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Speaker 1: Let's get to our guest. We have Alexis Crow with us.

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Speaker 1: She as partner in Global head of Geopolitical Investing Practice

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Speaker 1: at p WC. She joins us from our studio in Tokyo. Alexis,

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Speaker 1: thanks for being with us. So much to unpack, and

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Speaker 1: I'm glad we have you here to kind of look

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Speaker 1: back at what we saw come out of the Party

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Speaker 1: Congress in China. One of the questions that we've been asking,

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Speaker 1: with this kind of tighter control the president she has

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Speaker 1: over the polit bureau now and UM by extension the

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Speaker 1: government in China, whether things have become a little bit

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Speaker 1: more risky and so far as investing on the mainland

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Speaker 1: is concerned, sure, thanks so much for having me, Doug.

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Speaker 1: So certainly we've seen investors and market participants really repriced

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Speaker 1: risk of their position in China in digesting the events

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Speaker 1: of the congress. And you know what we've certainly seen

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Speaker 1: with the new appointments UH and the new reshuffle UM

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Speaker 1: perhaps now an absence of the checks and balances on

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Speaker 1: the ability to implement reforms visa VI President. She So,

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Speaker 1: you know, m key takeaway coming out of the Party

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Speaker 1: Congress is that safety is the number one KPI for

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Speaker 1: Beijing now and that investors are are sort of repricing

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Speaker 1: this visa v growth. And does this also mean because

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Speaker 1: so many UH people we've been speaking to say, oh,

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Speaker 1: China is a great place for Chinese people to invest,

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Speaker 1: but for foreign investors probably not, because the balance has

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Speaker 1: shifted so much now certainly, I mean, I think if

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Speaker 1: we look at just purely objective growth terms, you know,

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Speaker 1: we've had some severe shocks to the economy going back

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Speaker 1: to Fall of one, with the energy crunch and power outages. Um.

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Speaker 1: You know, some of the lagging structural effects of the lockdowns,

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Speaker 1: be it from Wuhan or be it from Shanghai. Then

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Speaker 1: of course the property sectors. So we are seeing companies

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Speaker 1: and investors from a global landscape look to other markets

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Speaker 1: for growth in a very unemotional circumstance. And then I

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Speaker 1: think now in the wake of the Congress, that's really

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Speaker 1: driven that home where UM, by and large many executives

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Speaker 1: have digested this is saying we are now the focus

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Speaker 1: on safety means we have to look for growth elsewhere.

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Speaker 1: I'd like to get your take on the move by

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Speaker 1: the Biden administration to lean very heavily into Beijing's ability

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Speaker 1: to advance some of the most sophisticated technology that it's

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Speaker 1: out there, super computing, artificial intelligence. We know now that

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Speaker 1: Washington is moving to limit the use it has of

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Speaker 1: certain types of semiconductor technology chip manufacturing. What does that

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Speaker 1: mean for the outlook as far as you see it

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Speaker 1: when you look at China. Thanks so much, Doug. You know,

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Speaker 1: we've talked over the years about this technological decoupling between

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Speaker 1: the U S and China, and we forecasted that with

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Speaker 1: an incoming Biden administration that that would not change at all.

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Speaker 1: And it had hitherto been relegated to hard tech in

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Speaker 1: terms of pipes and mass five g some software with

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Speaker 1: Chinese state entities, water cast gating out some US software.

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Speaker 1: But now the chip focus, of course, is forcing a

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Speaker 1: question for manufacturers and investors across the globe about the

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Speaker 1: advent of two technological trading systems and ecosystems. And so,

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Speaker 1: you know, we saw in the in the last Plenum,

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Speaker 1: we saw, you know, the focus on Chinese innovation and

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Speaker 1: driving a lot of R and D into that high

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Speaker 1: end Intel compatible semicon chip um And now I think,

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Speaker 1: you know, China will be in a serious conundrum as

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Speaker 1: to how it's going to innovate domestically. We've also seen,

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Speaker 1: notably some Dutch companies say that, Okay, well, you know,

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Speaker 1: we're we can still export from the Eurozone. So I

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Speaker 1: think some Eurozone players will think we might be able

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Speaker 1: to skirt these export controls. We know, UM China Taiwan

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Speaker 1: people always say, well, the Chinese had this long time span,

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Speaker 1: they can look way down the road and eventually get

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Speaker 1: Taiwan back. But doesn't uh Taiwan produce a very large

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Speaker 1: percent of certain kinds of chips that China needs badly

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Speaker 1: in the spheres they want to advance in. Does this

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Speaker 1: increase the belicosity of China now saying hey, this isn't

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Speaker 1: just about getting it back, it's history. This is about

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Speaker 1: this is something we need badly and we're gonna go

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Speaker 1: for it. Thanks Kathleen. So certainly I would say that Taiwan,

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Speaker 1: there's no question about it. It is the world's foundry

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Speaker 1: for for semicon. And we've seen that with Japanese courting

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Speaker 1: of of uh, you know, Taiwanese companies, in German courting

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Speaker 1: of Taiwanese companies. UM. You know, we're seeing that with

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Speaker 1: this return of what I would say, is industrial policy

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Speaker 1: or post industrial policy? Um, but really I would say that, UM,

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Speaker 1: I'm more concerned about the US provoking China here. M hmm.

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Speaker 1: Let's talk a little bit about the COVID zero policy.

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Speaker 1: One of the things that China has kind of created

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Speaker 1: for itself in in not making UM itself available to

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Speaker 1: certain types of remedies. And I'm thinking about the m

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Speaker 1: RNA vaccines that have come out of the West. It's

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Speaker 1: not allowed any of that to penetrate. Yes, there have

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Speaker 1: been some Western anti viral meds that have been allowed

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Speaker 1: in for those folks who have been infected with the virus.

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Speaker 1: How much of this is self inflicted? And is it

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Speaker 1: kind of a situation where nationalism has has kind of

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Speaker 1: swelled to the point where it's inflicted somewhat kind of

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Speaker 1: harm that's almost disproportional to any kind of nationalistic feeling

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Speaker 1: that you would think would support the economy. Thanks Doug.

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Speaker 1: I mean, it's also kind of concerning from an investing

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Speaker 1: standpoint when you think that some of the largest stewards

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Speaker 1: of capital in the globe are sitting within mainland China.

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Speaker 1: They need to get returns and they need to look

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Speaker 1: outside of China to invest and so the curtailments on

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Speaker 1: mobility are even concerning from that return standpoint. With regard

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Speaker 1: to the the ensuing policy, you know, I would say

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Speaker 1: that it seems very much a paternalistic stand So you

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Speaker 1: mentioned nationalism. I think more of this sort of confusion

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Speaker 1: definition of of of concentric rings and circles with regard

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Speaker 1: to protecting the innermost nucleus of a family, and that

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Speaker 1: seems very much the stants um. And so where we

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Speaker 1: go from here, I know certainly many executives are are

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Speaker 1: are looking forward to when some of these restrictions are

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Speaker 1: relaxed to be able to come back in and do

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Speaker 1: business in China. What does this mean for Hong Kong Um?

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Speaker 1: You know, I would say that historically we've had two

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Speaker 1: gateway cities from Asia to the West, and now I

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Speaker 1: would say there's probably one, which is Singapore. Okay. In

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Speaker 1: the time that we have left, which is about sixty seconds,

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Speaker 1: i'd let you get your take on Japan. You're there

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Speaker 1: in Tokyo. Give me your sense of how well the

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Speaker 1: economy is performing and the challenges facing the b O

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Speaker 1: J Sure, Doug, Well, you know, it's interesting when we

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Speaker 1: look at some of the real time indicators. Retail sales

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Speaker 1: are extraordinarily robust, and I can certainly sense it when

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Speaker 1: I'm walking in the streets in Tokyo, UM and you know,

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Speaker 1: the numbers continuing to surprise to the upside. Despite the

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Speaker 1: fact that we know that the Japanese consumers ex raordinarily

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Speaker 1: price sensitive, you're still looking at a core inflation rate

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Speaker 1: of less than half of what it is in the US,

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Speaker 1: hovering around three percent here. UM. Of course you're dealing

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Speaker 1: with some important inflation UH with with the FED height

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Speaker 1: UH site FED hiking cycle UM. And we're watching the

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Speaker 1: b o J intervened. So I would say that you know,

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Speaker 1: Kishiita Son's government UM is looking at supporting this through

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Speaker 1: fiscal measures and supporting tourism and courting foreign tourists to

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Speaker 1: be able to capitalize on a week er yet, so

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Speaker 1: I think the government and the bo G b o

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Speaker 1: J working together is quite a strong combination. Alexis good stuff.

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Speaker 1: Thank you so much for being with us. Alexis Crowe

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Speaker 1: as partner Global Head of Geopolitical Investing Practice at p WC,

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Speaker 1: joining us here on day Break Asia