WEBVTT - Who Will Blink First in the US-China Trade War? 0:00:02.720 --> 0:00:07.200 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.560 --> 0:00:11.920 The standoff between the US and China continues to escalate, 0:00:12.119 --> 0:00:16.120 which is leading to economic uncertainty worldwide. Bloomberg News now 0:00:16.120 --> 0:00:18.960 reporting China is expanding the ongoing trade war. 0:00:19.280 --> 0:00:21.240 It does not seem like we're getting any kind of 0:00:21.760 --> 0:00:24.840 state visit or to tant anytime soon, or even high 0:00:24.920 --> 0:00:25.560 level talks. 0:00:25.920 --> 0:00:28.560 In the last two weeks, the US has placed tariffs 0:00:28.600 --> 0:00:31.880 of one hundred and forty five percent on Chinese exports, 0:00:32.320 --> 0:00:35.000 and China has retaliated with tariffs of one hundred and 0:00:35.000 --> 0:00:39.400 twenty five percent and export restrictions on critical rare earth minerals. 0:00:39.760 --> 0:00:42.000 China wants to make a deal, they just don't know 0:00:42.040 --> 0:00:43.199 how quite to go about it. 0:00:43.360 --> 0:00:43.559 You know. 0:00:43.600 --> 0:00:44.559 It's one of those things that. 0:00:44.560 --> 0:00:50.080 Are not quite proud people, and President She's a proud man. 0:00:50.760 --> 0:00:52.960 At the moment, it doesn't seem to be working out, 0:00:53.080 --> 0:00:55.279 I think in the way in which President Trump may 0:00:55.320 --> 0:00:57.280 have anticipated or hoped that it would. 0:00:57.520 --> 0:01:00.560 Jennifer Welch helped lead China policy at the National Security 0:01:00.560 --> 0:01:05.600 Council during the first Trump administration and also under President Biden. Today, 0:01:05.720 --> 0:01:08.800 she's chief geoeconomics analyst for Bloomberg economics. 0:01:09.200 --> 0:01:13.480 They think President Trump's mo is to build pressure. There's 0:01:13.520 --> 0:01:17.400 a real contrast of approaches here. President Trump prides himself 0:01:17.440 --> 0:01:20.640 on his unpredictability as well as his hardball tactics right 0:01:21.120 --> 0:01:25.080 whereas Beijing, in particular Chinese President She Jumping, is a 0:01:25.160 --> 0:01:28.520 very methodical player when it comes to negotiations. They like structure, 0:01:29.160 --> 0:01:31.080 having a clear idea of what the agenda's going to 0:01:31.120 --> 0:01:34.119 be so they can prepare for it. And I think 0:01:34.160 --> 0:01:37.560 President Trump's unpredictability really puts them on the back heel 0:01:37.560 --> 0:01:38.360 in a lot of ways. 0:01:38.760 --> 0:01:41.680 For its part, China has signaled its open to talks. 0:01:42.120 --> 0:01:46.400 On Wednesday, Beijing appointed a point person for negotiations, but 0:01:46.480 --> 0:01:49.840 sources close to China's government have told Bloomberg that President 0:01:49.880 --> 0:01:52.640 She wants to see the White House approach talks with 0:01:52.680 --> 0:01:55.960 more respect, and it wants the Trump administration to adopt 0:01:56.000 --> 0:01:59.960 a more consistent position on tariffs. It begs the question, 0:02:00.560 --> 0:02:03.920 with the world's two largest economies in a standoff, which 0:02:04.000 --> 0:02:07.600 leader President Trump or President She will blink first. 0:02:08.240 --> 0:02:13.320 China is not going to engage in negotiations until it 0:02:13.440 --> 0:02:16.959 feels the United States has shown some sincerity. 0:02:17.240 --> 0:02:20.720 John lou Is Bloomberg's executive editor for Greater China. He's 0:02:20.760 --> 0:02:21.560 based in Beijing. 0:02:21.960 --> 0:02:24.520 I think the main concern for the Chinese side is 0:02:24.560 --> 0:02:27.400 that they go into some sort of back and forth 0:02:27.480 --> 0:02:32.000 with Washington and that whatever agreements they reach are either 0:02:32.600 --> 0:02:36.320 scuttled or the US goes back on them. The US, 0:02:36.360 --> 0:02:40.079 the Trump administration does something to embarrass not only the 0:02:40.160 --> 0:02:42.639 Chinese government but also she and so that I think 0:02:42.760 --> 0:02:44.959 is the number one concern for the Chinese side, and 0:02:45.000 --> 0:02:46.560 they want to make sure that does not happen. 0:02:50.160 --> 0:02:52.040 I'm David Gera, and this is the big take from 0:02:52.040 --> 0:02:54.959 Bloomberg News today on the show. What it will take 0:02:55.000 --> 0:02:58.120 for President's Trump and She to come to the negotiating table, 0:02:58.680 --> 0:03:01.480 How the current state of China, this economy, impacts its 0:03:01.560 --> 0:03:05.240 positioning in the trade war, and why hardball tactics are 0:03:05.400 --> 0:03:15.000 unlikely to work this time around. When preston Trump anoun's 0:03:15.000 --> 0:03:18.200 sweeping tariffs on about sixty trading partners earlier this month, 0:03:18.440 --> 0:03:21.880 he made good on a big campaign promise on day one. 0:03:21.800 --> 0:03:27.680 We will throw out Bidenomics and we will reinstate Maganomics. Maganomics. 0:03:29.120 --> 0:03:33.040 We will go right after China. We will not rely 0:03:33.160 --> 0:03:34.760 on them one bit. 0:03:35.000 --> 0:03:37.840 And while China has long been a target of Trump's ire, 0:03:38.360 --> 0:03:42.160 the size and scope of these tariffs caught Beijing by surprise, 0:03:42.760 --> 0:03:45.440 but Bloomberg' John lou says it shouldn't have come as 0:03:45.440 --> 0:03:45.840 a shock. 0:03:46.360 --> 0:03:49.440 I was surprised that there was surprise because I think 0:03:49.480 --> 0:03:52.320 what Donald Trump did was exactly what he said he 0:03:52.400 --> 0:03:54.920 was going to do. Right he said on the campaign trail, 0:03:55.000 --> 0:03:58.200 He's going to take tariffs on China to sixty some percent. 0:03:59.120 --> 0:04:01.720 After he took I think there was a bit of 0:04:01.760 --> 0:04:05.680 optimism here in China that that would not happen, but 0:04:05.760 --> 0:04:08.960 that's exactly what he did. The Chinese, for their part, 0:04:09.080 --> 0:04:12.280 made very clear that if tariffs came into effect that 0:04:12.360 --> 0:04:16.640 they would hit back. And from what I can gleanm 0:04:17.160 --> 0:04:21.040 the US was itself relatively surprised that the Chinese retaliated 0:04:21.160 --> 0:04:23.719 as proactively and aggressively as they did. 0:04:24.880 --> 0:04:27.400 Here in the US. This is all over the place, 0:04:27.520 --> 0:04:30.680 in newspapers and on television. They're in China. How much 0:04:30.760 --> 0:04:33.680 is this a subject of conversation? Is it everywhere as well? 0:04:33.920 --> 0:04:37.599 It's everywhere. It is the thing everybody is talking about. 0:04:38.680 --> 0:04:45.200 There's an overwhelming country wide consensus or sort of broad 0:04:45.320 --> 0:04:49.680 support for China to fight this, and so these tariffs 0:04:49.720 --> 0:04:55.320 have made you know, Shiji being very popular for retaliating. 0:04:56.040 --> 0:05:01.560 It's seen, I think, a broad swelling of patriotic sentiment, 0:05:01.680 --> 0:05:05.760 support for the government, and there is this feeling on 0:05:05.800 --> 0:05:12.240 the ground here amongst ordinary people, business owners that China 0:05:12.360 --> 0:05:16.080 is being wrong by these turriffs. I think the additional 0:05:16.120 --> 0:05:20.000 thing here, though, is there is a sense of foreboding. 0:05:20.640 --> 0:05:22.360 I think there is a sense of what does it 0:05:22.440 --> 0:05:25.880 mean for China economically and could this get even worse? 0:05:26.520 --> 0:05:29.560 John? On Wednesday, China's National Bureau of Statistics reported that 0:05:29.600 --> 0:05:33.080 the country's gross domestic product grew five point four percent 0:05:33.200 --> 0:05:35.000 in the first quarter from a year ago. That's more 0:05:35.000 --> 0:05:39.159 than was expected. How does China's economic position play into 0:05:39.160 --> 0:05:40.840 how it's approaching this trade war. 0:05:41.160 --> 0:05:45.640 I think the longer China can keep the economy ticking along, 0:05:45.760 --> 0:05:48.720 the longer China can hold out. And I think ultimately 0:05:48.920 --> 0:05:51.880 this is sort of a game of chicken, if you will, 0:05:51.920 --> 0:05:54.800 but also I think a game of endurance, and so 0:05:55.680 --> 0:05:59.120 whether or not economically China can keep growth up, I 0:05:59.120 --> 0:06:03.479 think that'll be a determining factor in how this trade 0:06:03.480 --> 0:06:07.479 war unfolds. And you mentioned the GDP data was better 0:06:07.520 --> 0:06:09.400 than expected for the first quarter. I don't know that 0:06:09.400 --> 0:06:12.600 that is super telling of the actual economic conditions here 0:06:12.640 --> 0:06:15.400 on the ground. There was actually a lot of exports 0:06:15.440 --> 0:06:18.200 in the first quarter that will pull ahead that companies 0:06:18.200 --> 0:06:20.800 in the US. Buyers in the US actually moved their 0:06:20.920 --> 0:06:24.400 orders ahead and sort of built up their inventories in 0:06:24.440 --> 0:06:27.159 anticipation that there would be higher tariffs on Chinese goods, 0:06:27.400 --> 0:06:29.640 and so that might be actually hiding some of the 0:06:29.800 --> 0:06:34.560 underlying weakness in the Chinese economy. We've had a terrible 0:06:34.600 --> 0:06:38.400 property crisis that has yet to be resolved. We've had 0:06:38.520 --> 0:06:43.039 weak consumer sentiment, weak consumer spending. The government has promised 0:06:43.040 --> 0:06:45.800 and has already started to roll out lots of stimulus 0:06:45.800 --> 0:06:50.280 measures to try and get households spending again, get companies 0:06:50.320 --> 0:06:53.920 investing again. And I would expect that the government will 0:06:53.920 --> 0:06:56.600 do more of that and at a greater magnitude as 0:06:56.600 --> 0:06:59.479 we go forward, as the impact of these tariffs are 0:06:59.520 --> 0:07:00.400 felt more broadly. 0:07:00.920 --> 0:07:03.760 That's going to determine how negotiations between the US and 0:07:03.880 --> 0:07:08.640 China play out. But another factor will be personality. Bloomberg's 0:07:08.680 --> 0:07:12.080 Jennifer Welch, who worked in the first Trump administration, thinks 0:07:12.080 --> 0:07:14.920 Trump's long standing emphasis on the art of the deal 0:07:15.280 --> 0:07:16.720 will play a huge role. 0:07:17.240 --> 0:07:21.120 From his perspective. He is the deal maker, right, He 0:07:21.200 --> 0:07:25.320 plays hardball. He is very much empowered at home, and 0:07:25.360 --> 0:07:28.400 I think he's trying to leverage that to bring a 0:07:28.440 --> 0:07:32.239 lot of confidence into these negotiations as sort of coming 0:07:32.280 --> 0:07:35.800 in with a mandate from the American people and really 0:07:35.840 --> 0:07:41.120 trying to utilize the fullest extent of America's comprehensive national 0:07:41.200 --> 0:07:44.600 power here and sort of going further than most presidents 0:07:44.640 --> 0:07:48.000 have in the past to challenge the limits of that. 0:07:48.000 --> 0:07:50.680 That's how I think he is approaching not just China, 0:07:50.840 --> 0:07:53.560 but negotiations with all these partners. 0:07:53.800 --> 0:07:56.640 What role does pride play in these conversations? You have 0:07:56.680 --> 0:07:59.320 two leaders here who are extremely proud individuals. I think 0:07:59.360 --> 0:08:02.760 it's fair to say, how does that affect or shape 0:08:03.520 --> 0:08:05.160 talks of this magnitude. 0:08:05.320 --> 0:08:07.320 I think that's one of the main hurdles to talks 0:08:07.640 --> 0:08:09.800 really taking off in a serious way at this point 0:08:09.800 --> 0:08:12.320 in time. Obviously, there's a lot of pain on both sides. 0:08:12.360 --> 0:08:14.680 There's the potential for even deeper pain as these terrorsts 0:08:14.680 --> 0:08:17.480 start to bite, and yet we're not really seeing a 0:08:17.480 --> 0:08:19.760 lot of progress in terms of negotiations, and in fact, 0:08:19.760 --> 0:08:22.160 each side still seems to be saying that the ball 0:08:22.240 --> 0:08:23.800 is in the other side's court, and I think a 0:08:23.880 --> 0:08:26.160 main reason for that is because neither of them wants 0:08:26.240 --> 0:08:29.200 to look weak, right. President Trump, especially after pausing on 0:08:29.240 --> 0:08:32.680 reciprocal terarifts and then even on the electronics exemptions, has 0:08:32.760 --> 0:08:35.240 been kind of pushing back in other ways to demonstrate 0:08:35.280 --> 0:08:37.640 he's still very strong on trade. And I think that's 0:08:37.720 --> 0:08:40.040 especially important for him when it comes to China because 0:08:40.040 --> 0:08:42.599 of the legacy of his campaign promises there and the 0:08:42.679 --> 0:08:44.920 legacy of his first term of wanting to appear tough 0:08:45.000 --> 0:08:47.839 on Beijing. I think likewise, for President She Jim Paying 0:08:48.160 --> 0:08:51.079 he feels as the leader of the second largest economy 0:08:51.120 --> 0:08:53.640 in the world, they need to demonstrate that they can't 0:08:53.640 --> 0:08:56.160 be pushed around by the United States anymore. They took 0:08:56.200 --> 0:08:59.880 those prior tariff hikes on the Chin and have to 0:09:00.040 --> 0:09:02.640 demonstrating their willingness to stand up for China. 0:09:04.040 --> 0:09:07.520 I think we're familiar with President Trump's personality, but President 0:09:07.600 --> 0:09:09.720 she is much more of an enigma for American audiences 0:09:09.720 --> 0:09:11.240 and John, I wonder if you could paint a picture 0:09:11.280 --> 0:09:14.679 for us of him as a leader, how he's responded, 0:09:14.679 --> 0:09:16.320 and what that tells us just about the way he 0:09:16.400 --> 0:09:17.880 approaches leading his country. 0:09:18.360 --> 0:09:22.880 I think he is a leader that projects stability, that 0:09:22.960 --> 0:09:30.080 projects forthrightness and standing his place, not making sudden turns 0:09:30.080 --> 0:09:32.320 in policy. But at the same time, I think when 0:09:32.440 --> 0:09:36.319 push comes to shove, he will make dramatic changes. During 0:09:36.360 --> 0:09:40.280 COVID China had this COVID zero policy. It put a 0:09:40.360 --> 0:09:43.840 tremendous burden on the economy, on the average citizen. And 0:09:43.880 --> 0:09:46.680 then at the end of twenty twenty two, we started 0:09:46.679 --> 0:09:50.400 seeing protests, people going on the street wanting the government 0:09:50.440 --> 0:09:53.800 to end the COVID zero policy. And because of that, 0:09:54.040 --> 0:09:57.040 he did almost overnight, just did away with that policy. 0:09:57.080 --> 0:09:59.520 And he is a man who is willing to make changes. 0:10:00.040 --> 0:10:03.320 But before that, I think he's shown that he's going 0:10:03.400 --> 0:10:07.600 to project strength and he's going to project stability, and 0:10:07.640 --> 0:10:09.719 that he knows where he's going and it's the right 0:10:09.760 --> 0:10:10.520 direction forward. 0:10:11.280 --> 0:10:13.960 Jennifer Welch says what President Trump may have been betting 0:10:14.000 --> 0:10:17.680 on is that China's economic situation, in particular the size 0:10:17.679 --> 0:10:20.199 of its debt, along with the housing and youth unemployment 0:10:20.240 --> 0:10:22.840 crises John mentioned, would make she bend. 0:10:23.120 --> 0:10:25.079 This is me reading the tea leaves a little bit. 0:10:25.559 --> 0:10:28.520 He may have not fully anticipated the extent to which 0:10:28.559 --> 0:10:30.880 Beijing was going to push back on this, so I 0:10:30.920 --> 0:10:33.200 think he engaged in kind of this tip for tat 0:10:33.240 --> 0:10:36.840 with Beijing to try and back them down by escalating 0:10:36.840 --> 0:10:40.120 to de escalate again. But the de escalation never happened, 0:10:40.120 --> 0:10:42.600 and now we have these extremely high terrorf rates on 0:10:42.640 --> 0:10:43.719 both sides. 0:10:45.160 --> 0:10:47.800 After the break where the US China trade war goes 0:10:47.800 --> 0:10:51.040 from here and the weapons Beijing has at its disposal 0:10:51.320 --> 0:11:03.679 to counter additional tariffs. Tensions between the US and China 0:11:03.800 --> 0:11:06.520 are fraught right now, and from the rhetoric coming out 0:11:06.520 --> 0:11:08.840 of the White House, you'd think the two have never 0:11:08.880 --> 0:11:12.680 been further apart on trade, but Bloomberg Economics, as Jennifer 0:11:12.720 --> 0:11:15.760 Welch says, Presidents Trump and She half broke her to 0:11:15.840 --> 0:11:16.800 deal before. 0:11:17.000 --> 0:11:19.240 It was inked in January twenty twenty. It's called the 0:11:19.280 --> 0:11:21.720 Phase one trade deal, and that was meant to be 0:11:21.880 --> 0:11:25.480 the starting point for what we're called Phase two negotiations 0:11:25.480 --> 0:11:28.360 that were supposed to deal with much more contentious issues 0:11:28.400 --> 0:11:31.880 around structural or forums in China that never really took off, 0:11:31.880 --> 0:11:33.840 in part because of the pandemic and in part because 0:11:33.880 --> 0:11:38.960 of deepening US China tensions. The question now is are 0:11:39.000 --> 0:11:42.400 the negotiations that may emerge out of this current round 0:11:42.440 --> 0:11:46.960 of tensions geared towards a Phase one redux where it's 0:11:47.040 --> 0:11:49.000 just going to be addressing the kind of current trade 0:11:49.200 --> 0:11:53.120 imbalance and through purchase agreements, or is it going to 0:11:53.120 --> 0:11:56.480 be trying to attack what those Phase two talks that 0:11:56.559 --> 0:12:00.960 never started were geared towards these larger structural issues. And 0:12:01.040 --> 0:12:03.559 I think different members of the administration probably have different 0:12:03.600 --> 0:12:06.600 perspectives on that. And the key question is going to 0:12:06.640 --> 0:12:09.400 be what's President Trump's view, right, And some of this 0:12:09.440 --> 0:12:11.240 may depend a little bit on the timeline to be 0:12:11.320 --> 0:12:14.200 frank right. I think one of the major incentives for 0:12:14.280 --> 0:12:17.320 him on the Phase one deal was it was inked 0:12:17.360 --> 0:12:20.080 in an election year and he probably wanted to put 0:12:20.160 --> 0:12:22.280 the US China trade war to the side and get 0:12:22.280 --> 0:12:25.080 that resolved before heading into a presidential election. 0:12:25.600 --> 0:12:28.440 Jennifer says it's important to remember that while President Trump 0:12:28.480 --> 0:12:31.600 isn't up for reelection and doesn't seem too worried about 0:12:31.600 --> 0:12:34.360 the fallout from a trade war, many of his allies 0:12:34.360 --> 0:12:38.280 in Congress are, and the midterms are right around the corner. 0:12:38.840 --> 0:12:42.840 That could be an incentive for him where maybe the ambition, 0:12:43.240 --> 0:12:46.840 so to speak, is lowered to something more like a 0:12:46.840 --> 0:12:49.920 Phase one Redux deal. But I think that's a million 0:12:49.920 --> 0:12:52.959 dollar question at this point, and it's also another reason 0:12:53.000 --> 0:12:55.920 why talks probably have nim progressed all that far as. 0:12:55.800 --> 0:12:58.720 The stalemate continues, both the US and China are eyeing 0:12:58.800 --> 0:13:02.280 other trade partners. The Trump administration has been lining up 0:13:02.320 --> 0:13:05.840 potential deals with some of China's biggest economic rivals. Some 0:13:05.880 --> 0:13:09.440 of the President's economic advisors met with leaders from Japan yesterday, 0:13:10.000 --> 0:13:12.760 and the administration has talks scheduled with South Korea and 0:13:12.840 --> 0:13:16.360 India in the coming weeks. For his part, President She 0:13:16.480 --> 0:13:20.320 has made trips to Vietnam, Cambodia, and Malaysia, and John 0:13:20.360 --> 0:13:23.679 lu says she is looking to improve China's trade relationship 0:13:23.720 --> 0:13:24.280 with the EU. 0:13:25.120 --> 0:13:28.880 Not only has Trump put these tariffs on China, but 0:13:28.920 --> 0:13:33.000 he's also put them on lots of American allies, Europe, 0:13:33.280 --> 0:13:37.320 many Southeast Asian countries, and so that gives China an 0:13:37.360 --> 0:13:41.040 opportunity to step in and to have itself be seen 0:13:41.320 --> 0:13:45.160 as a stabilizing force in the global economy as opposed 0:13:45.200 --> 0:13:48.800 to Washington d C, which Beijing will project as being 0:13:48.960 --> 0:13:53.680 unpredictable and as being not so caring about the rest 0:13:53.720 --> 0:13:57.640 of the world and concerned mostly about itself. Xijiping is 0:13:57.679 --> 0:14:01.319 in Southeast Asia this week. He's visiting Vietnam, He's visiting Malaysia. 0:14:01.840 --> 0:14:05.559 In Vietnam, he called on the Vietnamese to partner with 0:14:05.640 --> 0:14:09.720 China to resist the unilateral bullying that's happening in the world, 0:14:09.760 --> 0:14:12.920 which is of course availed reference to the United States. 0:14:13.200 --> 0:14:17.000 There's been reports that we're going to get many European 0:14:17.080 --> 0:14:21.080 leaders visiting Beijing later this year for a summit. That 0:14:21.200 --> 0:14:25.040 would suggest another opportunity for China to enhance its relationship 0:14:25.080 --> 0:14:29.800 with Europe. Whether or not other countries wholeheartedly embrace China, 0:14:29.800 --> 0:14:32.800 I think, is a different question. In Asia, for example, 0:14:33.000 --> 0:14:36.960 you have places like Japan, India, the Philippines, other Southeast 0:14:37.000 --> 0:14:40.200 Asian countries that have territorial disputes with China, and so 0:14:40.280 --> 0:14:43.960 they are not going to be embracing China that quickly. 0:14:43.960 --> 0:14:47.360 There's going to be suspicion in those relationships. Same with Europe. 0:14:47.680 --> 0:14:55.440 China has supported Russia and its war invasion of Ukraine diplomatically, rhetorically, economically, 0:14:55.520 --> 0:15:00.800 and so that is put many European countries off, and 0:15:00.840 --> 0:15:04.280 so there's going to be suspicion as China tries to 0:15:04.320 --> 0:15:05.680 strengthen these relationships. 0:15:05.960 --> 0:15:09.400 You characterize this as a game of chicken, and I'm 0:15:09.400 --> 0:15:12.000 wondering sort of how long China has here, how long 0:15:12.000 --> 0:15:14.520 the runway is for President She to hold out on 0:15:14.560 --> 0:15:18.400 negotiating before the situation becomes difficult for China economically, any 0:15:18.400 --> 0:15:20.000 sense of that At this point. 0:15:19.680 --> 0:15:21.960 I would say the runway for She in terms of 0:15:21.960 --> 0:15:24.920 that game of chicken is very long. Without a doubt, 0:15:25.080 --> 0:15:28.440 there is broad public support for China to fight back, 0:15:28.840 --> 0:15:31.600 and I think that means people are willing to take 0:15:31.880 --> 0:15:35.200 a little bit more pain if it means that that's 0:15:35.680 --> 0:15:38.600 what they need to do to contribute to the fight 0:15:38.640 --> 0:15:41.600 against the United States. And the other thing I would 0:15:41.600 --> 0:15:46.040 say is the Chinese government has a history of enduring 0:15:46.760 --> 0:15:51.960 difficult periods where they've placed additional burdens on local companies' 0:15:52.000 --> 0:15:56.400 local households. COVID is a great example of that. You know, 0:15:56.920 --> 0:16:00.360 I don't know of many countries where the government could 0:16:00.400 --> 0:16:03.440 have imposed lockdowns like they did here in China, and 0:16:03.480 --> 0:16:06.840 so I do think those points suggest that they can 0:16:06.840 --> 0:16:08.240 play this game for quite a while. 0:16:08.680 --> 0:16:12.800 Meaning President Trump might not get that phone call anytime soon. 0:16:13.160 --> 0:16:15.520 And the reason for that is there's a very different 0:16:15.840 --> 0:16:21.800 cultural dynamic at work, where the Chinese believe very strongly 0:16:21.880 --> 0:16:25.880 that at a working level that she will appoint somebody, 0:16:26.400 --> 0:16:29.640 that Trump will appoint somebody, and those two individuals will 0:16:29.680 --> 0:16:31.600 go back and forth and back and forth and back 0:16:31.600 --> 0:16:34.160 and forth and work out all the details of a deal. 0:16:35.120 --> 0:16:38.200 And only after that deal has been finalized and everybody's 0:16:38.240 --> 0:16:42.920 happy with it, only then will Hijinping appear to shake 0:16:42.960 --> 0:16:46.520 hands and sign something. President Trump really just wants to 0:16:46.560 --> 0:16:49.600 get she on the phone and try and work something 0:16:49.640 --> 0:16:55.160 out person to person, one on one, and it's just 0:16:55.280 --> 0:16:57.680 not the way the Chinese system works. It's not the 0:16:57.720 --> 0:16:59.080 way that Chijinping works. 0:16:59.560 --> 0:17:02.960 So that big question who's going to blink first? I 0:17:03.000 --> 0:17:05.600 put it to both Jennifer Welch in Washington and John 0:17:05.680 --> 0:17:06.600 Lou in Beijing. 0:17:07.160 --> 0:17:12.639 The first person to blink is going to immediately get 0:17:12.880 --> 0:17:16.200 a quick response from the other side. So if President 0:17:16.280 --> 0:17:21.119 Trump blinks first, you're going to get something affirmative from 0:17:21.160 --> 0:17:23.119 the Chinese side because they want out of this just 0:17:23.160 --> 0:17:26.440 as badly. If the Chinese blink, I think you probably 0:17:26.520 --> 0:17:28.840 will hear this great sigh of relief from Washington, DC. 0:17:29.520 --> 0:17:32.400 My bet would be that it is going to be 0:17:32.880 --> 0:17:37.240 neither side overtly obviously blinking. I think conversations are going 0:17:37.240 --> 0:17:40.440 to start in a quieter way at more working levels, 0:17:40.920 --> 0:17:44.639 to set this stage eventually for a leader level conversation 0:17:44.920 --> 0:17:49.800 because of sort of their mutual interest in guarding their 0:17:49.840 --> 0:17:54.640 respective pride. So that's my prediction. We'll see when it's 0:17:54.720 --> 0:17:55.720 upe actually occurring. 0:17:58.800 --> 0:18:01.320 This is the Big Take from bloom News. I'm David Gura. 0:18:01.880 --> 0:18:04.879 This episode was produced by David Fox, Rachel Lewis Chrisky, 0:18:05.000 --> 0:18:08.560 and our deputy executive producer, Julia Weaver. It was edited 0:18:08.560 --> 0:18:11.680 by Patty Hirsch, John Low, Jennifer Welch, and Chris Antsy. 0:18:12.240 --> 0:18:14.879 It was fact checked by Andreana Tapia and mixed and 0:18:15.000 --> 0:18:18.840 sound designed by Alex Sagura. Our senior producer is Naomi Shaven, 0:18:19.080 --> 0:18:22.639 Our senior editor is Elizabeth Ponso. Our executive producer is 0:18:22.720 --> 0:18:26.280 Nicole Beemster Boor. Sage Bauman is Bloomberg's head of Podcasts. 0:18:26.880 --> 0:18:28.960 If you liked this episode, make sure to subscribe and 0:18:29.000 --> 0:18:31.520 review The Big Take wherever you listen to podcasts. It 0:18:31.560 --> 0:18:34.480 helps people find the show, thanks for listening. We'll be 0:18:34.560 --> 0:18:35.280 back tomorrow.