WEBVTT - Governance 0:00:02.320 --> 0:00:05.720 Hello, and welcome to the New Economy. I'm Stephanie Flander's 0:00:05.720 --> 0:00:12.799 head of Bloomberg Economics. One thing I've noticed in twenty 0:00:12.800 --> 0:00:15.600 five years of writing and thinking about the global economy, 0:00:15.920 --> 0:00:19.319 we spend so much time anticipating the big changes that 0:00:19.360 --> 0:00:22.080 are coming down the track. By the time they actually happened, 0:00:22.160 --> 0:00:24.720 they seem like old news. When it comes to the 0:00:24.840 --> 0:00:27.680 rise of China, it's not old news at all. It's 0:00:27.680 --> 0:00:29.840 happening right now, and not at all in the way 0:00:29.880 --> 0:00:33.640 that many Western policymakers hoped in the late nineties nineties 0:00:33.760 --> 0:00:36.120 when they were negotiating to bring China into the World 0:00:36.120 --> 0:00:40.080 Trade Organization the w t O. Back then, I was 0:00:40.080 --> 0:00:43.640 working for Larry Summers, then Deputy Treasury Secretary. We found 0:00:43.680 --> 0:00:47.440 ourselves grappling with what became the Asia Financial crisis. A 0:00:47.520 --> 0:00:51.320 string of countries, Thailand, Indonesia, Career all ended up letting 0:00:51.320 --> 0:00:54.400 go of their currencies, and Chinese exporters were saying the 0:00:54.480 --> 0:00:57.800 Chinese currency needed to fall as well to let them compete. 0:00:58.520 --> 0:01:01.720 I remember going along with Summers in early to a 0:01:01.800 --> 0:01:04.960 grand room in the Forbidden City in Beijing for an 0:01:04.959 --> 0:01:08.319 audience with the man who was then steering Chinese economic 0:01:08.360 --> 0:01:12.760 policy Ju Rongji. He gave a magisterial assessment of what 0:01:12.840 --> 0:01:14.760 had happened in the region. It may have been the 0:01:14.840 --> 0:01:17.960 jet lag, but I think even Summers felt a bit outclassed. 0:01:18.800 --> 0:01:20.800 You made clear that when it came to the currency, 0:01:20.920 --> 0:01:23.160 China would hold firm, and that was good news for 0:01:23.160 --> 0:01:26.000 the region and the world. It helped stop more dominoes 0:01:26.040 --> 0:01:28.840 from falling, at least in Asia. But there was a 0:01:28.840 --> 0:01:31.720 message in that restraint. This was a country that was 0:01:31.760 --> 0:01:35.920 willing to think long term. Fast forward to today, and 0:01:36.040 --> 0:01:39.280 China is punching its weight in ways that confront the 0:01:39.440 --> 0:01:43.600 so called Washington Consensus head on. Now the US presidents 0:01:43.640 --> 0:01:45.560 doing a bit of that himself. We might get to 0:01:45.600 --> 0:01:48.640 that later with two people who've spent probably an unhealthy 0:01:48.680 --> 0:01:51.800 amount of their lives thinking about China, Tom Olick and 0:01:51.800 --> 0:01:55.880 Andrew Brown. But first, here's end a current senior Asia 0:01:55.920 --> 0:01:59.640 economy correspondent for Bloomberg News from the streets of Hong Kong. 0:02:08.000 --> 0:02:11.080 In my past three years covering China and the regions 0:02:11.120 --> 0:02:14.560 economies for Bloomberg News, I have seen a marked increase 0:02:14.639 --> 0:02:19.080 in China's global influence. Until two thousand and fifteen, for example, 0:02:19.440 --> 0:02:22.919 the only global body led by China was the International 0:02:22.960 --> 0:02:26.200 Network for Bamboo and Britan. It now has a much 0:02:26.240 --> 0:02:28.799 bigger say at the i m F through more voting 0:02:28.880 --> 0:02:32.240 rights and high level representation. It has its own Global 0:02:32.280 --> 0:02:35.560 Development Bank, the ai i B, set up to arrival 0:02:35.600 --> 0:02:38.840 the World Bank, and in the face of Donald Trump's 0:02:38.880 --> 0:02:42.959 trade policies, China's leaders are claiming to be the champions 0:02:42.960 --> 0:02:47.720 of globalization. Here's Curtis Chin, former US Ambassador to the 0:02:47.760 --> 0:02:51.919 Asian Development Bank under president's George W. Bush and Barack Obama, 0:02:52.120 --> 0:02:55.160 and now the inaugural Asia Fellow at the Milkan Institute. 0:02:56.240 --> 0:03:01.760 Every country, through its development systems, through its partnerships, at 0:03:01.760 --> 0:03:04.480 the end of day of looking out after its own interests. 0:03:05.040 --> 0:03:07.960 That's very different in China today or Europe, in the 0:03:08.040 --> 0:03:10.640 US today or in the past. I think the real 0:03:10.760 --> 0:03:14.680 question comes back to when a country advances its own 0:03:14.680 --> 0:03:18.720 interests by advancing a form of global economic government in 0:03:18.800 --> 0:03:22.120 US as advanced free trade and connectivity. The key question 0:03:22.400 --> 0:03:25.680 is what countries in looking out after their own interests 0:03:25.680 --> 0:03:29.000 harm other countries. I think that's the question today. When 0:03:29.040 --> 0:03:31.919 I speak with officials and business people and economists, there 0:03:31.919 --> 0:03:34.560 are usually two takes and much china Is growing influence 0:03:34.760 --> 0:03:38.320 means for the world economy. Optimists say China offers a 0:03:38.440 --> 0:03:41.720 vital source of financing to government's desper to build infrastructure 0:03:41.920 --> 0:03:45.560 and grow their economies. Critics say the likes of the 0:03:45.600 --> 0:03:49.160 ai I B are merely window addressing for China's spider's 0:03:49.160 --> 0:03:51.880 web of lending channels and lack of transparency, and are 0:03:51.920 --> 0:03:56.160 effectively an arm of the Commonist Party. Alicia Garcia Herrero 0:03:56.600 --> 0:03:59.520 has worked in the official sector for institutions such as 0:03:59.560 --> 0:04:01.920 i m F during the Mexico crisis. She has also 0:04:01.960 --> 0:04:05.000 worked for the European Central Bank and Bank for International Settlements. 0:04:05.320 --> 0:04:07.960 ALSIE is now based in Hong Kong as Chief Asia 0:04:08.000 --> 0:04:11.920 Economists for French Banknetics Is. Here's how she sums up 0:04:11.960 --> 0:04:15.840 the two pronged aspect of Chinese finance overseas. China's new 0:04:15.880 --> 0:04:18.080 model is a two layer model. So you see what 0:04:18.200 --> 0:04:21.920 you see. You don't see what is happening unless you 0:04:22.000 --> 0:04:24.840 really look at it very carefully, and even then we 0:04:25.000 --> 0:04:29.120 probably still don't don't know what is happening at its 0:04:29.120 --> 0:04:38.480 full meaningful for us. Recently, a backlash has been growing 0:04:38.480 --> 0:04:42.520 against China's expanding influence. There's the very public trades about 0:04:42.560 --> 0:04:45.920 McDonald chump, but there's also ongoing disputes with Europe at 0:04:45.920 --> 0:04:49.280 a w t O and smaller skirmishes like Malaysia's government 0:04:49.360 --> 0:04:52.839 dropping plans for China to fund major infrastructure works and 0:04:52.880 --> 0:04:56.200 Australia's government blocking Huawei from completing the build the nation's 0:04:56.440 --> 0:05:01.039 five G phone network. Here's Curtis Chin again. The China's 0:05:01.040 --> 0:05:05.880 approach to development, to lending, to assistance to its neighbors, 0:05:05.880 --> 0:05:08.520 not just in Asia but also in African around the 0:05:08.520 --> 0:05:13.320 world has had benefits, but it's also come with challenges 0:05:13.480 --> 0:05:15.960 that countries are now really beginning to think through. The 0:05:16.000 --> 0:05:18.000 I m F two has warned the China maybe loading 0:05:18.080 --> 0:05:21.359 up poor nations with even more debt, and others saying 0:05:21.600 --> 0:05:26.279 China's overall lending lack of transparency. China, of course refutes 0:05:26.360 --> 0:05:29.760 those complaints. Here's a I I BE president Jin Lacun, 0:05:30.000 --> 0:05:33.560 who recently spoke with Bloomberg Television. Contrary to some other 0:05:33.640 --> 0:05:40.400 people's misconception, it's not a program dominated by China. It's 0:05:40.440 --> 0:05:47.440 the program by which China works with other countries working 0:05:47.480 --> 0:05:53.159 with international financial institutions multi lactal Devember banks. So it's 0:05:53.240 --> 0:05:58.200 kind of cooperation. Unfortunately, some people miss under students as 0:05:58.360 --> 0:06:03.120 kind of China program. China wants to to take advantage 0:06:03.160 --> 0:06:06.360 of these to promote its own interests, which nothing could 0:06:06.400 --> 0:06:09.960 be further from the truth. So how do we get 0:06:10.000 --> 0:06:13.360 to this point? Complacency among Western leaders play the role. 0:06:13.839 --> 0:06:17.200 Lending by the International Monetary Fund and World Bank often 0:06:17.320 --> 0:06:21.360 carried bitter conditions that enraged nations from Indonesia to Greece, 0:06:21.600 --> 0:06:25.279 sparking riots on the streets. The process of navigating loan 0:06:25.320 --> 0:06:30.520 approval was also laced with politics. I spoke with Louis Cows, 0:06:30.600 --> 0:06:33.760 formerly of the IMF and World Bank and now lead 0:06:33.800 --> 0:06:37.560 Asia economists at Oxford Economics. There's no doubt about it 0:06:37.680 --> 0:06:42.320 that China's cloud globally has been on the rise. It 0:06:42.400 --> 0:06:44.919 has been on the rise, I think for two reasons. 0:06:45.360 --> 0:06:48.280 One is a very obvious one. It's an economic one. Simply, 0:06:48.320 --> 0:06:52.560 if you're if you're becoming bigger economically, you you carry 0:06:52.600 --> 0:06:56.320 more cloud, you do more trade, people look more at you, 0:06:56.320 --> 0:06:59.080 You have more money to spend on development and delton 0:06:59.200 --> 0:07:02.200 road projects, all kind of things. Also, I would say 0:07:02.240 --> 0:07:05.800 the global financial crisis did hurt a little bit, you know, 0:07:05.880 --> 0:07:09.880 the image of Western style democracy and capitalism, and so 0:07:09.920 --> 0:07:13.920 that has also played in China's favors. The global financial 0:07:13.920 --> 0:07:16.360 crisis a moment that laid bare the fragilities of the 0:07:16.360 --> 0:07:19.440 Western model and gifted China and opportunity to step up 0:07:19.600 --> 0:07:23.000 on the global stage. However, witnessed the limitations of the 0:07:23.040 --> 0:07:25.120 Western model as an official at the i m F 0:07:25.480 --> 0:07:29.000 during the rescue of Mexico in the nineteen nineties. We 0:07:29.000 --> 0:07:32.440 were late. So this is our fault to reform the 0:07:32.480 --> 0:07:40.240 existing institutions which were not working, I would say, especially 0:07:40.320 --> 0:07:45.360 for those newcomers. So that's our fault thing that we 0:07:45.360 --> 0:07:50.000 were naive not to realize that it was not only 0:07:50.040 --> 0:07:55.240 about you know, China in manufacturing, but it was much 0:07:55.280 --> 0:07:58.920 more rooming already then and and we were not naive 0:07:59.080 --> 0:08:03.760 not to be more general years with such a growing power. 0:08:05.240 --> 0:08:09.480 For now, China's influence is still increasing. In September, President 0:08:09.600 --> 0:08:13.240 She greeted African leaders in Beijing and promised over sixty 0:08:13.240 --> 0:08:16.600 billion in financing. That was around the same time that 0:08:16.680 --> 0:08:19.320 Donald Trump said he would skip two major so much 0:08:19.440 --> 0:08:23.440 in Asia in November, stoking concerns about American commitment to 0:08:23.480 --> 0:08:27.120 the region. That's an opportunity China is keen to exploit 0:08:27.280 --> 0:08:29.640 through pushing its view of a future with itself at 0:08:29.640 --> 0:08:34.000 the heart of the global economy. Here's Louis Harris. My 0:08:34.160 --> 0:08:37.440 main worry about the future is a little bit that 0:08:37.600 --> 0:08:41.160 collision course between these different economic models and what they 0:08:41.200 --> 0:08:45.640 would mean for for relations globally between the US and China, 0:08:45.800 --> 0:08:48.960 between China and other countries more generally, you know, and 0:08:49.120 --> 0:08:51.320 I don't want to be too negative because you know, 0:08:51.679 --> 0:08:54.680 China's growth is definitely a positive for the rest of 0:08:54.720 --> 0:08:58.079 the world, and China's willingness to invest in other countries 0:08:58.480 --> 0:09:00.760 is on a net basis a positives of the world. 0:09:01.120 --> 0:09:04.520 But that you know, the issue of these different economic 0:09:04.559 --> 0:09:07.880 morals is going to become an issue not with not 0:09:08.040 --> 0:09:10.080 just with the US, but also with other countries. We 0:09:10.120 --> 0:09:13.680 see that, you know, the Europeans have issues with China's model, 0:09:14.160 --> 0:09:16.480 and I think that we see it a little bit 0:09:16.480 --> 0:09:19.240 in India and Brazil as well. So this is you know, 0:09:19.440 --> 0:09:24.640 we're not this is not a Dante. Just as the 0:09:24.720 --> 0:09:28.199 architecture of global trade is being challenged, the world economies, 0:09:28.240 --> 0:09:36.439 government structures are evolving to accommodate China's role. That was 0:09:36.520 --> 0:09:39.880 in the current reporting from Hong Kong. Well, listening to 0:09:39.920 --> 0:09:43.720 all that with me have been Andrew Brown, who's a 0:09:43.760 --> 0:09:46.960 former columnist and bureau chief in China for the Wall 0:09:46.960 --> 0:09:50.960 Street Journal, but now the editorial director for the New 0:09:51.040 --> 0:09:54.720 Economy Forum at Bloomberg. And our own chief economist, Tom Ulick, 0:09:54.800 --> 0:09:57.800 who has just moved back to Washington after eleven years 0:09:57.880 --> 0:10:01.400 in Beijing. Maybe our q Andrew, if if you go 0:10:01.520 --> 0:10:05.200 back to when China joined the w t O at 0:10:05.200 --> 0:10:07.160 the beginning of the century, you know, how is the 0:10:07.240 --> 0:10:11.640 reality of China's rise compared with the kind of predictions 0:10:11.679 --> 0:10:15.280 that we were making around that time. Yeah, well, you 0:10:15.320 --> 0:10:17.840 have you have to remember that China's entry into the 0:10:17.960 --> 0:10:20.719 w t O was part of a much bigger project, 0:10:20.800 --> 0:10:25.600 which was to bring this rising power into the global 0:10:25.960 --> 0:10:31.520 economic financial security architecture. Was summed up by Bob Zelleck 0:10:31.640 --> 0:10:35.560 with the phrase that China should become a responsible stakeholder 0:10:35.600 --> 0:10:38.240 in the global system, the US led global system. And 0:10:38.720 --> 0:10:42.320 it's worked pretty well in places. China is now the 0:10:42.360 --> 0:10:45.920 biggest contributor to UN peacekeeping. Chinese ships are involved in 0:10:45.960 --> 0:10:49.360 anti piracy off the coast of East Africa, keeping the 0:10:49.400 --> 0:10:52.439 sea lanes open to the Persian Gulf. China has signed 0:10:52.520 --> 0:10:56.480 up to arms control agreements as signed does not proliferate 0:10:56.600 --> 0:10:59.440 nuclear weapons. That's been very successful. The bit that they 0:10:59.520 --> 0:11:05.160 got long was on integrating China into the global economy, 0:11:05.160 --> 0:11:08.240 in particular into the w t O, and what they 0:11:08.440 --> 0:11:14.960 failed to consider were the implications of integrating China's massive 0:11:15.600 --> 0:11:19.880 armies of cheap labor and its deep pools of capital 0:11:20.040 --> 0:11:22.760 into the global economy. Um it was seen as a 0:11:22.800 --> 0:11:26.440 slam duck that China's markets were closed, America's were opened, 0:11:26.440 --> 0:11:29.240 and so when China brought down tariffs, you would get 0:11:29.280 --> 0:11:33.040 this rush of US exports into China. In fact, what 0:11:33.200 --> 0:11:37.959 happened was that you had this China shop. Two million, 0:11:38.000 --> 0:11:41.240 two and a half million American workers lost their jobs. 0:11:41.280 --> 0:11:43.800 Whole towns were decimated, and you can see it now 0:11:43.840 --> 0:11:48.160 in the US rust belt. On the financial side, what 0:11:48.320 --> 0:11:52.719 happened was that short Chinese purchases of US treasuries kept 0:11:52.800 --> 0:11:56.160 interest rates low, and that was good for business, but 0:11:56.200 --> 0:12:00.400 it also led to financial excess and of hose gave 0:12:00.520 --> 0:12:04.280 rise to the two thousand and eight financial crisis. The 0:12:04.320 --> 0:12:06.760 third mistake that I think they made was that they 0:12:06.800 --> 0:12:09.880 thought the American policy makers at the time thought that 0:12:09.920 --> 0:12:13.079 this was going to be the start of economic reforms 0:12:13.120 --> 0:12:16.120 in China, and that once China joined the w t O, 0:12:16.360 --> 0:12:21.440 we would see the economy progressively become more open, and 0:12:21.480 --> 0:12:24.120 in fact it turned out to be the high watermark 0:12:24.360 --> 0:12:26.880 of reform. And then right now what you're seeing is 0:12:26.960 --> 0:12:35.800 reformed stalling and even going backwards. Tom Um. We tend 0:12:35.840 --> 0:12:39.320 to view other people's other nation's success through the prism 0:12:39.360 --> 0:12:41.559 of our own insecurities. I guess if you were China, 0:12:41.640 --> 0:12:44.640 you'd say that you wouldn't be complaining about our success 0:12:44.760 --> 0:12:46.600 if you hadn't been having if you didn't have all 0:12:46.600 --> 0:12:50.040 these problems in your own backyard with with populism and 0:12:50.080 --> 0:12:53.520 other things. Aren't they aren't we just um, shouldn't we 0:12:53.520 --> 0:12:55.719 just focus on our own concerns rather than blame it 0:12:55.760 --> 0:12:58.599 all on China. Well, one of the funny things, Stephanie, 0:12:58.640 --> 0:13:02.040 is that when you sit in Beijing, as Andy and 0:13:02.080 --> 0:13:04.600 I did for for a number of years, what you 0:13:04.640 --> 0:13:07.720 see coming through on the Chinese propaganda and the Chinese 0:13:07.720 --> 0:13:11.720 newspapers and television is a certain amount of if not glee, 0:13:12.040 --> 0:13:16.040 at least kind of like smug self satisfaction, the evidence 0:13:16.080 --> 0:13:19.600 of sort of social dysfunction and political dysfunction that you 0:13:19.640 --> 0:13:22.800 see in the US and Europe. There's nothing that China 0:13:22.880 --> 0:13:26.640 television likes better than broadcasting a riot in Greece or 0:13:26.679 --> 0:13:29.360 a violent protest in the United States, and the implicit 0:13:29.400 --> 0:13:33.920 messages look, that system is broken and our system works. UM. 0:13:34.120 --> 0:13:36.640 Coming back to your question about whether it's sort of 0:13:36.720 --> 0:13:41.560 unfair to blame populars blame the dysfunctions that we have, UM, 0:13:42.240 --> 0:13:44.840 whether we'd be less dissatisfied with China if we didn't 0:13:44.880 --> 0:13:48.560 have these dysfunctions at home. I think there's certainly an 0:13:48.559 --> 0:13:51.040 element of truth in that. But what I would add 0:13:51.480 --> 0:13:54.560 is that whilst the sources of the dysfunctions we see 0:13:54.559 --> 0:13:58.079 in the West are complex, and they relate to social 0:13:58.120 --> 0:14:02.559 policy failures, they relate to the rise of technology, they 0:14:02.600 --> 0:14:06.440 relate to forces unleashed by globalization that go beyond just 0:14:06.520 --> 0:14:09.040 the rise of China. China is part of the picture, 0:14:09.600 --> 0:14:14.840 and it is Chinese imports, cheap Chinese imports, Chinese industrial 0:14:14.920 --> 0:14:18.199 policy giving what many see as an unfair advantage to 0:14:18.320 --> 0:14:21.880 Chinese firms, which is to blame for an element of 0:14:21.960 --> 0:14:24.960 the problems that we see in terms of inequality and 0:14:25.160 --> 0:14:28.120 lost wages. And one of the things that enders sort 0:14:28.120 --> 0:14:31.480 of focusing on in that piece is the way that 0:14:31.600 --> 0:14:34.400 China itself has taken a more muscular role in some 0:14:34.480 --> 0:14:36.600 of these institutions, and it is creating in the case 0:14:36.600 --> 0:14:40.680 of the infrastructure, by creating its own institution for having 0:14:40.760 --> 0:14:43.080 influence on the world. When you look at what they've 0:14:43.200 --> 0:14:46.600 done in Africa and Latin America, is this a country 0:14:46.640 --> 0:14:49.760 that is actually trying to impose an alternative model onto 0:14:49.840 --> 0:14:53.520 the world or is it just pursuing its core national interest. 0:14:54.520 --> 0:14:58.200 I'm not sure we can effectively divide those two things. Um, 0:14:58.800 --> 0:15:02.280 when China pursue us its national interest, it does so 0:15:02.360 --> 0:15:05.840 in a way which is suited to and driven by, 0:15:06.040 --> 0:15:09.840 and accommodated to its national model. So when the US 0:15:09.920 --> 0:15:12.760 goes overseas, it goes it goes goes overseas with its 0:15:12.840 --> 0:15:17.200 mighty private corporations and its free markets, and those are 0:15:17.240 --> 0:15:22.160 the approaches which which benefit those corporations and also perpetuate 0:15:22.200 --> 0:15:25.640 the the U S model. And when China goes overseas, 0:15:25.640 --> 0:15:28.920 it goes overseas with its huge state owned banks and 0:15:28.960 --> 0:15:32.000 it's huge state and enterprises and companies that want to 0:15:32.040 --> 0:15:35.560 do business with China. Countries that want to do business 0:15:35.560 --> 0:15:38.720 with China then have to do business with the China model. 0:15:39.080 --> 0:15:41.840 So the pursuit of self interest and the perpetuation or 0:15:41.840 --> 0:15:44.960 the expansion of a particular model of governance. I think 0:15:44.960 --> 0:15:47.880 they go hand in hand. But are they encouraging in 0:15:47.960 --> 0:15:52.120 these deals? Are less transparent way of doing business? Are 0:15:52.120 --> 0:15:55.760 they pulling these countries away from the kind of things 0:15:55.800 --> 0:15:57.360 that the West would have tried to push on them, 0:15:57.360 --> 0:16:00.320 you know, rule of law, transparency, I mean, and the 0:16:00.440 --> 0:16:03.640 end of talked about the optimists and the pessimist views 0:16:03.720 --> 0:16:06.280 of of China when it comes to this, this lending 0:16:06.320 --> 0:16:08.480 and development aid in other countries, what do you think? 0:16:09.960 --> 0:16:13.680 I mean, regardless of what you think about the Belton 0:16:13.840 --> 0:16:17.080 Road initiative, which is really the prime vehicle through which 0:16:17.160 --> 0:16:20.360 China is providing infrastructure of the world, whether you think 0:16:20.360 --> 0:16:24.320 that this is a geopolitical play, whether you think, like 0:16:24.520 --> 0:16:28.720 many in India do, that this is neo colonialism with 0:16:28.840 --> 0:16:34.280 China as the metropol building infrastructure, lending money to small 0:16:34.360 --> 0:16:38.800 neighbors to bring them into its orbit and to create 0:16:39.320 --> 0:16:43.080 dependencies are on Chinese periphery. But whether you just think 0:16:43.120 --> 0:16:46.120 the whole thing is a big marketing scam, it's hard 0:16:46.240 --> 0:16:51.040 not to feel positive about China building infrastructure across some 0:16:51.120 --> 0:16:55.080 of the most unstable and less least developed parts of 0:16:55.120 --> 0:16:58.880 the world, from Central Asia to the Middle East and 0:16:59.280 --> 0:17:02.920 North Africa. I mean, it's a good thing that China 0:17:03.240 --> 0:17:07.360 is powering up Pakistan by building power stations there. Of course, 0:17:07.480 --> 0:17:10.679 be much better if it put in clean power stations 0:17:10.800 --> 0:17:14.280 rather than the old model that it's um, you know, 0:17:15.080 --> 0:17:18.439 knocking around in China. UM. But that I think is 0:17:18.520 --> 0:17:22.160 is very positive. The problem is the way the Chinese 0:17:22.200 --> 0:17:24.640 go about it. I mean, you know, Tom and I say, 0:17:24.680 --> 0:17:28.679 living in China, we've watched this happening, and Chinese infrastructure 0:17:28.920 --> 0:17:34.400 is is heroic in its ambition. I mean they build airports, 0:17:34.440 --> 0:17:38.880 they build train stations, they build whole cities ahead of demand, 0:17:38.920 --> 0:17:41.960 and it just sort of sits there empty, you know. 0:17:42.040 --> 0:17:44.639 And eventually the idea is that, you know, given the 0:17:44.640 --> 0:17:48.919 pace of urbanization in China, all of this surplus infrastructure 0:17:49.040 --> 0:17:52.639 will eventually come in useful and often it does, um, 0:17:52.720 --> 0:17:55.800 but very often it doesn't. And this form of of 0:17:55.800 --> 0:17:59.679 of development is hugely wasteful. You can afford it if 0:17:59.720 --> 0:18:03.040 you're tiner and you're a continental sized economy and you 0:18:03.080 --> 0:18:05.720 have deep pools of savings. If you're a Sri Lanka 0:18:06.119 --> 0:18:09.680 and you build a port and you haven't got done 0:18:09.720 --> 0:18:13.119 your preparatory work and you don't know whether it's going 0:18:13.160 --> 0:18:14.960 to turn a profit or not, and it doesn't and 0:18:15.000 --> 0:18:17.520 you don't have any ships coming in, you can bankrupt 0:18:17.520 --> 0:18:20.680 the country. And that's what we're seeing now across much 0:18:20.680 --> 0:18:28.719 of the developing world. The rise of great powers has 0:18:28.760 --> 0:18:30.960 almost always caused trouble, as we know when you look 0:18:31.000 --> 0:18:33.160 through history, in fact, that the rise of the US 0:18:33.240 --> 0:18:36.159 as a superpower was more or less the exception. In 0:18:36.280 --> 0:18:40.120 your gut, Andy and Tom, do you think we are 0:18:40.280 --> 0:18:44.120 on a fundamentally peaceful trajectory as China starts to really 0:18:44.160 --> 0:18:47.199 punch its weight in in the world, or do you 0:18:47.240 --> 0:18:49.840 worry at some point about where this is going to go. 0:18:51.160 --> 0:18:55.000 Look a lot of everybody is talking now about the 0:18:55.040 --> 0:19:00.680 fucilities trap and learned Lee quoting Thusive at Ease who 0:19:00.720 --> 0:19:03.399 said that you know, it was the rise of Athens 0:19:03.440 --> 0:19:07.000 and the fear that they's inspired in Sparta that made 0:19:07.040 --> 0:19:12.119 war inevitable. And Graham Allison at Harvard has talked about this, 0:19:12.280 --> 0:19:15.040 and he's looked at power transitions that have occurred through 0:19:15.160 --> 0:19:19.520 history and mostly they end in in war. I certainly 0:19:19.520 --> 0:19:23.920 don't think that war is inevitable. Certainly not war these 0:19:24.000 --> 0:19:27.159 days between great powers and in a nuclear age is 0:19:27.280 --> 0:19:31.440 almost unthinkable. Um. I don't think China and the US 0:19:31.480 --> 0:19:33.720 are going to go to war. China certainly doesn't want that. 0:19:34.080 --> 0:19:37.800 I worry more about Chinese nationalism and the particular kind 0:19:37.840 --> 0:19:40.280 of nationalism that you have in China now, which is 0:19:40.320 --> 0:19:45.000 a resentful type of nationalism that looks backwards to this 0:19:45.600 --> 0:19:48.639 century of humiliation. I worry that that's combined with a 0:19:48.720 --> 0:19:53.159 military build up navalism that we're seeing in China, combined 0:19:53.200 --> 0:19:58.960 now with aggressive or expansive Chinese territorial claims, particularly in 0:19:59.000 --> 0:20:02.600 the maritime Dome. I worry about an arms race that 0:20:02.720 --> 0:20:06.720 this is triggering in Asia. I worried particularly about Taiwan, 0:20:06.800 --> 0:20:09.119 whether China is going to run out of patients with 0:20:09.160 --> 0:20:13.480 Taiwan and it's pro independence leanings and course nuclearization. The 0:20:13.600 --> 0:20:16.160 nuclear arms race in Asia now, I think it's one 0:20:16.200 --> 0:20:19.480 to be worried about. So when you started that, I 0:20:19.520 --> 0:20:21.439 actually thought that you were going to say, but this 0:20:21.520 --> 0:20:23.720 is all too gloomy, and you ruled out the really 0:20:23.760 --> 0:20:28.200 catastrophic nuclear global scenario. But then your list of other 0:20:28.200 --> 0:20:29.800 things to worry about was so long, and I'm not 0:20:29.840 --> 0:20:31.800 sure I feel like I've ended up in a in 0:20:31.840 --> 0:20:35.040 a happier place. Tom, just in your gut, Are you 0:20:35.240 --> 0:20:38.600 as worried about the sort of regional implications, the regional 0:20:38.640 --> 0:20:40.879 instabilities that come out of this, even if we're not 0:20:40.920 --> 0:20:45.360 necessarily looking I hope at the end of the world. Um. So, Firstly, 0:20:45.440 --> 0:20:48.440 I think the mention of Thucidites trap reminds me that 0:20:48.720 --> 0:20:51.760 international relations as a discipline hasn't come up with any 0:20:52.560 --> 0:20:56.399 new new new paradigm since since ancient Greece, which I 0:20:56.440 --> 0:21:00.960 think reflects badly on international relations scholars. Um. Coming back 0:21:00.960 --> 0:21:04.480 to the question, I think Andy, you know, hit several 0:21:04.560 --> 0:21:07.640 nails on the head. But Um, for me, the key 0:21:07.680 --> 0:21:09.760 point that he made in which I agree with, is 0:21:10.720 --> 0:21:13.000 are we going to see an all out conflict between 0:21:13.240 --> 0:21:17.000 China and the United States? Clearly not in the nuclear 0:21:17.040 --> 0:21:21.840 age that would be catastrophic for all concerned. Are we 0:21:21.920 --> 0:21:27.159 going to see more frequent conflicts over specific issues like 0:21:27.200 --> 0:21:32.800 the South China see potentially like Taiwan, potentially around North Korea? Yes, 0:21:32.840 --> 0:21:38.119 I think absolutely. As China rises, China's interestful increasingly clash 0:21:38.240 --> 0:21:40.280 with those of the U S and its neighbors, and 0:21:40.320 --> 0:21:43.040 those regional hot spots are going to get hotter. I 0:21:43.080 --> 0:21:46.600 think there's there's quite a lot coming through this conversation 0:21:46.680 --> 0:21:49.320 about what we've said about the w t O, the 0:21:49.400 --> 0:21:52.720 decline of multilateralism that moved to a more kind of 0:21:52.720 --> 0:21:58.000 deal based global economy and geopolitics and more nationalism. I 0:21:58.040 --> 0:22:00.720 think that's definitely when people look at China and also 0:22:00.800 --> 0:22:02.920 frankly look at the US and other parts of the world, 0:22:02.960 --> 0:22:06.720 that feels like where we're heading is more nationalism, less 0:22:06.840 --> 0:22:11.560 multilateralism and move away from from rule based decision making. 0:22:11.640 --> 0:22:14.479 Plenty to be discussed, among other places, at the New 0:22:14.520 --> 0:22:17.359 Economy Forum. I'm sure we're talking about that in Singapore. 0:22:17.400 --> 0:22:20.000 But Tom Marlick and Andrew Brown, thank you very much, 0:22:20.280 --> 0:22:27.320 Thank you, Thanks hester thanks for listening to The New Economy. 0:22:27.520 --> 0:22:30.840 Today's episode was reported by Enda Current with editor Malcolm 0:22:30.880 --> 0:22:35.159 Scott and produced by Magnus Hendrickson. Francesca Levy is the 0:22:35.160 --> 0:22:38.080 head of Bloomberg Podcast. M