bettie: welcome to this special edition. i travel to china and spoke with a former ambassador to the united states, a leader in the

powerful state council and a top negotiator on foreign policy. mostlked them of the pressing issues between the two countries, from cyber spying to the most recent market turmoil, chinese, we begin on president xi jinping's much-anticipated visit to the u.s.. this is happening a few weeks away from the visit of xi jinping to the united states. what does he hope to accomplish? hi: i believe the areas are very important. first, it is for the leaders to have an in-depth discussion, following the discussion of california and beijing about the international situation, about , theespective countries policies, and about the future of our cooperation, particularly to charge a way forward,

furthering our relationship. we expect that there will be quite a few cooperation results flowing from the visit, what .eople call the deliverables i believe the president will reach out to american society to build the friendship between our two peoples. have said this visit can be compared to the visit back in 1979. it is that important to the relationship between the u.s. and china. is that accurate? i mean, how critical is this visit to china? jiechi: that was a historic visit, opening up the relationship between our two countries, and i think this visit is also vitally important. the united states has said and

has actually emphasized that they hope that this visit would be a milestone, putting our relationship firmly on a positive trajectory. betty: americans and the american public still have a mistrust of the chinese. a pew center poll recently said 54% of americans view china how does theso president plan to change that perception? iechi: the results of opinion polls change from time to time and from place to place. my understanding of american society is there is a deep awareness of the importance of nurturing a better relationship between our two countries, so i believe that the american people attach a great deal of importance to the visit. someurse, we have had

early harvest of this new model of the relationship between us. for instance, the trade between the two countries has grown quite a bit, and there are more student exchanges between us, and on the international scene, there has been good coordination between china and the united states, from the middle east to some parts of africa, from to the korean peninsula, so a better relationship is in the interest of both of our peoples and the world. of course, a relationship cannot be free from any problems. even people sometimes do not see way, and i common think for countries, sometimes they might have some divergence of views. that is not that important, so long as the differences in

proper perspective. betty: let's talk about the economy. recently, the chinese government , and thethe renminbi markets reacted violently around the world. is he going to talk about the economy, and how this he described the state of the chinese economy? i: they will talk about the world economic situation, the economic developers, the respective economies and the economic policies. thes very important on macro level that the two coordinatione more of their policies, but let me thet out that since outbreak of the financial crisis seven years ago, people have all worked very hard to revise the world economy. as people haver

expected, but that does not mean that we should not continue our good efforts, and china has done its part. you are no longer having double-digit growth rates. it just like a high jumper, the higher you go, the more difficult to raise the level. on the other hand, we still have a handsome 7% growth rate here in china. not free, china is from its own set of challenges and problems on the economic front. of course, there have been some ups and downs in the stock but givenarket, china's economic development, given the fact that china is a developing country, some movements on the stock exchange in china should not equal the whole picture of the chinese economy.

the value ofvalue the renminbi now, especially close to this visit? iechi: i think generally speaking it is quite steady. and we will, of course, continue to reform in china. in various sectors, including the financial sector, and when people look back 10 years or 15 years from now, we see that the market reform is really good, not only for china, but for the rest of the world. betty: let's see, 12 months from now, will be renminbi be lower in value? i: it is normal for the currency to move either way, but it is a reliable currency, and more and more people actually do

their trades in renminbi, and i -- will play ae healthy role not only in the chinese community but in trade and so and so forth. betty: were you surprised by how the markets reacted to the devaluation of the renminbi? : let me say this. every country has its challenges and everyoblems, country should do a better job of their own economy. betty: they should mind their own business, right? echi: i do not mean that. the chinese economy is a big one, but it is not that big. there are many players, so there economic performance fundamental he has an impact on the behavior

of the financial market and so and so forth, and the difference between china, the chinese stock and the stock exchange ismany western countries there are far more institutional and, ofs in the west, course, there is always room for anybody, so i do hope that people will take an appropriate and calibrated approach to what happens in the world in the financial markets, no matter where it might be, in china or in other countries, so people should be respectful to factsd to be fair, -- to and to be fair. betty: r bloomberg growth index pegs the chinese economy growing

so is, inr 6.6% gdp, fact, growth in china slower than what the statistics suggest? : i think our statistic is quite reliable. it is about 7% growth rate the that is our projection. of course, we have to do our level best to make sure the economy will go forward. betty: coming up, china faces accusations of cyber spying on american companies. how do you account for the white house? they say they can trace those cyberattacks back to origins in china. more on myfor interview with the top foreign-policy official. ♪

♪ betty: hello, and welcome back. i am betty. welcome back to our special "china behind the wall." some serious issues hang over the two sides, one that is about over, accusations that china is sparing on american companies. . asked counselor yang

yang: they should work together and work out there rules for cyber security and the spirit of mutual benefit and mutual respect. china, itself, is a victim of hacking activities, and the chinese government is firmly andnst hacking of any kind, i think every country should take a responsible, prudent should proceed on factual ground. betty: then how can you account for the white house? they say they have evidence that recent cyberattacks on the office of personnel management, for instance, the insurance company, they can trace those cyberattacks back to origins in china? how do you account for that? i think it is better

to let the american sides tell people their position, but the two sides stay in close touch on this issue, and i believe it is important for any government in the world to adopt a prudent and responsible attitude, and let me say that china is a responsible country. we are firmly against any kind of hacking activities. theft, andnst cyber china and the united states can work very closely on this issue. that is to make the cyberspace secure, transparent for all. betty: foreign policy is likely to figure very prominently in the presidential elections in the u.s. mrs. hillary clinton is running for the democratic nomination.

recently, we have heard a lot of news around the south china sea, and mrs. clinton, as you know, has made several comments about the dispute. in 2010, she took a harder stance against china and said it was in the american interest to have stability in that area, and i believe she said at the time, there is a concern that we all abide by the international rules, and she was speaking about china at that time, so why has china recently begun so much land in the south china sea? we are not reclaiming land in the south china sea. there is been some construction fs, so chinand reeef legal ground and historic facts to back up our position. about but america says

two thousand acres of unclaimed land have been added to the island. has land china reclamation on some of these reefs, which are part of chinese territory. but the very purpose of some construction on these islands reefsads is mainly -- and is mainly to serve public interests, of course, given the fact that some of our territory militarynded by countries,s of other so there is reasonable ground to have some defense facilities on these islands. there is a military airport being built on there, right? well, let me say.

lots of it, aviation, much of it is for civilian purpose mainly, and let me say that people should take a reasonable stand on it. about the disputes between china and some individual countries in that east asia, we believe the parties directly concerned should handle and try to solve and throughences friendly consultation and negotiation, and this is exactly stipulated in the declaration of conduct two parties in the south china sea. betty: it is my understanding, with the they filed hague, and the chinese have refused to engage in that complaint. mr. yang: because the philippines signed on to it, and

china made it very clear that such disputes or similar disputes should be solved by the parties concerned, and we would not participate in any kind of adjudication, as you have mentioned. china made this very clear. not this year or last year. about 10 years ago. china made its position very clear, so i believe it would be good for everybody to keep its word and to do what they have promised. betty: when you look at the disputes in the south china sea, the chinese sending navy ships up the coast of alaska when president obama was there, and the military parade commemorating the anniversary of the ending of world war ii, some look upon that as increasing military aggression by the chinese. all, let merst of

say that the anniversary of the chinese people's war of resistance against japanese aggression and against fascism has been welcomed by the world. celebrationof the is to bear in mind history, to respect the fallen heroes, and and to open upe a better future, so this kind of celebration is not directed at any government. his address at the commemorative event, the president actually in aoned piece -- peace very emphatic way, 18 times, and let me say that the military of moveountry should

according to international law, and that has always been china's position. of course, we have certain about what other countries have done, but facts are facts. cts speak louder than words. respect, mr.ll due yang, we saw missiles and nuclear capable warheads, and they saw the so-called aircraft carrier killer. is that a sign of peace? mr. yang: china is a big developing country, and we need defensive forces to make sure that our country is secure. there is nothing wrong about that. ,f you look around the world you know that it is a very and china'splace,

military force is for national defense, period. will notat people ascribe some other motives to china's defense establishment and its efforts in the right direction. betty: much more ahead with my conversation with yang, including the presidential race and china's view. mr. yang: there might be some ups and downs, that the general relationship is developing. betty: china behind the wall continues after the break. ♪

betty: welcome back to the bloomberg's "china: behind the wall to quote i am betty liu. as a hot topiced among president of candidates, and almost none of it is good it donald trump: almost none of it is good. u.s.-chinaked about relations. mr. yang: there might be ups and downs, but the general direction of the relationship is development. what i have heard from the general public in both countries is that this is a very important visit.

we have to make sure that the visit will be a great success. i think that is the true feeling of the two people's. when the dow plunged, donald trump, who is the leading candidate to win the republican nomination, he came out very forcefully and said this is china's fault, that china made this mess, because they devalued , so is the chinese government prepared to deal with a president trump? well, i have just expressed my views on the financial markets of various that any, and i think look at the fax and then come to the right conclusion. i am not going to comment -- betty: including mr. trump.

yang: i am not going to comment on any particular person's views. when you look at the new york stock exchange, sometimes it goes down. sometimes it bounces back. well, and they are having quite a recovery of the american recovery -- economy, and we wish the american economy getting better not goodr, and it is for anybody to point an accusing finger at somebody else. betty: so in 12 months, what would you like to see accomplished? mr. yang: in 12 months' time, of course, let's work hard to make the president's visit and the heads of state meeting a success. and thatessage be out china and the united states will continue to build this new model of the relationship between

china and the united states. i think it is also very people to view things from a new perspective. that is we are in the 21st century. the 20th century is a great century, but there are lessons to be learned, as well, so adopt a more forward-looking attitude. betty: i have spoken a lot about the concerns of the americans, but i am curious from you. what deeply concerns you the most? what keeps you up at night? well, now in this information age, diplomacy is going on somewhere while you are asleep or awake, so i have to make sure that things are functioning in a normal fashion, and it is my view that people of the world aspire to a better

tomorrow, and it is the responsibility of diplomats both to bridge the gap between various countries and to promote more good interaction among the peoples, and in the face of , energy problems, terrorism, and many other things . i think china and the united states and many other countries should work together. if we all pitch in and do our best, i think the world will be a better place. betty: for more on my interview of, goate counselor yang to bloomberg.com. thank you for watching this bloomberg special report. i am betty liu from beijing. ♪

>> this is trending business, live from hong kong. viewerso welcome our joining us from the u.s. this morning. these are the top stories hour.ng this shares are tracking the gates on wall street after fed officials speculations of a rate year.se later this federal reserve bank lockhart the rateoted against hike, it was, quote, a close call, which makes him the fourth maker to speak out in favor of the rise happening sooner rather than later. u.s. justice department is

said to be conducting a criminal investigation into volkswagen, the auto maker admitted to cheating air pollution tests, officials familiar with the inquiry. in frankfurtnged monday, prompting them to look trade violations. and the state of the chinese data from an alternative set of indicators not be allngs might that bad afterall, data collected from china's most used search engine and main bank card network suggests that the economysecond-largest is stabilizing. the findings tie in with the conclusion of the china beige released earlier this week. and we'll have some breaking news out for you right now. the asian development bank has outlook ford its 2015 and 2016 and has cut its growth forecast for the reason. the details.

>> so this is a new report adb.sed by the going through it, it's not quite encouraging. said, hearing, as you for they downgraded region. iny expect asia to grow 6% 2016, down from their march 6.3% forof growth of both years. now, the key factors that they cite, first of all, slower andth prospects for china india. first of all, for china, they're thisting growth at 6.8% year. that would be down from 7.2%, projected earlier. course, lower than china's own target of about 7%, which is slowest pace in a quarter century. and, of course, a slowdown in expects to hit commodity exporters in asia.

now, industrial economies, the to grow at them 1.9%, down from 2.2%. the key takeaway from the report, though, capital outflows, a key concern for asia this year. we have already in the first quarter seen capital outflows of $125 billion. so the bank is now saying that the may be forced to follow u.s. in raising rates in order this destabilizing capital flow reversals. u.s. dollar.hening that poses a threat to asian companies with large foreign exposure, such as indonesia.i lanka, now, an interesting part of the adb, they released a special chapter on women, saying that asia's economic boom

has helped them in the past few years, actually women's workforceion in the has declined from 56% in 1990 to 49% in 2013. asia's growth prospects downgraded by the adb. you.to >> you can get more on the latest report in about two hours, when we speak to the bank's chief economist. a.m. in hong30 kong and for you folks out in singapore. caved, who is -- david, who is monitoring the market report. shanghai, how are things looking? >> very quiet start. see, malzahn, so a malaysia. decent session there. we're seeing a decent session here. we're off the highs of the day. steam,osing a bit of

into midmorning across the asia pacific. of 1%. tenth the oppositehai is going way. since then, it's actually slowly crept back up. again, we're nearing the four dollar,ainst the u.s. obviously a fairly weak level. we're on the way up for that rate.ge quick check, hong kong dollar. up,reason i bring this that's going to be flat here, is buying up u.s. dollars. since this has been hitting -- longer-termget to a chart. it's been hitting the lower bound here of that allowed exchange rate. they keep this table for a lot of different reasons which we won't get into at this point in time. in essence, every time we hit this level, expect them to alleviate some of

that upward process. theme just get you to mid-point. a little bit weaker compared to that. traders are telling us, again, stepping into the market, billion -- 50 billion. roughly aboutto 7.7, 7.8 billion u.s. dollars. is really just coming in from a lot of the outflows. what else do we have? the movers here in hong kong. want to -- three groups of companies. this've been talking about all morning. we'll get you more in a just a moment. apple has, of course, removed of these applications on its online store, because of the bugs and how these apps were created which allowed malware to in. china southern, among the hit leads. website.he

they're saying that it has managed to fix this flaw. chat, instant messaging application. fairly big development. a lot of people use it. i think that is an understatement altogether. in the hundreds of millions. i don't have the exact number. point, doesn't seem to be affecting shares. i will leave it there. back to you. top storyng to our this hour, apple forced to pull some offerings from its app after hackers breached its highly secure controls over developers. let's bring in edwin now for this.n this code ghost, this malware, way on to gets its these apps? >> it's what remarkable because thenow apple has some of best security in the business. how it apparently happened, to palo alto networks,

software tools were downloaded from chinese servers. to have affected mostly chinese apps. we're talking about stuff like we chat and net ease. so apparently they downloaded malware from an unofficial server. that's how it made its way on to app. >> you're talking about these apps with millions of users. ohundreds of millions. has there been much response? prettyresponse has been quick from what i see. they've already come out and patched we chat or they said the malware only versions and the most current versions are unaffected. they have said no user information has been compromised. it's really difficult to tell. it seems like the

damage has been contained. >> contained but it has been done. apple? bad p.r. for >> i think people were a lit sur many apps made it past its fence. but i think the fact that, for now, there hasn't been a user-scale loss of information. so it's to their benefit. again, we'll have to see. cases, it's always really difficult to tell. >> we'll continue to monitor this one. so much for joining us on that. well, the chinese president, xi firstg, prepares for his state visit to the u.s. one of his top foreign affairs officials is playing down their differences. bloomberg's betty liu spoke with him in beijing. they started by talking about china plans to respond to u.s. concerns over

cyberespionage. >> china itself is a victim of hacking activities. is the chinese government of anyagainst hacking kind. country, say that any if there is a case, then it be given sufficient facttion but given the internet you know, the is transnational and its activities could be covert, it does time for any country to the investigation. shouldhink every country take a responsible, prudent and should proceed on factual ground.

>> and there were plenty other things discussed when betty liu with yang jiechi. fullan watch that interview, "china: behind the onl," air bag today bloomberg television. coming up, heading west. chinese president leaves for the u.s. today. trades,ok at how cybersecurity and regional talks.s will dominate ♪

>> the stories making headlines around the world today. russia say they have worked out a way to avoid potential classes between their they come across each other in syria. russia is considering deploying troops to aid assad, while

act to stopit may suspected arms system. benjamin said he reached agreement with -- benjamin netanyahu said he reached agreement with vladimir putin. alexis tsipras has taken office. between his party and the independent greeks will 300-memberats in the parliament. fallen on bonds have the results with the international bailout seen as more secure. contrast, the jan vote prompted a sell -- the january sell-off ind a security. republicanoup of presidential contenders has theen smaller with withdrawal of scott walker. now, while he didn't mention donald trump by name, walker urged other markers to pull out for the same reason. walker had promised as recently sunday to stay in the race, but had less than 1% support in

poll.nt >> well, the asian development released its outlook for 2015 and 2016 and has cut growth forecast for the region. adp announced that growth in the region will come in at 6% in 2016.ar and that's, of course, below march's of 6.3% for both years. two key factors for this. slower growth prospects for and indian. for china, adp's growth at 6.8% year, that's, of course, below china's own target of which is already the slowest pace in a quarter century. hit commodityo exporters in asia as well. key risks to look out for, net capital outflows from asia,

remain a key concern. the bank now says that policy to contain necessary destabilizing a capital flow reversal. may mean asia may be forced to follow the u.s. in raising also. the strength in the u.s. dollar posing a threat to asian with large foreign currency exposure. those are the key takeaways from report.s back to you. >> all right. thanks. well, the chinese president is u.s. today for his first state visit. couple ofuest says a difference and a few trade deals hide major differences between the two powers. withe joined today, along our very own steven. so first up, seattle, where from. is a safe place they say, where a lot of xi's predecessors have gone before. are you thinking about the relationship now? two years ago, when these two

very custody di. >> well -- cuddly. >> yes. let's more problems now. but the major problem for china now, going to the united states, is to convince the americans and the world, the corporate world, that china is still full of commercial promise. it's a good place to invest in. and forget all the media headlines. [laughter] >> so there's a lot of marketing in the trip. >> yes. obviously why he goes to seattle first, home of boeing, business-friendly, washington state sells a lot of and apples to china. washington, d.c. is full of in capitol hill. it's less risky for him to go to and foster the business ties. >> but not just that. back home, it will be wall-to-wall coverage of the president's visit. he's saying to people back home, still a well-sought-after market.

don't worry. see, everyone is coming to us. china is still a great place to be. china hasd that achievablend priorities. what do you think the top ones are? >> the differences, the specific the twoces, between countries, which have been by groups and subgroups, well before this meeting. so he is going to spend just a couple of days in washington. time spent eating anyway. is more realistic goal is he is going to the united states, one tothem, as i said before, is market china to corporate america, saying, you know, headlines.media but the other is to take the temperature, the political temperature, of place. political passions are running united states, ahead of the elections. feel,ts to go have a

gauge the winds of change. check out if his own foreign ministry has been on what's the goods happening in america. >> do you think he arrives a little wounded given the stock route, at least the perceptions elsewhere that they didn't handle the slowing very well? there is the hacking allegations. do you think he arrives with his reputation, from abroad, a little bit wounded? >> well, the chinese president not going to be worried about the stock market. attitudeg to take the in this meeting with business people, the markets go up and know.you that's part of what's happening. he's going to brush it aside. anyway.ot his area it's a very narrow area. the cyberattacks go, i know it gets a lot of headlines and a lot of press but that that topic

has been shown as a bone to the media. what can you say about it? well, what can you disagree or on it? it's the kind of thing where you sounding.a very nice we'll be nice to each other from now on, agreement, and that's going to be that. so i think it's a distraction during the meeting. >> what about the presidential race? obviously that is going to be a front line there as well. trump.ed about you said he's a wild card, a headache. he's leading the polls now. the republican race, even -- dare i say it -- becomes president, how is beijing going to respond to that? stage,ink at this early china is going to focus on the issues rather than the personalities. they arethe new issues using against china as opposed to the previous presidential election? what's going to be said on the campaign trail? shift?e going to be a what is the new stick they're going to bash china with?

and the washington watchers, washington watchers back in now going to have a hard time with trump. they're going to say, what can say about this? life is going to be tough for people back home. >> all right. to watchng to continue out for headlines from xi's trip. thanks so much for joining us analysis from asia. young up next, the entrepreneur making reusable water bottles fashionable. studio, us live in the when we return. ♪

>> you may not think your water bottle is a fashion statement, next guest argues otherwise. we're joined by c.e.o. and us now, sarah, joining in the studio in hong kong. okay. i've seen these water bottles

everywhere. they've gone viral! tell us a little bit about the product. hydratione first fashion accessory. it's a beautiful bottle but it also works really well. it keeps drinks cold for 24 hours and hot for 12. >> how did you get this technology to work out this way? >> it's double-walled stainless steel. there's a vacuum seal inside. this all started. you used to be in taxes, i know. >> yes. >> now you decided to be this entrepreneur. where was the inspiration? >> i had a passion for creating a better water bottle. i always carried water bottle but it looked like i was continually camping or hiking. didn't look like i was a fashionable woman living in a big city. i just had an idea in my head and i thought the market was product. a better >> you sold four million bottles. oprah'se a part of magazine. for you?his blown up

where do you see prospects next year? becausereally grown out our four million bottles we sold are walking around with customers. there's a real network viral of the bottle looks great, so people ask questions when you bring it into a meeting or a yoga class. what's next for us, international expansion. we're sold in 35 countries but we're starting to work with some retailers around the world. they're calling us and asking us storesg swell to their and countries. >> environmentally-friendly bottles are nothing new. what do you think it is that set you apart from what else is out there? >> we really think of ourselves as the fashion accessory, for womanshion-forward man or or child sometimes. we come out with new seasons aice a year, just like fashion company. and we're always trending. so we're the colors, the patterns everyone wants. our customers become collectors swells. have multiple

maybe one they leave at work, one in their gym bag. a really giftable item. >> so your growth has quadrupled. where do you see the markets reallyu think you can kind of put more of these bottles in? for us.is a huge market we're just starting to do work companies,reat including starbucks. europe is also an opportunity for us. process of opening a london office soon. >> do you ever have any fears of growing too fast? your company is just four, five years old. >> it took us five years to get here. we grew very slow by being careful and picky, only working and bestbest customers retailers. we'll continue that strategy as we grow. becomee careful not to mass market and still be an affordable luxury. at the same time, i think our growth is very fast.

>> swell cofounder. well, the next hour, we'll have more on the a.d.b.'s regional outlook. why the china forecast is concerning. ♪

>> it's tuesday, the 22nd of september. yvonne. this is trending business. here's what we're watching for you this morning. syndrome. the asian development bank dials back its regional growth thatast, again, worried its declining appetite for developing hurt economy. they are set to grow at the rate this year. defending his territory, beijing's foreign policy chief

says construction on reefs in the south china sea is good for the whole region. yang jiechi says differences beween neighbors should solved through friendly consultation and negotiation. interview.exclusive and volkswagen is now said to be criminalct of a investigation in the u.s., after revealing it rigged its cars to cheat on air pollution tests. 18% in frankged frankfurt. you can let us know what you think of today's top stories by twitter. me on >> indonesia is getting under way. here's david with a look at the market. >> thanks. so what we're seeing right now is a rebound. we haven't erased the chart we saw on monday. but we're still feeling the music and the beat from wall re