WEBVTT - Richard McGregor on China's development (Radio)

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<v Speaker 1>Ten minutes here before the top of the hour. Our

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<v Speaker 1>guest is Richard McGregor, senior fellow at the Lowe Institute,

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<v Speaker 1>with us to talk a little bit more about the

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<v Speaker 1>latest developments in China and this consolidation of power by

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<v Speaker 1>Shi jun Ping. Richard, always great to have you on

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<v Speaker 1>the program. You know, we have to ask a lot

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<v Speaker 1>of the same questions in seemingly different ways. So let

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<v Speaker 1>me flip this around a little bit. We we knew

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<v Speaker 1>that Hi Jumping had amassed a lot of power in

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<v Speaker 1>in China, and we've known that for the past many years.

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<v Speaker 1>Is this almost more transparent? Now? What you see is

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<v Speaker 1>what you get. All seven members of the Standing Committee

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<v Speaker 1>the polit Bureau are she supporters, she loyalists and at

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<v Speaker 1>least you know that's the case. Yeah, I mean that

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<v Speaker 1>is certainly one way of looking at it. Um. You know,

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<v Speaker 1>there's art of clarity from China in that respect. Art

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<v Speaker 1>of clarity also Procejumping himself. He has a very specific

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<v Speaker 1>and detailed policy program both at home and abroad, which

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<v Speaker 1>he wants to execute in what he thinks are now

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<v Speaker 1>more dangerous times. So he's going to rely on people

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<v Speaker 1>who are utter loyalists to do that, I mean I

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<v Speaker 1>should say that. I mean, in some respects we are

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<v Speaker 1>treating these people who have been appointed to the polit

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<v Speaker 1>Bureau Standing Committee as mere Cipher's for She. But they're

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<v Speaker 1>not greenhorns, you know, they've all had massive jobs in

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<v Speaker 1>the system for many, many years. But but they're all

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<v Speaker 1>on the same page as well, so they're not appointed

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<v Speaker 1>on competence alone. It's also loyalty. Is everyone really all

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<v Speaker 1>on the same page though, I mean, there's definitely this

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<v Speaker 1>facade of unity. But let's just take this, for example,

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<v Speaker 1>that they had to rewrite the constitution to allow she

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<v Speaker 1>to break term limits a unanimous vote in favor, two

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<v Speaker 1>thousand two delegates all think it's a great idea. Really,

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<v Speaker 1>is there really no dissent or is it just really

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<v Speaker 1>well hidden? Well, certainly at the moment, at a moment

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<v Speaker 1>like that and there's voting, that's not the time to

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<v Speaker 1>express any descent at all. Um, the look that the

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<v Speaker 1>system is opaque. Um. You know, one of the funny

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<v Speaker 1>things leading up to this party Congress, when we're all

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<v Speaker 1>trying to discern what might happen, you know, one of

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<v Speaker 1>the prime analytical tools for working, you know, following elite

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<v Speaker 1>politics in China, and of course it's elite politics. Was

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<v Speaker 1>only the elite can practice it, you know, was you know,

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<v Speaker 1>we look at people's birthdays, how old are they and

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<v Speaker 1>the line we used to look at people's factions. Now

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<v Speaker 1>that's gone, age retirement limits has gone, no succession planning

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<v Speaker 1>and the like. So of course there's disagreements are within China,

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<v Speaker 1>and there's disagreements within execution, but we don't have any

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<v Speaker 1>insight into that because at the top it is pretty

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<v Speaker 1>much a black box. Now will it remain like that

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<v Speaker 1>for the next five years? In other words, everybody marching

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<v Speaker 1>in lockstep. I doubt that's true. There's too many pressures

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<v Speaker 1>in the system, but it's not clear easily clear to

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<v Speaker 1>us outside. Thus I think we have to say probably

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<v Speaker 1>that in this next period it may not be as

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<v Speaker 1>friendly to outside investors as what we had been led

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<v Speaker 1>to believe. You know, in terms of pushback, I'm not

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<v Speaker 1>saying that Lee Ka cheongg you know, was was giving

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<v Speaker 1>huge pushback, but both he and Leo Hubb were seemingly

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<v Speaker 1>preaching a slightly more moderate model for investors. You remember,

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<v Speaker 1>back in March, we saw what looked like a promise

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<v Speaker 1>for more transparency, and and that got swept swept to

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<v Speaker 1>the side, and in fact now it looks like it's

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<v Speaker 1>almost a mini purge up there at the top. So

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<v Speaker 1>is it at least safe to say the atmosphere for

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<v Speaker 1>investing is not so safe going forward as it was. Well,

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<v Speaker 1>that's an interesting question because I certainly think at the

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<v Speaker 1>local level of provincial city and even a lower level

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<v Speaker 1>of governments, they're very keen on foreign investment, um, particularly

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<v Speaker 1>as the other drivers of the Chinese economy are not

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<v Speaker 1>working so well. Um. So there's two issues. Are foreign

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<v Speaker 1>investors are less welcome I don't think so. Are there

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<v Speaker 1>investments less safe because of growing gear political issues. That's

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<v Speaker 1>quite possible, I would say, but then they're on the horizon,

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<v Speaker 1>but not right in front of us at the moment.

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<v Speaker 1>I really think the biggest issue for everybody is COVID zero,

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<v Speaker 1>because the policy was reaffirmed quite strongly by C. Jimping.

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<v Speaker 1>You would expect that, but he did it anyway, and

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<v Speaker 1>I think that's really crushing the economy in China and

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<v Speaker 1>making it difficult for Chinese investors as much as foreign investors.

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<v Speaker 1>Until we can see our way clear of that, then

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<v Speaker 1>I don't really see how it's friendly to any sort

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<v Speaker 1>of investment at all. Yeah, and other potential risks around

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<v Speaker 1>that too. In terms of dissent, because you know, we've

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<v Speaker 1>got COVID zero, we saw signs of graffiti emerging and

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<v Speaker 1>power the restrooms. I mean, it sounds trivial, but that's

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<v Speaker 1>really the only place that people can express opinions now

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<v Speaker 1>because there's no surveillance in a public restroom. So some

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<v Speaker 1>of these expressions of frustration with COVID zero. Is there

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<v Speaker 1>any risk that this bubbles up if it continues for

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<v Speaker 1>much longer, Well, that there has to be, but I

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<v Speaker 1>don't want to exaggerate that, because you know, we see

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<v Speaker 1>a lot of stuff on Twitter and the like of

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<v Speaker 1>this sort of descent, people getting angry the latest lockdown.

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<v Speaker 1>Who wouldn't for example. But if you talk to other

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<v Speaker 1>people in China, they say that there's still a lot

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<v Speaker 1>of support for COVID zero because they buy the government

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<v Speaker 1>line that the Chinese government policy has actually protected the

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<v Speaker 1>health of Chinese. So many million plus Americans have died.

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<v Speaker 1>The official figures for deaths in China below six thousand. Now,

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<v Speaker 1>don't no doubt that's an underestimate, but maybe not by

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<v Speaker 1>too much and people seem to have accepted the trade off.

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<v Speaker 1>Now I wonder how much longer that lasts actually, because

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<v Speaker 1>if the economy does continue to perform in a really

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<v Speaker 1>sub half fashion, that will flow onto incomes and create

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<v Speaker 1>other pressures. So we haven't seen that the scent yet.

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<v Speaker 1>Just finally on that point, of course, China has its

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<v Speaker 1>own sort of mini doctor Fauci's medical professionals who have

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<v Speaker 1>the status and standing to speak up a little bit

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<v Speaker 1>independently and periodically. They've been making their voices voice known

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<v Speaker 1>on this issue as well, So I'm watching out for

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<v Speaker 1>that as well. So we've seen a big cell down

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<v Speaker 1>in Chinese equities, and bind flows have have kind of stabilized,

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<v Speaker 1>but but they have been down. Are you are you

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<v Speaker 1>thinking that maybe domestic investors will ultimately be the winners

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<v Speaker 1>here because a lot of foreigners have backed away, but locals,

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<v Speaker 1>you know, may take advantage of these better prices. Well,

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<v Speaker 1>I'm very careful about commenting on markets and stock markets

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<v Speaker 1>in particular, really also in China, but I don't think

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<v Speaker 1>the markets in China are really that reflective of much

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<v Speaker 1>other than confidence in the life um And so whether

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<v Speaker 1>the domestic investors are all going to pile in now

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<v Speaker 1>that the foreigners were out, and they'll win on the

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<v Speaker 1>bounce back. Okay, tough to say. Richard out of time, unfortunately,

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<v Speaker 1>Richard McGregor, senior fellow at the Lower Institute, with his

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<v Speaker 1>live here