraine’s Donbas region and putting up a fierce fight against its troops near Kherson in the south. There are signs the Kremlin may also be redeploying forces to protect Crimea, which Russia annexed as the main prize of its 2014 campaign, in the event Ukraine is able to break through its lines. Most Read Markets There’s an Unusual Thing Happening in the Housing Market Markets Stocks Exact Harsh Toll on Would-Be Market Timers Business FedEx Has Biggest Drop in Over 40 Years After Pulling Forecast Markets Stocks Sink in Worst Week Since Bottoming in June: Markets Wrap Technology Adobe Near Deal for Online Design Startup Figma, Sources Say Terms of Service Do Not Sell My Info (California) Trademarks Privacy Policy ©2022 Bloomberg L.P. 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