Speaker 1: You're listening to Asia Centric, the podcast that explores the
Speaker 1: big ideas and trends moving money across the region, and
Speaker 1: Kaijidmitrieva in Hong Kong and.
Speaker 2: I'm John Lee. Katya. You moved to Hong Kong earlier
Speaker 2: this year.
Speaker 1: Yes, I did. Back in March, and.
Speaker 2: About a month before you've moved, there was a big
Speaker 2: discussion happening in the city. People were asking whether Hong
Speaker 2: Kong might be over. Yeah.
Speaker 1: I think I represented a bit of the reverse migration.
Speaker 1: There were a lot of folks, you know, hundreds of
Speaker 1: thousands of people had left Hong Kong at the time.
Speaker 2: Well, it's still a big question that I think the
Speaker 2: people in the financial sector are still asking. Earlier this year,
Speaker 2: Hong Kong was once again named the number one financial
Speaker 2: capital of Asia, replacing Singapore.
Speaker 1: Yeah, because Singapore had replaced it for a bit, and
Speaker 1: then it was once again kind of crowned the top
Speaker 1: for global listeners folks who aren't in Hong Kong, I
Speaker 1: think some background is in order. Stephen Roach, former chairman
Speaker 1: of Morgan Stanley Asia and an economist, earlier this year,
Speaker 1: declared the city over in an opinion column in The
Speaker 1: Financial Times and this elicited a surge in responses, including
Speaker 1: from local politicians. But Stephen is back. Stephen comes back
Speaker 1: quite a bit. Actually, he joins us here today. Welcome Stephen.
Speaker 3: Great to be back, and great to tell you that
Speaker 3: even if I thought Hong Kong was over, I am
Speaker 3: not over.
Speaker 1: We're glad to have you back. You came back a
Speaker 1: few times this year, you said in March. In June,
Speaker 1: you sat down with myself and some reporters here, and
Speaker 1: I wonder, have you changed your mind about Hong Kong.
Speaker 3: No, I have. I laid out in this article three
Speaker 3: factors that led me to this seemingly draconian conclusion. One
Speaker 3: that Hong Kong was tied to the Chinese economy, and
Speaker 3: we can talk about that, but I think the Chinese
Speaker 3: economy is still in trouble. Two that Hong Kong was
Speaker 3: caught in the crossfire of the US China trade war,
Speaker 3: and that needs to be updated in light of the
Speaker 3: reelection of Donald Trump. And you know, i'll give you
Speaker 3: a spoiler alert, it doesn't look like it's going to
Speaker 3: get any better. And three, admittedly a very contentious issue,
Speaker 3: especially here in the great City of Hong Kong. The
Speaker 3: political climate in the aftermath of twenty nineteen Article twenty three,
Speaker 3: and a general sense on the outside that is very
Speaker 3: different than I pick up from the Hong Kongers on
Speaker 3: the inside, that there's still a tough impression of what's
Speaker 3: going on in the city from the standpoint of a
Speaker 3: rule of law, free speech, free press.
Speaker 1: And those are things that haven't changed.
Speaker 3: I think the government is trying very hard to put
Speaker 3: on a good face, but I don't detect a seismic
Speaker 3: shift in that area either.
Speaker 2: Stephen, you are the chairman of Morgan Stanley Asia Pacific
Speaker 2: for a number of years. Can you compare Hong Kong
Speaker 2: today versus when you left Hong Kong ten or so
Speaker 2: years ago.
Speaker 3: Well, I loved my platform here in the position I
Speaker 3: was in. The city was vibrant. It's a large city,
Speaker 3: but it's a small community. It's just amazing. You can
Speaker 3: walk down the street or you know, walk on a sidewalk,
Speaker 3: you know, a large city. And it hasn't happened to
Speaker 3: me today because I haven't been out because of the typhoon.
Speaker 3: But you always bump into somebody, you know. You know,
Speaker 3: I'm a transplanted New Yorker, have lived there most of
Speaker 3: my life, and you know that rarely happens in New York.
Speaker 3: It does happen in Singapore and in other city in Asia,
Speaker 3: but Hong Kong is unique in that regard. The city
Speaker 3: has changed, it's grown. The one thing I really notice
Speaker 3: a lot is the development of West Calhoun, especially the
Speaker 3: cultural centers, has really come into its own and that's
Speaker 3: great to see because that was always a missing link
Speaker 3: when I was here. You know, I loved art, loved
Speaker 3: to go to the museums music, and it was much
Speaker 3: harder to do back then. You know, the West Calhoun
Speaker 3: Art District is right outside the building that Morgan Stanley
Speaker 3: moved into as the first tenant of ICC during my
Speaker 3: time as being the chairman of Morgan Stanley Asia, so
Speaker 3: we were sort of pioneers back then. We actually moved
Speaker 3: into ICC when it was still under construction. You know,
Speaker 3: they cleared an elevator bank for us, and our offices
Speaker 3: were in great shape, but there was nothing else there.
Speaker 3: And you know, to see all of these museums come
Speaker 3: to life and the traffic it attracted like a magnet
Speaker 3: has been certainly great to see since I've been gone.
Speaker 1: The makeup of Hong Kong is changing quite a bit,
Speaker 1: and you can see it in the investments coming in,
Speaker 1: the kinds of retail and restaurant tenants coming in, and
Speaker 1: you mentioned that it's becoming much more tied to the
Speaker 1: Chinese economy. I mean, historically it's been kind of a
Speaker 1: bit of both. You know, you have the West, you
Speaker 1: have China, but it's kind of leaning more towards the mainline. Now,
Speaker 1: we saw a lot of initiatives that Hong Kong's bringing
Speaker 1: out to make doing business easier and you know, transportation
Speaker 1: and traffic easier between the two places. So I wanted
Speaker 1: to ask you what do you think that means for
Speaker 1: the city and what do you think it means as
Speaker 1: Hong Kong's traditional role as sort of the financial capital
Speaker 1: of Asia and sort of a meeting point.
Speaker 3: Well, the advertising campaign for Hong Kong has long been
Speaker 3: folkscused on the view that Hong Kong is Asia's world city,
Speaker 3: and certainly the point got that you made on the
Speaker 3: presence of mainlanders begins to skew that image in a
Speaker 3: much more China centric fashion. Again, going back to my
Speaker 3: experience of working in the early days of ICC, I
Speaker 3: saw that immediately when I would walk through the mall
Speaker 3: to you know, take an airport express train or to
Speaker 3: take the MTR back to Central and I would see
Speaker 3: bus loads of Chinese tourists coming into shop. You know,
Speaker 3: initially I was unprepared for that because I think the
Speaker 3: mall had been built in large part is a typical
Speaker 3: Hong Kong mall that had you know, a large attraction
Speaker 3: for international students, but it was more and more Chinese
Speaker 3: from literally the very start.
Speaker 1: Isn't that good for the economy?
Speaker 3: Well, traffic is good, but you know, what is Hong
Speaker 3: Kong really attempting to achieve in its not just branding,
Speaker 3: but in looking to the future. Does it ascribe to
Speaker 3: the notion that the pr campaign of Asia's World City
Speaker 3: always promised, or does Hong Kong want to just be
Speaker 3: another big, dynamic city of China. Those are two different concepts,
Speaker 3: and I think that well, Hong Kong certainly maintains a
Speaker 3: very strong international flavor. There are many more Chinese characteristics
Speaker 3: to that flavor than were evident during the years when
Speaker 3: I worked here.
Speaker 2: So, Stephen, if you're the chairman of Morgan Stanley right
Speaker 2: now and you're still looking to expand in the Asia,
Speaker 2: Pacific region. Would Honkong still be the place where you
Speaker 2: would expand or would it be another city?
Speaker 3: Well, you know, Hong Kong was our base, and you know,
Speaker 3: we built a big infrastructure of talent facilities support around
Speaker 3: Hong Kong, and you know, it's centrally located. It made
Speaker 3: a good deal of sense when we established it. You know,
Speaker 3: our hope and the hope of you know, most global
Speaker 3: financial services firms was that Hong Kong, unlike any other
Speaker 3: city in the region, would be the gateway of international
Speaker 3: capital markets into China. And I you know, I still
Speaker 3: think that's a reasonable approach to take. And you know,
Speaker 3: if we had to do it all over again from scratch,
Speaker 3: I think that would be a decision that my former
Speaker 3: colleagues would still be comfortable with today.
Speaker 1: So you're saying you would still choose Hong Kong.
Speaker 3: Yeah, I think with the benefit of hindsight, you know,
Speaker 3: we're now more aware of the challenges that China faces
Speaker 3: than before and the impact those challenges would have on
Speaker 3: Hong Kong.
Speaker 1: One of those challenges going forward, maybe the US president
Speaker 1: and US policies. President elect Jnald Trump has promised sixty
Speaker 1: percent tariffs on Chinese imports as well as tariffs on
Speaker 1: on other goods. But I wonder what do you make
Speaker 1: of the US China relationship going forward, because you literally
Speaker 1: wrote a book called Accidental It's sitting in front of me,
Speaker 1: Accidental Conflict America, China and the clash of false narratives.
Speaker 1: So would love to hear your take on this. I mean,
Speaker 1: where do we go from here?
Speaker 3: Well, I'm I'm worried about it. You know, I started
Speaker 3: working on it maybe five years ago, published it about
Speaker 3: two years ago. And the topic, there are a few
Speaker 3: things in there that need to be updated, but the concept,
Speaker 3: the topic, the arguments I think are more relevant today
Speaker 3: than they were back then. And the theory of the book,
Speaker 3: if you want to call it. The theory is that
Speaker 3: both nations are enamored largely for political reasons of false
Speaker 3: narratives about the other, and in some respects, especially in
Speaker 3: the United States, that reflects almost a demonization of China.
Speaker 3: And looking specifically at who Donald Trump is named to
Speaker 3: his senior policy team, from Robert Leithheiser to Marco Rubio
Speaker 3: to the new Defense secretary to the new National Security Advisor,
Speaker 3: You've got a group of hawkish advisors the likes of
Speaker 3: which have never really been at the top of any
Speaker 3: American administration before. And not only do you have hawkish
Speaker 3: advisors and by the way, at the bench of those
Speaker 3: who have not been selected as very deep in China hawks,
Speaker 3: so there could be more of these individuals have put
Speaker 3: in place. But not only do you have the people,
Speaker 3: you've got the blueprint of a strategic anti China strangulation
Speaker 3: that was laid out in explicit detail in Project twenty
Speaker 3: twenty five, which Donald Trump on the campaign trail said, well,
Speaker 3: I certainly have nothing to do with it, but we
Speaker 3: all know that wasn't true.
Speaker 1: I'm glad you brought up Project twenty twenty five because
Speaker 1: something like a nine hundred plus page document really lays
Speaker 1: out what a lot of Republicans hope to accomplish, and
Speaker 1: a large part of that has been China. I think
Speaker 1: you were reading that casually the other night.
Speaker 3: Well, you know, when the election didn't go the way
Speaker 3: I thought and admittedly hoped, I forced myself to because
Speaker 3: I couldn't go back to sleep read I think it's
Speaker 3: like eight hundred and eighty nine pages. I went through
Speaker 3: that with the help of my search tool and picked
Speaker 3: out six chapters that were particularly onerous with respect to China,
Speaker 3: and just briefly, Chapter four on Defense policy America needs
Speaker 3: to re arm to fight China and equip Taiwan with
Speaker 3: anything it needs to resist the coming invasion. Chapter five
Speaker 3: on the State Department identified China as America's number one
Speaker 3: foreign adversary, Russia above Iran. Chapter eight on Development Aid
Speaker 3: said end the fanaticism over climate change in the midst
Speaker 3: of you know here, I sit here typhoon, and Lord
Speaker 3: knows what kind of weather we've had in the US
Speaker 3: this year, and the fanaticism on climate change because it's
Speaker 3: an opportunity for China to take advantage of US through
Speaker 3: its superb green technologies. Chapter seventeen on the Department of
Speaker 3: Justice argues for reinstatement of the China Initiative, which is
Speaker 3: a huge threat to people engagement. Chapter twenty three on
Speaker 3: the Commerce Department urges strategic decoupling and no uncertain terms
Speaker 3: with China. And finally, Chapter twenty six on Trade policy
Speaker 3: lays out the manifesto for tariffs and it was written
Speaker 3: signed by none other than the recently incarcerated Peter Navarro.
Speaker 3: So read all these chapters, but take a look at
Speaker 3: Project twenty twenty five because it is a blueprint that
Speaker 3: is very much aligned with what the President articulated on
Speaker 3: the campaign trail. And the final thing I'll say about
Speaker 3: it is when I woke up at two thirty in
Speaker 3: the morning on November sixth and saw the president's victory
Speaker 3: statement live from mar A Lago. Near the end of
Speaker 3: the statement, the words that just wrung in my ear,
Speaker 3: which he has now acted and delivered on, is my
Speaker 3: motto to govern will be very simple, and I'm quoting
Speaker 3: promises made are promises held.
Speaker 1: So we should definitely expect sixty percent tariffs.
Speaker 3: Sixty I don't think he'll do sixty, but he will
Speaker 3: do tariffs.
Speaker 2: Stephen, lots of pundits think that Trump two point zero
Speaker 2: would just basically be a peat of his first term,
Speaker 2: But reading between the lines, you think that things could
Speaker 2: actually get worse in terms of US China relations.
Speaker 1: I do.
Speaker 3: I mean he was a neophyte when he came to
Speaker 3: office in twenty sixteen. It was unexpected to him, unexpected
Speaker 3: to all of us. He had some strong views, especially
Speaker 3: on China, what he wanted to do, and he delivered
Speaker 3: on him. Now eight years later, he has the experience
Speaker 3: of that, his views have strengthened, and he's got this
Speaker 3: blueprint that we just talked about, Project twenty twenty five.
Speaker 3: So I think we we have to take him much
Speaker 3: more at his word this time than we did before.
Speaker 3: You know, a lot of his words prior to the
Speaker 3: twenty sixteen election were very inflammatory and contentious, and it's
Speaker 3: not clear that he meant or delivered on all of them.
Speaker 3: But again, promises made, promises kept. He's going to keep
Speaker 3: his word.
Speaker 2: And what do you think the response will be from China?
Speaker 2: In the first time around, when Trump was in office,
Speaker 2: China arguably showed some restraint. Do you think will be
Speaker 2: the same this time around?
Speaker 3: Well, you know, that's up at China. I think what
Speaker 3: we learned from two Thoy eighteen, nineteen and twenty was
Speaker 3: that when the US takes action, China will retaliate. Whether
Speaker 3: they retaliate to the same magnitude is debatable. It's an
Speaker 3: opportunity for China to really show, you know, maybe a
Speaker 3: little bit more leadership and restraint if they don't, but
Speaker 3: I think given domestic political concerns in Beijing, you can
Speaker 3: definitely expect retaliation if Trump were to move as promised
Speaker 3: on the campaign trail.
Speaker 1: What are the things that you know, I wanted to
Speaker 1: talk about money and the economy, what people are worried about.
Speaker 1: You come here frequently, you're in China, frequently based in
Speaker 1: the US, and you talk to a lot of people.
Speaker 1: So I wonder from those conversations, what are people, especially
Speaker 1: in the kind of weeks and days and weeks following
Speaker 1: the election of Donald Trump, what are people concerned about?
Speaker 1: What are people saying? What are people asking you?
Speaker 3: Well, I haven't been to China since the election. I'm
Speaker 3: going there in two days, and you know, get in
Speaker 3: touch with me and I'll let you know what I find.
Speaker 3: I think that there is a fair amount of uncertainty,
Speaker 3: and there is still this sort of naive, bordering on
Speaker 3: smug belief that, oh, he doesn't mean what he says.
Speaker 3: Some people say, oh, you know, he's the consummate, quintessential
Speaker 3: deal maker. This is just a negotiating ploy. None of
Speaker 3: what he says will come to pass. Keep in mind
Speaker 3: that when he was sworn into office in early twenty seventeen,
Speaker 3: the effective tariff of the US head on Chinese products
Speaker 3: was three percent. When he left office, it was nineteen.
Speaker 1: It stayed there too, and it's still at nineteen.
Speaker 3: So you know, again, I think the Chinese who are
Speaker 3: in denial and in belief that you know, the deal
Speaker 3: maker is back. We can do another deal like we
Speaker 3: did with you know, the Phase one trade deal, which
Speaker 3: by the way, accomplished nothing. You know, they're they're still
Speaker 3: holding out for a more transactional deal focused Trump. And
Speaker 3: you know, the new wild card in the equation, and
Speaker 3: I stress, and I put emphasis on the word wild is,
Speaker 3: of course Elon Musk, who has a very large manufacturing
Speaker 3: facility in China and a very prominent role as Trump's
Speaker 3: new buddy.
Speaker 1: Do you think he could counteract some of the hawkishness
Speaker 1: in the cabinet, at least as it's announced so far,
Speaker 1: just because of that.
Speaker 3: So what's that mean, Katcha. Does that mean that the
Speaker 3: US is going to impose forty fifty, maybe sixty percent
Speaker 3: tariffs on China for everything that comes in except Tesla's.
Speaker 3: If that's what it means, you will see the most
Speaker 3: extreme outcry from the guy in the street that you've
Speaker 3: ever seen. You know, you think that the protests from
Speaker 3: time to time have been bad, Let him try that
Speaker 3: and see what happens.
Speaker 1: Could Musk potentially I've heard this idea flagged that that
Speaker 1: must could potentially kind of walk back or working with
Speaker 1: Trump walk back some of the tariffs. Say hey, and
Speaker 1: you know, I've got this factory in China. We get
Speaker 1: a lot of these cars from these factories. We don't
Speaker 1: want to be tariff And by the way, there's a
Speaker 1: lot of other products that probably wouldn't be good to tax.
Speaker 3: So Elon Musk, speaking purely from the standpoint of self interest,
Speaker 3: is going to be able to get Donald Trump, who
Speaker 3: has been as strident in his anti China views as
Speaker 3: anyone over the last fifteen years, to change his mind
Speaker 3: just because of his self interest in preserving the sort
Speaker 3: of the financial integrity of this huge outsourcing betties made
Speaker 3: in China. Look, I'm not going to rule anything out,
Speaker 3: but I think again that borders on a hugely disruptive
Speaker 3: response from Trump's core based constituency.
Speaker 1: Yeah.
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Speaker 2: I'd love to talk more about China. You know, recent
Speaker 2: co ed you highlighted the risk of China falling into
Speaker 2: a Japan like quagmire characterized by stagflation deflation as a
Speaker 2: result of a major debt field asset bubble. You also
Speaker 2: mentioned that China may need at japan like three arrow strategy.
Speaker 2: I think you're referencing the framework of the late Japanese
Speaker 2: PM Shinzo Abe, But can you explain more on this?
Speaker 3: Yeah. I taught for a number of years John two
Speaker 3: courses at Yale. One was a course called The Next China,
Speaker 3: which focused on where China was headed. Was focused on
Speaker 3: the lessons of Japan, the rise and fall of Asia's
Speaker 3: first miracle economy, how it happened, and how they responded.
Speaker 3: So I've studied both economies very careful, and increasingly in
Speaker 3: recent years, I've been struck by the similarities between Japan
Speaker 3: and China, largely from a structural point of view, aging societies,
Speaker 3: declining working age population, and stagnant to falling total factor
Speaker 3: of productivity. And then China does exactly what Japan did,
Speaker 3: mistakenly stumbles into a debt fueled property bubble the likes
Speaker 3: of which no country has really ever experienced before. And
Speaker 3: lo and behold, this year there is China's first whiff
Speaker 3: of deflation. So, look, these two economies are not the same.
Speaker 3: I recognize that there's a lot of differences between a
Speaker 3: developing economy that it needs more urbanization, you know, more
Speaker 3: capital stock per worker to boost productivity, and most importantly
Speaker 3: more consumption as China does. But you know, the similarities
Speaker 3: that I've just outlined are close enough where Beijing cannot
Speaker 3: afford to split hairs. And so I argued in this
Speaker 3: piece in the Ft that China needs to act on
Speaker 3: the basis that in fact is succumbing to the Japanese disease,
Speaker 3: rather than be in denial of the applicability of that
Speaker 3: analysis and the three arrows of Shinzo Abi said that
Speaker 3: you address this problem if it is a Japanese like
Speaker 3: problem with monetary policy, which China has done very effectively.
Speaker 3: I might add fiscal policy, which China has been the
Speaker 3: sort of lukewarm and really going as large as it
Speaker 3: needs to. And then the third piece, the third arrow
Speaker 3: in ABB's nomenclature, the structural piece, which China, like Japan,
Speaker 3: has been unable and unwilling to do. And it was
Speaker 3: a political problem in Japan, and it's a political problem
Speaker 3: in China. And monetary and lukewarm fiscal are necessary but
Speaker 3: not sufficient from a Japanese three arrow perspective. And that's
Speaker 3: what worries me about China right now, that it's sort
Speaker 3: of following the path that Japan has been on with
Speaker 3: respect to its structural problems as well as its response.
Speaker 1: I'm glad you brought up that piece, John, because one
Speaker 1: thing that I've been surprised by is recently, you know,
Speaker 1: in recent months, kin has started to roll out and
Speaker 1: this is all kind of provincially and city by city,
Speaker 1: but policies that at least address some of the demographics challenges,
Speaker 1: so you know, profertility policy, a lot more funding for childcare,
Speaker 1: and incentives sometimes just all out just direct cash stimulus.
Speaker 1: So I wonder if they are if officials are kind
Speaker 1: of starting to realize this challenge because demographics and the
Speaker 1: decline in tafar, as you mentioned, is it big, is
Speaker 1: a big part of this.
Speaker 3: Well, you know, they certainly realize it now. For I
Speaker 3: would say fifteen years I mean they abandoned their one
Speaker 3: child family planning policy formally.
Speaker 1: No, I forget maybe twenty sixteen, fish.
Speaker 3: Seven or eight years ago, and they have since they
Speaker 3: did that, increased incentives for women of child bearing age
Speaker 3: to have more care, and they've been reluctant to do that.
Speaker 3: I found that interesting because in my China class, I
Speaker 3: had a number of Chinese women, it was a large class,
Speaker 3: and I pulled them aside and unscientifically selected focus groups
Speaker 3: and I asked them about that, So, like, what's the deal,
Speaker 3: what would it take Chinese women to have more babies?
Speaker 3: And they said two things. Number one, we are now
Speaker 3: used to small families. It's our culture, it's the way
Speaker 3: our family units operate. And number two, the expense it's
Speaker 3: huge and it's not something that we can afford. And
Speaker 3: given high levels of youth unemployment, if anything, that has
Speaker 3: become more of a problem.
Speaker 1: Yeah, certainly a structural issue.
Speaker 2: Stephen, what pushback do you get when you compare China
Speaker 2: to Japan? Like the big picture discussion on the demographics
Speaker 2: and the asset bubble get but a lot of people
Speaker 2: when they look at Japan. It's quite unique. You know,
Speaker 2: the corporate culture is well known to be resistant to change,
Speaker 2: resistant to new technologies. You know. I recently had a
Speaker 2: discussion with an executive of a major Japanese broker and
Speaker 2: he was telling me that they still send investment research
Speaker 2: reports to clients via a fax machine, and I was
Speaker 2: really shocked. Could you argue that maybe China's economy is
Speaker 2: much more dynamic, much more entrepreneurial.
Speaker 3: Yeah, you could, But I think again, I go back
Speaker 3: to the work I did in sort of understanding the
Speaker 3: culture of corporate Japan wrapped around these fairly rigid, inefficient
Speaker 3: care retzus conglomerates centered around a main bank, and you know,
Speaker 3: they invested in each other. And I don't think you
Speaker 3: have to be that creative to find their equally dominant
Speaker 3: counterpart in China in the form of state owned enterprises
Speaker 3: state on enterprises, who are conglomerates who have their tentacles everywhere.
Speaker 3: The banking system is still very much under the thumb
Speaker 3: of the government. And if you look at relative productivity
Speaker 3: statistics private versus state owned enterprises, state on enterprises are
Speaker 3: the low productivity growth segment of the Chinese economy and
Speaker 3: they have become much more important under Jianping than they
Speaker 3: were under his predecessors. So, like I said, they're different.
Speaker 3: The final thing I'd say about this, John, is the
Speaker 3: Chinese have debated this issue internally actively. In May of two,
Speaker 3: twenty sixteen, and there was a big feature on Bloomberg
Speaker 3: about this. There was an interview published on the front
Speaker 3: page of People's Daily, an interview with the editors of
Speaker 3: People's Daily, and a quote authoritative person who preferred to
Speaker 3: remain anonymous, as they do in China, who warned of
Speaker 3: the Japanese like disease afflicting China, and that spurred a
Speaker 3: really active debate. And you know, I do go to
Speaker 3: China a lot, and the Chinese knew that I taught
Speaker 3: a course on the lessons of Japan. I was invited,
Speaker 3: and I have given most recently, you know, last June
Speaker 3: lectures in China to senior Chinese officials on the lessons
Speaker 3: of Japan and their relevance to China. So they they
Speaker 3: understand the risks, and you know, the onus is on
Speaker 3: them to address the poor of those risks they think
Speaker 3: are applicable to them.
Speaker 1: Yeah, long term challenges and short term challenges We've talked
Speaker 1: about quite a bit today. Is there anything else that
Speaker 1: you think we missed or we should ask you one
Speaker 1: more final question about well.
Speaker 3: I think I'm still reeling from the news of who
Speaker 3: Donald Trump is bringing into his inner circle to advise
Speaker 3: him on strategy, and I think that that is challenging
Speaker 3: both internally in the United States and externally to China
Speaker 3: and to the rest of the world. And I would
Speaker 3: maybe just not only is he going after China with
Speaker 3: higher tariffs, but his concept of the most beautiful word
Speaker 3: in the dictionary, tariffs, is one that he wants to
Speaker 3: apply to all of America's trading partners with broad tariffs.
Speaker 3: Sometimes he's mentioned in number ten, but he most frequently
Speaker 3: mentioned in number twenty percent on all tariffs, citing the
Speaker 3: brilliance of the President William McKinley in the late eighteen
Speaker 3: hundreds for realizing the tariffs were the panacea for all
Speaker 3: that ails America. McKinley was dead wrong on that. Trump
Speaker 3: is going to be dead wrong on that. And what
Speaker 3: we never really appreciate in the US is when we
Speaker 3: take actions against others, they take actions against us. It's
Speaker 3: human nature, it's geopolitical strategy, and that type of thinking
Speaker 3: after we passed the Smooth Holly tariffs in the early
Speaker 3: nineteen thirties led to a global trade war that played
Speaker 3: a key role in creating the Great Depression. So, you know,
Speaker 3: we've got to be mindful of the consequences of the
Speaker 3: choices we made in December fifth. American voters never really
Speaker 3: want to look at consequences until it's too late.
Speaker 2: Stephen, before we let you go, I wanted to ask
Speaker 2: there's a lot of investors listening to our podcast. It's
Speaker 2: been quite a sobering discussion on US China relations. Is
Speaker 2: there any countries or sectors that you think could do
Speaker 2: well over the next few years.
Speaker 3: It's very clear that we're in an extremely frothy period
Speaker 3: in asset markets right now. The US market's gone straight up,
Speaker 3: cryptocurrencies have gone straight up.
Speaker 1: Tesla stock has soared more than thirty percent since Trump
Speaker 1: was elected.
Speaker 3: Yeah, Tesla. You know, the Chinese stock market, the Hong
Speaker 3: Kong stock market have gone on massively since the stimulus
Speaker 3: measures were announced on September the twenty fourth. I've been
Speaker 3: around long enough that I don't like to buy into
Speaker 3: vertical lines in markets, and so I'm cautious I'm certainly
Speaker 3: fully invested in my own account, but I do not
Speaker 3: check it every night because I'm nervous about what comes next.
Speaker 3: This is, you know, a time to be wary rather
Speaker 3: than a time to be unbridled in your enthusiasm for
Speaker 3: that asset class that everybody except you seem to be missing.
Speaker 3: So I'm not going to go out there and venture
Speaker 3: a bet on that one.
Speaker 1: Yeah, a lot, a lot of uncertainty, and we appreciate
Speaker 1: you joining us here today to kind of guide us
Speaker 1: through the fog. Thanks so much for joining us.
Speaker 3: Thank you, Kytya, Thank you John.
Speaker 1: I'm Katya Dimitrieva.
Speaker 2: I'm John Lee and this podcast was produced by Clara
Speaker 2: Chen And you've been listening to the Asia Centric podcast