To National Security and they do not like what he did. Then he went to japan and made nice with them and said they need to step up in terms of their trade talks. The president pushing on trade. Lets go to brussels and maria tadeo. Youre talking about continue negotiations. There are continue negotiations there to figure out who runs the place. Maria european leaders were locked in a room for 19 hours, that is a new record, and they had to nominate the head of the european commission, the manner woman who replaced jeanclaude juncker. One of the most important political jobs in the European Union but they were unable to get the job done. The fingerpointing, the blame falling on Angela Merkel, the allpowerful german chancellor who was unable to bring in her own christian democrats tobacco deal that would have seen a socialist two back a deal that would of seen a socialist the thinking is Angela Merkel has given away the prize in europe. It is unclear if we could see a compromise play out. David how much of this is politics and how much is on the merits . The candidate from the social democrats has had the deputy job for some time. He is fairly wellrespected, isnt he . Maria he is very wellrespected and many see him as a progressive voice. Many see him as very experienced , someone who knows brussels very well and knows how to work the machine. The problem is you are looking at the christian democrats, the winners of the european elections, the epp who believe this makes no sense. The epp should at least fight to get it and that is the pushback we have seen to Angela Merkel from her own political group. This is stunning. Back in the day this is a woman who was powerful and who could make everyone go her way and get everyone in the same line. The issue is that many do not understand the rationale behind this. The issue is that until we get a new head of the commission, it is unclear who can replace mario draghi at the helm of the European Central bank. You could get a situation where you have an ecb with no european backers. David and we get to do the whole thing tomorrow. Thanks to maria tadeo in brussels. Now lets go to hong kong and Sophie Kamaruddin staying up. I understand the protesters have occupied sophie we had protesters earlier breaking into the lobby and gaining entry to the main chambers of the Legislative Council building. They have since attempted to disperse of their own volition after the Hong Kong Police in a facebook announcement advise they would move into clear the protesters in the building and around the vicinity. We now have right police entering the area, setting up a perimeter around harcourt road brandishing shields. Up to this point, access to the area has been relatively unimpeded. We do have hong kong democracy lawmakers demanding and urgency demanding an urgent meeting with carrie lam, from whom we have yet to hear an official response. David even as youre speaking, we are seeing the riot police move in. The people with hardhats on are the protesters. Thus far, it feels like the administration has been fairly restrained in their response. Do we think that is about to change . Beene they have restrained, and an earlier Statement Issued by the government they noted the procession throughout the day was conducted in a peaceful manner but they did condemn the actions of the radical protesters that broke into the Legislative Council building. As you noted, it is a fairly restrained response given the intense public scrutiny on carrie lam and the government in the wake of last months antiextradition rallies that have led to the demands of this prodemocracy movement to be for an independent inquiry. David it started with that extradition law that the protesters objected to, but i understand it has gone well beyond that, including the carrie lam herself. Do we know what the protesters want . The protesters here, it is unclear exactly what their goal is. Some parallels could be drawn with the student led movements in taiwan in 2014 when they were able to occupy taiwans legislature for several weeks. It looks like the administration in hong kong is not going to allow that to happen. When it comes to the wider demand by the human rights front, there are five key demands, among which is the resignation of carrie lam. Electoral reform is also something which is being called for by the demonstrators. That was a central issue at the heart of the 2014 occupy movement, whether that will be brought back up for discussion remains to be seen. David one last question. Outsidetching video where the riot police are, and inside the Legislative Council building. One last question for the moment. Traditionally there are demonstrations on this day, which is the anniversary of hong kong going back to the mainland chinese. Are these larger than what we have seen in prior years . Sophie this annual protest by the human rights front in years past has seen a peak of about 400,000 people gathered into the court. Today the official estimates by the chr f numbering 550,000 protesters. The police cap tally the police count tally is 150,000. This is the type of discrepancy we have seen for recent rally throughout june, when the organizers saw one million from one rally, 2 million for another, and the Police Numbers considerably lower than that. David sophie, thank you so much for your great reporting throughout the day. We will keep watching these pictures. Lets go back to michael mckee. We were talking about the trade truce between President Trump and president xi. My question is what does it mean for the economy . We will put up a chart that shows pmi, china down, europe down, u. S. Just over 50. How much of the growth in the world is being driven by trade uncertainty . Michael much of it. The peaks were in the middle of last year and the tariffs were imposed on china and we started to see Global Manufacturing rollover and move away from the peaks to being in contraction territory. China moving in that over the last segment. Teargase are seeing being dispersed by the riot police in hong kong. I am surmising that is what you are seeing. It appears the police are trying to disperse the crowd outside, not clear what is going on inside the Legislative Council. We are watching this story as it develops. How much of this is just plain uncertainty . The tariffs are not that material in terms of global transactionen the between the United States and china in terms of their economy. Michael that is what were hearing from u. S. Manufacturers, they do not want to make any plans because we do not know what the rules will be. Export orders have collapsed and were not seeing exporters make any money. They are on the sidelines. That is creating more uncertainty. The same is true for germany. You see that reflected in the european pmis. The atlanta fed gdp now number came out at 1. 5 . That is half what it was in the first quarter. David when we heard from chairman powell, he referred to trade a few times in considering the possibility of a cut. We have a meeting in july. How is the truth is when President Trump and president xi likely to affect that consideration . Michael at this point we will not have an impact. We heard that from mayor lee daily we heard that from merit we heard that from italy daily last week we heard that from mary daily last week. The numbers from the trade uncertainty are coming in week. David many thanks to michael mckee. Now we will go back over to hong kong. President trump came away from the saturday meeting with president xi saying we not expose chinese goods to more imports. Right now were watching demonstrators in hong kong and riot Police Coming in with tear gas. Theyve have taken over the Legislative Council building. We want to bring in from washington, michael pillsbury, Hudson Institute chinese strategy center. Thank you for joining us. We want to talk about trade. We cannot ignore what is going on in the streets of hong kong. Dramatic video of tear gas being dispersed. Put this in a larger context of china because you understand that story so well. Are related,two the demonstrations in hong kong and the promises with the trade talks. The demonstrators point is they do not trust the role of law in china. They do not want to lose extradition system where they can be picked up and drag to china, not to mention the 85,000 americans in hong kong. Trademe problem with the talks is been the chinese refusal to sign the enforcement mechanism. They say we will abide by the intellectual property rules. Please do not have an enforcement mechanism. You see this as a connection between the two. It is a matter of trust. Can the Chinese Government be relied on. It looks like 500,000 to one Million People in hong kong are saying no. David there were a lot of promises made in 1997 when hong kong reverted back to china. At the same time, the situation has changed. Hong kong was much larger compared to china that it is today. China has grown a lot. Michael theres a triangle going on. The british got the promise, than the Chinese Government itself had to take various measures to implement the agreement, which they are generally done, which not completely. Finally, there is the american side, where our Congress Passed the Hong Kong Policy act where we hold a weapon over the chinese and hong kong. We can say we will not recognize you as an economist traded entity anymore. David at the same time, we are recognized as being one country, two systems for some time. It is not something the United States can get directly involved in, correct . Michael we are directly involved. We have a large consulate in hong kong. By law toequired report on the degree to which china is keeping his promise. We have diplomats, economic officers, we keep track of what is going on in hong kong and we can take action against them if this gets out of hand. David to what extent does this bring pressure to bear on president xi . For a long time weve surmised he has the upper hand in negotiations with President Trump because he controls his country. Now we are watching this dramatic footage live from hong kong. It does not look like he is much in control of hong kong at the moment. Sophie at the moment perhaps,at the moment, but president xi remains in charge of the talks. Theyve not set the date for when they will meet President Trumps negotiators. Theyve not put a time limit on how long this can drag on. The chinese have been heartened by the letters from our Business Companies exposing opposing tariffs. The chinese still look like their control, and they hope to just ride out this kind of demonstration and postpone extradition, but not withdraw it. David i do not want to put words in your mouth. I take it you said you are in favor of the chinese death of the United States taking a firm line with china to restructure our trade agreements. Were you disappointed when President Trump saturday said no new tariffs and we will go easy on huawei . Michael i was not disappointed. I think the chinese position has gotten tougher. Their economy has not been hurt by these tariffs. What we are facing, what President Trump had to do is safe enough faced a president xi to get the talks started again and find out how much they will go on with what the agreed to already. This is a. This is a period of some limbo. The president has not put much pressure on china. All of the things around chinas periphery, they are afraid of what we will do. Invite the dalai lama to the white house. Sell more weapons to taiwan. There is about 10 pressure points ive read about myself that we can apply to china. President trump is not at that point yet. He still thinks we need to see what the chinese cards are at the next round of negotiations. Helpstrations in hong kong everybody understand that the Chinese Government should not be trusted. They have to have an enforcement mechanism for the trade agreement. David to what extent is President Trump limited and the pressure he can bring to bear without damaging our own economy and our own businesses . Michael the is limited by the 2020 president ial election campaign. He does not want to have people in the streets against him. A businessman who writes letters there is one of the biggest problems. He has the funds to pay off the farmers. Yet the chinese commitment to buy more Farm Products in the immediate future. The trend is still positive. Im still optimistic there can be a trade agreement with enforcement, but it will not be something we get in just one day whether president s says boom to the chinese and they immediately surrender. This is a long set of talks. Isid what were watching right police in hong kong attempting to disperse the crowd. There are a lot of people left in the square. I believe there are still occupying the Legislative Council building. It is not just the u. S. And china. What messages being sent right now to Southeast Asia to the region around china . Michael the credibility of the Chinese Government is what is at stake. You remember the chinese hinted they were in favor of the extradition agreement, then they took it back. London ambassador in said we never asked for this. China is trying to have this be a handsoff matter, escape from the obvious point of the demonstrations, that these demonstrators do not trust china. They want to escape from that and say this is just a local matter between carrie lam and the demonstrators. David is it likely that president xi will find the need to be tougher given what is going on . He has to communicate to his own country he is in charge so he cannot appear weak and negotiations with President Trump . Michael not quite. The main point for president xi is the allegation about hong kong. Foreign, hostile invaders is a term the hawks in china use. They were in the americans were involved, they are involved in hong kong. That is wrong. We are not backing these demonstrations in any tangible way. As long as the chinese think that, that is a sign they believe we are out to contain them and start a new cold war. President trump is not doing that, so it does help them with the trade talks. They want to relieve pressure on the trade talks. David to what extent is some of this inevitable . We have a rising number two power that has been growing amazingly fast, challenging a number one power economically and militarily. Whenever that happens, you will have conflict, whether rides in the streets of hong kong were an attempt to redo trade relationships between the United States and china . Michael it is an inevitable trend that china is on the rise. President trump has written about before he was elected, he uses an expression called good china, bad china. The good china is the one that does of the rule of law, because of a kind of democracy, has a much more open remarket. What we are getting is some kind of compromise or even moving in the bad direction. That is why the trade talks are so important. That is why the hong kong demonstrations help President Trump but i do not advise him to get directly involved or send an Aircraft Carrier or take a side. This is the hong kong people themselves saying we do not trust chinas government without enforcement. Theres almost no enforcement mechanism for the britishhong kong remain. Years, thet 50 british cannot get an enforcement mechanism into the agreement they made with beijing when Margaret Thatcher negotiated this. President trump once a enforcement mechanism in writing. David you talked about the move toward an opening for a market in china. When the president first came to power, he made noises about reform. More recently, he is not talk about reform. Yes talked increasingly about the communist party. It goes to the heart of what President Trump is insisting on, modifying their state owned economy when it comes to things like subsidies for their company. Is that a true conflict we will not get past . Are reformers in china who do not agree with president xi and they say chinas growth rate will suffer if they are inefficient subsidies. This is what President Trump has said he feels insulted by. He said that china in 2025 plan it says inn 2015 the top 10 tech sectors in the world, china must have government share by subsidies. I think the president is quite right. There is part of the trade talks. The problem is the subsidies are secret. There is not a list this as your resolve the subsidies we have. We have to rely on the chinese to confess where the subsidies are and then we have to demand they be reduced. It is back to the demonstrators in hong kong and can we trust the Chinese Government or not . The demonstrators are saying no. David thank you so much. No one better to talk about the developing situation then michael pillsbury, direction of the Hudson Institute china strategy center. Now we want to go back to Sophie Kamaruddin in hong kong. Where are you in relation to what were seeing right now with the tear gas . Are you in a safe place . Sophie i am in a safe pla