WEBVTT - Stephen Engle on China, Taiwan (Audio)

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<v Speaker 1>Well, as he had mentioned um China extending its drills

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<v Speaker 1>near Taiwan following Nancy's Pelosi Nancy Pelosi's visit to the

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<v Speaker 1>territory that was a week ago. Now drills ongoing joining

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<v Speaker 1>us now, as Steven Angel Bloomberg's TV chief North Asia correspondent, Stephen,

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<v Speaker 1>what's the situation around Taiwan at the moment. Yeah, So

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<v Speaker 1>we were going to have those four days of military exercises,

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<v Speaker 1>which we did have from Wednesday to Sunday following Nancy

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<v Speaker 1>Pelosi's exit from the island after her controversial visit, and

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<v Speaker 1>they did have these six exclusion zones encircling Taiwan, and

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<v Speaker 1>that's where we had a number of different exercises with

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<v Speaker 1>the p l A, Navy, the Air Force as well

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<v Speaker 1>as rocket teams. A number of different missiles were fired,

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<v Speaker 1>ballistic missiles as well as claims by Japan that a

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<v Speaker 1>few of them actually went over the island of Taiwan

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<v Speaker 1>and also into Japan's Exclusive Economic Zone or e Z.

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<v Speaker 1>So it was set up for being quite an inflammatory

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<v Speaker 1>a week. Obviously that was supposed to conclude on Sunday.

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<v Speaker 1>But again we're hearing from the military of China that

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<v Speaker 1>they've either extended or launched new exercises. As we just

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<v Speaker 1>heard from Ed that anti submarine operations are underway as

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<v Speaker 1>well as well as air to see strikes. And again

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<v Speaker 1>Taiwan would call this the most provocative by the p

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<v Speaker 1>l A and decades. We'll have to see where it

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<v Speaker 1>goes from here, Steve, as you know, I mean, the

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<v Speaker 1>big concern here is on the invasion front, right that

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<v Speaker 1>that the mainland Chinese forces would actually invade Taiwan. Are

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<v Speaker 1>people saying that this is essentially a dress rehearsal under

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<v Speaker 1>these circumstances, I think they're using this opportunity to fine

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<v Speaker 1>tune their tactics obviously, and to poke little holes in

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<v Speaker 1>the fence around Taiwan. Uh see where there's vulnerabilities. And

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<v Speaker 1>for their sake, Taiwan is doing the same thing. They're

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<v Speaker 1>seeing the tactics being used by the p l A

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<v Speaker 1>forces and where they need to bolster their defenses as well.

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<v Speaker 1>I would be the last wanted to say that Nancy

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<v Speaker 1>Pelosi's visit would spark an invasion of Taiwan. I think

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<v Speaker 1>there's been a standoff in a status quo for a

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<v Speaker 1>long time for very good reason. Neither side if you will,

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<v Speaker 1>would want war right now. But I think they're just

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<v Speaker 1>testing each other right now. Yeah, to what degree, both

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<v Speaker 1>Pelosi's visits and what we're seeing from the Chinese military

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<v Speaker 1>at the vironment, it's really tailed to domestic audiences rather

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<v Speaker 1>than address rehearsal for an invasion. Oh, he absolutely, absolutely,

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<v Speaker 1>if you're talking about shij and PINGI absolutely has a

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<v Speaker 1>domestic audience to cater too. I think when Nancy Pelosi

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<v Speaker 1>actually landed on the island, there was an outcry from

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<v Speaker 1>ultra nationalists on way bar in the Chinese social media

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<v Speaker 1>that the Beijing did not do enough well in the

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<v Speaker 1>last you know, six days or so. They've been trying

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<v Speaker 1>to escalate, if you will, the military exercises and show

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<v Speaker 1>a sign of strength, if you will, against the moves,

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<v Speaker 1>and there's been some economic moves as well, But just

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<v Speaker 1>how far can China go without also damaging itself as

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<v Speaker 1>well on the economic front. So if you're she she

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<v Speaker 1>in Ping and you're dealing with difficulties on the economic

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<v Speaker 1>front visa vie the property market, you're looking at the

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<v Speaker 1>People's Congress in the fall, do you exploit this as

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<v Speaker 1>a way of building nationalism? I think obviously everything they

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<v Speaker 1>do kind of tries to build up nationalism and support

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<v Speaker 1>for the Communist Party. I think that's Is it a distraction,

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<v Speaker 1>It's well, it depends on how you do it. I mean,

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<v Speaker 1>if you are seen by the populace in China as

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<v Speaker 1>losing the optics game, then then it is a distraction.

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<v Speaker 1>But if you also say, you know, vilify Nancy Pelosi,

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<v Speaker 1>villify the u S efforts to destabilize the status quo,

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<v Speaker 1>then they can use it to their advantage, especially as

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<v Speaker 1>you say at ahead of this Party congress where seed

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<v Speaker 1>in Ping will very likely get that third consecutive term.

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<v Speaker 1>A number of other countries Australia you're included, have described

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<v Speaker 1>China's actions after Pelosi's visit as an overreact. Shouldn't do

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<v Speaker 1>you think the US and its allies got a bit

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<v Speaker 1>caught off? God by just how long these drills have

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<v Speaker 1>been going on for now? Well, Joe Biden was asked

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<v Speaker 1>about that today and he expressed confidence that China would

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<v Speaker 1>not escalate beyond just these drills. As I said, the

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<v Speaker 1>economic sanctions so far a pretty miniscule. Again, the big

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<v Speaker 1>economic trade between the two is on integrated circuits and

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<v Speaker 1>China absolutely needs those integrated circuits from Taiwan, so cutting

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<v Speaker 1>that off would do itself there you know, some harm um.

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<v Speaker 1>But again Joe Biden also kind of refused when he

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<v Speaker 1>was asked, did did Nancy Pelosi cause this tension these

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<v Speaker 1>military games? And he refused to falter. Really he's saying

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<v Speaker 1>that was her decision to go. But I'm sure there's

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<v Speaker 1>been a lot of internal dialogue and maybe some uh

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<v Speaker 1>conversations if you will, behind the scenes. Is like that

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<v Speaker 1>probably wasn't such a good idea. Well, it's interesting you

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<v Speaker 1>bring up the semiconductor story, I mean where Taiwan is

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<v Speaker 1>concerned and the product that needs to go to the mainland.

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<v Speaker 1>What has commercial shipping been like in the Taiwan Straight

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<v Speaker 1>over the last week. Well, there was big concern obviously

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<v Speaker 1>because these six exclusion zones, or as state media in

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<v Speaker 1>China called them, danger zones. Uh many of them, or

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<v Speaker 1>at least three of them I could see on the map,

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<v Speaker 1>are in the Taiwan Straight uh key shipping lane. Obviously

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<v Speaker 1>for global shippers, some have had to divert around the

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<v Speaker 1>east side of the island rather than go through the

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<v Speaker 1>Taiwan Straight But shipping tracking data that Bloomberg has seen

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<v Speaker 1>shows that four of the p l A so called

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<v Speaker 1>danger zones are being traversed right now by merchant ships.

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<v Speaker 1>So it seems as though the threat, at least according

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<v Speaker 1>to many of the shipping lines, has diminished. How does

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<v Speaker 1>all of this get received domestically in Taiwan, not just

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<v Speaker 1>Nanci Pelosi's visit, the military flaxing that's going on from China,

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<v Speaker 1>you know, how do how do the ordinary Hiwanese feel

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<v Speaker 1>about all of this? Yeah, that that's an interesting question.

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<v Speaker 1>I think it probably um they've they've been dealing with

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<v Speaker 1>this threat for many, many years. I lived in Taiwan

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<v Speaker 1>in the early or to mid nineties, and there was

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<v Speaker 1>there was these kinds of things. In fact, six there

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<v Speaker 1>was an eight month long standoff called the Third Taiwan

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<v Speaker 1>Straight Crisis. Two different US aircraft carrier groups were sent

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<v Speaker 1>to the area. One the Nimbits even passed through the

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<v Speaker 1>Taiwan Straight There was serious saber rattling going on, and

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<v Speaker 1>Taiwan got on with its business. And I think they're

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<v Speaker 1>still doing that as well. There's gonna be a little

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<v Speaker 1>bit of economic pain, but even the Ministry of Finances

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<v Speaker 1>chief statistician giving a press conference, the Chief statistician, essentially saying,

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<v Speaker 1>because of the China's reliance on electronics and integrated circuits

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<v Speaker 1>and the like, we expect very little chance of China

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<v Speaker 1>imposing stricter economic sanctions that would be the biggest pain.

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<v Speaker 1>That the military threat has always been there. But yes,

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<v Speaker 1>these are very provocative war games, obviously, Stephen, good stuff. Oh,

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<v Speaker 1>by the way, very quickly, what do we know about

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<v Speaker 1>the way in which this is being represented in Chinese

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<v Speaker 1>press outlets. Oh, they're absolutely using it to their advantage

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<v Speaker 1>as they would. I mean, the most of the media

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<v Speaker 1>outlets are controlled by the Communist Party, so they'll they'll

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<v Speaker 1>they'll be using this to their advantage. Obviously. Always a pleasure, Steve,

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<v Speaker 1>thanks so much for being with this Bloomberg. Stephen Engel,

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<v Speaker 1>who is our chief Asia TV North Asia TV correspondent,

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<v Speaker 1>joining us from Hong Kong