on the south china sea. marco polo's return and asia's cauldron. all around the country along the south china sea. lisa: this is the area everybody is watching. when it comes to markets as well, down drift in the day will tom: we got through this without a data check. lisa: i'm trying to bring it back to the data and not comment on south china sea policy. yields. tom: lisa is looking at yields. futures are negative five. stay with us through the day on radio and television. this is bloomberg. ♪ jonathan: good morning, good morning. a quiet end to a quiet week. negative four point. the countdown to the open starts right now. >> everything you need to get set for the start of u.s. trading. this is "bloomberg: the open" with jonathan ferro. ♪ jonathan: from new york, we begin with the big issue. in uncomfortable consensus. >> i would not be shocked if we have a correction. >> near-term, big wall of worry. >> we will see a midcycle correction. >> markets are bad it midcycle slowdowns. >> the 2% or 3% correction should pop up. >> there are a lot of risks

as actually south china sea is international waters, china objects to that? so how far are both sides willing to continue to push in order to have their way? well, that is the question, right? i mean this is, this is a big deal. what we've seen that happen in the south trying to see what their strong, arming their way into saying this, lars, everything is ours and saying, well we've got freedom navigation, we're going to push back to let you know that we're here. we've got our presence. it's been a big deal and then you see what happened just at the end of this past month in august. and it does it bring things to a new level? obviously, no one wants international conflicts or a global war. but right now, you're seeing the chinese posture themselves and say, you know what, we see a weakness in dc and we're gonna push hard and as fast as we can to accomplish more . we saw this from, from big stayed enemy actors during the obama administration as well. where they got as much accomplished as they could during those 8 years. they're doing it again now because they

the philippine van taiwan lay claims to parts of the south china sea, which is caused by vital shipping lanes and contains gas fields and rich fishing grounds. china. hi, this famished military outposts on artificial islands in the south china sea and objects to foreign warship failing through what it claims is its sovereign waters. but china is extending its reach into other territories to protect what it considers its maritime sell court, which is part of its multi $1000000000.00 spending package, better known as the belt enrolled initiative that saw in shanghai call is the in that port in hong kong, thailand. singapore and malaysia, and crucially, it's paying billions of dollars to build poor se myanmar, to ensure lanka, and pakistan as you can see, it completely in circles. india raising concerns in new delhi about it's been fluid and then china's expansive foreign policy and navy, which is many times bigger than its own fleet. and with good reason, sri lanka, lost control of a strategic $1400000000.00 hamburger total port to a chinese company after he couldn't keep up with debt we

k is sending its largest warship through the south china sea, as beijing is flexing its muscles in the disputed waters of victory for women's health and human rights campaigners. mexico supreme court rules that penalizing abortion is unconstitutional. ah, how we got more right in the forecast. japan over the next day, or 2 little area cloud, him moving through the saved pan wet weather coming in as we go on through the the next 2448 house could see this area of low pressure, which will swing its way through some mic showers coming in 27 celsius f, tokyo does move through prices. skies coming through that rain turns increasingly, sherry making way for the next system. another rather more organized band of cloud and rain which will make his way across northeast and parts of china across the korean peninsula. and moscow she is pushing into southern parts of japan to that state. centralized china saying a few shares, hong kong largely dry taiwan. we'll see a few shad joy your attention to these systems. here we have a tie, fern, and shown to that's in the open waters that's making its way

it is clearly in response to beijing and the moves of the south china sea and its response to taiwan.erybody knows there is tension in the south china chief -- see. this attempt to get australia with nuclear powered summaries for the first time is a very serious attempt to push back with the balance of power. it will take care of the islands and expand influence in the area. it is a very important action that will have major impact in the whole region and globally. going back to the balance power principle. >> from a chinese perspective this is a way to counter china's influence in the region. is this going to change beijing's behavior? >> this goes back to colonial area gunboat diplomacy with cold war era soviet sauce put on top of it. the real issue, i wonder how the people in different countries there, arguing this. you said the u.s. representative in china was violating international norms and imposing its will. it is kind of ironic. it is the u.s. and great britain talking about this after what happened in afghanistan and the middle east? as far as beijing is concerned it is the

s. guided missile destroy that sailed close to islands, claimed by beijing in the south china sea. it comes as a u. k. naval fleet docs in japan. on a tour of the indo pacific, britain says it's focusing on the region and china as activities in disputed waters . the tree, the year reports from beijing, japan's defense minister, no boar t, she was given a tour of the case, the largest and most powerful warship, the hatred miss queen elizabeth as adopt near tokyo. the ship leads to destroy his que forgets a submarine and to support ships which set sail from britain made. london says the so called carrier strike group is part of the you case, new tilt toward the region. for a defense evidence on it, the rival comes the face of increasing chinese military activity in the south trying to see beating claims most of the contest waters territory also claimed by many of its neighbors including vietnam and the philippines. japan says china is its main national security threat and says intensifying chinese activity around taiwan has created a sense of crisis. beijing considers the sell food is

there are also fears a military confrontation in the south china sea coulspiral into conflict. stern countries are also wary of china's growing investnt in pacific island nations. in the short-term, ties between australia and china will sink even lower. the reement could also tie australia to u.s. policy on china, omitting canberra's freedom of choice. while an economic response could be on the table beijing's thirst for resources means such measures could back fire on the economy, limiting china's options. mark: angela merkel has been to her last scheduled visit as chancellor to police a palace. latest polls for germany's chancellor show the csu party trailing. what is happening next? let's bring in for analysis the senior policy analyst at the european policy center. good to see you. the intimate era for germany and, of course, for europe. >> yes. we will see a lot of uncertainty, i think, coming from germany after the election because at the moment, it is likely three parties will be involved in negotiations, so do not expect to have a german government by the end of the year

they had more than its -- then a century but you cannot ignore china claiming the south china sea. it has been building artificial recently area and had trade strikes against australia over the past few months so it is hard to see improving that situation at all. haidi: paul allen with the latest on u.s. australia and china relations. data from pfizer and moderna suggest the efficacy of covid-19 vaccines wane over time but they say a booster shot is effective at warding off the virus and new variants. let's get more from carol wessel. we thought we were getting the breakthrough in factions because the delta variant was more contagious but is this to do with immunity instead of just the variance? carol: the data today suggested that the breakthrough cases among the vaccinated have to do more with the efficacy of the vaccine waning over time rather than the delta variant. the data shows the vaccine becomes less effective as children get more risky cases and more time goes on. the case they are making is we need a booster shot. this is data presented ahead of an fda meeting on friday

it's been held over two years since 1996 in the coast of the south china sea. the u.s. and other nations have been mounting in recent months. we have reports. reporter: a show of china's force in the air and its advanced technology. >> i think everyone cares the most about the age 20 bomber. -- h 20 bomber. other than that it is the j 20 fighter. reporter: j 10 and j 20 stealth fighters are among the highlights of this airshow. it is part of beijing's drive to compete against western rivals, selling its latest military hardware and technology. >> the main feature of the f k 2000 air defense weapons system is that it is a combat vehicle integrated with an air defense system. and has two sets of radar, a photoelectric sensor, six missiles on each side, and two antiaircraft guns. reporter: it is a show the u.s. is likely to keep a close eye on. it signed a security pact with the u.k. and australia that includes providing nuclear powered submarines to cameras at the tarrant to what they cs chinese threats in the end of pacific region. last week, leaders of japan, au

ready themselves, the whole china sea of the south, which is bigger than the middle that and see and taking all of this islands in sales. and so on. all these small islands, she's being add commerce in public in america, not to militarize this islands. and they have, in mid july, the china has it, can these land that belong to nobody actually for themselves? what they did put on this military bought strategy bumble enemy sides. so you have to understand that some pacific countries can feel threatened by china. these fact okay, let's go ahead. yeah. all right, 3 big points. i think these are actually on the mind of a lot of people. let me say is when you bite into the hand of one of your most important business partners, i don't want to say the people who feed you when you bite into that hand. are you not going to expect that some kind of reaction? look, that was the period of time where you talk about origins tracing. when a lot of hostile forces were, she was in china of deliberately releasing the virus to the world, or even engineering such a virus to hom, other people and china wa

obviously, it is engaged in some controversial areas, in disputed areas, we've seen in the south china seare there is stress. china is also in dispute with some of its neighbours like vietnam and philippines, on fishing grounds, etc. we have seen that. that is china, that is what they are doing at the moment. it's right that the united kingdom alongside other allies such as australia, stand up for the rules —based system and the international law and that is why we don't recognise some of the claims made about parts of the south china sea. we uphold the un convention of freedom of the sea and make sure we stand by that and so i think that's where we are with china but china is a global power, that is the reality of it, and we have to work with china to point out where we think things are unacceptable such as uighur or hong kong, and human rights, but also recognise the simple reality of them as a very large economy and we need to make sure we are protected from the abuse of that if that were to occur. our correspondent steve mcdonell is in beijing. hello to you. what is a reaction from chi

decisions, such as building artificial reefs and then taking over entire areas of the south china sea you can't come in, this is china'territorial waters. ros: you allude to that particular project more broadly in the region, what would you pick out as main security pressure points that china and the u.s. are aware of? frank: it is taiwan, number one and number two, freedom of navigation. xi jinping has made it clear by the time of the centenary of the chinese come in's party founding in 2049, he wants taiwan to be back in the fold as it were. they have never accepted taiwan as an independent state. they would like it to come back under chinese rule, and they will do that one way or another. whether that means an actual military invasion, certainly there are signs, they have carried out aggressive acts such as penetrating taiwan security airspace and making threatening moves. but there is no indication they are planning that imminently. ♪ ros: next, we turn to france because around 3000 health workers have been suspended because they haven't gotten themselves vaccinated against covid.

so we hear why on earth, the aging want to constrain maritime passage through the south china sea. right at the time when the china has empowered it's heavily on coast guard to use lethal force. where every claims jurisdiction, which is a great expense of the south china sea, and where it's now requesting information from vessels transiting us for regions, but on it's so this would action gap has led to this collapse and trust and really this strengthening of military to terrance in the region is welcomed quietly . i'm much of the region at no, i think i know how likely is china going to use this alliance to justify expanding its own military? well i, i don't see that china is going to be putting more effort than it already is into its military budget. there could be a call from yes, i can, i, there might be calls from the war ox to try and have budget happen. 800 juncture chance, not in return to this, but recently that is going to try to join the a former t p p. so i think china's response is going to be economic in terms of australia, this idea that australia is being constrained

just months off, the britain infuriated beijing by sending its war ships to the south china sea to join, so called freedom of navigation operations, led by washington and china has condemned the new lions calling it a throwback to the cold war. countess should not build exclusionary blocks targeting or harming the interest of 3rd parties. in particular, they should shake off their colewell mentality and ideological prejudice. we are so you can always professor benjamin child and animal activists. richard becca about australia's choice of military partners and where this could all be leading. there's no explanation, why are the u. s. and the u. k. now, at this time helping australia develop a nuclear power suite of submarines and then turning around and saying this will advance the world peace. clearly this is about another war. this is about a war that is being prepared against china. the us leaders, they talk about the endo pacific, which is of course, a know term was made up to enable us to explain us leaders explain, bringing more countries into the anti china alliance, the surroundi

i won't sugar on the south. china sea, taiwan and hong kong china position is.

been discussing, because the whole world has an interest in staff —— free passage across the south china seare. and the other thing about afghanistan, although china to size the united states for being in afghanistan and for leaving afghanistan, the fact is that china has vital interests in afghanistan which it is going to have to look after, and it is pretty complicated, including, for china, this could destabilise the region. it has investments in the belt and road, it is a close ally of pakistan, and this will take a lot of chinese management and it is a strategic challenge that china has not yet had to face. ~ , ., challenge that china has not yet had to face. ~ i. ., ., ~' challenge that china has not yet had to face. ~ i. ., ., ~ ., ., challenge that china has not yet had to face. ~ i. ., ., ., to face. when you look over all that the growth — to face. when you look over all that the growth of _ to face. when you look over all that the growth of china's _ to face. when you look over all that the growth of china's influence - the growth of china's influence around the world, do you thin

through its territorial see, doctor again says paging concert is the british leads presence in the south china sea to be unfriendly. but the war ships have so fast did clear of islands claimed by china. their mission will continue until the end of the year. katrina, u l t 0. it's time for the weather. here's everson. how we got more writing the full cost to japan over the next day, or $2.00 little area cloud. him moving through the sea of japan. wet weather, coming in as we go on through the next 2448 house. could see this area of low pressure which will swing its way through some mic showers coming in 27 celsius f t o k. does move through prices, skies coming through that rain turns increasingly, sherry making way for the next system, another rather more organized. find of cloud and rain which will make us where it goes north, east and parts of china across the korean peninsula. and more south is pushing into southern parts of japan to that state. centralized china saying a few shares, hong kong lousy, dry taiwan. we'll see a few shots joy your attention to these systems. here we have a tie fern,

hidden very stealthily for months on and so ultimately it will alter the military balance in the south china seae last eight years and it�*s developing hypersonic weapons which can go up into the stratosphere and then power down at mach eight, eight times the speed of sound and if they can get the guidance right that will punch a hole in a warship and send it to the bottom of the ocean so the us is now very concerned that it�*s basically lost to the military edge in the region but together with australia and the uk and possibly others may think they can address that and confront some of china�*s actions which has been condemned by us decisions such as building these artificial reefs and taking over entire areas in the south china sea and finger cannot come and visit china territory waters. you alluded to that particular— china territory waters. you alluded to that particular project _ china territory waters. you alluded to that particular project more - to that particular project more broadly in the region, what would you pick out as being the main pressure point where the main security pressure

remember the, the dispute in the south china seas, which went against china, that the world court ruled against china. that was the case brought by the philippines and then we have no other countries in the region, vietnam, malaysia, all of which also threatened that china to the world court. so that's a problem the china has with it with its neighbors. and then of course, there is the big 900 pound gorilla in the road, which is the origin zip code. and you know, millions upon millions of people have died all over the world. trillions upon trillions of trillions of economic value has been destroyed and then needs to be some sort of a proper inquiry about. then he said, chime, it has been your response to the phone or our silly, silly accusations against other states, and there's no help the rest of the world, which has an right to find out about the origin. yeah, that's my job. get to the bottom of georgia and i've talked many, many times about this. it looks like the by the ministration is not particularly interested in finding out about that here joe, let me go back to you. i mean, i'

my movers in the south china sea and i have been coming up with new side china arrangements. we would like to see more respect between the 2 big powers . these relationship should never evolved into a nuclear war. going to push the button, but it's great. and in but reaffirms that towards unacceptable. you know, yet when they met june, geneva, but any war between big nations or nuclear powers, unacceptable. you're going to make it good. groomed. the risks that will go nuclear, a very high, any assistance you know, with less than you put them on ability was we have not been able to place her. come with us, not come up with something. you just need them to deal with each other. president trump said business and it's a good word, not just this year in business, but all saying politics. politics need to provide an environment for good cooperation and not to lobby for isn't someone else's interest to so that that that person would be the can betray them. himself, as the top guy is here, muslim chillers these kind of these people, the policymakers need to to feel responsibility for

and she's talking about the south china sea and the china does not have autonomy and control over the south china sea . but there have been a number of kind of military actions that have taken place in just the last couple of days that have been pretty serious. including the u. s. warship that traveled within 12 miles of a artificial chinese island in the south trying to see and china was furious about this so angry that some of its representatives as well as some of its state run newspapers or calling for china to retaliate by simply sending war ships within 12 miles of us bases in the pacific as well as within 12 miles of different us allies . and then also there are reports of china actually sending the planes into ty ones airspace recently. that happened just for the last 24 hours. so there been a number of these issues that have crept up. the problem right now for the vitamin administration is that they need to have a reset because right now is china is leaning pretty heavily into this face to see the us can and cannot do. you know, we've talked a lot about that again and then wh

got a real temperamental area that we're dealing with the south china sea, we.

so i think it's based upon in part chinese behavior in the south china sea and they have created a problemis really leaving australia with very few choices about how it proceeds in the future. >> and china has not only expanded its claims in the south china sea, it's tried to punish australia for steps its taken, one to block chinese 5g from coming into australia and, two, calling for simply an investigation into the or gins of covid. china is australia's nmber one trading partner, judy, yet, today, clearly a sign australia is deciding strategically that the future is with the u.s. to counterchina. >> woodruff: and as yu say, this is a big move that's happening. what do the people you talk to say they expect china to do in response? >> they're not going to respond well. this will only reinforce what china already believes is happening which is the u.s. is ying to contain china using what china calls gangs as in the u.s. and its partners are ganging up on china. but the chinese experts i spoke to today pointed out the chinese-u.s. relationship is already bad. chinese's rath may be pointed t

open in the pacific region. china has also bought military outpost on artificial islands in the south china sea, in an effort to reclaim territory. that's also claimed by other countries in the region. back into high china shows of its prototype of the advance c h 6 drone unmanned aerial vehicles using reconnaissance roles and in combat missions. i think that's where the trend is really heading towards for china, in mimicking the, the, the trends are set by the united states as the leading military power in the world . we've seen over the last 2 decades shift towards a lot of autonomous, unmanned and highly intelligent military platforms, on land and in the c and, and in the air industry experts say, although many of chinese aircraft aren't yet much for those in the u. s. airport staging, scaly out to narrow that gap. lower that monthly out. is there a north korean state medias is miss out the country test. try it on tuesday. was a new hypersonic missile. south korea says it was launched from the central north province show gang. shortly after this, all was fonts, young young's ambassadors the

south china - and how it may evolve. freedom of navigation in the south china sea l navigation in the south china sea has become a sourcereefs and claimed large parts of the ocean has its own, but today its officials were quick to condemn their aukus party. translation: cooperation between the us, uk understrain translation: cooperation between the us, uk under strain of clearance brings her seriously undermined regional peace and stability. intensify the arms race and undermined international nuclear nonproliferation efforts. but undermined international nuclear nonproliferation efforts.- nonproliferation efforts. but as industry is _ nonproliferation efforts. but as industry is likely _ nonproliferation efforts. but as industry is likely to _ nonproliferation efforts. but as industry is likely to benefit - nonproliferation efforts. but as| industry is likely to benefit from the deal which could see large contracts for engineering and technology firms. but australia's decision to opt for a nuclear powered submarines means cancelling a contract with france to build a diesel electric ones on the french have called it a b

and in the south china sea, in that neighborhood, the way he is warning against china as a nemesis of the united states, the way they're going to work on race with china, of course, leading dot arms race in asia, as well as china's ambition to become continental power and asia, all of that, of course, is leading towards cold war. and what's more problematic about it is that there's this, this in this, this dangerous situation evolving in the south china sea with now with the united states. of course how things are starting to build some of these and all that sort of stuff. we're having a nuclear peninsula with the korea's so all we have, we have a dangerous situation. it just as secretary, good terrorist described to us a world on fire. president biden's attempt to prevent the united states as the wolves firefighter has not been exactly the convincing. and let me tell you why not because you did not see all the right things. he said a lot of things, but i just compared the president by den speech today with president obama speech back in 2009 when he 1st became president after george

, it makes it trying to think twice before they keep trying to control parts of the, the, the south china sea. you also have the quad, where we're working with other countries there to make sure that china doesn't become, become more aggressive. and i think the signal is, if they should be foolish enough to become more aggressive, even to one very taiwan, they're not going to just be facing the united states, but they're going to be facing a lot of other countries. let's focus on this, this current balance to china. the chinese embassy in washington have been quite wasted. their response suggesting this is a new cold war mentality. is this the start? would you say, or could this be the start of a new cold war? i don't think so. i think a lot of people like to compare it, but it take some of the lessons that we learn from the cold war. like i mentioned the an disagreement and basically trying to send a signal to trying up that, you know, basically they have very little to gain if they don't change the way that they've been doing things. and i think it's important to have was straight there bec

one is to send a message to china that if they keep being aggressive in the south china sea and, you know, taking over more and more of it, they're not, they're going to confront not just the united states with the united kingdom and australia. it's also something that we did in the cold war when we had what we called and this united states, australia, and new zealand together to combat what we saw the soviet expansionism in the, in the, in the region. so basically, i think this is to send a message from china, and i also think the timing is appropriate given what has just happened in afghanistan. people concerned about is the united states still going to be there? we need it. and the other thing is we supposedly did not check with our allies enough ganesh, than before we went out. this is a signal we're still working with. the british, basically the united kingdom is the biggest naval power in europe sell to have them . and of course the united kingdom, so long history of involvement in the, in the, in the area. so i think it's important to get them involved with this as, as well. a