1 00:00:00,480 --> 00:00:00,720 Speaker 1: Dame. 2 00:00:01,360 --> 00:00:04,320 Speaker 2: Time to catch up with our Asia business correspondent Peter Lewis, 3 00:00:04,360 --> 00:00:06,000 Speaker 2: who is with this evening. 4 00:00:06,040 --> 00:00:08,320 Speaker 1: Hi, Peter, Good Evening. Jack. 5 00:00:08,640 --> 00:00:12,399 Speaker 2: Donald Trump reckons that Taiwan should be paying the US 6 00:00:12,400 --> 00:00:15,320 Speaker 2: for its defense, as explained to Bloomberg. So what's he 7 00:00:15,320 --> 00:00:15,880 Speaker 2: here to say? 8 00:00:17,239 --> 00:00:19,720 Speaker 1: Well, yes, this was a Bloomberg interview that was done 9 00:00:19,760 --> 00:00:22,560 Speaker 1: about a month or so ago, but only released last 10 00:00:22,640 --> 00:00:26,920 Speaker 1: week in time for the Republican National Convention. He's basically 11 00:00:26,960 --> 00:00:29,280 Speaker 1: what he said in this interview was he knows the 12 00:00:29,320 --> 00:00:32,760 Speaker 1: people of Taiwan very well. He claims he respects them gratefully, 13 00:00:33,000 --> 00:00:35,120 Speaker 1: but he says, first of all, they took one hundred 14 00:00:35,120 --> 00:00:38,600 Speaker 1: percent of our chip business. And then he says, I 15 00:00:38,600 --> 00:00:43,000 Speaker 1: think Taiwan should pay US for defense. Now I'm not 16 00:00:43,280 --> 00:00:47,320 Speaker 1: totally sure what is actually means by that, because Taiwan 17 00:00:47,440 --> 00:00:51,559 Speaker 1: already does pay for its defense. All the arms that 18 00:00:51,600 --> 00:00:54,880 Speaker 1: it buys it pays for. It doesn't get them for 19 00:00:54,960 --> 00:00:57,880 Speaker 1: three And what's more, it buys nearly all of it 20 00:00:58,640 --> 00:01:03,800 Speaker 1: from the United States the government negotiated military sales agreements. 21 00:01:03,800 --> 00:01:08,000 Speaker 1: But nevertheless, it makes Taiwan one of the largest markets 22 00:01:08,360 --> 00:01:12,360 Speaker 1: for American defense companies and arms manufacturers. So he is 23 00:01:12,400 --> 00:01:17,759 Speaker 1: already paying a lot of money to the United States. 24 00:01:18,120 --> 00:01:20,520 Speaker 1: Now on the point he makes about Taiwan taking one 25 00:01:20,560 --> 00:01:24,600 Speaker 1: hundred percent of our chip business, as we're obviously referring 26 00:01:24,600 --> 00:01:28,759 Speaker 1: to Taiwan's semiconductor manufacturing company, which is the world's biggest 27 00:01:29,400 --> 00:01:33,160 Speaker 1: chip foundry. It's hard to say, though, in the case 28 00:01:33,200 --> 00:01:37,520 Speaker 1: of TSMC, that they've somehow stolen America's chip business. It 29 00:01:37,640 --> 00:01:41,840 Speaker 1: is true that companies like Intel, for example, used to 30 00:01:41,880 --> 00:01:46,720 Speaker 1: be the world's dominant force in semiconductor manufacturing, and it's 31 00:01:46,760 --> 00:01:51,120 Speaker 1: also true that that's been overtaken by firms like Samson 32 00:01:51,160 --> 00:01:54,640 Speaker 1: Electronics in South Korea and TSMC in Taiwan. But that 33 00:01:54,720 --> 00:02:00,560 Speaker 1: has happened because TSMC has made huge investments into the business. 34 00:02:00,680 --> 00:02:03,280 Speaker 1: It's plowed a lot of money, a lot of resources 35 00:02:03,320 --> 00:02:06,600 Speaker 1: into it, taking big risks in the process. But nevertheless, 36 00:02:06,600 --> 00:02:10,880 Speaker 1: in particular has built up in the AI space. It 37 00:02:10,960 --> 00:02:14,680 Speaker 1: has very very well managed plants and factories which are 38 00:02:14,720 --> 00:02:20,400 Speaker 1: regarded as producing extremely high quality products and producing them 39 00:02:20,840 --> 00:02:25,000 Speaker 1: on time. So this is down to Taiwan's investment in 40 00:02:25,040 --> 00:02:29,840 Speaker 1: its business and companies liked he SMC, companies like Intel 41 00:02:30,440 --> 00:02:33,440 Speaker 1: have really fallen behind, particularly in the AI space. They 42 00:02:33,480 --> 00:02:38,680 Speaker 1: really haven't anticipated the growth in that particular sector at all, 43 00:02:39,360 --> 00:02:42,880 Speaker 1: unlike some of the Asian chip manufact factorers. But that's 44 00:02:42,919 --> 00:02:48,200 Speaker 1: not really Taiwan's steaming or taking one hundred percent of 45 00:02:48,240 --> 00:02:51,040 Speaker 1: America's chip business, as Donald Trump likes to claim. 46 00:02:51,600 --> 00:02:54,720 Speaker 2: Yeah, some tracking ahead. It would be fascinating to see 47 00:02:54,760 --> 00:02:57,520 Speaker 2: what happens in the early months of next year, if 48 00:02:57,560 --> 00:03:00,800 Speaker 2: indeed he is the next president. The third plan them 49 00:03:00,840 --> 00:03:03,519 Speaker 2: in China this week in security was a major focus. 50 00:03:04,320 --> 00:03:10,639 Speaker 1: It was indeed, they talked very much about protecting national security. 51 00:03:10,720 --> 00:03:14,480 Speaker 1: That's been a top priority for a while. But also 52 00:03:15,000 --> 00:03:18,040 Speaker 1: it seems to me that it sort of takes presidents 53 00:03:18,720 --> 00:03:21,880 Speaker 1: over the economy, that if there's a choice between initiatives 54 00:03:21,880 --> 00:03:25,440 Speaker 1: that are going to protect national security are going to 55 00:03:25,440 --> 00:03:28,560 Speaker 1: boost the economy, Even though they say they're equal, I 56 00:03:28,600 --> 00:03:33,959 Speaker 1: suspect that national security will win. The communicate that came 57 00:03:34,000 --> 00:03:38,600 Speaker 1: out yesterday warned very much about geopolitical risks. It says 58 00:03:38,720 --> 00:03:43,720 Speaker 1: China should lead global governance. I presume that means creating 59 00:03:43,800 --> 00:03:50,240 Speaker 1: alternative organizations to some of the Western dominated institutions. They 60 00:03:50,320 --> 00:03:53,880 Speaker 1: talked about balancing economic development with security, but as I say, 61 00:03:53,880 --> 00:03:56,560 Speaker 1: I rather suspect security is very much going to be 62 00:03:56,600 --> 00:03:59,920 Speaker 1: at the forefront of their minds. What I found more 63 00:04:00,080 --> 00:04:04,040 Speaker 1: alarming was they wanted to talk about, first of all, 64 00:04:04,080 --> 00:04:06,920 Speaker 1: creating a socialist modern power. I'm not sure what they 65 00:04:07,000 --> 00:04:12,000 Speaker 1: meant by that. They didn't exactly say, but they were 66 00:04:12,040 --> 00:04:18,120 Speaker 1: talking very much about coordinating, implementing various measures to prevent 67 00:04:18,160 --> 00:04:21,080 Speaker 1: and resold risks. And they want to weave what they 68 00:04:21,080 --> 00:04:26,960 Speaker 1: say is a dense social security risk prevention and control 69 00:04:27,080 --> 00:04:32,400 Speaker 1: network and maintain social stability. And also they say they 70 00:04:32,440 --> 00:04:35,880 Speaker 1: want to step up state propaganda. They say it's necessary 71 00:04:35,920 --> 00:04:40,279 Speaker 1: to strengthen public opinion guidance. Now this sounds rather alarming 72 00:04:40,360 --> 00:04:44,040 Speaker 1: to me. It sounds like a lot more internal controls. 73 00:04:44,360 --> 00:04:48,200 Speaker 1: As we know, the Communist Party under Jijipin what's to 74 00:04:48,240 --> 00:04:52,440 Speaker 1: control everything, every aspect of life in China, whether it 75 00:04:52,440 --> 00:04:55,800 Speaker 1: be economic, whether it be business, whether it be social, 76 00:04:55,880 --> 00:04:59,080 Speaker 1: whether it be aspects of your personal life. They very 77 00:04:59,120 --> 00:05:04,120 Speaker 1: much control social media. They cramp down on dissent very 78 00:05:04,880 --> 00:05:07,520 Speaker 1: very harshly. It seems to me that some of those 79 00:05:07,560 --> 00:05:12,320 Speaker 1: statements warning and more coming along those lines and really 80 00:05:12,320 --> 00:05:16,440 Speaker 1: trying to indoctrinate people's thinking and even key issues like 81 00:05:16,480 --> 00:05:19,560 Speaker 1: the economy, they feel you know that people are bad 82 00:05:19,680 --> 00:05:22,120 Speaker 1: mouthing the economy and that people should be much more 83 00:05:22,760 --> 00:05:27,080 Speaker 1: positive and supportive about what they're doing on the economic front. 84 00:05:27,640 --> 00:05:31,800 Speaker 2: Speaking of the economy public secti versus private sector, is 85 00:05:31,800 --> 00:05:34,920 Speaker 2: there any indication the Chinese leadership wants to scale back 86 00:05:35,000 --> 00:05:36,440 Speaker 2: investment in the public sector. 87 00:05:37,800 --> 00:05:41,480 Speaker 1: Well, they talk all the time about being business friendly 88 00:05:41,760 --> 00:05:47,560 Speaker 1: and the important of private companies. However, the rhetoric is 89 00:05:47,640 --> 00:05:50,960 Speaker 1: not really matched by the actions. When you look at 90 00:05:51,000 --> 00:05:53,760 Speaker 1: the actions, it seems very clear to me that the 91 00:05:54,360 --> 00:06:00,400 Speaker 1: big state owned enterprises do get preferential treatments by local 92 00:06:00,440 --> 00:06:03,680 Speaker 1: government and by the central government in Beijing. You only 93 00:06:03,720 --> 00:06:07,160 Speaker 1: have to look at the economic data we had. The 94 00:06:07,279 --> 00:06:11,360 Speaker 1: data for fixed investment came out on Monday. Well, private 95 00:06:11,400 --> 00:06:16,119 Speaker 1: companies invested just zero point one percent. Oh, it grew 96 00:06:16,240 --> 00:06:18,960 Speaker 1: private investment just by zero point one percent in the 97 00:06:18,960 --> 00:06:21,599 Speaker 1: first half of the year. Public investment, in other words, 98 00:06:21,680 --> 00:06:26,000 Speaker 1: through stateholed enterprises grew nearly seven percent. So that just 99 00:06:26,120 --> 00:06:30,280 Speaker 1: tells you when you see private companies just not really 100 00:06:30,839 --> 00:06:33,960 Speaker 1: willing to invest, that they just don't have the confidence 101 00:06:34,360 --> 00:06:37,679 Speaker 1: in doing so and in building more of their business 102 00:06:37,680 --> 00:06:41,400 Speaker 1: and investing in more of their businesses over time. 103 00:06:42,040 --> 00:06:46,560 Speaker 2: Yeah, yeah. Meanwhile, India is embracing Apple products. 104 00:06:47,560 --> 00:06:51,960 Speaker 1: Oh yeah. This is a very deliberate strategy by Apple 105 00:06:52,520 --> 00:06:56,560 Speaker 1: to try and diversify away from China. That's what's known 106 00:06:56,600 --> 00:07:00,400 Speaker 1: as the China plus one strategy. In that's post COVID 107 00:07:00,839 --> 00:07:05,680 Speaker 1: companies learnt very hardly, very harshly about the risks of 108 00:07:05,680 --> 00:07:08,040 Speaker 1: putting all your eggs in one basket and just relying 109 00:07:08,080 --> 00:07:13,720 Speaker 1: on China for your supply chains. So Apple's chosen markets 110 00:07:13,720 --> 00:07:18,040 Speaker 1: where it wants to develop is India. It now produces, 111 00:07:18,840 --> 00:07:22,120 Speaker 1: you know, about one in seven of its products in India. 112 00:07:22,200 --> 00:07:25,160 Speaker 1: It's got a couple of flagship Apple stores in the 113 00:07:25,200 --> 00:07:29,120 Speaker 1: country now, and its revenue from India is jumping. It's 114 00:07:29,160 --> 00:07:32,160 Speaker 1: up about a third now in the last twelve months. 115 00:07:32,160 --> 00:07:35,240 Speaker 1: It's up to about six billion dollars a year. So 116 00:07:35,280 --> 00:07:39,760 Speaker 1: Apple is quite deliberately diversing its manufacturing and revenue sources 117 00:07:39,800 --> 00:07:44,240 Speaker 1: beyond China. Now, it's not going to abandon China altogether, 118 00:07:45,200 --> 00:07:49,080 Speaker 1: but nevertheless, India is becoming a much more important market, 119 00:07:49,560 --> 00:07:52,000 Speaker 1: and it seems as a very good market in many ways, 120 00:07:52,000 --> 00:07:56,240 Speaker 1: not just for Apple, but for other tech companies as well. 121 00:07:56,240 --> 00:08:00,280 Speaker 1: It's got a very young, well educated population and the 122 00:08:00,320 --> 00:08:04,640 Speaker 1: demographics have very much in India's favor, unlike in China, 123 00:08:04,720 --> 00:08:08,440 Speaker 1: which is getting more and more elderly. And you've got 124 00:08:09,520 --> 00:08:13,120 Speaker 1: developing infrastructure in the country, still nowhere near as good 125 00:08:13,160 --> 00:08:16,320 Speaker 1: as China, but nevertheless developing, so providing a lot of 126 00:08:16,360 --> 00:08:19,720 Speaker 1: the things that technic companies like Apple require. 127 00:08:20,080 --> 00:08:23,400 Speaker 2: Yeah, very good. As your business correspondent, Peter Lewis, thank 128 00:08:23,440 --> 00:08:26,040 Speaker 2: you for your time. Always great to chat for more 129 00:08:26,080 --> 00:08:29,400 Speaker 2: from hither Duplasy Alan Drive. Listen live to news talks 130 00:08:29,440 --> 00:08:32,640 Speaker 2: it'd be from four pm weekdays, or follow the podcast 131 00:08:32,720 --> 00:08:33,719 Speaker 2: on iHeartRadio.