Speaker 1: The second half of the last decade was a lot
Speaker 1: terrorist attacks across Europe. Braxt the global impact of Donald
Speaker 1: Trump's election in the US so many of us looking
Speaker 1: forward to reliving the Roaring twenties.
Speaker 2: But well that didn't quite go as planned.
Speaker 3: Iran says it will take revenge for the US killing
Speaker 3: of its most powerful military commanding, rowing concern as the
Speaker 3: tool from that deadly coronavirus now grows breaking.
Speaker 2: You stay at home, that is the order.
Speaker 4: Tonight.
Speaker 5: Russia has launched a military assault on Ukraine.
Speaker 6: The war in Ukraine has begun.
Speaker 1: Shifts in everything from geopolitics to trade and public health
Speaker 1: also meant changes to the political order in several countries.
Speaker 6: Joseph R. Biden Junior is elected the forty sixth President
Speaker 6: of the United States.
Speaker 7: British Prime Minister Boris Johnson resigning today.
Speaker 3: It Lee is said to elect a far right leader.
Speaker 6: President Raja Taya Bertawan has claimed victory. Luis Naso Lula
Speaker 6: Silva has been voted in as Brazil's next president.
Speaker 1: As well as changes to the global economy and the
Speaker 1: boom underway in artificial intelligence. All this has happened as
Speaker 1: companies in the US and around the world realize just
Speaker 1: how reliant they've become on strong but narrow trade routes.
Speaker 1: Bloomberg dispatch reporters around the world to see how the
Speaker 1: situation is changing on the ground and what conclusions can
Speaker 1: be drawn. Malcolm Scott, Jenny Leonard and Brendan Murray are
Speaker 1: here to make sense of it all. I'm Roslin Matheson
Speaker 1: in for Wes Kasova today on The Big Takeo's changed
Speaker 1: a lot over the past three years. So could a
Speaker 1: shift in global trade be the start of a great reset? Brendan,
Speaker 1: your Big Take print stories all about the great reset
Speaker 1: as companies change up their supply chains. But what made
Speaker 1: you and your colleagues want to write about this?
Speaker 5: Well, there were two reasons, really, and the first had
Speaker 5: to do with the lack of available data. Trade data
Speaker 5: are notoriously backward looking. Most of the numbers we get
Speaker 5: from the government come out with a month or two legs,
Speaker 5: so they don't really do us much good. They're good
Speaker 5: at telling us what happened in the rearview mirror, but
Speaker 5: not good at watching what's changing in real time. The
Speaker 5: second catalyst has to do with the pandemic lockdowns when
Speaker 5: reporters and editors got really good at doing what they
Speaker 5: do from the confines of their own home. But what
Speaker 5: we wanted to do was send a dozen Bloomberg reporters
Speaker 5: out in the field to see what was really going
Speaker 5: on on the ground.
Speaker 1: And we've got a really interesting array of examples that
Speaker 1: we'll talk about in greater detail. But Mal, can we
Speaker 1: talk a bit more about the Great Reset itself? What
Speaker 1: we mean by that were basically talking about events mostly
Speaker 1: since twenty twenty.
Speaker 7: The economic drivers of this great reset, or the sort
Speaker 7: of slow rewiring of the global economy, they have been
Speaker 7: around for a while. You know, China's been on this
Speaker 7: industrialization path for a couple of generations. Now it's really
Speaker 7: a political catalyst that's made us really come to this
Speaker 7: point now where we are talking about this as a reset.
Speaker 7: You know, Donald Trump's presidency brought his protectionist policies to
Speaker 7: the fore China bashing became a sport in the US.
Speaker 8: Not only has China declined to adopt Promise reforms, it
Speaker 8: has embraced an economic model dependent on massive market barriers,
Speaker 8: heavy stage subsidies, currency manipulation, product dumping, force, technology transfers,
Speaker 8: and the theft of intellectual property. And also trade secrets
Speaker 8: on a grand scale.
Speaker 7: And then President Biden has really sustained much of that,
Speaker 7: if dialing back on some of the rhetoric, but those
Speaker 7: punitive tariffs they're still in place, they haven't gone anywhere.
Speaker 7: And then he's lay it on even doubled down on
Speaker 7: this reshuring narrative that's really driving not only the US
Speaker 7: but others to rethink their supply chains. And at the
Speaker 7: same time, China's perceived economic coercion of trade partners that
Speaker 7: it's tried to slap on the wrists such as Australia
Speaker 7: when countries don't do it as it would please. That
Speaker 7: seems to have really backfired, and that's really accelerating rather
Speaker 7: than detracting from this push to reshure, revisit supply chains,
Speaker 7: diversify from China.
Speaker 1: What's interesting mail to hear you talk about the political
Speaker 1: imperatives here, and I want to bring in, Jenny, do
Speaker 1: you see this as purely just down to the trajectory
Speaker 1: of the relationship between US and China or what else
Speaker 1: might be at play?
Speaker 4: Well, it has a lot to deal with the trajectory
Speaker 4: of the US China ties. Obviously, it's started in the
Speaker 4: Trump administration we have seen sort of the through line
Speaker 4: to the Biden years. But you know, populism in US
Speaker 4: politics means now in both parties that politicians want things
Speaker 4: to be made in America again.
Speaker 9: Tonight, I'm announcing new standards require all construction materials using
Speaker 9: federalist infrastructure projects to be made in America.
Speaker 4: And so that, apart from the US China relationship, is
Speaker 4: what we will see going into the twenty twenty four
Speaker 4: election and presumably also going forward.
Speaker 1: We were always going to be at this point or
Speaker 1: was it just expedited by those sort of events of
Speaker 1: the past few years.
Speaker 5: In particular, global trade had basically plateaued about five or
Speaker 5: ten years before Donald Trump came into office, and companies
Speaker 5: were already starting to kind of back away from China
Speaker 5: seeing that they were overly concentrated there. So it was
Speaker 5: already in motion before put the trade war, the terif
Speaker 5: that Donald Trump launched again in China. President Trump tonight
Speaker 5: escalating his trade war with China, threatening new tariffs that
Speaker 5: they're coming soon and they are sweeping. And then the
Speaker 5: pandemic and then you layer on Russia's war in Ukraine
Speaker 5: and all of those things accelerated the risk calculation that
Speaker 5: companies were going through. If you're a company now and
Speaker 5: you're looking at eighty percent of your production is in China,
Speaker 5: you better be thinking about cutting that, say, in half,
Speaker 5: or at least by a third if the political situation
Speaker 5: deterior tanny further.
Speaker 1: It's interesting to hear you talk a bit about Ukraine
Speaker 1: as well, because when we talk about this, it's really
Speaker 1: the entire world that's affected. I was trying to think
Speaker 1: of any country that may not be affected by this
Speaker 1: that I sort of came up with North Korea and
Speaker 1: not much else. Brenda, Let's talk about Western nations first.
Speaker 1: In that in some of the research and the work
Speaker 1: that we did for this story, is there an example
Speaker 1: where you could highlight the particular impact that we're seeing
Speaker 1: on what you think is the West.
Speaker 5: So Italy is a really good example, stemming from the
Speaker 5: Russian War in Ukraine, not necessarily the China situation. So
Speaker 5: in southern Italy, we dispatched a reporter to an Adriatic
Speaker 5: seaport called Brindisey. This is an ancient Roman city with
Speaker 5: ruins from the thirteenth century. Today it's become a busy
Speaker 5: gateway for natural gas imports from suppliers all over the Mediterranean.
Speaker 5: That's a big change from just a few years ago
Speaker 5: when natural gas used to flow north to south through Italy,
Speaker 5: originally from Russia. That gas pipeline has literally been reversed
Speaker 5: and it's now handling imports in a northward direction from
Speaker 5: countries in North Africa and elsewhere that are trying to
Speaker 5: replace those Russian supplies.
Speaker 1: And Jenny, do you see much of an impact in
Speaker 1: the US itself. I mean, the US has been obviously
Speaker 1: a champion of trying to get companies to redesign their
Speaker 1: supply chains. For all the work so far that's gone
Speaker 1: on under the Biden administration in particular, has anything worked.
Speaker 4: Obviously, the Biden administration has really zeroed in on semiconduct
Speaker 4: clean energy technology, raw materials. They've passed multiple laws over
Speaker 4: the last two years that include billions and subsidies for
Speaker 4: these sectors to incentivize coming to the US, which is
Speaker 4: a much more expensive place to build a fab and
Speaker 4: then in the end make semiconductors. Those laws will take
Speaker 4: years to bear fruit, and we've seen TSMC, the big
Speaker 4: Taiwanese semiconductor company that was sort of the big hope
Speaker 4: to build a fab in Arizona said that it's going
Speaker 4: to push back its production timeline until twenty twenty five, which,
Speaker 4: of course politically is not so convenient for the Biden
Speaker 4: administration because they would love to send the President or
Speaker 4: the Commerce secretary to a ribbon cutting ceremony before the
Speaker 4: election in November and say, hey, look, we've said we
Speaker 4: will make trips in America, and here's the first trip
Speaker 4: made in America. And that really seems like that's really
Speaker 4: not in the offing anymore.
Speaker 1: And now there are impacts also in emerging markets. We
Speaker 1: have looked across the breadth of emerging markets and some
Speaker 1: interesting examples in the story also about that.
Speaker 7: The unifying theme that we've sort of come across, and
Speaker 7: of course we're hearing from the bottom up in this story,
Speaker 7: but also the top down in academia land, is that
Speaker 7: the emerging markets they don't want to get caught in
Speaker 7: the middle of this. They want to benefit from it.
Speaker 7: They're coalescing around this concept of the global South. They're
Speaker 7: taking a transactional view. They don't want to pick sides
Speaker 7: any confrontation, be it the US and Russia, be it
Speaker 7: the economic confrontation of the US and China, so some
Speaker 7: winners are being created. Our story looks at a couple
Speaker 7: of examples where specific locations seem to be doing pretty
Speaker 7: well out of this rewiring of the global economy. So
Speaker 7: in Morocco, just about a half an hour's drive inland
Speaker 7: from Tangier, there's a port that's really doing well, the
Speaker 7: Tangier Tech City that's being developed with Chinese and Moroccan
Speaker 7: government support. South of the US border with Mexico, truckers
Speaker 7: there are struggling to keep up with demand as the
Speaker 7: rerouting of demand from the US means that they're buying
Speaker 7: more from Mexico. Our Bloomberg Economics economist estimates that the
Speaker 7: tariff goods are down about one hundred and fifty billion
Speaker 7: dollars relative to their pre trade war trend from China.
Speaker 7: Mexico's filled about ninety billion of that gap. So there
Speaker 7: are winners, But the real overwhelming danger longer term is
Speaker 7: that these sort of protectionist policies, the reassuring policies, in
Speaker 7: the ends, they may make it harder for the next
Speaker 7: batch of economies to get onto that first couple of
Speaker 7: rungs of the development ladder, and that shuts off an
Speaker 7: avenue of growth. And development for countries with vast and
Speaker 7: rapidly growing populations. Now, that's not going to be good
Speaker 7: for the emerging world.
Speaker 5: I think one of the caveats there that we should
Speaker 5: address is that this is not easy. Vietnam Thailand do
Speaker 5: not have the infrastructure to flip a switch and start
Speaker 5: producing goods like China does. So this is going to
Speaker 5: be a costly and time consuming process, and it's going
Speaker 5: to mean a lot of dislocation for workers. It's going
Speaker 5: to mean a lot of risk in the investment that
Speaker 5: goes into these countries. But ultimately, I think what we're
Speaker 5: seeing are the very early signs, the very early days
Speaker 5: of a process that we'll see play out for a
Speaker 5: long time.
Speaker 1: And Jenny, just to Male's point about these countries saying
Speaker 1: they don't want to have to pick aside and also
Speaker 1: concern that their own development will be affected as a
Speaker 1: result of this. It's not like a narrative that China
Speaker 1: and other countries seem to seize on because it can
Speaker 1: get some good traction. But does the US administration see
Speaker 1: that and how are they're going to be able to
Speaker 1: counter it?
Speaker 4: I think the Biden administration does see that, but it's
Speaker 4: very hard to counter that narrative because when I talked
Speaker 4: about the US populism, you know, anti trade sentiment that
Speaker 4: sort of feeds into politics here. That is going to continue,
Speaker 4: and that is what I'm hearing from some people who
Speaker 4: are advising the administration on how to counter that narrative.
Speaker 4: They would love to have a positive trade agenda. They
Speaker 4: would love to have something like a TPP.
Speaker 1: A major victory for President Obama and his economic agenda
Speaker 1: as the US, Japan, and ten other countries have approved
Speaker 1: the Trans Pacific Partnership.
Speaker 4: That President Trump withdrew from his first week in office,
Speaker 4: and nobody really in the US seems to be wanting
Speaker 4: to go back to that agreement. So the Biden administration
Speaker 4: came up with a different approach, which is called the
Speaker 4: ipav US.
Speaker 3: President Joe Biden has signed up a dozen countries to
Speaker 3: help challenge Chinese dominance in Asia. During a tour of
Speaker 3: the continent, he announced the Indo Pacific Economic Framework, saying.
Speaker 4: That has lots of pillars, but is not supposed to
Speaker 4: be a trade agreement because it's not. It's also not
Speaker 4: going to get the benefits on the market opening and
Speaker 4: tariff reduction that the TPP countries we're looking for. You
Speaker 4: see a lot of sticks from this administration, as we
Speaker 4: have from the Trump administrations, saying more tariffs, more restrictions,
Speaker 4: subsidies in the US, incentivize you or penalize you if
Speaker 4: you're not doing this. So what is the carrot? Where's
Speaker 4: the carrot coming from? For Vietnam, for Japan, for other
Speaker 4: countries that are part of the now loosely agreed to
Speaker 4: IPF agreement, Because that's missing. I think they have a
Speaker 4: harder time convincing these other countries. We're not trying to
Speaker 4: have you choose, but you know this is the right way,
Speaker 4: and I think that's going to play out over the
Speaker 4: next couple.
Speaker 2: Of years after the break.
Speaker 1: How have the US China tensions affected international trade? Let's
Speaker 1: talk a bit specifically about China and this question now
Speaker 1: of decoupling or diversification. Now, let's go back a little
Speaker 1: bit and talk about how we even got to this
Speaker 1: point where so many companies and countries found their supply
Speaker 1: chain so dependent on China.
Speaker 2: How did that happen?
Speaker 7: China opened in the late seventies, there was those reforms
Speaker 7: led by Dengshaupin. At that stage, China's share of global
Speaker 7: trade was less than one percent. Zoom through the eighties
Speaker 7: and nineties, rapid growth in China's manufacturing sector along with
Speaker 7: its overall economy. But this all got super turbocharged by
Speaker 7: the entry into the WTO in two thousand and one.
Speaker 7: That entry coincided with the revolution in communications technology that
Speaker 7: allowed mega companies, big global companies to track their diversified
Speaker 7: supply chains, you know, with stuff like the Internet, and
Speaker 7: we could communicate with suppliers through things like email for
Speaker 7: the first time. And the labor force in China was
Speaker 7: in that sweet spot. The education system had created, you know,
Speaker 7: a skilled labor force by that stage, so there was
Speaker 7: just a secret source. Come into the mid twenty tens,
Speaker 7: and all of a sudden, the world started to wake
Speaker 7: up to the fact that, wow, China's really eating everyone's
Speaker 7: lunch here, and in the process, manufacturing sectors elsewhere around
Speaker 7: the world were being hollowed out. Then in twenty fifteen,
Speaker 7: China sort of stuck its head above the parapet a
Speaker 7: little bit with the China twenty twenty five Industrial Plan
Speaker 7: that identified these ten industries in which it wanted to
Speaker 7: become globally competitive over the next decade. So now just
Speaker 7: two years from where we are today. That sort of
Speaker 7: was the economic backdrop to what then happened on the
Speaker 7: political front.
Speaker 1: Brendan, I'm curious your perspective here on this. I mean,
Speaker 1: we've talked about the Great Reset and that beginning, but
Speaker 1: for many companies it's just not easy just to say
Speaker 1: that's it, We're going to change our supply chains. But
Speaker 1: are there also a lot of companies that simply don't
Speaker 1: want to.
Speaker 5: Well, the companies that are having the most difficulty are
Speaker 5: the ones that want to sell into the Chinese market.
Speaker 5: You can produce lots of goods and expensively there and
Speaker 5: export them. But China has you know, upwards of a
Speaker 5: billion or more people now that are increasingly in the
Speaker 5: middle class, even affluent. They've got a lot of money
Speaker 5: to spend on Tesla's and Swiss watches and other things
Speaker 5: that we report on weekend and week out at Bloomberg.
Speaker 5: So there's definitely a reluctance. You see it in the
Speaker 5: big the Wall Street banks that want to finance a
Speaker 5: lot of the infrastructure and economic development that China still
Speaker 5: has to do. It's a you know, you can't live
Speaker 5: with it, you can't live without it kind of arrangement
Speaker 5: with China. Now, a lot of companies are finding out
Speaker 5: that if you do leave China or speak in a
Speaker 5: way that isn't pleasing to the Chinese government, then you know,
Speaker 5: there will be repercussions for that. So they're trying to
Speaker 5: walk a fine line. Very few of them are just
Speaker 5: pulling up their tent stakes and leaving.
Speaker 4: You know, what's interesting is that I think some of
Speaker 4: the firms are more impacted maybe by choosing Ping's policies
Speaker 4: than by what the Biden administration is putting forward as
Speaker 4: policies to sort of lure them back home. They're spooked by,
Speaker 4: you know, a crackdown on the US due diligence sector.
Speaker 4: Micron we've seen the Chinese go after well.
Speaker 5: Chinese regulators vowed to ban some domestic purchases of chips
Speaker 5: made by US firm Micron Technology.
Speaker 4: The Chinese sort of promising this is just the first
Speaker 4: step in a way. Having this uncertainty in the Chinese
Speaker 4: market is something that they're also trying to grapple with
Speaker 4: more so than actually heeding the Biden administration policies. But
Speaker 4: of course we're also seeing policies that the White House
Speaker 4: has been working on for two years now, trying to
Speaker 4: limit the investment in certain sectors in China.
Speaker 6: The US is now planning to place a limit on
Speaker 6: exports of American chip making equipment to China. The latest
Speaker 6: move is aimed at halting China's advances in the realm
Speaker 6: of semiconductor production and protecting American.
Speaker 4: Firms, possibly creating a chilling effect for these companies thinking
Speaker 4: do we really want to put our money there? Do
Speaker 4: we really want to put our NoHo there? The US
Speaker 4: does not believe that there's a private sector in China
Speaker 4: that all the know how, all the money, everything you
Speaker 4: do there goes to the military, and that of course
Speaker 4: could be used against the US military if there is
Speaker 4: a conflict. So those are also underlying factors that some
Speaker 4: of the firms are grappling with.
Speaker 1: It's really interesting, Jenny, with seeing of course, lots of
Speaker 1: comments from officials in China of late sort of reassuring
Speaker 1: on the private sector. Not a lot of specifics in
Speaker 1: any of that so far, but certainly trying to send
Speaker 1: a message again and meeting of course with sort of
Speaker 1: executives from US companies.
Speaker 9: As tensions between the US and China remain at an
Speaker 9: all time high.
Speaker 6: Microsoft co founder Bill Gates has met President Jijing Ping.
Speaker 4: And that's happening all the while. They're cracking down on
Speaker 4: some of these sectors. In the White House, which is
Speaker 4: usually pretty quiet on the China front, has actually been
Speaker 4: seizing on that, saying they're seeing a concerning pattern and
Speaker 4: sort of sending the message to the business community. Maybe
Speaker 4: the Chinese are trying to play at both sides here.
Speaker 4: It's up to you what you do, but you know,
Speaker 4: you see the risks here. So that's sort of an
Speaker 4: interesting new development that we've seen over the last three months,
Speaker 4: i would say, coming from the White House.
Speaker 1: And of course none of this is happening in a vacuum.
Speaker 1: We've been talking about some of the policies that we've
Speaker 1: seen from China. But Mal, I'm curious, how does China
Speaker 1: see all of this? What is the impact that you've
Speaker 1: seen so far for any on the economy of China.
Speaker 7: China isn't sitting back, abashed and tail between its legs.
Speaker 7: It continues to press ahead with plans to develop these
Speaker 7: industries such as AI evs, where companies such as BYD
Speaker 7: and making great strides effectively doing that via skirting the
Speaker 7: US they're not trying to sell evs in America. That's
Speaker 7: just too tough. But let's sell them to the rest
Speaker 7: of the world instead.
Speaker 1: China's waging a war not in the Pacific, but non
Speaker 1: Australian roads. Its manufacturers are locked in a heated race
Speaker 1: to bring the cheapest electric vehicle to our market.
Speaker 7: They're plowing ahead on that front. But by the same
Speaker 7: they're also aware that just as the rest of the
Speaker 7: world is maybe a little bit too reliant on China,
Speaker 7: China's economy was perhaps a little bit too reliant on
Speaker 7: the rest of the world. So since around mid twenty twenty,
Speaker 7: we've heard more from Chijinping and others about this duel
Speaker 7: circulation growth model. The duel being let's stick with the
Speaker 7: global engagement, let's continue to do that, but let's back
Speaker 7: it with additional domestic demand. And also let's assemble more
Speaker 7: of those components, or produce rather more of those components ourselves.
Speaker 7: So there were assembling products that are made from components
Speaker 7: that are also made in China, so that value added,
Speaker 7: that all important valu added stays at home. And then
Speaker 7: the third thing they're doing is just as the US
Speaker 7: and other Western like minded countries are trying to diversify
Speaker 7: away from China a little bit. So China is trying
Speaker 7: to back away from its reliance on those markets, and
Speaker 7: it's having some success. It's diversifying its customer base and
Speaker 7: selling more sense to its Southeast Asian neighbors.
Speaker 2: Coming up, what follows the Great Reset.
Speaker 1: We've talked a lot in this conversation about the Great Reset,
Speaker 1: but I want to just come into something a bit
Speaker 1: more specifically, and this is something Jenny, you've touched on
Speaker 1: so far in the conversation, which is the US election,
Speaker 1: which is coming up late next year. And you could
Speaker 1: argue that Joe Biden has been a more protectionist president
Speaker 1: than his predecessor, Donald Trump. But equally, is the US
Speaker 1: political climate at this point where no one can afford
Speaker 1: to not be seen to be protectionist sort.
Speaker 4: Of yes, I think when it comes to the US
Speaker 4: China relationship, there's multiple layers of concerns, from national security
Speaker 4: to human rights, which we've seen a lot in the
Speaker 4: apparel sector. You know, Shinjug, the Western Chinese region, there's
Speaker 4: a whole lot that was passed that sort of now
Speaker 4: bans Catton coming in and other products coming in from
Speaker 4: that region. So if you look to twenty twenty four,
Speaker 4: former President Trump, who's running for reelection, is promising a
Speaker 4: full decoupling from China. Now he sort of thinks that
Speaker 4: he hasn't done everything he could have done in his
Speaker 4: four years in the White House, so now he is
Speaker 4: really going at it in part two, promising a full decoupling.
Speaker 4: And so everyone sort of on the Republican side is
Speaker 4: measuring their stance based on what Trump has already done,
Speaker 4: what Trump is promising. You don't really hear anyone who
Speaker 4: is pro business, pro engaging with China on the Republican side.
Speaker 4: And of course President Biden, who's running for reelection, has
Speaker 4: similar views and has continued some of the policies that
Speaker 4: we've seen from the Trump administration. So on China, I
Speaker 4: think we will see the protectionism going forward.
Speaker 5: I think another thing to keep a close eye on
Speaker 5: as we go through the campaign season and rhetoric kind
Speaker 5: of flies around, is any pushback that this decoupling that
Speaker 5: we would get from the Republican candidates gets from the
Speaker 5: business community. Because tariffs were not a popular strategy. Donald
Speaker 5: Trump got a lot of political mileage out of them
Speaker 5: from his base, but tariffs were not popular, and if
Speaker 5: the pandemic didn't come along, we might have been looking
Speaker 5: at more tariffs and phase of inflation that might have
Speaker 5: been caused by tariffs. Decoupling from the Chinese economy sounds
Speaker 5: like a really good hawkish approach, But I bet if
Speaker 5: you asked the big corporate donors if they would like that,
Speaker 5: you'd get a different answer.
Speaker 1: And Jenny, you were talking of course about how other
Speaker 1: allies have supported the US in this better sense of
Speaker 1: Aneya's also at the pace of it and perhaps being
Speaker 1: driven avertly by US foreign policy. And you know, going
Speaker 1: back to what Mao was talking about the global South
Speaker 1: countries are feeling caught in the middle, and India is
Speaker 1: a really interesting case.
Speaker 2: Brenda, can you talk a bit more about India.
Speaker 5: Yeah, So, India, like you said, is one of these
Speaker 5: really interesting examples. It wants to be the beneficiary of
Speaker 5: the de risking that companies are doing from China. It
Speaker 5: wants to make iPhones and other high tech equipment, and
Speaker 5: it wants to benefit from this shift away from China economically.
Speaker 5: But on the geopolitical side, it's portraying itself as a
Speaker 5: neutral in the sort of China Russia axis against the West.
Speaker 5: It will see how long it can kind of stay
Speaker 5: in the middle there. For the story that we're talking about,
Speaker 5: we had a reporter go to a factory outside of
Speaker 5: New Delhi that's getting the financial support from the Modi government.
Speaker 5: It's this facility where we learned that even the CFO
Speaker 5: who we talked to said, we're doing very well. We're
Speaker 5: making mobile phones, but it's going to take years and
Speaker 5: years and so this process it's complicated. The infrastructure, even
Speaker 5: in a place like India is not up to par
Speaker 5: with China. So all this talk about racing to catch
Speaker 5: up to China or replace China is a really difficult process.
Speaker 7: Even as India does see to be the next China. Ironically,
Speaker 7: that's boosting, not reducing its reliance on shipments from China,
Speaker 7: because as they seek to boost the manufacturing sector, they
Speaker 7: need to be buying those components or the machines that
Speaker 7: make the components from China.
Speaker 1: Do you smail any other unintended consequences of this great
Speaker 1: reset when you look around the world.
Speaker 7: I mean from an economics perspective, they abound. We're trying
Speaker 7: to tackle this big inflation shock, and many of these
Speaker 7: measures are only going to make the goods that we
Speaker 7: buy more expensive, so that's going to get tougher. There's
Speaker 7: the misallocation of resources as governments try to pick winners. Historically,
Speaker 7: that's not proved to be a good idea. You know,
Speaker 7: if we're all pushing to reshore and manufacture these certain
Speaker 7: so called strategic products, it probably won't be too long
Speaker 7: until there's a glood of those things and we're all
Speaker 7: talking about the misallocation of resources that happened.
Speaker 5: I think one of the most basic unintended consequences that
Speaker 5: we could see play out is there's all this talk
Speaker 5: about reshoring, near shoring, bringing production back home to create
Speaker 5: manufacturing jobs, when a lot of those jobs are just
Speaker 5: going to be automated. The technology is such now that
Speaker 5: you don't need one thousand people in a factory to
Speaker 5: make a car anymore. You need some robots and a
Speaker 5: few hundred. We visited a company in County Kerry, Ireland
Speaker 5: that's making products for Ikea. By the way of three
Speaker 5: D printing, there's no need for Chinese production or production
Speaker 5: anywhere else. It just happens without any sort of supply
Speaker 5: chain at all. So those are the kinds of advances
Speaker 5: that we're seeing that could make the next several decades
Speaker 5: really interesting.
Speaker 2: Where do you see the great reset going?
Speaker 1: If you think about what the world might look like
Speaker 1: in five years from now or ten years from now,
Speaker 1: do you see a radically different global economy.
Speaker 5: I think the length and the degree of the transformation
Speaker 5: is going to depend on whether the US China conflict
Speaker 5: goes from a cold war situation to a hot one.
Speaker 5: It will transform very quickly if we're in some sort
Speaker 5: of military conflict with China, and the decoupling will happen
Speaker 5: almost over night. The short answer is it's going to
Speaker 5: be a slow, costly process, but we're going to see
Speaker 5: the world change before our own eyes over the next
Speaker 5: decade or two.
Speaker 4: You know, Brendan mentioned the China situation, which of course
Speaker 4: has to do with Taiwan, which is the center of
Speaker 4: the global semiconductor industry. I think it's going to be
Speaker 4: really interesting to watch their Taiwan is also having a
Speaker 4: presidential election in early twenty twenty four. They really want
Speaker 4: the semiconductor industry to remain centered on Taiwan because that
Speaker 4: gives them a little bit of what they call the
Speaker 4: silicon shield. So I'm watching that election very closely.
Speaker 2: Brendan, Malcolm, Jenny, thank you for joining me today.
Speaker 1: Thanks for ros Thank you Ross, thank you, thanks for
Speaker 1: listening to us here at The Big Take. It's a
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