WEBVTT - Covid Forced the World to Change in Ways We May Keep 0:00:05.640 --> 0:00:09.119 Hello, and welcome to Stephanomics, the podcast that brings the 0:00:09.119 --> 0:00:12.360 global economy to you. The smart heard among You will 0:00:12.400 --> 0:00:15.720 have noticed I'm not Stephanie Flanders. In fact, I'm Tom Warlick, 0:00:15.840 --> 0:00:19.360 chief economist at Bloomberg. Stephanie is taking a break this week, 0:00:19.400 --> 0:00:22.400 and in a rare display of poor judgment, left me 0:00:22.480 --> 0:00:26.239 to mind the shop. Now. There haven't been many benefits 0:00:26.239 --> 0:00:28.720 from the COVID crisis, but one that is hard to 0:00:28.760 --> 0:00:31.360 deny has been that the planet has been given a 0:00:31.360 --> 0:00:34.520 bit of a breather. Carbon emissions are expected to fall 0:00:34.560 --> 0:00:37.879 in twenty for the first time since the Great Financial Crisis, 0:00:38.479 --> 0:00:41.959 and marine biologists tell us that whales and other aquatic 0:00:42.040 --> 0:00:44.479 life are getting to hear themselves think for a change 0:00:45.400 --> 0:00:48.159 in those respects, at least, we don't really want to 0:00:48.200 --> 0:00:50.600 go back to the way things were about how to 0:00:50.680 --> 0:00:54.320 do it? Bloomberg's own Michell jam risco as a story 0:00:54.360 --> 0:00:58.000 this week explaining how some of Southeast Asia's tourist hotspots 0:00:58.160 --> 0:01:01.600 are trying to answer that question. We also have senior 0:01:01.720 --> 0:01:06.400 UK economist Dan Hansen on Brexit and Dave Rank, America's 0:01:06.440 --> 0:01:09.720 former top diplomat in China, on high relations between the 0:01:09.760 --> 0:01:13.160 world's two biggest powers might look under a Biden administration. 0:01:13.440 --> 0:01:16.240 But first of all, here's Michelle with a view from 0:01:16.319 --> 0:01:29.920 Thailand's tourist authority. These feelings are waiting for you to 0:01:30.040 --> 0:01:36.360 come back from the north. That's the appeal from the 0:01:36.400 --> 0:01:40.200 Tourism Authority of Thailand, a country that typically owes one 0:01:40.319 --> 0:01:43.480 fifth of its economy to tourism. Thailand has seen its 0:01:43.520 --> 0:01:46.400 growth protects fall apart this year with travel shut down 0:01:46.400 --> 0:01:50.400 amid the global pandemic. Yet even as Southeast Asia's second 0:01:50.400 --> 0:01:53.200 biggest economy is doing what it can to bring visitors back, 0:01:53.840 --> 0:01:56.440 it's also doubling down on a rare victor in the pandemic. 0:01:56.800 --> 0:02:01.120 The environment. The country has seen normally packed beaches get 0:02:01.120 --> 0:02:06.240 a reprieve, elephants roam freely, and endangered species pepper lonely shorelines. 0:02:07.400 --> 0:02:11.840 That's prompted Thailand's Environmental Minister, Barrow Silva Archa to dust 0:02:11.880 --> 0:02:17.120 off a decades old dream. Now, by government decree, Thailand's 0:02:17.200 --> 0:02:19.399 national parks will be required to close for at least 0:02:19.440 --> 0:02:22.919 a couple of months every year. That gives mother nature 0:02:22.960 --> 0:02:25.320 the chance to regularly get the sort of virus era 0:02:25.400 --> 0:02:30.000 rehabilitation that's been a silver lining for an otherwise disastrous 0:02:31.440 --> 0:02:37.560 cod COVID nineteen is a big knock on the door. 0:02:38.000 --> 0:02:40.560 That is time for you to adjust your way of life. 0:02:40.800 --> 0:02:43.440 If you don't adjust, mother nature will do it for you. 0:02:44.280 --> 0:02:47.959 The disease is the result of humans upsetting balance in nature. 0:02:48.639 --> 0:02:52.320 Everything has repercussions. We have to find balance and should 0:02:52.440 --> 0:02:55.120 use this pandemic as a lesson that we have to 0:02:55.200 --> 0:02:58.640 protect nature before it's too late. We have to realize 0:02:58.639 --> 0:03:05.120 it's a very see of the damage we've cost. The 0:03:05.120 --> 0:03:07.720 coronavirus pandemic has been a wake up call too many. 0:03:08.639 --> 0:03:11.280 Amid the horrors of sickness, the terrible death toll, and 0:03:11.320 --> 0:03:15.120 the devastation of economies, it's prompted people, businesses, and governments 0:03:15.160 --> 0:03:19.000 across the globe to rethink the way they live and operate. Now, 0:03:19.040 --> 0:03:21.800 as countries try to take their first steps back toward normality, 0:03:22.400 --> 0:03:25.040 many are reassessing and wondering what elements of the COVID 0:03:25.080 --> 0:03:27.600 world they might actually want to keep even after the 0:03:27.639 --> 0:03:31.960 crisis has passed. On the Thai Island destination of cocamt 0:03:32.400 --> 0:03:35.640 which forms part of a marine national park, businesses are 0:03:35.640 --> 0:03:39.360 weighing the government's message on sustainable tourism against their simple 0:03:39.440 --> 0:03:55.120 desperation to have visitors backs. I've lived here for modern tas, 0:03:55.960 --> 0:04:01.160 I've never seen the that Skalawan Kumnum also known as Petch. 0:04:02.000 --> 0:04:04.320 He's a fire dance performer who also owns a bar. 0:04:04.600 --> 0:04:08.680 It is the rule that looks good on paper, but 0:04:08.800 --> 0:04:14.240 in reality, especially for small business populate does who have 0:04:14.400 --> 0:04:22.480 rent to pay would be devastating. Before the pandemic struck, 0:04:22.800 --> 0:04:25.520 cosimt was well known for its nightlife and party scene, 0:04:25.520 --> 0:04:28.440 which profited from the hordes of visitors to the island's idyllic, 0:04:28.480 --> 0:04:32.640 white sand beaches. One afternoon earlier this month, only a 0:04:32.680 --> 0:04:35.120 few visitors walked on the shoreline of the newly pristine 0:04:35.200 --> 0:04:38.719 main beach, talking to locals from the beach front papayas 0:04:38.720 --> 0:04:42.880 salad vendors to bar workers like Wichion Jong. Everyone worries 0:04:42.880 --> 0:04:45.599 how they will survive if there are more months without tourists, 0:04:46.680 --> 0:04:50.040 which who tends the Naga bar on the island thinks 0:04:50.040 --> 0:04:51.880 he might even have to leave the country to find 0:04:51.880 --> 0:04:55.320 employment and pay the bills during the closure. It's one, 0:04:59.240 --> 0:05:02.520 there are two se Some agree with the closures because 0:05:02.520 --> 0:05:06.279 he's during the low season, but some said the closure 0:05:06.320 --> 0:05:17.360 will mean no income for them. Saren tip To Monks, 0:05:18.000 --> 0:05:21.599 president of the Islands Tourism Association, says there was already 0:05:21.640 --> 0:05:23.880 a tangle with government officials on the duration of the 0:05:23.880 --> 0:05:26.960 annual closures, which the ministry first wanted to be four 0:05:27.040 --> 0:05:30.599 months long. Businesses are calling for a waiver from the 0:05:30.640 --> 0:05:34.440 closures altogether. They argue that an annual shutdown would inflict 0:05:34.520 --> 0:05:38.240 yet more pain on the islands residents after the pandemic 0:05:38.279 --> 0:05:45.720 already decimated trade Hawaii will affect us for sure. Don't 0:05:45.720 --> 0:05:50.880 forget that this archipelago isn't just some uninhabited islands. There 0:05:50.880 --> 0:05:54.320 are people living on God Summit, so if they close, 0:05:54.600 --> 0:05:57.880 there will be an impact. At first, they wanted to 0:05:57.880 --> 0:06:00.880 close the park for four months. We've asked them to 0:06:00.920 --> 0:06:03.960 cut it back to two months, but really we don't 0:06:03.960 --> 0:06:07.440 want them to close at all. Who will be responsible 0:06:07.560 --> 0:06:12.760 for our jobs, income and livelihoods For tourism businesses. If 0:06:12.760 --> 0:06:15.960 there's no clients at all for just two or three weeks, 0:06:16.360 --> 0:06:21.040 we'll feel the pain already because there are expenses. People 0:06:21.080 --> 0:06:23.840 here on the island are already taking care of the environment. 0:06:24.240 --> 0:06:28.240 Otherwise we wouldn't be here today. Nobody is here to 0:06:28.279 --> 0:06:37.520 destroy the island. They need to rethink this. Coosamt was 0:06:37.560 --> 0:06:41.159 once a modest fishing village, then it exploded into a 0:06:41.200 --> 0:06:45.400 magnet for European visitors and backpackers. It's only getting tourists 0:06:45.400 --> 0:06:47.800 by the handfuls these days, though, and even then it's 0:06:47.880 --> 0:06:52.080 usually locals visiting on the weekends with borders still largely 0:06:52.080 --> 0:06:55.160 closed in a special tourism visa only just being offered now. 0:06:55.800 --> 0:06:58.640 Thailand's efforts to revive the industry have relied on getting 0:06:58.640 --> 0:07:02.760 that domestic travel churning again. They've even tried offering high 0:07:02.800 --> 0:07:07.200 roller packages to push wealthier travelers to depleted resorts, but 0:07:07.279 --> 0:07:09.520 these have been met with limited success and are no 0:07:09.680 --> 0:07:12.920 match for Thai tourism's ban or year of when it 0:07:12.960 --> 0:07:15.320 took in more than sixty billion dollars in revenue from 0:07:15.360 --> 0:07:19.760 about forty million foreign visitors. There's a heated debate in 0:07:19.800 --> 0:07:22.880 the business world about how hard to push sustainability tourism 0:07:22.960 --> 0:07:27.040 right now. If you don't prioritize it, you risk overstressing 0:07:27.080 --> 0:07:30.120 popular destinations and ruining what visitors came to enjoy in 0:07:30.160 --> 0:07:33.480 the first place. But push too hard and only the 0:07:33.560 --> 0:07:36.080 very wealthiest will be able to frequent these beautiful corners 0:07:36.080 --> 0:07:38.920 of the earth, crushing local mom and pop firms that 0:07:38.960 --> 0:07:44.480 rely on mass tourism. McKinsey and Company partner Steve Saxon 0:07:44.520 --> 0:07:46.560 has spent the past decade and a half watching the 0:07:46.600 --> 0:07:50.480 fast evolving tourism landscape and Asia, including a long building 0:07:50.480 --> 0:07:52.720 debate on how many visitors might mean too much of 0:07:52.720 --> 0:07:56.720 a good thing. What we called over tourism before was 0:07:56.760 --> 0:08:00.800 never actually any good for anybody. The toys themselves didn't 0:08:00.840 --> 0:08:03.680 enjoy going to crowded places where they couldn't enjoy the 0:08:03.760 --> 0:08:06.200 natural beauty or see the sites because there were just 0:08:06.280 --> 0:08:09.960 too many other tourists, and in some cases this even 0:08:10.160 --> 0:08:15.280 started to frustrate the local residents. Higher end or more 0:08:15.320 --> 0:08:18.480 affluent tourism does support a bit more in terms of 0:08:18.600 --> 0:08:22.760 jobs and in terms of GDP. However, in terms of 0:08:22.760 --> 0:08:27.080 flights coming in hotel rooms you need, that's dependent on 0:08:27.120 --> 0:08:30.480 the number of guests. The focus needs to be on 0:08:30.520 --> 0:08:33.959 how do we bring back the quantity and improve the 0:08:34.040 --> 0:08:38.000 quality at the same time. Thailand isn't alone in its dilemma, 0:08:38.600 --> 0:08:42.360 especially in Southeast Asia, whose travel and tourism industries account 0:08:42.400 --> 0:08:45.719 for over one tenth of the region's GDP and its employment. 0:08:46.360 --> 0:08:49.120 The boom already had policymakers thinking about how to make 0:08:49.120 --> 0:08:53.280 sure these gains were sustainable. As in Thailand, the Philippines 0:08:53.360 --> 0:08:55.880 is now making the environment a bigger part of that conversation. 0:08:56.679 --> 0:09:01.680 It's become a sort of grassroots movement. Take Alamino's home 0:09:01.720 --> 0:09:05.760 of the Hundred Islands National Park as an example. Twenty 0:09:05.840 --> 0:09:09.160 four year old Mayor Brian Celeste is sketching plans for 0:09:09.240 --> 0:09:14.920 longer term restrictions to foot traffic. Local scuba sureros divers 0:09:14.960 --> 0:09:18.359 who collect garbage have been retrieving only a few kilograms 0:09:18.400 --> 0:09:21.719 a month recently, compared with hundreds before the virus hit. 0:09:23.160 --> 0:09:25.839 So Lestie wants to preserve those games long after COVID 0:09:25.920 --> 0:09:28.760 nineteen has eased, and he's commissioned to study to help 0:09:28.800 --> 0:09:33.320 local officials moderate the inflow of visitors. For me, because 0:09:34.120 --> 0:09:36.880 under dions it's a it's a pressure, do I know, 0:09:37.720 --> 0:09:41.520 it's a pressure to our city. So we cannot afford 0:09:41.559 --> 0:09:44.120 to loose under dias And if we continue to over 0:09:44.200 --> 0:09:51.160 commercialize our our and all we may stand in the 0:09:51.320 --> 0:09:55.439 honorand so we try our best to limit, not severely 0:09:55.480 --> 0:10:01.319 limit the man very at least to balance everything, balancing 0:10:01.360 --> 0:10:10.000 commercialization and preservation between if you overcommercialize preserved, if you 0:10:10.120 --> 0:10:13.599 overpreserve the kind of man An incong cities. So it 0:10:13.679 --> 0:10:16.640 does we have to strike the balance between. We heard 0:10:16.640 --> 0:10:19.400 a lot about balance and the course of reporting this story. 0:10:20.240 --> 0:10:24.160 In reality, government officials are all quick to celebrate environmental gains, 0:10:24.640 --> 0:10:27.720 the far more at odds about how to sustain them. 0:10:27.720 --> 0:10:31.199 That's especially true during a highly fraught economic recovery, as 0:10:31.200 --> 0:10:33.440 other problems pop up like a game of whack mole 0:10:33.679 --> 0:10:38.199 competing for attention. Even just across Asia, there are plenty 0:10:38.200 --> 0:10:41.320 of countries that are implementing their own environmental studies, but 0:10:41.400 --> 0:10:45.120 prioritizing the prittying up of local attractions in preparation for 0:10:45.200 --> 0:10:49.280 mobs of tourists to return Sri Lanka's enjoying a bit 0:10:49.320 --> 0:10:52.319 of a boom and domestic tourism and New Zealand's authorities 0:10:52.320 --> 0:10:56.200 are pushing the same. At Cambodia's world famous anchor Wad 0:10:56.200 --> 0:10:59.560 Temple complex, flower beds and thousands of trees are being 0:10:59.559 --> 0:11:04.760 planted and anticipation of the crowd's return. Mother Nature certainly 0:11:04.760 --> 0:11:08.000 has more adoring fans these days. It'll be tough to 0:11:08.080 --> 0:11:10.720 keep up her winning street because everyone recalibrates their lives 0:11:10.920 --> 0:11:15.360 yet again after the pandemic. But environmental activists Billy doom 0:11:15.480 --> 0:11:20.040 Leeing in this Philippines is upbeat. She sees businesses adapting 0:11:20.520 --> 0:11:25.000 because they'll have to because Touristan has been closed for 0:11:25.160 --> 0:11:32.199 so long. Um businessmen are tourists and enterprises. I detempted, 0:11:32.480 --> 0:11:37.319 do you know, get as many people back as possible. 0:11:37.880 --> 0:11:42.319 But I think the circumstances surrounding the pandemic will naturally 0:11:42.720 --> 0:11:46.800 UM help crypt that because now people are forced to 0:11:46.840 --> 0:11:51.200 see it to innovate, what other experiences, what other models 0:11:51.200 --> 0:11:57.080 they can use to become sustainable financially and ecologically. As 0:11:57.120 --> 0:12:00.040 travel lanes reopen and fits and starts, some of the 0:12:00.120 --> 0:12:03.600 world's hattes destinations will have a new look, and they'll 0:12:03.640 --> 0:12:07.320 expect everyone to help keep it that way. For Bloomberg News, 0:12:07.559 --> 0:12:19.000 this is Michelle jam Risco. Thanks Michelle for that report. 0:12:19.400 --> 0:12:21.360 Good to hear that the pandemic is having at these 0:12:21.360 --> 0:12:25.120 some positive impacts, even if the main beneficiaries so far 0:12:25.400 --> 0:12:30.000 a Thailand's elephant population. Now let's go from a part 0:12:30.040 --> 0:12:32.400 of the world where the COVID pandemic is providing some 0:12:32.559 --> 0:12:36.280 respite to a partner. It definitely is not U. S. 0:12:36.360 --> 0:12:40.400 China relations Already in we've had a war of words 0:12:40.480 --> 0:12:43.440 between Washington, d C. And Beijing over the origins of 0:12:43.440 --> 0:12:48.959 the COVID crisis, US sanctions on Chinese technology firms, escalating 0:12:49.000 --> 0:12:52.800 concern about events in Shinjang in Hong Kong, the US 0:12:52.800 --> 0:12:57.480 closing a Chinese consulate, and China retaliating in kind. All 0:12:57.520 --> 0:13:01.040 of this, of course, is bad news for the global economy. 0:13:01.480 --> 0:13:05.880 At Bloomberg Economics, we've estimated the decoupling between China and 0:13:05.880 --> 0:13:09.720 the US could deal a significant blow to China's growth, 0:13:10.360 --> 0:13:13.200 and if the US persuaded its allies to join up 0:13:13.200 --> 0:13:17.600 on a containment strategy, China's annual expansion could slow all 0:13:17.600 --> 0:13:21.480 the way down towards one percent. Now, not a lot 0:13:21.520 --> 0:13:23.880 of people know more about U. S. China relations than 0:13:23.960 --> 0:13:27.280 Dave Rank. Dave served as the Deputy Chief of Mission 0:13:27.400 --> 0:13:30.240 in the US Embassy in Beijing. That means he was 0:13:30.280 --> 0:13:33.920 the most senior career diplomat charged with making the relationship 0:13:33.960 --> 0:13:36.800 work on the ground. He quit in two thousand and 0:13:36.880 --> 0:13:40.439 seventeen after a difference of opinion with the Trump administration 0:13:40.600 --> 0:13:43.760 whole climate change. He believed in it and they didn't, 0:13:44.400 --> 0:13:47.160 and is now teaching at Yale and providing advice to 0:13:47.240 --> 0:13:50.240 business leaders from a perch at the Cohen Group. I'm 0:13:50.360 --> 0:13:57.080 very glad he's able to join us today. It's really 0:13:57.080 --> 0:14:01.160 been a remarkable deterioration in US in your relationships over 0:14:01.200 --> 0:14:04.000 the course of the last four years, but with the 0:14:04.040 --> 0:14:07.760 election coming up in November, there's a chance for reset. 0:14:08.360 --> 0:14:10.920 How should we think about this? How much is how 0:14:11.000 --> 0:14:15.240 much of the deterioration in the relationship is an idiosyncrasy 0:14:15.280 --> 0:14:17.960 of the Trump administration and how much of it is 0:14:17.960 --> 0:14:21.280 structural something we shouldn't expect to change no matter who's 0:14:21.280 --> 0:14:24.240 in power. Sure, I mean that's a great question to 0:14:24.240 --> 0:14:27.400 start with. Tom And as you know, I left government 0:14:27.440 --> 0:14:29.560 about three years ago. But I'll say even at the 0:14:29.680 --> 0:14:33.160 end of the Obama administration, there was a strong sense 0:14:33.320 --> 0:14:35.920 that the U. S. China relationship was coming to a 0:14:36.040 --> 0:14:39.400 really fundamental change, that that the paradigm the way we 0:14:39.440 --> 0:14:45.160 had looked at the relationship essentially since since UH the U. S. 0:14:45.200 --> 0:14:50.760 And China started, UH recognized each other that the rules 0:14:50.800 --> 0:14:52.800 of the game had changed, and that whether it was 0:14:52.880 --> 0:14:55.920 Donald Trump or Hillary Clinton, UH, you were going to 0:14:55.960 --> 0:14:58.520 see a change in the U. S. China relationship. I 0:14:58.560 --> 0:15:03.120 think though that you know, Donald Trump took the relationship 0:15:03.200 --> 0:15:07.520 that no American government, at least since the end of 0:15:07.520 --> 0:15:10.600 the Second World War has gone, which is much more unilateral, 0:15:11.240 --> 0:15:15.120 much less interested in the global structures and partnerships and 0:15:15.160 --> 0:15:20.440 alliances that really had been our hallmark since And so 0:15:20.800 --> 0:15:23.200 you know, I think there's an aberration in the sense 0:15:23.280 --> 0:15:26.320 that Donald Trump is not the internationalists, not interested in 0:15:26.320 --> 0:15:30.560 international partnerships, but the concern about China and what it 0:15:30.560 --> 0:15:34.160 means for for the US that competition. I think that 0:15:34.280 --> 0:15:36.400 was coming no matter who was there. And I think 0:15:36.400 --> 0:15:39.640 you'll see if if Biden is elected, that there will 0:15:39.680 --> 0:15:42.520 be a tension in the relationship, even if we get 0:15:42.520 --> 0:15:45.240 back to a more normal way of working within the 0:15:45.280 --> 0:15:49.040 US government. Dave, you worked with a number of officials 0:15:49.360 --> 0:15:52.680 under the Obama administration who we might well see coming 0:15:52.720 --> 0:15:56.280 back if we see a Biden win in November. What's 0:15:56.320 --> 0:16:00.680 your sense of how the Biden team views the U S. 0:16:00.760 --> 0:16:03.960 China relationship. What do you think their priorities would be 0:16:04.280 --> 0:16:08.640 if we saw them coming in at the end of November. Sure, well, 0:16:08.640 --> 0:16:11.280 I think some of you you'd see some consistency. There's 0:16:11.320 --> 0:16:14.640 real concern, not just in the at the political level, 0:16:14.640 --> 0:16:17.040 in other words, in the Democratic and Republican Party, but 0:16:17.080 --> 0:16:22.200 also within the bureaucracy about particularly in the area of technology, 0:16:22.680 --> 0:16:25.600 the rivalry between the United States and China and the 0:16:25.680 --> 0:16:28.520 relevance of a lot of those technologies to really core 0:16:28.680 --> 0:16:31.760 national security concerns. And I think that will be, at 0:16:31.840 --> 0:16:34.280 least from what I can see and read, that will 0:16:34.320 --> 0:16:36.480 be a concern of a would be a concern of 0:16:36.520 --> 0:16:40.240 a Biden administration if there is one. But you know, 0:16:40.720 --> 0:16:43.760 I think you'd also see, which is I think very 0:16:43.800 --> 0:16:48.360 different from the Trump administration, an effort because the the 0:16:48.440 --> 0:16:51.080 you know, the people around Biden, and as I understand 0:16:51.440 --> 0:16:54.440 Vice President Biden himself, see a lot of areas where, 0:16:54.880 --> 0:16:56.480 you know, whether we want to or not, we're gonna 0:16:56.520 --> 0:16:58.480 have to cooperate with the Chinese. We're gonna have to 0:16:58.480 --> 0:17:02.680 work together areas like climate change, the Iran nuclear deal, 0:17:02.880 --> 0:17:05.720 and of course the pandemic and dealing with the global 0:17:05.840 --> 0:17:10.000 public health issues. Is there a world where things keep 0:17:10.080 --> 0:17:14.000 getting worse? I wonder whether the Chinese side have been 0:17:14.160 --> 0:17:18.760 pulling their punches because they're thinking, we need to maintain 0:17:18.800 --> 0:17:22.320 optionality for when a Biden administration comes in. We don't 0:17:22.359 --> 0:17:25.119 want to burn our bridges. If a Biden team comes 0:17:25.160 --> 0:17:28.480 in and they maintain the same kind of broad strategic 0:17:28.520 --> 0:17:32.879 orientation regarding China as a kind of strategic threat, but 0:17:32.960 --> 0:17:36.280 they're more effective at building alliances. Is there a world 0:17:36.280 --> 0:17:40.280 where the gloves come off and China's restraint is removed 0:17:40.320 --> 0:17:44.040 and we see relations deteriorating even further and faster than 0:17:44.080 --> 0:17:47.040 they have under the Trump administration. So I left town 0:17:47.080 --> 0:17:50.000 because anyone who has lived through will tell you that 0:17:50.200 --> 0:17:53.600 it can always get worse, right, But I'm I'm relatively 0:17:53.600 --> 0:17:58.640 optimistic that I mean, for for however much the Chinese 0:17:58.640 --> 0:18:02.960 are concerned about, you know, a rivalry with the United States, fundamentally, 0:18:02.960 --> 0:18:05.399 they've got a lot of interest in stability, not just 0:18:05.480 --> 0:18:07.920 in the in the U. S. China relationship, but overall 0:18:08.000 --> 0:18:11.679 that they they have a big vested stake in the 0:18:11.800 --> 0:18:15.399 success of global systems, in the global trading system, and 0:18:16.040 --> 0:18:20.200 in not uh sort of dediating that from that and 0:18:20.920 --> 0:18:24.119 heading down the path to a really hot competition. I 0:18:24.200 --> 0:18:26.320 think they understand that that's not in their interests, it's 0:18:26.359 --> 0:18:28.919 not in our interests, and there is a middle ground 0:18:28.920 --> 0:18:31.880 where we can It's kind of cliche, but we can 0:18:31.920 --> 0:18:35.800 compete without being without confrontation that that you know, we 0:18:35.840 --> 0:18:39.480 can walk that fine line at less drill dine on 0:18:39.520 --> 0:18:43.159 a couple of live issues, um. First of all, Um, 0:18:43.200 --> 0:18:46.560 I'd be really interested to get your view on financial decoupling. 0:18:47.000 --> 0:18:50.160 There's been a couple of great Bloomberg news scoops recently 0:18:50.560 --> 0:18:54.320 suggesting that at a senior level in the US administration 0:18:54.520 --> 0:18:58.720 there's been real consideration of imposing sanctions on a big 0:18:58.800 --> 0:19:03.720 Chinese bank, possibly imposing sanctions on some big Chinese financial 0:19:03.760 --> 0:19:07.919 startups and financial Um, the kind of the the child 0:19:07.960 --> 0:19:10.720 of the Ali Baba group is one that's been mentioned 0:19:11.280 --> 0:19:14.640 from yours insiders experience. Could you tell us a little 0:19:14.680 --> 0:19:18.760 bit about how that kind of decision would be made? Well, 0:19:18.800 --> 0:19:20.960 I guess I can talk about how that kind of 0:19:21.000 --> 0:19:23.199 decision used to you know, would have used to be 0:19:23.280 --> 0:19:26.440 made under the Trump administrations a little different. And that's why, 0:19:26.520 --> 0:19:28.280 first of all, I've heard the same reports and and 0:19:28.280 --> 0:19:30.520 of course Bloomberg has done a great job and in 0:19:30.960 --> 0:19:33.880 uh flushing some of those out. But it's really hard 0:19:33.920 --> 0:19:35.840 to tell what's going on in the in the Trump 0:19:35.840 --> 0:19:39.239 administration because so many decisions seem to be not just 0:19:39.400 --> 0:19:42.240 made at the highest levels, but started and finished at 0:19:42.240 --> 0:19:45.680 the highest levels. And so in the Obama administration or 0:19:45.800 --> 0:19:49.760 previous administrations, you'd have people who know the issues intimately 0:19:49.880 --> 0:19:52.800 understand the ups and downs. Why, you know, taking action 0:19:52.880 --> 0:19:55.639 against one of the big big four Chinese banks or 0:19:55.680 --> 0:19:58.520 against and financial you know, the impacts that could have 0:19:59.240 --> 0:20:04.199 on real life issues here, whether they're financial or legal 0:20:04.320 --> 0:20:07.400 or technical in the United States. In the Trump administration, 0:20:07.400 --> 0:20:09.399 you look at the TikTok and the wee chat bands 0:20:09.440 --> 0:20:12.480 and all of the legal trouble they run into. That's 0:20:12.480 --> 0:20:15.840 what I think is different about this administration, and where 0:20:16.240 --> 0:20:18.440 if something like that were to be rolled out, the 0:20:18.800 --> 0:20:21.919 odds that it would run into something that sort of 0:20:21.920 --> 0:20:23.920 working level folks would have flagged as, hey, this is 0:20:23.920 --> 0:20:26.440 gonna be a problem. It's not legal, it's going to 0:20:26.520 --> 0:20:29.840 have huge blowback for the U. S economy that the 0:20:29.840 --> 0:20:34.080 Trump administration I think is liable to miss. Let's say 0:20:34.080 --> 0:20:37.400 they do it anyway. Let's say the Trump administration has 0:20:37.440 --> 0:20:40.760 a swing at and financial If you were sitting if 0:20:40.760 --> 0:20:43.600 you were still sitting in the embassy in Beijing, what 0:20:43.680 --> 0:20:45.960 would you be worried about? What would you see as 0:20:46.000 --> 0:20:49.399 the sort of the range of possible Chinese reactions to 0:20:49.560 --> 0:20:52.080 a to a U S move like that. Yeah, I mean, 0:20:52.240 --> 0:20:56.320 I think the the at least traditionally, I would worry about, Okay, 0:20:56.560 --> 0:21:01.040 what American companies are on the outs the Chinese anyway, 0:21:01.080 --> 0:21:04.679 that have a toe hold here, but but are are vulnerable? 0:21:04.720 --> 0:21:08.560 Are they liable to come under Chinese pressure? That's probably 0:21:08.600 --> 0:21:10.840 where I would look first. You know that I won't 0:21:10.920 --> 0:21:13.400 name names, but there I'm sure companies that have had 0:21:13.440 --> 0:21:17.520 problems and and just look for additional problems in that area, 0:21:18.119 --> 0:21:21.960 you know, something like the Unreliable Entities List. I could 0:21:22.000 --> 0:21:26.080 see the mof COM, the Commerce Ministry floating out a 0:21:26.200 --> 0:21:29.800 name for some critical American company that may end up 0:21:29.840 --> 0:21:31.520 on that list. And you know, that's that's hard to 0:21:31.520 --> 0:21:35.399 do business if you're that kind of rumors circulating for 0:21:35.520 --> 0:21:39.880 you around you selling their treasury holdings. That's the kind 0:21:39.920 --> 0:21:43.280 of the big sort of stick which many believe that 0:21:43.400 --> 0:21:46.320 China holds over the US. Is that a real possibility? 0:21:46.680 --> 0:21:48.240 Isn't there an old joke? You know, if you owe 0:21:48.240 --> 0:21:52.159 the bank fifty you're in trouble. If you owe the 0:21:52.480 --> 0:21:54.760 bank five million dollars, they're in trouble. I guess the 0:21:54.800 --> 0:21:56.960 numbers have gone up since the joke was first issued. 0:21:57.000 --> 0:21:59.160 But but you know, this is kind of I mean, 0:21:59.480 --> 0:22:03.680 it's an ill stration of the the difficulty of taking actions, 0:22:03.720 --> 0:22:06.680 whether it's the US against and financial or the Chinese 0:22:06.680 --> 0:22:09.520 selling T bills, because you know that the act of 0:22:09.560 --> 0:22:13.560 selling those would have enormous negative consequences for the Chinese, 0:22:13.560 --> 0:22:15.880 and so it would be a tough decision to make, 0:22:15.920 --> 0:22:18.880 and that technocrats in China would be I'm sure making 0:22:18.920 --> 0:22:23.120 that case mutually assured destruction. I think Larry Summers once 0:22:23.160 --> 0:22:27.560 called it. Let's talk about a risk which is kind 0:22:27.560 --> 0:22:31.840 of increasingly sort of mentioned in the markets, um popping 0:22:31.920 --> 0:22:35.600 up a little bit in commentary about the relationship. Let's 0:22:35.600 --> 0:22:40.520 talk about the risk that something radical and destabilizing happens 0:22:40.560 --> 0:22:44.000 with Taiwan. UM. Now, you've not only worked in the 0:22:44.119 --> 0:22:47.640 US Embassy in Beijing, you've also worked in the US 0:22:47.720 --> 0:22:53.919 mission in Taiwan. What probability would you put on a 0:22:54.119 --> 0:22:58.199 Chinese invasion of Taiwan in between the US election on 0:22:58.480 --> 0:23:02.639 November three and a new president coming into office on 0:23:02.720 --> 0:23:06.320 January twentie So I should start off by saying I 0:23:06.320 --> 0:23:08.760 am concerned. You listen to some of the rhetor coming 0:23:08.760 --> 0:23:10.840 out of China. You saw that warning. I think it 0:23:10.920 --> 0:23:14.400 was in people's daily that to the Taiwanese. Don't say 0:23:14.400 --> 0:23:17.879 you haven't been warned, you know, a very stern tone 0:23:17.960 --> 0:23:21.000 that you haven't. You know, the Chinese rarely roll out 0:23:21.640 --> 0:23:26.480 unless they're contemplating something serious. I'm not a military person, 0:23:26.760 --> 0:23:30.959 but my understanding from from talking to people who do 0:23:31.000 --> 0:23:33.280 it for a living, say, it's not you know, an 0:23:33.280 --> 0:23:36.280 invasion of Taiwan would not be an easy thing, and 0:23:36.760 --> 0:23:39.720 the kind of preparations it would require to do that 0:23:40.440 --> 0:23:43.840 we'd see between now and January twenties. So that's kind 0:23:43.840 --> 0:23:46.880 of cold comfort that to me. I'm I'm I'm fairly 0:23:47.119 --> 0:23:50.399 sanguine about the risk of an invasion before January twenty, 0:23:50.760 --> 0:23:53.119 but I think the long term issue is one that 0:23:53.160 --> 0:23:55.200 we ought to be concerned about. That. You know that 0:23:55.200 --> 0:23:58.160 that the status quo that kept peace in the Taiwan 0:23:58.240 --> 0:24:02.719 Strait is really starting to break down, and that wouldn't 0:24:02.720 --> 0:24:04.360 be good for us, and I think it'll be good 0:24:04.359 --> 0:24:07.439 for Beijing, it would be bad for Taiwan. So so 0:24:07.480 --> 0:24:10.760 I worry about that. Dave, great pleasure having you on 0:24:10.760 --> 0:24:13.320 the show. Thanks so much for sharing your insights. Thank you, 0:24:13.400 --> 0:24:23.120 Tom Great to be here, So from a country that's 0:24:23.240 --> 0:24:26.040 rising up in the global economic rankings to one that 0:24:26.160 --> 0:24:28.960 is not. Every so often on Stephanomics, we like to 0:24:29.040 --> 0:24:31.919 check in on progress with Britain's century long process of 0:24:31.960 --> 0:24:35.439 industrial decline and with Brexit talks again in the news 0:24:35.760 --> 0:24:38.200 now seems like a good moment. So I'm very glad 0:24:38.240 --> 0:24:40.840 to be joined by one of the most astute observers 0:24:41.119 --> 0:24:45.360 of the economics of Brexit, Bloomberg's UK economist Dan handsOn. 0:24:48.720 --> 0:24:52.399 So we're in the middle of negotiations, or we're in 0:24:52.440 --> 0:24:56.560 the middle of the commencement of some new negotiations. What's 0:24:56.600 --> 0:24:59.800 the latest So over the past week or say, there's 0:25:00.040 --> 0:25:02.159 been a bit of a stalemate, surprise surprise in the 0:25:02.400 --> 0:25:06.280 in the Brexit negotiations. So we've had the UK saying 0:25:06.280 --> 0:25:09.040 that it doesn't want to continue for more negotiations with 0:25:09.119 --> 0:25:12.520 the EU until the SHOW signs that it's willing to 0:25:12.560 --> 0:25:17.280 make concessions. And the UK also wants the EU to 0:25:17.400 --> 0:25:21.560