Speaker 1: You're listening to Asia Centric from Bloomberg Intelligence, the podcast
Speaker 1: that pulls back the curtain non global business so you
Speaker 1: can invest better across the Pacific rim. I'm Tom Corbett
Speaker 1: in Hong Kong and.
Speaker 2: I'm John Lee. Taiwan's election was cast as a stark
Speaker 2: choice between two very different destinies, but relations with China
Speaker 2: may be only part of the picture. For the island's.
Speaker 1: Voters, Taiwan's new leaders have their work cut out for them,
Speaker 1: navigating the way forward for its more than twenty three
Speaker 1: million people while walking a tightrope in relations between two
Speaker 1: global superpowers.
Speaker 2: Taiwan's voters are also concerned about its economy, growth, jobs
Speaker 2: and prosperity, and how china response could set a new
Speaker 2: tone in relations with the US and for Taiwan's business clan.
Speaker 1: What will the next four years look like for the
Speaker 1: Taiwanese people and for Taiwan's standing on the global stage.
Speaker 1: Let's bring in two experts to sort it out. Jennifer
Speaker 1: Welch is chief geoeconomics analyst at Bloomberg Economics. She also
Speaker 1: served in the Trump and Biden Whitehouses shaping US Taiwan policies.
Speaker 1: She joins US from Taipei.
Speaker 2: And Mayva Kuza, senior global economists for Bloomberg Economics, joins
Speaker 2: us from Switzerland.
Speaker 1: Jennifer and Mava, it's great to have you.
Speaker 3: Hijahntam, great to be here, Thanks so much for having us.
Speaker 2: Taiwan just elected lighting To as the new president. Is
Speaker 2: this a resounding success for the ruling party, the Democratic
Speaker 2: Progressive Party or DPP. On one hand, they sealed an
Speaker 2: unprecedented third presidential term, but on another it was one
Speaker 2: of the tightest mansions in years. Jennifer, what's your key takeaway?
Speaker 4: Yeah, I'm not sure that they would use the term
Speaker 4: resounding and to describe their victory. As you noted, they won,
Speaker 4: but they won by a pretty narrow margin, and perhaps
Speaker 4: more concretely, they failed to secure a majority of their legislature.
Speaker 4: They're going to be facing a divided government as a result,
Speaker 4: and that could be a major challenge for them going
Speaker 4: forward in terms of advancing their domestic agenda. But other
Speaker 4: than that, yes, it's a historic win. This is the
Speaker 4: first time that any party has secured a third term
Speaker 4: since Taiwan began holding open elections several decades ago, and
Speaker 4: certainly a really strong sign of Taiwan's maturing and very
Speaker 4: vibrant democracy.
Speaker 2: And Jennifer, it's pretty much safe to say that this
Speaker 2: is the party that mainland China did not want to see.
Speaker 2: When what do you think the reaction will be from mainland.
Speaker 4: China, Well, we're still watching and observing what China's going
Speaker 4: to do, and this is very much a live issue.
Speaker 4: In fact, we just saw the news that China has
Speaker 4: established relations with Nauru, one of Taiwan's few remaining diplomatic partners,
Speaker 4: leaving Taiwan with just twelve partners left on the world stage,
Speaker 4: including the Vatican. So my take on this is though
Speaker 4: that Beijing's reaction has still been fairly considering the spectrum
Speaker 4: of things that they could possibly do in the week
Speaker 4: of the election. For example, we haven't seen a heightened
Speaker 4: amount of military activity, yet we haven't yet seen them
Speaker 4: roll out economic measures that they had been sort of
Speaker 4: singling they'd be willing to take in the week of
Speaker 4: the election if they didn't get the results they wanted.
Speaker 4: And I think a major reason for this is one
Speaker 4: because of that legislative outcome that the DPP is not
Speaker 4: going to be having full control over both the presidency
Speaker 4: and the legislative un and two, I think part of
Speaker 4: it is that they believe that Lie sort of extended
Speaker 4: an olive branch in his victory speech enough at least
Speaker 4: to give them no immediate cause for concern. But I
Speaker 4: think in the weeks and months between now and the
Speaker 4: inauguration in May, when Lai will be sworn in as president,
Speaker 4: we're likely to see additional steps from Beijing seeking to
Speaker 4: shape his approach and probably up the pressure on Taiwan.
Speaker 1: Mayva Kuzam Jennifer Welch. Let's get into the heads of
Speaker 1: the Taiwan voters for a moment. How heavily do cross
Speaker 1: straight relations figure in their thinking, especially considering economic considerations growth, jobs, wages, unemployment.
Speaker 1: Right there is in the low double digit Is this
Speaker 1: really all about China?
Speaker 4: Well that's a really good question, Tom, because actually, when
Speaker 4: you speak to a lot of Taiwanese voters, despite all
Speaker 4: the headline attention from international media on the cross rate issue,
Speaker 4: but most voters here have been concerned about are that
Speaker 4: more bread and butter issue of cost of living, you know,
Speaker 4: the economy or social policies. That's where a lot of
Speaker 4: the focus has been. And yes, cross right issues are
Speaker 4: an important topic, not just in terms of China being
Speaker 4: a major economic trading partner and obviously a major consideration
Speaker 4: for Taiwan, but also you know, for how Taiwan thinks
Speaker 4: about itself and its role on the world stage. But yes,
Speaker 4: the vast majority of voters are far more concerned, just
Speaker 4: like many voters around the world, with issues that affect
Speaker 4: their day to day life, and that tends to be
Speaker 4: more in the economic realm.
Speaker 1: Which is kind of contrary to what we hear in
Speaker 1: the Western narrative that this is a big all about
Speaker 1: China elections, so to speak, What, in your assessment do
Speaker 1: Western observers, particularly in the US, perhaps not understand or
Speaker 1: not yet or not fully appreciate about the nuances between
Speaker 1: the Taiwan elections and relations with China.
Speaker 4: And in fairness to Western media, I will say one
Speaker 4: of the biggest differences between the candidates going into this
Speaker 4: election was on crosstrate issues like when you look at
Speaker 4: their economic policies and their social policies, there's not a
Speaker 4: huge amount of ideological changes there. What they really had
Speaker 4: a difference of opinion on is what Taiwan's relationship with
Speaker 4: mainland China should be and how Taiwan should conduct that relationship.
Speaker 4: So in fairness, there is a major difference there, and
Speaker 4: that's probably the biggest areas of divergence among the candidates.
Speaker 2: And is there any demographic trends that we should be
Speaker 2: aware of. I have been reading in the press that
Speaker 2: some of the younger voters were more support of the
Speaker 2: ruling party or the DPP.
Speaker 4: Actually, one of the most interesting trends in this election
Speaker 4: is how many youth voters we think were brought over
Speaker 4: to the third party, the Taiwan People's Party led by Coinja.
Speaker 4: He has had a lot of attraction among youth voters,
Speaker 4: and that was true when he was mayor of Taibei
Speaker 4: as well. In fact, if you're looking for an interesting excursion,
Speaker 4: he's got a really great rap video that he did
Speaker 4: as part of one of his re election campaigns. It
Speaker 4: was the signal of how he's been able to curate
Speaker 4: a lot of interest among youth. I went to a
Speaker 4: TPP rally on Friday night just to kind of get
Speaker 4: a sense of the ground, and I'd say about ninety
Speaker 4: five percent of the people I saw there were youth,
Speaker 4: And there were so many folks there that I couldn't
Speaker 4: even approach the rally stage, it was that crowded. I
Speaker 4: couldn't even see it from where I was. The streets
Speaker 4: were so jammed. So he really attracted a lot of youth,
Speaker 4: and that became a really interesting facet in this election
Speaker 4: because he wasn't just drawing from the other opposition party
Speaker 4: that Guilming down. He was probably drawing youth that would
Speaker 4: otherwise traditional voted for the DPP. And I think what's
Speaker 4: going to be really interesting to watch going forward is
Speaker 4: do those youth voters stick with the TPP four years
Speaker 4: from now or even two years from now in the
Speaker 4: next sort of local elections, or are they going to
Speaker 4: eventually mature back into the DPP ranks. A lot of
Speaker 4: this might really determine the future of this new third
Speaker 4: party and how much sort of running room they have
Speaker 4: still in Taiwanese politics.
Speaker 1: That youth vote is having a big impact on other democracies,
Speaker 1: not just in Taiwan. Do you think we're on the
Speaker 1: cusp of a generational shift in attitude, so to speak
Speaker 1: in Taiwan?
Speaker 4: I think it's it's going to be something to watch
Speaker 4: because the thing that's been most interesting among this youth
Speaker 4: vote is the generation just before them, as they mentioned,
Speaker 4: was very heavily inclined towards the DPP and also to
Speaker 4: this more China skeptic perspective. It was culminated in something
Speaker 4: called the Sunflower Movement that happened under the previous administration
Speaker 4: in Taiwan around this trade agreement that Taiwan was pursued
Speaker 4: with mainland China, and a lot of the same students
Speaker 4: and activists who are involved in that movement have since
Speaker 4: become major sort of officials in the DPP. The generation
Speaker 4: behind them didn't have that experience and doesn't seem to
Speaker 4: necessarily have the same level of China skepticism as the
Speaker 4: one in between them. So it's going to be really
Speaker 4: interesting to watch how use views towards China and Taiwan
Speaker 4: evolved and what translates that into in terms of like
Speaker 4: which of the parties that they tend to lobby behind.
Speaker 4: But I think that's going to be the key demographic
Speaker 4: that these parties are going to have to capture going forward,
Speaker 4: and it might be the one that's hardest to place
Speaker 4: where exactly they'll land. They seem to again be more
Speaker 4: in this middle zone of actually not as concerned about
Speaker 4: China as the generation above them, but something to watch for.
Speaker 2: Sure, Jennifer, With the latest election results, what does these
Speaker 2: meanful relationships between mainlane China and the US. There seem
Speaker 2: to be some progress between both countries after President's Biden
Speaker 2: and She met last November. Do you think this will
Speaker 2: still be the case going forward.
Speaker 4: I think it will still be the case going forward.
Speaker 4: That's my base case. But I will say as someone
Speaker 4: who was there for Bali in twenty twenty two, where
Speaker 4: we likewise had very good sort of feelings coming out
Speaker 4: of that meeting, shared sense of the importance of stabilizing
Speaker 4: the relationship. Just a few months later, we had the
Speaker 4: Chinese spy balloon incident, which really threw all of those
Speaker 4: plans off the rails, and it took several months for
Speaker 4: those to get back on track in terms of when
Speaker 4: US Cabinet members started visiting China again and then eventually
Speaker 4: laying down the plans for the San Francisco meeting. So
Speaker 4: I think what that goes to show is that meeting
Speaker 4: was a really positive sign. Another positive sign, I should say,
Speaker 4: their ability to still sit down and meet and agree
Speaker 4: on sort of the fundamentals of this relationship. But on
Speaker 4: the other hand, this is a really fragile sort of
Speaker 4: equal that can be easily challenged by another major crisis
Speaker 4: or point of tension, and whether it's something as completely
Speaker 4: unexpected as that spy balloon, or it's something like, for example,
Speaker 4: tensions over Taiwan. And I think a huge factor looking
Speaker 4: forward is going to be what is Beijing's reaction to
Speaker 4: the election, What does Beijing think Washington's reaction to the
Speaker 4: election is, and how does that relationship proceed over the
Speaker 4: coming months between now and the inauguration and then immediately
Speaker 4: after the inauguration in May.
Speaker 1: And Jennifer's remarks are a great segue to bring in
Speaker 1: Mavokuzam with Bloomberg economics. Maybe, but you have put forth
Speaker 1: a widely publicized is it a model? Five theories, five
Speaker 1: scenarios modeling Taiwan, US and China relations, ranging from lasting
Speaker 1: stability to full blown conflict. Talk a little bit about
Speaker 1: how that came about, how you modeled it and how
Speaker 1: you arrived at the potential ten trillion dollar cost of
Speaker 1: a conplic to the global economy.
Speaker 3: Hey, thanks Tom, Yes, that's right. We've looked into those
Speaker 3: five scenarios, the status COO and then some improvement scenarios
Speaker 3: and some scenarios of very severe escalation in the relationship
Speaker 3: between Taiwan mainland China and the US, and in particular
Speaker 3: this extreme case scenarios that you mentioned term, which is
Speaker 3: by no way our main baseline scenarios within the status chool,
Speaker 3: is sticky, and it's sticky for a reason. And one
Speaker 3: of these reasons, of course, is human costs. But the
Speaker 3: other reason is exactly what you've just said, that the
Speaker 3: economic costs of a severe escalation would be disastrous for
Speaker 3: all the main parties involved and for the global economy.
Speaker 3: But coming back to this war scenario, just to give
Speaker 3: a flavor of how we've looked into it. So what
Speaker 3: we've done is that we've worked closely with Jennifer to
Speaker 3: decide on the modeling assumptions to design this scenario of
Speaker 3: what could happen in a very severe scale. And this
Speaker 3: very severe escalation would be a case where China would
Speaker 3: launch an invasion of Taiwan that would draw the US
Speaker 3: into a local conflict. So what could happen in that case.
Speaker 3: The first thing, of course, is that Taiwan's economy would
Speaker 3: be cut off from the rest of the world. So
Speaker 3: we have modeled a case of one hundred percent cut
Speaker 3: in Taiwan's trade with the rest of the world, we
Speaker 3: would have US soldiers fighting directly with Chinese soldiers, and
Speaker 3: in that case, we would expect that the two economies,
Speaker 3: the two countries would actually cut off all relationships, especially
Speaker 3: economic relationships. So we've also modeled only one hundred percent
Speaker 3: cut in all trade between the US and China. What
Speaker 3: would also happen is that the Taiwan's trade is actually
Speaker 3: the busiest shipping route in the world, with lots of
Speaker 3: shipping from Stasia, from Japan, from Korea transiting to go
Speaker 3: to their different destination. It would hurt one of the
Speaker 3: biggest manufacturing hub in the world. We are looking at
Speaker 3: a one year war scenario and eighty percent of trade
Speaker 3: in this region would be disrupted. Eighty percent of trade
Speaker 3: coming out of South Korea, Japan and Selfistasia would be disrupted.
Speaker 3: And finally, we would expect uslies to take very severe
Speaker 3: retaliation or severe economic functions against China, as we've seen
Speaker 3: precently of course in the uk Usha a question. And
Speaker 3: so that's a sort of modeling basis that we've used,
Speaker 3: and from there we've used different suite of models to
Speaker 3: look into what the implications would be.
Speaker 4: And I think just to add on to that and
Speaker 4: elaborate on what we are saying, Yes, we exsess that
Speaker 4: the risk of a war at this point is low probability. However,
Speaker 4: it's a high enough probability and risk and a high
Speaker 4: enough impact, certainly a very severe impact that we think
Speaker 4: warrants examination of what that would entail. I think, more broadly,
Speaker 4: if you look past the specific scenario of a war,
Speaker 4: the odds of a crisis are also not that small.
Speaker 4: If we had to put a number on it, we'd
Speaker 4: say about one in four. And there are a lot
Speaker 4: of reasons for that, but some of the main ones
Speaker 4: are that we've just seen the traditional pillars of stability
Speaker 4: in the street really eroding over the last few years.
Speaker 4: You know, for example, Taiwan is associating itself with a
Speaker 4: distinct Taiwan identity. Beijing sees that and is extremely concerned
Speaker 4: by it, and is also sort of in line with
Speaker 4: its growing power, seeking to make progress towards unification with Taiwan,
Speaker 4: this sort of historic task for Beijing. And then meanwhile,
Speaker 4: you have the United States, which is historically plaid sort
Speaker 4: of a balancing role in the street. Also having a
Speaker 4: very tense relationship with China, and that really invokes Taiwan
Speaker 4: and makes cross straight issues more challenging. So there's a
Speaker 4: lot of dynamics that play that are really straining stability.
Speaker 4: And if you look at the other end of the
Speaker 4: probability spectrum, it's also not a pretty picture. For example,
Speaker 4: we would say that there's probably greater chance of relations
Speaker 4: getting tenser over the next few years than improving.
Speaker 2: So MAYEVI, could you put these in perspective? How big
Speaker 2: is ten trillion dollars as a percentage of global GDP.
Speaker 3: It's ten percent of global GDP, so it is ten
Speaker 3: trillion dollars in twenty twenty two GDP numbers, for example,
Speaker 3: But it's ten percent of global GDP. It's seventeen percent
Speaker 3: of Chinese GDP. It's nearly seven percent of US GDP.
Speaker 3: So of course the US is less exposed, it's further
Speaker 3: away from the conflict, it's not directly on the conflict zone.
Speaker 3: It's also a bit less industrial economy, so it's not
Speaker 3: as badly by the semiconductor's shock, but seven percent is
Speaker 3: still huge. And if you think ten percent of global
Speaker 3: GDP to give your perspective the global financial crisis or
Speaker 3: the pandemic crisis, the COVID crisis, we're about six percent,
Speaker 3: so GDP fell six percent below its previous round on
Speaker 3: the shock, so ten percent. It's bigger than the global
Speaker 3: financial crisis or the pandemic, so it would be a
Speaker 3: huge shock there. Of course, uncertaintyes it's a scenario, so
Speaker 3: things could develop very differently. And it also realized a
Speaker 3: lot on this assumption that semiconductors is what we called
Speaker 3: sometimes in supply chains, the golden screw, this very specific
Speaker 3: part without which you can't do anything. And we've worked
Speaker 3: very closely with your colleagues in Bloomberg Intelligence looking at
Speaker 3: how much semiconductor's capacity is made in Taiwan, almost made
Speaker 3: in Korea and Japan. And the big thing in that
Speaker 3: case is that sixty percent more or less of the
Speaker 3: most advanced logic semiconductors, the one we find in smart phones, tablets,
Speaker 3: sort of advanced electronics are made in Taiwan and most
Speaker 3: of the rest is made in South Korea. So that's
Speaker 3: already one thing, and we've just assumed that without those
Speaker 3: semiconductors we can build smart funds so these factory has
Speaker 3: come to HELT. That's the first cost. And then about
Speaker 3: a third of the less advanced logic semiconductors are made
Speaker 3: in Taiwan, and a lot of it is actually made
Speaker 3: in China and South Korea, but a lot is made
Speaker 3: in China. So you use access to probably about sixty
Speaker 3: percent of all the semiconductors that you need in cars,
Speaker 3: that you need in consumer electronics, that you needed, all
Speaker 3: the transport equipment at very big chocked supply chains. If
Speaker 3: you lose ten percent or those semiconductors, you need to
Speaker 3: decrease production by ten percent. And on top of that,
Speaker 3: of course, if you decrease production of cars by sixty percent,
Speaker 3: production of all the steel or robber that goes in
Speaker 3: cars also goes down by sixty percent. So there are
Speaker 3: the second round effects. There are lots of uncertainties, but
Speaker 3: I think the sort of scale of thinking how exposed
Speaker 3: Western supply chains and Western industries are to these very
Speaker 3: specific semiconductors coming from Taiwan and from Asia give us
Speaker 3: a scale of the show can they risk?
Speaker 2: And Jennifer, you mentioned that this is a low probability event.
Speaker 2: I think you mentioned one out of four chance it
Speaker 2: could happen, but walls in Ukraine as well as Gaza
Speaker 2: have reminded us that long simmering feuds can erupt into
Speaker 2: conflict if these wars increase.
Speaker 4: The odds, And just to be clear, the one and
Speaker 4: four was more for a major crisis in the street,
Speaker 4: I think we would put the probability of war as
Speaker 4: probably less than half of that, so somewhere in the
Speaker 4: ballpark of more like a one in ten. And I
Speaker 4: want to be really clear here when it comes to geopolitics,
Speaker 4: you know, assigning probabilities to really complex, dynamic geopolitical environments
Speaker 4: is more of an art than a science, So I
Speaker 4: really want to emphasize here is more it's a low probability.
Speaker 4: The exact number is sort of a wide confidence range
Speaker 4: when you put it that way, I think in terms
Speaker 4: of what the ongoing conflicts in Ukraine and the Middle
Speaker 4: East suggest and what the implications are for conflict in
Speaker 4: the Taiwan Street, it's sort of a mixed bag, you know.
Speaker 4: I think in particular, if you look at the war
Speaker 4: in Ukraine, it has some detern effects. Right because we're
Speaker 4: approaching the two year anniversary, Russia is still at war.
Speaker 4: It didn't achieve the quick victory that I think Moscow
Speaker 4: thought it was going to achieve, and that it probably
Speaker 4: indicated to Beijing that it thought it was going to achieve.
Speaker 4: And if I'm Beijing watching that, how difficult their land
Speaker 4: invasion of a much smaller power has been with the
Speaker 4: largest land army in Europe. And I'm thinking towards an
Speaker 4: amphibious invasion, which is one of the most difficult military
Speaker 4: operations for any military to undertake, but especially against an
Speaker 4: environment as challenging as Taiwan with its rocky cliffs and
Speaker 4: its really dense environment, That's a pretty high challenge and
Speaker 4: I'd probably be thinking more closely about whether my military
Speaker 4: is ready for that. In sort of learning the lessons
Speaker 4: learned from Russia, I think where it starts to maybe
Speaker 4: become less concerning of a warning sign or warning story
Speaker 4: for Beijing would be sort of the impact of the
Speaker 4: international reaction. Right the West came out pretty quickly and
Speaker 4: scercely with international sanctions on Russia, but Russia has demonstrated
Speaker 4: the ability to weather those at least well enough for
Speaker 4: Putin's sake. And then the second piece of it is
Speaker 4: recent science that we've been seeing that Western support for
Speaker 4: Ukraine might be slightly wavering or might be starting to
Speaker 4: hit a point in which there's a timeline attached to it.
Speaker 4: And again, if I'm Beijing watching that, I might think, Okay,
Speaker 4: I'm expecting some degree of international probrium if I take
Speaker 4: this step, which let's just be clear, Beijing right now
Speaker 4: does not signal any interest in taking Taiwan by force.
Speaker 4: It continues to prefer a peaceful solution to the issue,
Speaker 4: and I think has a lot of other things on
Speaker 4: its plate.
Speaker 1: China's domestic issues are well document to. The property crisis
Speaker 1: has been dragging down much of the economy. Growth is
Speaker 1: the slowest in decades. You've got a consumer segment fearful
Speaker 1: of spending or at least conservative. There's a lack of demand,
Speaker 1: concerns about salary cuts, job losses. How much do you
Speaker 1: think these conditions, these challenges in mainland China are shaping
Speaker 1: China's reaction and shaping Taiwan's outlook.
Speaker 4: I think on the first part of your question about
Speaker 4: how they shape Beijing's outlook and speaking more broadly than
Speaker 4: just Taiwan, but I think in general, we're seeing Beijing
Speaker 4: really emphasize that it wants to maintain a stable external
Speaker 4: operating environment, and by which I mean, I don't think
Speaker 4: Beijing's likely to pick a fight to distract attention from
Speaker 4: their internal challenges. Instead, what we tend to see Beijing
Speaker 4: do is it prefers not to take on too many
Speaker 4: challenges at once, internal or external. That being said, I
Speaker 4: also think Beijing is not going to be one to
Speaker 4: shy away from a fight if it feels like it's
Speaker 4: being forced into it. And what I mean by that
Speaker 4: is if it feels its challenge or it feels that
Speaker 4: another power, whether it be Taiwan, the Philippines, in the South, Chinesee,
Speaker 4: or anyone else is sort of taking for granted Beijing's resolve,
Speaker 4: then it might feel even more pressure to come out
Speaker 4: strong and demonstrate that it is not distracted and that
Speaker 4: it is not incapable of responding swiftly to it. I
Speaker 4: think in terms of the economic relationship, you know, it's
Speaker 4: been really interesting to observe is even as Taiwan is
Speaker 4: developing this sort of separate identity and has a very
Speaker 4: tense political relationship with Beijing, the economic ties are still
Speaker 4: quite robust even after eight years of tensions. In eight
Speaker 4: years of the current administration in Taiwan working to diversify
Speaker 4: Taiwan's economic ties. Taiwan exports are still finding a major
Speaker 4: market in Main Man China. There's still a lot of
Speaker 4: investment relationships there. So it's a very interdependent relationship. And
Speaker 4: that was actually part of the campaign discourse and the
Speaker 4: debate here in Taiwan was it's not just about the
Speaker 4: political relationship, it's also about what the political relationship means
Speaker 4: for Taiwan's economy when it has that level of interconnectedness
Speaker 4: with China's.
Speaker 2: Jennifer, you have the unique distinction of working under both
Speaker 2: President Biden and Trump as a Taiwan expert. And we
Speaker 2: have another election coming around the corner in November, the
Speaker 2: US will decide how do you think that election will
Speaker 2: impact US China relations.
Speaker 4: I think this might be, from the perspective of both
Speaker 4: US chinations and the cross right dynamic, one of the
Speaker 4: more decisive US elections in recent decades. And what I
Speaker 4: mean by that is, as I mentioned earlier, the US
Speaker 4: has traditionally played this role as kind of a power
Speaker 4: balancer in the street, and increased US China tensions over
Speaker 4: the past years have complicated that role a little bit
Speaker 4: because Beijing no longer sees the US, not that they
Speaker 4: ever really did, but even less so as an objective
Speaker 4: kind of observer. In fact, there was growing concern in
Speaker 4: Beijing that the United States is using Taiwan to sort
Speaker 4: of contain China as part of a broader containment effort.
Speaker 4: And when you have that is the backdrop plus increased
Speaker 4: cross straight tensions, I think Washington's role and how it
Speaker 4: handles that role becomes even more sort of decisive for
Speaker 4: how dynamics industry might play out going for it, and
Speaker 4: I think having worked for both of these administrations before,
Speaker 4: there are major differences in how they approach China and
Speaker 4: how they approach cross rate issues. Some of it is
Speaker 4: a difference in tone, not necessarily substance, but tone can
Speaker 4: really matter when you're dealing with complex and somewhat contentious
Speaker 4: issues like crossright issues, which is among the most sensitive
Speaker 4: issues in US general relations.
Speaker 1: What did you notice in the change of tone. We've
Speaker 1: heard the rhetoric from both former President Trump and current
Speaker 1: President Joe Biden. What would your take?
Speaker 4: I think what I'd point to is, especially towards the
Speaker 4: end of former President Trump's first term in office, he
Speaker 4: took a much more direct, I would say adversarial approach
Speaker 4: to China. I think he might share that characterization, you know,
Speaker 4: for example, being very direct and criticizing China over the pandemic.
Speaker 4: This coming on the heels of, of course, the trade
Speaker 4: war and all of his frustrations about China's economic practices.
Speaker 4: Adding on top of that, there was just a sweep
Speaker 4: of actions that the previous administration undertook and that last
Speaker 4: year in office, everything from restrictions on Chinese companies like
Speaker 4: TikTok and to things like condemning China's human rights practices
Speaker 4: and rolling out the genocide determination on Hinjong. In terms
Speaker 4: of the Biden administration approach, again, I think you see
Speaker 4: a lot of continuing in substance. Right the Biden administration
Speaker 4: has continued efforts of what they frame is de risking
Speaker 4: from China, continuing to roll out some of the restrictions
Speaker 4: that may have been mentioned earlier on China's access to
Speaker 4: technology that could fuel its military. But the tone is
Speaker 4: shifted a little when you look at how, for example,
Speaker 4: President Biden talks about the importance of maintaining stability in
Speaker 4: the relationship with China even as they have their differences.
Speaker 4: The importance of I think, as they put it, responsibly
Speaker 4: managing this competition even as they compete fiercely. That's sort
Speaker 4: of a difference in tone between how the two administrations
Speaker 4: have talked about balancing these competing imperatives of having a
Speaker 4: competitive relationship and acknowledging that that is, you know, fundamental
Speaker 4: piece of this equation, while also trying to maintain the
Speaker 4: stability to ensure it doesn't go off the rails in
Speaker 4: ways that neither party really wants it to. And you know,
Speaker 4: going into the November election, I think that we're likely
Speaker 4: to see you know, these two approaches really at the forefront.
Speaker 4: I fully expect former President Trump, if he secure as
Speaker 4: a second term, would pick up that you know, approach
Speaker 4: to China where he left it off. He's already talked
Speaker 4: about his concerns about China's economic practices, among other things.
Speaker 4: And likewise, I think for President Biden and I would
Speaker 4: expect a continuity of his approach to China. The commonality
Speaker 4: is that competition, but I think that the difference is
Speaker 4: a slight difference in tone.
Speaker 1: Our guests have been Jennifer Welch, chief geoeconomics analyst at
Speaker 1: Bloomberg Economics and Mava Kuzemp, senior global economists for Bloomberg Economics.
Speaker 1: Jennifer has joined us from Taipei, Mava from Uric. It's
Speaker 1: been a wide ranging and very engaging conversation about China,
Speaker 1: the US, Taiwan and the road ahead. We look forward
Speaker 1: to being in touch.
Speaker 4: Thank you Tom, Thank you John Alert.
Speaker 1: I'm Tom Corbett in Hong Kong and I'm John Lee.
Speaker 2: This podcast was produced by Claraton and you've been listening
Speaker 2: to the Age of Century podcast