1 00:00:00,040 --> 00:00:04,840 Speaker 1: Peter Lewis Asia Business Correspondents with us Alopeter, Hello, Heather, Okay, 2 00:00:04,880 --> 00:00:07,240 Speaker 1: so we have all the whole world had a look 3 00:00:07,240 --> 00:00:10,360 Speaker 1: at the goose stepping and the drones and the nukes 4 00:00:10,360 --> 00:00:12,160 Speaker 1: and the whole lot that was going on at the parade. 5 00:00:12,200 --> 00:00:13,640 Speaker 1: What was the point of making us look at that? 6 00:00:15,120 --> 00:00:18,200 Speaker 2: Well, Jijinping is sending out a clear message here, which 7 00:00:18,239 --> 00:00:21,840 Speaker 2: is that China may be the second largest economy in 8 00:00:21,880 --> 00:00:24,480 Speaker 2: the world, but it's not happy with that. It's not 9 00:00:24,560 --> 00:00:27,639 Speaker 2: just going to stick with being a large economy. It 10 00:00:27,800 --> 00:00:31,840 Speaker 2: fully intends to be a global power and a large 11 00:00:31,840 --> 00:00:35,199 Speaker 2: military power as well. Now this is very much in 12 00:00:35,280 --> 00:00:40,560 Speaker 2: contrast to, for example, Japan. When Japan developed economically in 13 00:00:40,600 --> 00:00:43,800 Speaker 2: the nineteen sixties and seventies and then eventually in the 14 00:00:43,840 --> 00:00:48,040 Speaker 2: eighties became the world's second largest economy, it had no 15 00:00:48,120 --> 00:00:51,680 Speaker 2: intention of developing militarily, and that was partly because of 16 00:00:51,720 --> 00:00:55,160 Speaker 2: its constitution that was imposed upon its wouldn't allow that. 17 00:00:55,680 --> 00:00:59,240 Speaker 2: But also it didn't want to be a diplomatic power either. 18 00:00:59,320 --> 00:01:03,280 Speaker 2: It wasn't looking to change global institutions. It was quite 19 00:01:03,360 --> 00:01:07,400 Speaker 2: happy to sell you walkman's and video recorders and motor 20 00:01:07,440 --> 00:01:10,800 Speaker 2: cars and stick with that China is not going to 21 00:01:10,840 --> 00:01:14,319 Speaker 2: stick with that at all. It's making it very clear 22 00:01:15,360 --> 00:01:18,399 Speaker 2: not only does it have the capability of defending its 23 00:01:18,440 --> 00:01:21,000 Speaker 2: own sovereignty, not only is it going to be a 24 00:01:21,040 --> 00:01:24,920 Speaker 2: big regional power across Asia, but it wants to be 25 00:01:25,000 --> 00:01:28,160 Speaker 2: a global power as well, and one that can challenge 26 00:01:28,200 --> 00:01:32,720 Speaker 2: the US. Now, despite all that military hardware that you 27 00:01:32,840 --> 00:01:35,480 Speaker 2: saw being paraded through Beijing, and that was only what 28 00:01:35,560 --> 00:01:37,200 Speaker 2: we were allowed to see, I'm sure they have a 29 00:01:37,240 --> 00:01:41,000 Speaker 2: lot more impressive stuff behind that, they are a long 30 00:01:41,080 --> 00:01:44,640 Speaker 2: way from being able to challenge the US and project 31 00:01:44,720 --> 00:01:49,280 Speaker 2: that power globally. I mean, the US has military bases 32 00:01:49,680 --> 00:01:53,320 Speaker 2: all over the world, including several right on China's doorstep 33 00:01:53,880 --> 00:01:58,880 Speaker 2: in Japan, in South Korea, in the Philippines. China has 34 00:01:58,960 --> 00:02:02,360 Speaker 2: just one base around the world. That's in Djibouti in 35 00:02:02,680 --> 00:02:04,920 Speaker 2: East Africa, or the only one that it admits to. 36 00:02:05,040 --> 00:02:08,320 Speaker 2: There is suspicions that it has one in Cambodia and 37 00:02:08,360 --> 00:02:11,639 Speaker 2: maybe one in tagik Stant but it's a long long 38 00:02:11,680 --> 00:02:14,840 Speaker 2: way behind the US. So at the moment, this is 39 00:02:14,880 --> 00:02:19,119 Speaker 2: for show, but it's Jijingping sending out a very important 40 00:02:19,120 --> 00:02:21,240 Speaker 2: message here and particularly to the US. 41 00:02:22,760 --> 00:02:25,080 Speaker 1: What did the Chinese population think of the images of 42 00:02:25,160 --> 00:02:27,160 Speaker 1: Jiji pain nicks to Putin and Kim Jong Un. 43 00:02:28,440 --> 00:02:31,079 Speaker 2: Well, it's very unusual for them because they don't see 44 00:02:31,480 --> 00:02:35,080 Speaker 2: Kim jongn very often. He's very rarely in Beijing and 45 00:02:35,240 --> 00:02:38,720 Speaker 2: is certainly never seen in this sort of public gathering. 46 00:02:38,800 --> 00:02:41,720 Speaker 2: It's the first time that those three leaders, Vladimir Putin, 47 00:02:41,880 --> 00:02:45,400 Speaker 2: Jijinging Kim Jong Un have been seen together in public. 48 00:02:46,120 --> 00:02:49,520 Speaker 2: The Chinese population know very little about what goes on 49 00:02:49,600 --> 00:02:53,040 Speaker 2: across the border in North Korea because it's also secretive. 50 00:02:53,080 --> 00:02:55,800 Speaker 2: It's not only secretive to us, it's secretive to the 51 00:02:55,919 --> 00:03:01,600 Speaker 2: Chinese population as well. But the very clear that Jijinping 52 00:03:02,360 --> 00:03:06,720 Speaker 2: is trying to craft here a domestic consumption is that 53 00:03:06,760 --> 00:03:09,839 Speaker 2: he is a global leader, and leaders from all over 54 00:03:09,880 --> 00:03:13,440 Speaker 2: the world want to come to these events in China 55 00:03:13,720 --> 00:03:17,400 Speaker 2: and be seen with him and to develop relationships with China. 56 00:03:17,480 --> 00:03:20,440 Speaker 2: There are more than twenty global leaders there. There were 57 00:03:20,480 --> 00:03:24,160 Speaker 2: six of them from Southeast Asia alone, so he's projecting 58 00:03:24,240 --> 00:03:28,720 Speaker 2: there his image of having the most influence out of 59 00:03:28,720 --> 00:03:31,320 Speaker 2: all of the global leaders in the Southeast Asian region, 60 00:03:31,360 --> 00:03:35,080 Speaker 2: which is a very important economic zone. So this is 61 00:03:35,200 --> 00:03:40,200 Speaker 2: very much for domestic consumption projecting him as being a 62 00:03:40,280 --> 00:03:43,160 Speaker 2: global leader, not just the leader of his country, and 63 00:03:43,240 --> 00:03:47,320 Speaker 2: taking his country forward into its rightful place in the world. 64 00:03:48,000 --> 00:03:50,160 Speaker 2: And the way he sees it is that he wants 65 00:03:51,360 --> 00:03:54,720 Speaker 2: he wants China to have a big say in the 66 00:03:54,760 --> 00:03:56,840 Speaker 2: way in which the world is run and in some 67 00:03:56,920 --> 00:03:59,880 Speaker 2: of those global institutions that were previously set up by 68 00:03:59,840 --> 00:04:03,160 Speaker 2: the US after the Second World War, like the IMF, 69 00:04:03,560 --> 00:04:05,480 Speaker 2: like the World Bank and so on. 70 00:04:06,000 --> 00:04:09,120 Speaker 1: Peter, what's going on with this global bond sell off? 71 00:04:10,560 --> 00:04:13,440 Speaker 2: Yes, well, this is interesting. The countries that this is 72 00:04:13,480 --> 00:04:18,599 Speaker 2: occurring in the US, the UK, France, and Germany, Japan 73 00:04:19,120 --> 00:04:23,400 Speaker 2: are all countries that are heavily indebted and are struggling 74 00:04:23,480 --> 00:04:27,560 Speaker 2: with their fiscal discipline. They're struggling to reign in public spending, 75 00:04:27,839 --> 00:04:32,599 Speaker 2: They're struggling to bring down their deficits. And this sell 76 00:04:32,640 --> 00:04:35,200 Speaker 2: off is occurring at the long end of the bond curve, 77 00:04:35,279 --> 00:04:39,000 Speaker 2: in other words, with bonds with durations of ten, twenty 78 00:04:39,040 --> 00:04:41,280 Speaker 2: to thirty years or more, not at the short end, 79 00:04:41,560 --> 00:04:46,160 Speaker 2: which is where central banks can influence interest rates. This 80 00:04:46,240 --> 00:04:49,760 Speaker 2: area of the bond curve is outside the control of 81 00:04:49,839 --> 00:04:54,000 Speaker 2: central banks, and it's basically investors balking at first of 82 00:04:54,040 --> 00:04:57,400 Speaker 2: all the amount of debt that's being issued and the 83 00:04:57,440 --> 00:05:00,880 Speaker 2: failure of government simply to be able to reigin this 84 00:05:01,000 --> 00:05:03,520 Speaker 2: in and control spending. I mean we're seeing that for 85 00:05:03,560 --> 00:05:07,120 Speaker 2: example in the UK, where they maybe there's a fifty 86 00:05:07,560 --> 00:05:11,240 Speaker 2: pound black hole. The French government may well fall next 87 00:05:11,240 --> 00:05:15,880 Speaker 2: week because it's unable to reign in spending. And then, 88 00:05:15,920 --> 00:05:19,520 Speaker 2: of course in the US you have this issue with tariffs. 89 00:05:19,680 --> 00:05:23,040 Speaker 2: It could be that if these tariffs that Donald Trump 90 00:05:23,120 --> 00:05:26,919 Speaker 2: is imposed upon countries around the world have found to 91 00:05:27,240 --> 00:05:30,520 Speaker 2: be illegal by the Supreme Court, and the US may 92 00:05:30,560 --> 00:05:34,120 Speaker 2: have to pay them back to all those countries that 93 00:05:34,640 --> 00:05:38,440 Speaker 2: has collected tariffs from so far. So this will reduce 94 00:05:39,160 --> 00:05:42,560 Speaker 2: by maybe two or three trillion dollars over the next 95 00:05:42,600 --> 00:05:44,960 Speaker 2: ten years the amount of money that the US is 96 00:05:45,000 --> 00:05:49,600 Speaker 2: collecting and therefore put more stress on its finances. So 97 00:05:49,640 --> 00:05:52,440 Speaker 2: the bomb markets and investors in the bomb markets are 98 00:05:52,480 --> 00:05:54,719 Speaker 2: really saying, if we're going to take on this risk, 99 00:05:55,080 --> 00:05:58,600 Speaker 2: we need to have higher interest rates to compensate us 100 00:05:58,600 --> 00:05:59,279 Speaker 2: for that risk. 101 00:06:00,400 --> 00:06:02,839 Speaker 1: Wow, it's going to get very complicated. Peter. I appreciate 102 00:06:02,880 --> 00:06:04,360 Speaker 1: your time. As always, We'll talk to you next week. 103 00:06:04,360 --> 00:06:07,640 Speaker 1: Peter Lewis Asia Business correspondent. By the way, on the parade, 104 00:06:08,560 --> 00:06:10,960 Speaker 1: Judith Collins has had a crack at Helen Clark for 105 00:06:11,000 --> 00:06:13,240 Speaker 1: going to the parade and for being seen in that 106 00:06:13,360 --> 00:06:16,160 Speaker 1: class photo with Putin and Kim John Earn and a 107 00:06:16,200 --> 00:06:16,800 Speaker 1: whole lot of them. 108 00:06:16,960 --> 00:06:19,600 Speaker 2: The next time Helen Clark criticizes me for getting a 109 00:06:19,640 --> 00:06:22,360 Speaker 2: bit of extra money for our defense force, I think 110 00:06:22,400 --> 00:06:25,279 Speaker 2: I'm going to tell her exactly where she can put 111 00:06:25,279 --> 00:06:25,800 Speaker 2: her thoughts. 112 00:06:27,040 --> 00:06:30,200 Speaker 1: For more from Heather Duplessy Allen Drive, Listen live to 113 00:06:30,279 --> 00:06:33,320 Speaker 1: news talks they'd be from four pm weekdays, or follow 114 00:06:33,360 --> 00:06:35,080 Speaker 1: the podcast on iHeartRadio.