WEBVTT - U.S. China Trade Talks--Who'll Blink First?  Meredith Sumpter talks to Armstrong & Getty

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<v Speaker 1>We begin today's meditation with a few sipping exercises to

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<v Speaker 1>remind it the little treat can go a long way.

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<v Speaker 1>So pick up your McCafe iced coffees, close your eyes,

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<v Speaker 1>and deep sipping and deep satisfaction out take a street

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<v Speaker 1>retreat at McDonald's right now, getting mccaffee iced coffee in

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<v Speaker 1>any size and any flavor for just ninety nine cents

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<v Speaker 1>until eleven a m price of participation. Maysberry. I hope

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<v Speaker 1>you happy the horn running, Michael, because we're in a

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<v Speaker 1>trade war with fun. It's a trade war, Sturry midnight.

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<v Speaker 1>We're in a trade war. Oh boy, slightly forward to

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<v Speaker 1>the west. Are you auditional news? Welcome to the show.

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<v Speaker 1>Glad you're here. This is a real pleasure to welcome.

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<v Speaker 1>Meredith Sumter. Whoops, my screen just went black. Artist who

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<v Speaker 1>is the head of research, strategy and operations for the

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<v Speaker 1>Eurasia Group. We frequently talked to Mystery and Bremer, who

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<v Speaker 1>had up that fine out fit. Meredith, how are you? Oh,

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<v Speaker 1>I'm well, thanks for having me on. Is he and

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<v Speaker 1>technically your boss? Yes? He certainly isn't. He's a great

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<v Speaker 1>boss to have sounds now, are you just saying that

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<v Speaker 1>or wink. If you need Jack and Joe, you guys

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<v Speaker 1>have had him on the show. You know how much

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<v Speaker 1>funny is and what what dynamic content we get to

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<v Speaker 1>work with which has an impact on everyday lives here

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<v Speaker 1>in America. So it's just a real pleasure to be

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<v Speaker 1>speaking with you and to be part of this part

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<v Speaker 1>of this roder discussion. Well cool. One of the things

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<v Speaker 1>that makes us crazy is just the breathless um coverage

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<v Speaker 1>of the current trade negotiations with China. And it's all

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<v Speaker 1>about Trump and the rest of it, But to us,

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<v Speaker 1>it's really interesting what both countries are trying to achieve

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<v Speaker 1>in their strategies. Um, can you just give us a

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<v Speaker 1>brief description of why the US and the Trump administration

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<v Speaker 1>is going to the wall over trade issues with China? Well,

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<v Speaker 1>a great question. But first point is this is really

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<v Speaker 1>not about trade and it's really not about tariffs. This

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<v Speaker 1>is about which economic model sort of the U s

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<v Speaker 1>led liberal market economy that we all know and love

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<v Speaker 1>here or China's state directed economic model is going to

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<v Speaker 1>be the leading economic force for the century. But those

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<v Speaker 1>are pretty high stakes. Yeah, they are very high stakes,

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<v Speaker 1>which is why you see that the kind of backing

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<v Speaker 1>up to the wall pressure that President Trump is putting

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<v Speaker 1>on here. Look, he was elected on a platform of

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<v Speaker 1>revitalizing US industry, and when it comes down to that,

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<v Speaker 1>what he's trying to force China to do is to

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<v Speaker 1>play by the same rules that every other major developed

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<v Speaker 1>economy or our market driven economy plays by. And it

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<v Speaker 1>wasn't that big of a deal when you know, twenty

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<v Speaker 1>years ago, when China was relatively of a lower level

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<v Speaker 1>economic power and was not directly competing with US companies

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<v Speaker 1>and US industry leaders. China now is in some of

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<v Speaker 1>these strategic sectors of the future. Actually, China is making

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<v Speaker 1>more investments than we are here at home and is

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<v Speaker 1>aiming to be a leading driving force and some of

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<v Speaker 1>these strategic growth drivers of the future. So US is

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<v Speaker 1>watching this and saying, hey, if you're going to try

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<v Speaker 1>to lead, that's fine, but you've got to fairly compete.

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<v Speaker 1>You can't get where you are by doing things like

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<v Speaker 1>you know, unfair market access rules, force technology transfer funding

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<v Speaker 1>ways to take I P and then build off of

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<v Speaker 1>that without actually having to do the research and development

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<v Speaker 1>to make it yours. So that's what this is really about.

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<v Speaker 1>The President is using the threat of tariff and actually

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<v Speaker 1>using tariffs to try to force China and to force

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<v Speaker 1>Chinese President Fijian King to change these structural rules by

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<v Speaker 1>which China's economy currently functions. And that's the key point here.

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<v Speaker 1>So that's an enormous task for a totalitarian, you know,

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<v Speaker 1>semi communist regime. Uh, kind of cap lest communist hybrid Uh.

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<v Speaker 1>Is it even possible to get halfway there on some

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<v Speaker 1>of these giant issues like um, stop stealing our patents

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<v Speaker 1>and quick demanding all of our I T and all

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<v Speaker 1>of our R and d um or is it all

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<v Speaker 1>or nothing? It's certainly worth an effort to try to

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<v Speaker 1>put as much effort as possible on China to reform

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<v Speaker 1>the way that it functions. And the way that that

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<v Speaker 1>the White House has been trying to do this is

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<v Speaker 1>say like, look, these kinds of market based reforms are

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<v Speaker 1>not only good for us and for all the other

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<v Speaker 1>economies they're trying to fairly compete, but they're also necessary

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<v Speaker 1>for China to really develop and transform your own economy.

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<v Speaker 1>So they've been phrasing these reform concessions in a way

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<v Speaker 1>that would make sense for China's own domestic comparative need

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<v Speaker 1>for reform, but that you've really touched on the key

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<v Speaker 1>problem here, which is that in order to function like

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<v Speaker 1>in market based economy, the political center has to let

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<v Speaker 1>go of control of the economy. And there's no sign

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<v Speaker 1>that Beijing under Stegent Ping especially is prepared to do that.

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<v Speaker 1>So on one hand, you can force as much pressure

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<v Speaker 1>as possible to see how far you can get to

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<v Speaker 1>push China to make baseline structure reforms. They are going

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<v Speaker 1>to be good for US companies, good for US industry,

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<v Speaker 1>good for fair competition. But at some point you're gonna

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<v Speaker 1>you're gonna hit that wall. And that's the key question

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<v Speaker 1>is how do you shift your strategy when the tariff

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<v Speaker 1>pressure is not getting you the full response that you

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<v Speaker 1>need to protect US industry and to protect onward growth

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<v Speaker 1>prospects with the US economy. H I've got a question

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<v Speaker 1>about that, But first, um, I forgot my question. Maybe

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<v Speaker 1>I'll go with mother questions. Meredith Sumter of the Eurasia

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<v Speaker 1>Group is on the line, Oh, to what extent is

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<v Speaker 1>this our last best chance to put this kind of

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<v Speaker 1>pressure on China? Do we have to do it when

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<v Speaker 1>we've got a president who just doesn't care and have

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<v Speaker 1>a strong economy. Well, certainly, both the the unorthodox approach

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<v Speaker 1>of President Trump and the US economy remaining resilient are

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<v Speaker 1>you know, the two most important factors as to why

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<v Speaker 1>the US is taking this position now. But there's there's

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<v Speaker 1>more to this as well. Uh, looking at how are

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<v Speaker 1>we going to A couple of things need to happen. One, Yes,

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<v Speaker 1>you need to put pressure on China, and you've got

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<v Speaker 1>to find the most viable way to do that. So

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<v Speaker 1>we're gonna try this with tariffs. And the President has

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<v Speaker 1>already hinted that if this level of economic pain with

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<v Speaker 1>tariffs is not enough to push China, he's prepared to

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<v Speaker 1>issue even additional tariffs on Chinese goods. What you need

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<v Speaker 1>to watch here is which economy is going to be

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<v Speaker 1>the most resilient and in taking on this kind of

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<v Speaker 1>economic pressure, because the moment that one or the other

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<v Speaker 1>economies begins to weaken, that also weakens the negotiating hand.

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<v Speaker 1>And both sides know that. Well, yeah, I hate to

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<v Speaker 1>interrupt you, but I just was ocurred to me that

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<v Speaker 1>we So you've got two things going on there. On

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<v Speaker 1>on one hand, you've got the incredibly strong economy of

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<v Speaker 1>the United States. On the other, hand, You've got our

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<v Speaker 1>clitical process where when there starts to be pain, there's

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<v Speaker 1>gonna be a lot of pressure on a lot of

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<v Speaker 1>politicians to say some really scary things to try to

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<v Speaker 1>get trumped back down. Is their political pressure in China

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<v Speaker 1>too of that sort? There is political pressure in China,

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<v Speaker 1>but not of the sort that we have here in

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<v Speaker 1>our own democratic country. So that the political pressure in

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<v Speaker 1>China is to ensure that China does what it needs

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<v Speaker 1>to do so that more Chinese are able to see

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<v Speaker 1>their livelihoods continue to develop an increase as as as

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<v Speaker 1>it has. She didn't actually believed that he's in the

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<v Speaker 1>stronger position because he doesn't have the same kinds of

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<v Speaker 1>political democratic pressures that Trump has here account president for life. Yeah,

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<v Speaker 1>but I've heard that they're they're critically interested in saving

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<v Speaker 1>face and not being seen as being strong armed by

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<v Speaker 1>the US. Is that true? That is true, And that's

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<v Speaker 1>why we see it as highly unlikely that despite the

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<v Speaker 1>elevation of tariff overnight that Chinese Vice Premier Leal Hood,

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<v Speaker 1>who's the chief negotiator here in Washington right now, we

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<v Speaker 1>see it highly unlikely that China is going to agree

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<v Speaker 1>to the concessions that Washington wants. We're almost out of time.

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<v Speaker 1>I get two quick questions, who blinks first? And what day?

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<v Speaker 1>Please tell us that who blinks first, Jack and Joe

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<v Speaker 1>depends upon which economy is going to blink first, So

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<v Speaker 1>watch that very closely. Point two is in order to

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<v Speaker 1>really be successful in the long term, the US needs

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<v Speaker 1>to do more than put pressure on China and work

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<v Speaker 1>with like minded allies to do so. We need to

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<v Speaker 1>really invest here at home, to double down on investments

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<v Speaker 1>and scaling up our workforce across the country. Love doing

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<v Speaker 1>the basic R and D in our industry so we

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<v Speaker 1>can compete with China and outcompete China. Meredith Sumter, Meredith,

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<v Speaker 1>I'm so sorry to jump in. We're up against a heartbreak.

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<v Speaker 1>Meredith Sumter, head of Research, Strategy Operations your Asia Group.

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<v Speaker 1>A pleasure. Thank you, really great. I'm really great. Thank you.

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<v Speaker 1>That's the best conversation I've heard on that yet. Marshall's

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<v Speaker 1>got his news coming up, but I know more about

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<v Speaker 1>it than I did before the whole China trade thing.

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<v Speaker 1>Who's going to blink win? That's the shan for all

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<v Speaker 1>your foodies out there. I'm unwrapping a McDonald's steak, egg

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<v Speaker 1>and cheese bagel. Look at this steak and the juice

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<v Speaker 1>running down the side. Get a little bit on a

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<v Speaker 1>wrapper here M. And then the fluffy egg and real

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<v Speaker 1>cheese floted over the side looking just so good. M M.

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<v Speaker 1>Grilled onions and a butt of bagel too. Thumbs up

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<v Speaker 1>a McDonald steak, egg and chaves bagel for breakfast. Love it,

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<v Speaker 1>M bomp up. I participate in McDonald's