WEBVTT - Previewing Taiwan's Inauguration, Iran's President Missing After Crash 0:00:02.480 --> 0:00:10.440 Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 0:00:10.520 --> 0:00:13.720 Daybreak Aisia podcast. I'm Doug Krisner. You can join Brian 0:00:13.800 --> 0:00:16.640 Curtis and myself for the stories, making news and moving 0:00:16.680 --> 0:00:19.560 markets in the APAC region. You can subscribe to the 0:00:19.600 --> 0:00:23.080 show anywhere you get your podcast and always on Bloomberg Radio, 0:00:23.320 --> 0:00:26.080 the Bloomberg Terminal, and the Bloomberg Business app. 0:00:27.200 --> 0:00:31.120 Taiwan's president or in president elect, Lijingda is to be 0:00:31.200 --> 0:00:34.360 sworn in as president today and that will put him 0:00:34.440 --> 0:00:37.960 right at the center of very difficult relations between the 0:00:38.120 --> 0:00:40.919 United States and China. And joining us for some discussion 0:00:40.920 --> 0:00:43.279 of this is Ron A Mitter, who is Professor of 0:00:43.360 --> 0:00:47.680 US Asia Relations at the Harvard Kennedy School, to get 0:00:47.680 --> 0:00:51.960 some insights on this. So, by most accounts, Leijingda is 0:00:52.440 --> 0:00:56.800 likely to make a speech today that would be one 0:00:56.840 --> 0:00:59.800 of continuity, but there's always the chance that there'll be 0:00:59.800 --> 0:01:02.120 some thing in there that rocks the boat. What are 0:01:02.120 --> 0:01:06.360 you expecting in terms of the tone. 0:01:05.120 --> 0:01:07.600 Well, I think Brian that he's going to try and 0:01:08.360 --> 0:01:10.280 pump up the volume a little bit when it comes 0:01:10.280 --> 0:01:13.560 to the question of Taiwan being separated from the mainland. 0:01:13.800 --> 0:01:17.280 His predecessor who's just leaving office president saying one was 0:01:17.319 --> 0:01:20.000 pretty careful to make sure that she didn't trigger that 0:01:20.240 --> 0:01:23.080 red line, which Beijing has always said is going to 0:01:23.120 --> 0:01:26.080 be the trigger for an all out opposition by them, 0:01:26.120 --> 0:01:29.480 and that is, of course, the decoration of independence by Taiwan. Now, 0:01:29.520 --> 0:01:32.480 I think it's highly unlikely that lightingder As the new president, 0:01:32.840 --> 0:01:36.080 is going to actually utter the I word of independence, 0:01:36.319 --> 0:01:38.479 but he may try and use language that's a bit 0:01:38.520 --> 0:01:42.520 more forceful than that of his predecessor. That having been said, 0:01:42.680 --> 0:01:45.640 I'm sure that there will have been extremely strong signals 0:01:45.920 --> 0:01:49.160 from the United States from the Biden administration, but he 0:01:49.200 --> 0:01:52.680 should not try and upset the current status quo, particularly 0:01:52.680 --> 0:01:57.240 since mainland mainland China's relations with the US have been 0:01:57.280 --> 0:01:59.480 getting better in the last year, and so while they're 0:01:59.480 --> 0:02:01.680 going to be stronger rhetoric, I don't expect to hear 0:02:01.720 --> 0:02:04.240 any difference in terms of Taiwan's policy. 0:02:04.680 --> 0:02:07.320 Mister Lai managed to get around forty percent of the 0:02:07.360 --> 0:02:10.920 popular vote, so there is not a strong mandate, is there. 0:02:12.080 --> 0:02:14.160 Well, forty percent is pretty strong. I think there are 0:02:14.160 --> 0:02:16.240 an awful lot of politicians who would like to have 0:02:16.320 --> 0:02:19.400 that In the context of Taiwan, which is three major 0:02:19.440 --> 0:02:22.360 candidates all coming together. It is certainly the case that 0:02:22.400 --> 0:02:26.799 if the two candidates who lost, Coen Jur and Ho 0:02:26.960 --> 0:02:30.239 Yui had actually managed to get together with their respective 0:02:30.280 --> 0:02:33.840 parties and run together against him, then it's possible he 0:02:33.919 --> 0:02:36.120 might have lost. But that having been said, he can 0:02:36.160 --> 0:02:38.520 certainly go back and say he actually does have the 0:02:38.520 --> 0:02:41.079 presidential mandate because he's got a lot more votes than 0:02:41.120 --> 0:02:43.400 either of the other two. His problem is a little 0:02:43.400 --> 0:02:45.400 bit similar to the one in the US at the moment, 0:02:45.600 --> 0:02:48.440 which is that even though he has the presidency, Congress 0:02:48.600 --> 0:02:53.920 is split. Essentially the opposition KMT Nationalist Party does have 0:02:53.960 --> 0:02:56.920 a very significant number of seats, pretty much actually slightly 0:02:56.960 --> 0:03:00.519 more I think one more than the ruling DPP in 0:03:00.560 --> 0:03:03.600 the presidency actually has, and that means that it may 0:03:03.639 --> 0:03:06.959 be hard to get legislation through Taiwan's Congress, even though 0:03:07.160 --> 0:03:09.840 lighting the does have the presidency in his hands. 0:03:11.000 --> 0:03:16.120 Professor, I'm curious about the nuanced line between declaring independence 0:03:16.600 --> 0:03:20.040 and stating that we already have independence, because that's basically 0:03:20.080 --> 0:03:22.639 what William Lai has been saying. He's pushing for the 0:03:22.680 --> 0:03:26.240 status quo. The status quo is de facto independence. So 0:03:27.080 --> 0:03:29.840 how nervous would China be if he starts talking about 0:03:29.880 --> 0:03:32.840 that in great detail? And even if it isn't a 0:03:32.880 --> 0:03:36.360 declaration officially, it's statement that we have it. 0:03:37.880 --> 0:03:40.880 Well, that phrasing of we don't need to declare independence 0:03:40.920 --> 0:03:43.080 because essentially we have it already was actually used in 0:03:43.080 --> 0:03:45.560 the form by saying one his predecessor as well, so 0:03:45.600 --> 0:03:48.920 it's not completely new in that sense. I think that 0:03:48.960 --> 0:03:52.240 Beijing is getting more and more nervous about the idea 0:03:52.360 --> 0:03:55.480 that there might be any kind of formal separation, and 0:03:55.520 --> 0:03:57.600 that's why we've seen, in fact, just today that there 0:03:57.600 --> 0:04:01.800 have been yet more sorties of fighter craft in the skies, 0:04:01.840 --> 0:04:04.400 not quite above the island, but certainly quite close to it. 0:04:04.440 --> 0:04:06.760 And they've made it very clear again that they regard 0:04:06.840 --> 0:04:10.200 any statement that goes in the direction of independence to 0:04:10.240 --> 0:04:12.800 be one that they would consider a trigger warning from 0:04:12.840 --> 0:04:15.880 their point of view. That said, it is certainly the 0:04:15.920 --> 0:04:18.320 case that they've acknowledged for a long time that Taiwan 0:04:18.360 --> 0:04:20.919 has been autonomous. That might be a better word to 0:04:21.000 --> 0:04:24.000 use than independent. And the question now comes as to 0:04:24.040 --> 0:04:27.080 how long they're willing to tolerate something that looks genuinely 0:04:27.120 --> 0:04:30.479 like the status quo. In other words, that Taiwan will 0:04:30.520 --> 0:04:33.159 not get and probably won't move very hard to seek 0:04:33.600 --> 0:04:37.160 formal independence for its status, but rather seek to try 0:04:37.200 --> 0:04:41.599 and find, say, international organizations such as the WTO or 0:04:42.080 --> 0:04:44.719 sections of the United Nations, where it can have a 0:04:44.760 --> 0:04:48.720 sort of substate role. There are precedents for other entities 0:04:48.720 --> 0:04:51.880 which are not fully recognized states getting some sort of 0:04:51.920 --> 0:04:55.880 recognition in international organizations. The question is whether Beijing will 0:04:55.920 --> 0:04:58.400 consider that now part of its red line. 0:04:58.560 --> 0:05:00.400 So what does this mean for the United Sis dates, 0:05:00.440 --> 0:05:04.440 particularly in the context of a US presidential election at 0:05:04.440 --> 0:05:06.960 the end of this year that may say a change 0:05:06.960 --> 0:05:09.000 in administrations, but. 0:05:09.000 --> 0:05:11.120 The rest of this calendar year. My guess is that 0:05:11.160 --> 0:05:14.520 it's pretty much baked into the calculations on both the 0:05:14.520 --> 0:05:18.440 side of Beijing and of Washington. In other words, they 0:05:18.480 --> 0:05:21.120 know that both sides have known that this inauguration was 0:05:21.160 --> 0:05:23.279 going to happen. The election actually happened four months ago 0:05:23.320 --> 0:05:26.480 in January, and what's happened so far has not produced 0:05:26.520 --> 0:05:30.480 any great surprises since then. Also, both sides essentially don't 0:05:30.520 --> 0:05:34.320 have a great interest in raising the temperature on US 0:05:34.440 --> 0:05:36.919 China relations more broadly, in the run up to that 0:05:36.960 --> 0:05:41.800 presidential election. Essentially, the Chinese side know that if President 0:05:41.839 --> 0:05:44.479 Biden is re elected that at that point they're going 0:05:44.560 --> 0:05:46.159 to have to work out how they'll deal with the 0:05:46.200 --> 0:05:49.000 timeline question over the four years after that, in the 0:05:49.000 --> 0:05:51.479 face of an administration which has made it very clear that 0:05:51.520 --> 0:05:54.839 it does continue the consider the continued status quoa of 0:05:54.839 --> 0:05:58.719 Taiwan to be a core US interest. If President Trump 0:05:58.839 --> 0:06:01.000 is re elected, then I think the general sense from 0:06:01.040 --> 0:06:02.960 the Beijing side is that they're not sure what he 0:06:03.040 --> 0:06:07.000 might do, anything from actually doubling down on harsh words 0:06:07.080 --> 0:06:10.440 or actions with China to maybe being less involved as 0:06:10.480 --> 0:06:14.560 a sort of more isolationist position from the outside world. 0:06:14.720 --> 0:06:17.280 And so from that point of view, Beijing will speak 0:06:17.320 --> 0:06:20.200 strong language, it will send those fighter planes into the 0:06:20.240 --> 0:06:24.000 skies near Taiwan, but it's unlikely to want to trigger 0:06:24.040 --> 0:06:27.120 any kind of major confrontation now before it knows the 0:06:27.160 --> 0:06:29.320 result of that US presidential election. 0:06:29.920 --> 0:06:32.480 Everything we've seen in the past is that Taiwan people 0:06:33.279 --> 0:06:37.239 would not in any way support becoming a part of China. 0:06:37.320 --> 0:06:40.240 I mean, that's the sense of things. And you talked 0:06:40.240 --> 0:06:44.760 about autonomy. How much has what's happened to Hong Kong 0:06:45.279 --> 0:06:49.120 hurt China in the eyes of Taiwan people, losing its 0:06:49.320 --> 0:06:52.839 semi autonomous status here right, I. 0:06:52.839 --> 0:06:54.799 Mean the parting of the National Security Law in twenty 0:06:54.880 --> 0:06:58.440 twenty in Hong Kong had an extremely negative effect on 0:06:58.520 --> 0:07:01.880 impressions of getting closed to China in Taiwan, and in fact, 0:07:01.880 --> 0:07:05.560 in the previous presidential election back in twenty twenty, which 0:07:05.640 --> 0:07:09.920 was held in the kind of shadow of that Hong 0:07:10.000 --> 0:07:13.280 Kong National Security Law, Taiing Ian was essentially able to 0:07:13.400 --> 0:07:16.680 get reelection in large part by citing the example of 0:07:16.680 --> 0:07:19.160 Hong Kong. But there are other means of getting close. 0:07:19.240 --> 0:07:22.360 Political closeness, as you've said, is something that most Taiwanese 0:07:22.360 --> 0:07:24.400 people don't seem to want to have. They prefer a 0:07:24.480 --> 0:07:27.840 version of the status quo. But something like eighty percent 0:07:28.160 --> 0:07:32.240 of Taiwan's businesses are in some way tied to the mainland, 0:07:32.640 --> 0:07:34.840 and the mainland has shown certainly in the last few 0:07:34.880 --> 0:07:39.520 months that it's capable of operating partial boycotts or sanctions 0:07:39.840 --> 0:07:42.800 against Taiwanese goods. It could be pineapples, it could be chemicals. 0:07:42.880 --> 0:07:45.760 Both of those have been hit recently to show that 0:07:45.800 --> 0:07:48.840 if it wants to squeeze Taiwan's economy, then it has 0:07:49.040 --> 0:07:51.480 the capacity to do that. I would look to that 0:07:51.520 --> 0:07:53.960 sort of area, or for instance, companies like fox Conn, 0:07:54.120 --> 0:07:57.960 run by a Taiwan millionaire, Terry Gull, but operating largely 0:07:58.000 --> 0:08:01.040 in factories on the south coast of China, for where 0:08:01.080 --> 0:08:04.080 Beijing may choose to squeeze less on the military front, 0:08:04.200 --> 0:08:06.120 probably more on the economic front. 0:08:06.320 --> 0:08:09.200 Professor, what do we know about the cabinet of the 0:08:09.320 --> 0:08:11.960 incoming president? Who is he surrounding himself with. 0:08:13.240 --> 0:08:17.200 Well, he does have, amongst others, people who know the 0:08:17.280 --> 0:08:19.600 United States very well, including Vice President be Kim, who 0:08:19.680 --> 0:08:24.080 is of course someone who has American family and is 0:08:24.160 --> 0:08:28.000 very well known in Washington. In addition, it's fairly likely 0:08:28.040 --> 0:08:31.240 that he's going to push hard on domestic economic issues 0:08:31.240 --> 0:08:33.800 with his cabinet, one of the reasons being that although 0:08:34.040 --> 0:08:37.280 one of the factors that most analysts would say led 0:08:37.320 --> 0:08:41.120 to his reelection was the fear of the opposition parties 0:08:41.120 --> 0:08:43.079 getting too close to China, at least on the part 0:08:43.120 --> 0:08:45.760 of forty percent of the voters, there is a lot 0:08:45.800 --> 0:08:50.840 of dissatisfaction within Taiwan itself about the state of the economy, 0:08:51.280 --> 0:08:54.679 and because of that, issues such as youth unemployment, for instance, 0:08:54.880 --> 0:08:59.439 it's going to be important for Li's government to essentially 0:08:59.640 --> 0:09:02.439 come up with more economic growth. So figures like Selby 0:09:02.520 --> 0:09:05.440 Kim will be important in terms of US relations, but 0:09:05.520 --> 0:09:08.840 the domestic economy and domestic politics will probably be much 0:09:08.880 --> 0:09:11.080 more at the center of what happens in the next 0:09:11.120 --> 0:09:14.120 four years than it might appear on inauguration day itself, 0:09:14.280 --> 0:09:17.160 when obviously attention is much more on what Beijing is 0:09:17.200 --> 0:09:17.720 going to do. 0:09:18.800 --> 0:09:22.480 Excellent stuff. Thank you very much. Professor Professor Roni Mitter, 0:09:22.960 --> 0:09:33.320 Professor of US Asia Relations at Harvard Kennedy School, joining 0:09:33.360 --> 0:09:35.560 us in our studios for a closer look at China 0:09:35.600 --> 0:09:38.920 and indeed the Asia Pacific is Fred Newman, Chief Asia 0:09:38.960 --> 0:09:43.480 Economist and co head of Global Research for Asia at HSBC. 0:09:44.400 --> 0:09:46.640 So Frederick, thank you very much for joining us here 0:09:46.640 --> 0:09:49.320 in our studios. As usual, let's start off with China, 0:09:49.320 --> 0:09:51.439 looking at some of the measures of late Again, we're 0:09:51.440 --> 0:09:54.040 hearing from economists that you know, it's a step in 0:09:54.080 --> 0:09:56.400 the right direction, but it may not be enough, and 0:09:57.160 --> 0:10:02.120 you know the chasm is huge and such. Your thoughts 0:10:02.440 --> 0:10:04.520 on the developments we saw at the end of last weekend, 0:10:04.520 --> 0:10:05.240 whether they might. 0:10:05.120 --> 0:10:07.719 Work well, it's not the magic bullet that we've been 0:10:07.720 --> 0:10:11.680 ho we'revoping for. But look, they're taking new measures. That is, 0:10:11.720 --> 0:10:15.240 they had rolled out new tools to actually address the 0:10:15.280 --> 0:10:17.480 housing problem. Now you could say the money they put 0:10:17.480 --> 0:10:20.800 behind is not large enough, but at least they're thinking 0:10:20.800 --> 0:10:23.640 a little bit outside the box. For example, they brought 0:10:24.160 --> 0:10:27.680 a new central bank tool. The Central Bank will provide 0:10:28.160 --> 0:10:32.080 money at very low interest rates to commercial banks to 0:10:32.200 --> 0:10:36.080 buy excess housing. We hadn't had that specific program before. 0:10:36.559 --> 0:10:38.520 And so the hope is here that look that at 0:10:38.600 --> 0:10:41.160 least they're opening the toolbox a little bit, and that 0:10:41.200 --> 0:10:44.839 would give them then the potential opening to add further 0:10:44.960 --> 0:10:48.120 funds in the future. But certainly in themselves, this is 0:10:48.160 --> 0:10:51.360 not going to solve the housing crisis. And once we fell, swoop. 0:10:51.440 --> 0:10:53.720 Okay, So let's say that we're going to get incremental 0:10:53.720 --> 0:10:57.080 steps over in the future, something of the same order 0:10:57.120 --> 0:11:00.080 of magnitude. How many years is going to take fred 0:11:00.120 --> 0:11:03.680 for China to get out from underneath this problem? 0:11:04.880 --> 0:11:08.439 Well, look, we already three years, three plus years into this, 0:11:09.440 --> 0:11:13.080 and you think that housing market corrections magnitude would take 0:11:13.080 --> 0:11:15.600 five six years with the economy to fully digest. So 0:11:15.600 --> 0:11:18.120 I would say we're looking another couple of years here 0:11:18.160 --> 0:11:21.040 at least before you really can say the housing crisis 0:11:21.120 --> 0:11:24.880 behind us, and that's you know, that's in the US. 0:11:24.960 --> 0:11:28.199 It took many years as well for this to be digested. That. 0:11:28.520 --> 0:11:31.319 The thing though, at the moment, is we yet need 0:11:31.360 --> 0:11:33.920 to stop the bleeding. We're not even talking about recovery. 0:11:33.920 --> 0:11:36.840 We still talking about prices falling, We're still talking about 0:11:37.080 --> 0:11:40.679 housing construction being under pressure, we still talk about demand falling. 0:11:40.960 --> 0:11:44.640 We just want to arrest those downward trends, stabilize things, 0:11:44.640 --> 0:11:46.559 and then it's going to take another couple of years 0:11:46.559 --> 0:11:49.280 before you see things really accelerate again. 0:11:50.040 --> 0:11:53.000 The ultra long sovereign bond sales, which you know is 0:11:53.520 --> 0:11:56.120 going to be done in several trenches, walk us through 0:11:56.120 --> 0:11:58.960 the mechanism for mean, because what it seems like is 0:11:59.000 --> 0:12:02.640 that it's the federal govern you know, raising money and 0:12:02.760 --> 0:12:06.040 enabling local provinces to buy up some of these unsold homes. 0:12:06.320 --> 0:12:10.120 What's the transmission mechanism? How does that money move from 0:12:10.400 --> 0:12:13.199 the federal to the provincial governments. 0:12:14.000 --> 0:12:16.280 Well, we're not quite clear exactly how much of that 0:12:16.360 --> 0:12:19.319 money will be put towards housing purchases, right, so it's 0:12:19.320 --> 0:12:21.560 a bit of a black box. Nevertheless, we know that 0:12:21.600 --> 0:12:24.720 the government's saying we need to raise more money. We 0:12:24.760 --> 0:12:27.640 need to essentially put more money into the economy, be 0:12:27.720 --> 0:12:30.960 it in housing or be it in other infrastructure projects 0:12:30.960 --> 0:12:34.400 for example. So by putting out long term bonds, you 0:12:34.520 --> 0:12:37.880 really try to raise money essentially for the long term. 0:12:37.920 --> 0:12:39.920 You're not going to attack short term money markets. It 0:12:40.440 --> 0:12:44.000 aims at a different class of investors, and it's really 0:12:44.040 --> 0:12:47.760 trying to establish long term funding mechanisms that local governments 0:12:47.800 --> 0:12:50.960 and ultimately could use as well. So that's the idea. 0:12:51.000 --> 0:12:54.480 It's going to building a long term funding market. It's 0:12:54.600 --> 0:12:56.360 less so that the money is all going to be 0:12:56.400 --> 0:12:57.960 available for housing purchases. 0:12:58.080 --> 0:13:00.400 So let's say maybe we're at the halfway point in 0:13:00.480 --> 0:13:03.120 terms of the recovery for the property market in China, 0:13:03.160 --> 0:13:05.920 and then once we get, you know, fully through this 0:13:06.200 --> 0:13:09.040 period of recovery, maybe we can talk about kind of 0:13:09.080 --> 0:13:11.480 a recovery in the broader economy. But I'd like to 0:13:11.520 --> 0:13:13.920 talk a little bit about what's going on in Taiwan. 0:13:14.320 --> 0:13:17.040 The installation of a new president will happen later today. 0:13:17.600 --> 0:13:19.520 One of the things that we were talking about over 0:13:19.520 --> 0:13:24.199 the weekend, Brian and myself, we know that semiconductor manufacturing 0:13:24.360 --> 0:13:29.680 is very, very concentrated in Taiwan. TSMC obviously the largest 0:13:29.720 --> 0:13:32.599 player globally. I think ninety percent of the chips in 0:13:32.640 --> 0:13:35.560 the world come out of out of that manufacturing facility. 0:13:35.600 --> 0:13:39.120 But as countries like the US and maybe countries in 0:13:39.160 --> 0:13:43.240 Europe seek to diversify, so it's not so concentrated. What 0:13:43.440 --> 0:13:49.760 is the economic future for Taiwan if companies like TSMC 0:13:49.880 --> 0:13:52.559 begin to lose their heft. 0:13:52.960 --> 0:13:55.560 Well, it's certainly a big headwind for the Taiwanese economy 0:13:55.600 --> 0:13:59.760 because of course semiconductor advanced semiconductor manufacturing is you write, 0:14:00.320 --> 0:14:03.040 is the driving force of the Taiwanese economy, and so 0:14:03.240 --> 0:14:07.080 losing those fabs to other countries would certainly be a setback. 0:14:07.120 --> 0:14:10.400 But make no mistake, the Taiwanese economy is much larger 0:14:10.400 --> 0:14:15.080 than this. Yes, they have spectacular advances in high end chips, 0:14:15.200 --> 0:14:19.560 but it's very concentrated to one company, a couple of factories. 0:14:19.600 --> 0:14:22.360 It's not like thousands of workers work there. It's a 0:14:22.360 --> 0:14:26.000 big profit driver, but it doesn't really employ that many people. 0:14:26.040 --> 0:14:29.200 So if you just talk about overall economic growth, the 0:14:29.400 --> 0:14:33.000 direct significance isn't that large. It's more significant because it 0:14:33.080 --> 0:14:37.200 gives other companies in Taiwan access to advanced semiconductors. But 0:14:37.240 --> 0:14:41.760 I would argue that ultimately Taiwan has a fairly diversified economy. 0:14:41.800 --> 0:14:45.120 We always talk about chips, but there's petrochemicals, there's electronics, 0:14:45.160 --> 0:14:49.200 there's other types of manufacturing, and you know, ultimately it 0:14:49.240 --> 0:14:51.720 is a very small island's only twenty million people. They 0:14:51.760 --> 0:14:54.120 need to if their companies want to grow, they have 0:14:54.200 --> 0:14:57.240 to grow overseas. They can't just grow domestically, right, So 0:14:57.280 --> 0:15:00.000 there's a limit to which you can actually expand capacity 0:15:00.080 --> 0:15:03.960 Taiwan anyway, So it's not necessarily deathnel here to the 0:15:04.000 --> 0:15:04.880 Tawanese economy. 0:15:04.880 --> 0:15:06.640 Well, I'm curious though, whether or not you think that 0:15:06.720 --> 0:15:11.360 Taiwan plays a bigger role in between China and the 0:15:11.480 --> 0:15:15.280 United States, or whether or not it continues to be 0:15:15.600 --> 0:15:18.280 sort of there in the background, a potential danger, but 0:15:18.720 --> 0:15:20.520 not playing such an active role. So that's the first 0:15:20.520 --> 0:15:23.800 part of the question. The second part is in China's 0:15:23.800 --> 0:15:25.920 response to the US so far, it's been more words 0:15:25.960 --> 0:15:28.640 than actions. Do you expect more in terms of. 0:15:28.640 --> 0:15:32.800 Actions, maybe in terms of the protection on the trade side, Yeah, yes, 0:15:32.840 --> 0:15:34.920 some of those things. Yeah, Well on that first, so 0:15:35.000 --> 0:15:37.760 we have seen actually the Chinese so far actually not 0:15:38.040 --> 0:15:40.960 taken much action against the US lying low and they're 0:15:41.000 --> 0:15:43.400 just taking on the Chin and they're still open for 0:15:43.560 --> 0:15:46.720 US companies to do business in China. But visa of 0:15:46.760 --> 0:15:49.480 a Europe, we've actually seen the Chinese start to say, 0:15:49.680 --> 0:15:52.240 if you start to impose these measures, we may have 0:15:52.320 --> 0:15:55.160 to retaliate. So they're a bit more aggressive visa of 0:15:55.160 --> 0:15:58.040 a Europe because they don't want Europe to follow the United States. 0:15:58.400 --> 0:16:00.600 The other thing that the Chinese could alter do is 0:16:00.640 --> 0:16:03.120 they could make a life for US companies in China 0:16:03.240 --> 0:16:05.520 much much harder. That's not on the cards yet, and 0:16:05.600 --> 0:16:08.000 so far they want US companies to be involved. But 0:16:08.040 --> 0:16:10.240 of course if there is a you know, if there's 0:16:10.240 --> 0:16:13.680 an opportunity then to kind of pay back the US 0:16:14.240 --> 0:16:16.680 by shutting out US companies, I think that might be 0:16:16.960 --> 0:16:19.320 sort of the next way to do it. In terms 0:16:19.360 --> 0:16:21.640 of Taiwan, I think it's going to play more of 0:16:21.640 --> 0:16:26.880 a backstory here. The temperature has declined, you know, around Taiwan, 0:16:27.400 --> 0:16:29.560 and so we'll have to see how the US election 0:16:29.680 --> 0:16:32.920 shapes up. That's of course always a point where you 0:16:32.960 --> 0:16:37.120 could see escalating tensions. But I think broadly speaking, things 0:16:37.120 --> 0:16:40.760 are not quite as acute as some of the headlines suggests. 0:16:41.440 --> 0:16:43.600 You know you read the news. I mean China preparing 0:16:43.640 --> 0:16:47.080 to take countermeasures against the European Union if it continues 0:16:47.400 --> 0:16:51.880 a series of investigations around subsidies. We were talking a 0:16:51.920 --> 0:16:54.880 moment ago about the Canadian Trade Minister looking at the 0:16:54.920 --> 0:16:58.800 possibility of tariffs on Chinese evs. We know what we 0:16:58.880 --> 0:17:01.280 heard last week from the Bike administration when it came 0:17:01.360 --> 0:17:04.760 to new tariffs on Chinese goods. Do you are you 0:17:04.840 --> 0:17:07.959 worried about a new trade war, or at least a 0:17:08.000 --> 0:17:08.880 hotter trade war. 0:17:10.200 --> 0:17:10.440 Yes. 0:17:10.680 --> 0:17:12.760 I think the worrying trend here is that if the 0:17:12.920 --> 0:17:16.639 US imposes restrictions, other countries will start to follow. And 0:17:16.840 --> 0:17:19.040 there's a certain logic to this, because if the US 0:17:19.040 --> 0:17:22.919 says no thank you to Chinese electric vehicles, and these 0:17:23.000 --> 0:17:26.520 vehicles are being redirected into other markets and they necessarily 0:17:26.640 --> 0:17:30.600 get overwhelmed, and then they start to pose restrictions as well, 0:17:30.640 --> 0:17:32.480 And so the risk is that you have a cascading 0:17:32.520 --> 0:17:34.959 effect here with the European Union, in Canada and everybody 0:17:34.960 --> 0:17:38.400 else it's following the US. And that's not necessarily good 0:17:38.400 --> 0:17:41.200 for the world economy. It's not necessarily good for consumers, 0:17:41.320 --> 0:17:44.919 and so we want to kind of contain trade restrictions 0:17:44.960 --> 0:17:48.239 to a bare minimum. It doesn't say that they're not 0:17:48.400 --> 0:17:53.359 justifications in some instances, but remember, any disruption to trade 0:17:53.440 --> 0:17:56.760 is ultimately a negative for the world economies, a negative 0:17:56.760 --> 0:17:59.840 for consumer for consumer choice, and so the hope is 0:17:59.840 --> 0:18:02.960 that other countries will become a bit more judicious in 0:18:03.080 --> 0:18:06.040 terms of their application of these measures than kind of 0:18:06.359 --> 0:18:07.879 using brute force. 0:18:09.000 --> 0:18:11.440 Are we about to see the yen play a more 0:18:11.600 --> 0:18:17.200 important role in the global economy and are you expecting 0:18:17.240 --> 0:18:19.440 to see weakness in the dollar anytime soon? 0:18:20.520 --> 0:18:23.440 So yen is unlikely to play a stronger role. It's 0:18:24.280 --> 0:18:26.040 so much pressure at the moment. I don't think it 0:18:26.080 --> 0:18:30.080 will re establish itself as a reserve currency necessarily anytime soon. 0:18:31.000 --> 0:18:33.960 And there's pressures on the en remain quite severe. That's 0:18:33.960 --> 0:18:38.320 because US interest rates are sky high and Japanese interest 0:18:38.359 --> 0:18:41.080 rates are what they are, and so there is probably 0:18:41.080 --> 0:18:43.960 ongoing pressure in the Japanese end. The Japanese Center Bank 0:18:44.040 --> 0:18:47.520 is trying to push back against this, allowing yields to 0:18:47.720 --> 0:18:50.040 rise to kind of slow down to this end of 0:18:50.040 --> 0:18:53.120 the Japanese end. But remember a weaker Japanese end plays 0:18:53.160 --> 0:18:57.000 a functional role in Japan's reflation. It raises inflation, it 0:18:57.080 --> 0:18:59.600 raises competitiveness, and that's ultimately good for Japan. 0:19:00.200 --> 0:19:02.520 All right, Frederick, thank you for coming into our studios 0:19:02.560 --> 0:19:04.600 and joining us here on a Monday morning. We do 0:19:04.640 --> 0:19:08.320 appreciate it. Fred Newman, Chief Asia Economist and co head 0:19:08.440 --> 0:19:11.280 of Global Research for Asia at HSBC. 0:19:17.920 --> 0:19:22.000 Let's take a closer look at the President of Iran 0:19:22.240 --> 0:19:26.399 at this helicopter crash. Michael Heath joins us Bloomberg ecogov editor, 0:19:26.480 --> 0:19:30.159 joining us from our studios in Sydney. Michael, I know 0:19:30.200 --> 0:19:34.920 it's still early in this event. We have information kind 0:19:34.920 --> 0:19:38.000 of trickling in even before the announcement of this crash, though, 0:19:38.040 --> 0:19:41.440 I think it's fair to say that relations between Tehran 0:19:41.520 --> 0:19:45.920 and Washington were very, very strained. Do we know anything 0:19:45.920 --> 0:19:50.080 about what's happening in Iran right now? Irrespective of the 0:19:50.119 --> 0:19:52.560 search for the crash site. 0:19:52.920 --> 0:19:57.440 The pictures that are being broadcast on I run in 0:19:57.480 --> 0:20:00.760 safe TV and mainly of people either either praying for 0:20:01.119 --> 0:20:06.680 the health of the president or obviously emergency vehicles heading 0:20:06.760 --> 0:20:10.160 up to the area. As to the higher level politics 0:20:10.160 --> 0:20:12.840 of it, it doesn't seem to have been a great 0:20:12.920 --> 0:20:17.000 deal said. The US has announced that President Biden has 0:20:17.000 --> 0:20:19.800 been briefed on it, but it's very very unclear sort 0:20:19.800 --> 0:20:22.959 of the status of it. Was it just a hard landing, 0:20:23.040 --> 0:20:25.680 is it something more serious, It's just unknown at the moment. 0:20:26.000 --> 0:20:30.640 That's a particularly mountainous part of Iran, and obviously the 0:20:30.680 --> 0:20:34.080 pictures have shown very very thick fog there as well 0:20:34.119 --> 0:20:37.679 in rain. So really we're just as you say, the 0:20:37.720 --> 0:20:40.879 little bits and bobs of information are trickling out, but 0:20:41.040 --> 0:20:44.000 until we get something official, it's really just speculation. At 0:20:44.000 --> 0:20:44.600 this stage. 0:20:45.000 --> 0:20:48.919 We understand that Iran asked Turkey to send a rescue 0:20:48.960 --> 0:20:53.119 helicopter and one with night vision capabilities. It looks to 0:20:53.160 --> 0:20:55.920 be very close to the border. Do we know whether 0:20:56.240 --> 0:20:59.240 this crashes on the Iranian side or on the Turkysh side. 0:21:00.480 --> 0:21:02.360 It seems to be on the Iran inside. I mean 0:21:02.440 --> 0:21:06.160 that area is actually also known as Azerbaijan. It's said 0:21:06.200 --> 0:21:09.119 to have crashed in East Azerbaijan. So you've got the 0:21:09.160 --> 0:21:14.000 Republic of Azerbaijan former Soviet republic, and then you've got 0:21:14.000 --> 0:21:17.920 in northwest Iran, you've got another region called Azerbaijan, and 0:21:17.960 --> 0:21:19.960 there's west and East and so it does seem to 0:21:19.960 --> 0:21:22.199 have happened just over the border inside Iran, but the 0:21:22.280 --> 0:21:25.040 area is known as Azerbaijan. But he was flying back 0:21:25.119 --> 0:21:29.200 that those three helicopters involved in the three helicopters, one 0:21:29.200 --> 0:21:31.760 of the which was containing the president, was flying back 0:21:31.800 --> 0:21:35.720 after the opening of a dam between Azerbaijan and Iran 0:21:36.440 --> 0:21:38.680 as they sort of try and warm relations between the 0:21:38.720 --> 0:21:39.680 two sides. As well. 0:21:40.440 --> 0:21:44.240 In terms of the person of mister Raisi, I think 0:21:44.640 --> 0:21:48.639 he's an ultra conservative cleric. He's obviously the president of 0:21:48.680 --> 0:21:51.720 the country, and many analysts believe that he was being 0:21:52.160 --> 0:21:56.520 groomed to become the next supreme leader of Iran. So 0:21:56.680 --> 0:21:59.959 obviously with his absence, I mean that that would lead 0:22:00.560 --> 0:22:01.440