1 00:00:00,320 --> 00:00:03,320 Speaker 1: So COVID nineteen is um is a kind of stress 2 00:00:03,360 --> 00:00:08,640 Speaker 1: test for for how economic systems function, and if you 3 00:00:08,680 --> 00:00:11,159 Speaker 1: look at how China and the US have performed in 4 00:00:11,200 --> 00:00:21,079 Speaker 1: the last six months, China is actually doing rather better. Hello, 5 00:00:21,200 --> 00:00:23,880 Speaker 1: and welcome to Stephanomics, the podcast that brings the COVID 6 00:00:23,920 --> 00:00:26,880 Speaker 1: global economy to you. We're all about China this week, 7 00:00:27,040 --> 00:00:30,160 Speaker 1: and that was Tom Aulick, Bloomberg's chief economist and old 8 00:00:30,240 --> 00:00:32,760 Speaker 1: China hand, who has just published a book that helps 9 00:00:32,800 --> 00:00:36,280 Speaker 1: explain why China's economy has not had the big crisis 10 00:00:36,360 --> 00:00:39,800 Speaker 1: that so many experts have confidently predicted over the years, 11 00:00:40,200 --> 00:00:42,000 Speaker 1: and why it also appears to be winning the fight 12 00:00:42,040 --> 00:00:46,440 Speaker 1: against COVID nineteen. But first, you'll remember we spoke to 13 00:00:46,479 --> 00:00:50,000 Speaker 1: Sharon Chen, Bloomberg's Beijing bureau chief, back in April. She 14 00:00:50,120 --> 00:00:53,200 Speaker 1: was in quarantine then in her apartment after a reporting 15 00:00:53,240 --> 00:00:57,000 Speaker 1: trip to Wuhan. That city was just coming out of lockdown. 16 00:00:57,080 --> 00:01:00,880 Speaker 1: Then first into the COVID crisis and first out. We 17 00:01:00,960 --> 00:01:03,840 Speaker 1: spoke to her then about the early signs of recovery 18 00:01:03,840 --> 00:01:05,839 Speaker 1: there and what it might tell us about the road 19 00:01:05,880 --> 00:01:08,600 Speaker 1: ahead for the rest of us. Well three months on, 20 00:01:08,959 --> 00:01:10,880 Speaker 1: I was interested to find out what life has been 21 00:01:10,920 --> 00:01:14,120 Speaker 1: like in China since then, and whether the authorities still 22 00:01:14,160 --> 00:01:22,920 Speaker 1: feel good about the way they've handled the pandemic. Sharon, 23 00:01:23,080 --> 00:01:25,160 Speaker 1: it's great to talk to you again. I know that 24 00:01:25,240 --> 00:01:28,160 Speaker 1: you're planning another trip to Wuhan, but you've been talking 25 00:01:28,200 --> 00:01:31,800 Speaker 1: to businesses there about what's what's happening. When we spoke 26 00:01:31,840 --> 00:01:33,920 Speaker 1: at the beginning, it seemed to show something that we 27 00:01:34,000 --> 00:01:37,480 Speaker 1: have seen in other places, that it's a twin track economy, 28 00:01:37,640 --> 00:01:41,240 Speaker 1: that production side coming back but not so much the 29 00:01:41,280 --> 00:01:45,480 Speaker 1: consumer side. Is that's still true? Yes, so um you know, 30 00:01:45,680 --> 00:01:48,760 Speaker 1: bought the data and the anecdotes kind of indicate that 31 00:01:48,760 --> 00:01:52,320 Speaker 1: that's what's happening. Unfortunately, obviously the data is a bit 32 00:01:52,360 --> 00:01:55,440 Speaker 1: of a lagging indicator, but we have factory production and 33 00:01:55,480 --> 00:01:59,720 Speaker 1: retail sales, exports, fixed st investment up till me UM 34 00:01:59,760 --> 00:02:02,559 Speaker 1: and you know, the economy reopened in April, and even 35 00:02:02,600 --> 00:02:07,080 Speaker 1: in May, we saw that local manufacturers had basically almost recovered. 36 00:02:07,120 --> 00:02:10,639 Speaker 1: You know, industrial production was only zero point four percent UM, 37 00:02:10,760 --> 00:02:14,600 Speaker 1: not lower than the year before in growth, but consumptions 38 00:02:14,680 --> 00:02:18,359 Speaker 1: obviously still lagging UM and exports as well. I mean 39 00:02:18,520 --> 00:02:21,240 Speaker 1: some more recent data, you know, we look at subway 40 00:02:21,320 --> 00:02:23,480 Speaker 1: data and a lot of the cities, and in Buhan 41 00:02:23,840 --> 00:02:27,280 Speaker 1: it shows that traffic passenger traffic has recovered to about 42 00:02:27,280 --> 00:02:31,120 Speaker 1: half the level, which is you know, decent. And also 43 00:02:31,200 --> 00:02:33,120 Speaker 1: it could be one of the reasons which we talked 44 00:02:33,120 --> 00:02:36,600 Speaker 1: about earlier, that people are buying cars and just driving 45 00:02:36,600 --> 00:02:39,760 Speaker 1: themselves instead of taking public transport, so it's not entirely 46 00:02:39,800 --> 00:02:42,799 Speaker 1: reflective of how you know, how much people are out again. 47 00:02:43,200 --> 00:02:46,320 Speaker 1: And we should mention that Wuhan had a flare up 48 00:02:46,360 --> 00:02:49,800 Speaker 1: in May, so it reopened um in early April, and 49 00:02:49,800 --> 00:02:52,280 Speaker 1: then in May and new cluster of cases was discovered, 50 00:02:52,400 --> 00:02:55,960 Speaker 1: and you know, the city reacted very strongly. Obviously, they 51 00:02:55,960 --> 00:02:57,880 Speaker 1: put in place a lot of strict restrictions and then 52 00:02:57,880 --> 00:03:01,240 Speaker 1: they tested the entire population of level million people in 53 00:03:01,280 --> 00:03:03,800 Speaker 1: the span of two weeks and since then they haven't 54 00:03:03,800 --> 00:03:06,400 Speaker 1: reported a single case. So, you know, just based on 55 00:03:06,440 --> 00:03:09,640 Speaker 1: the anecdotes as well, we do see that factories are 56 00:03:09,680 --> 00:03:12,920 Speaker 1: back up a full capacity UM, a lot of the 57 00:03:12,960 --> 00:03:16,400 Speaker 1: exporters are benefiting. Trade did search as soon as the 58 00:03:16,440 --> 00:03:19,160 Speaker 1: city reopened, but of course it depends on what kind 59 00:03:19,200 --> 00:03:21,600 Speaker 1: of product you're making. You know. We spoke to one 60 00:03:21,639 --> 00:03:25,960 Speaker 1: factory manager who they make plastic cups for airlines and 61 00:03:25,960 --> 00:03:29,480 Speaker 1: for hotels, and you know, business has just evaporated because 62 00:03:29,639 --> 00:03:32,200 Speaker 1: the travel industry just collapsed, like they just don't have 63 00:03:32,240 --> 00:03:35,040 Speaker 1: any demand. But then we talked to another factory that 64 00:03:35,480 --> 00:03:38,240 Speaker 1: was making helmets and then pivoted to making more face 65 00:03:38,280 --> 00:03:41,320 Speaker 1: shields and protective gear, and they've seen, you know, demand 66 00:03:41,320 --> 00:03:45,120 Speaker 1: from South America double because the virus cases there keep increasing. 67 00:03:45,520 --> 00:03:47,840 Speaker 1: And then it's the same on the consumption front as well. 68 00:03:47,880 --> 00:03:51,040 Speaker 1: You know, restaurant owners they are struggling because people don't 69 00:03:51,040 --> 00:03:53,240 Speaker 1: really feel safe and also some of the habits like 70 00:03:53,320 --> 00:03:56,200 Speaker 1: eating at home, they've just persisted. Um. But on the 71 00:03:56,240 --> 00:03:58,680 Speaker 1: other hand, you know, we spoke to a factory owner. 72 00:03:58,920 --> 00:04:02,560 Speaker 1: He produces hot dry noodles, but the instant kind like 73 00:04:02,640 --> 00:04:05,280 Speaker 1: instant raman where you add hot water, and you know, 74 00:04:05,360 --> 00:04:07,760 Speaker 1: business is just going through the roof. He's even expanded, 75 00:04:07,800 --> 00:04:10,320 Speaker 1: he's now delivering to the next city because people just 76 00:04:10,440 --> 00:04:12,680 Speaker 1: want to stay at home, but they want to eat 77 00:04:12,840 --> 00:04:15,640 Speaker 1: your favorite food still, so you know, it's just definitely 78 00:04:15,680 --> 00:04:19,200 Speaker 1: a mixed bag. So if you're if you're involved in 79 00:04:19,240 --> 00:04:22,120 Speaker 1: the COVID business or you're providing, you're able to provide 80 00:04:22,120 --> 00:04:23,719 Speaker 1: food that people don't need to be sitting in a 81 00:04:23,800 --> 00:04:26,760 Speaker 1: restaurant to eat. You're doing You're doing all right. That 82 00:04:26,839 --> 00:04:29,680 Speaker 1: was interesting what you said about the exports, because one 83 00:04:29,720 --> 00:04:32,760 Speaker 1: of the concerns looking at China was that we saw 84 00:04:32,839 --> 00:04:35,440 Speaker 1: the sort of early signs of a V shaped recovery, 85 00:04:35,440 --> 00:04:38,000 Speaker 1: at least when it came to production, and then the 86 00:04:38,080 --> 00:04:41,240 Speaker 1: fear was that the terrible things that were going on 87 00:04:41,279 --> 00:04:44,679 Speaker 1: in the rest of the world would then bring China 88 00:04:44,760 --> 00:04:47,839 Speaker 1: down again because of it's dependent on exports. But it's 89 00:04:47,839 --> 00:04:50,359 Speaker 1: so what you're saying is there is that's a twin 90 00:04:50,440 --> 00:04:52,839 Speaker 1: track as well. If you're on the consumption side, you're 91 00:04:52,839 --> 00:04:56,880 Speaker 1: doing badly, but actually some of the core products are exporting. 92 00:04:56,920 --> 00:04:59,800 Speaker 1: Well yeah, I mean, like the supply chain is so 93 00:05:00,000 --> 00:05:02,120 Speaker 1: global and so integrated now as well, right, I mean, 94 00:05:02,160 --> 00:05:04,920 Speaker 1: they also feel the impact on the raw material side, 95 00:05:05,400 --> 00:05:08,680 Speaker 1: but I think you know, the trade story. What's interesting 96 00:05:08,880 --> 00:05:11,120 Speaker 1: has is that it's also kind of shown the limits 97 00:05:11,120 --> 00:05:14,120 Speaker 1: of government intervention on government support. You know, the government 98 00:05:14,200 --> 00:05:17,640 Speaker 1: has rolled out a lot of support for these businesses 99 00:05:17,839 --> 00:05:22,920 Speaker 1: and especially the smaller ones, but until global demand recovers, 100 00:05:22,960 --> 00:05:25,240 Speaker 1: there is a limit to what the government can do. 101 00:05:25,640 --> 00:05:27,560 Speaker 1: And you know, some of the companies that we spoke 102 00:05:27,640 --> 00:05:30,240 Speaker 1: to said that they can apply for loans and they 103 00:05:30,240 --> 00:05:33,760 Speaker 1: can apply for grants, but until their own clients overseas 104 00:05:34,200 --> 00:05:37,719 Speaker 1: are really able to um bring those orders back, you know, 105 00:05:37,760 --> 00:05:40,560 Speaker 1: there's there's really not much they can do. And then 106 00:05:40,680 --> 00:05:43,360 Speaker 1: another option for them is to try to get new clients. 107 00:05:43,400 --> 00:05:46,960 Speaker 1: But then with travel basically understand still, these these trade 108 00:05:46,960 --> 00:05:49,520 Speaker 1: fairs and everything, I mean, those things aren't happening as well. 109 00:05:50,000 --> 00:05:52,039 Speaker 1: You mentioned that they had tried in Wuhan to have 110 00:05:52,200 --> 00:05:56,320 Speaker 1: various measures to stimulate consumption, and of course that's something 111 00:05:56,440 --> 00:05:58,920 Speaker 1: we've had this week. The British government has been trying 112 00:05:58,960 --> 00:06:02,120 Speaker 1: to throw a lot of the economy to to get 113 00:06:02,160 --> 00:06:05,680 Speaker 1: consumers out and about now that the lockdown is easy, 114 00:06:05,680 --> 00:06:09,280 Speaker 1: we've seen lots of consideration of that in the US 115 00:06:09,440 --> 00:06:13,120 Speaker 1: as well. Does it work to be putting more money 116 00:06:13,200 --> 00:06:16,040 Speaker 1: into consumers pockets or is it really all about confidence 117 00:06:16,080 --> 00:06:18,960 Speaker 1: in the virus? I mean, I think it does work. 118 00:06:19,040 --> 00:06:23,520 Speaker 1: They've given out about five hundred million grand or shopping vultures, 119 00:06:23,560 --> 00:06:26,839 Speaker 1: that's about seventy three million U S dollars and you know, 120 00:06:26,839 --> 00:06:28,920 Speaker 1: people that we spoke to said that they regularly use 121 00:06:28,960 --> 00:06:32,279 Speaker 1: those vultures, and I think it does get people spending, 122 00:06:32,360 --> 00:06:34,760 Speaker 1: although it's unclear how much of that spending happens in 123 00:06:34,760 --> 00:06:37,560 Speaker 1: person and how much of it is happening online because 124 00:06:37,560 --> 00:06:40,600 Speaker 1: you know, a lot of transactions in China shop online 125 00:06:40,680 --> 00:06:43,440 Speaker 1: very easily. Um So I don't know how much that 126 00:06:43,760 --> 00:06:46,719 Speaker 1: is really helping encourage people to go outside and to 127 00:06:46,800 --> 00:06:50,599 Speaker 1: do things that they used to do. Interestingly, one of 128 00:06:50,600 --> 00:06:53,200 Speaker 1: the restaurant owners we spoke to said that it was 129 00:06:53,240 --> 00:06:57,039 Speaker 1: the mass testing campaign that Juhan executed that was the 130 00:06:57,080 --> 00:07:00,559 Speaker 1: big confidence booster. You know, he saw the most number 131 00:07:00,560 --> 00:07:02,919 Speaker 1: of customers come in the day after they finished their 132 00:07:02,960 --> 00:07:05,880 Speaker 1: campaign and announced that they had tested every single person 133 00:07:05,920 --> 00:07:07,640 Speaker 1: in the city. And you know, if the city is 134 00:07:07,680 --> 00:07:10,040 Speaker 1: able to pull that off, like, I think that that 135 00:07:10,080 --> 00:07:13,480 Speaker 1: does kind of really reap dividends in terms of making 136 00:07:13,480 --> 00:07:20,920 Speaker 1: people feel confident and making them feel safe. Of course, 137 00:07:20,960 --> 00:07:24,320 Speaker 1: we're also looking ahead wondering how long we're going to 138 00:07:24,440 --> 00:07:28,600 Speaker 1: feel like we're in uh what you described it when 139 00:07:28,640 --> 00:07:30,480 Speaker 1: you came back from Wuhan last time, a sort of 140 00:07:30,560 --> 00:07:36,320 Speaker 1: dystopian post lockdown world where everyone's getting temperature tests or 141 00:07:36,400 --> 00:07:41,040 Speaker 1: where you're being socially distanced. How far when you're in 142 00:07:41,080 --> 00:07:44,120 Speaker 1: your day to laid life and when you go out 143 00:07:44,160 --> 00:07:47,920 Speaker 1: with friends in Beijing. I mean, how far do you 144 00:07:47,960 --> 00:07:50,560 Speaker 1: still feel you are from normal life? Does it feel 145 00:07:50,600 --> 00:07:53,280 Speaker 1: when you have these outbreaks that it's still one step 146 00:07:53,360 --> 00:07:56,120 Speaker 1: forward one step back? Or is it are you starting 147 00:07:56,120 --> 00:07:57,720 Speaker 1: to see the light at the end of the tunnel? 148 00:07:58,480 --> 00:08:01,160 Speaker 1: I mean, personally, I do you like life is pretty 149 00:08:01,200 --> 00:08:03,600 Speaker 1: much back to normal? So we had an outbreak in 150 00:08:03,640 --> 00:08:07,560 Speaker 1: Beijing a couple of weeks ago, and you know, they 151 00:08:08,000 --> 00:08:11,520 Speaker 1: they didn't employ the same kind of city wide lockdown 152 00:08:11,560 --> 00:08:14,720 Speaker 1: that they've used in China and other places, in part 153 00:08:14,760 --> 00:08:16,600 Speaker 1: because you know, the states are just higher in Beijing. 154 00:08:16,680 --> 00:08:19,480 Speaker 1: They can't really bring the city to a stand still 155 00:08:19,520 --> 00:08:22,480 Speaker 1: because there's just so much commerce going on, and then 156 00:08:22,600 --> 00:08:26,320 Speaker 1: also the halls of government are here as well. So 157 00:08:26,360 --> 00:08:28,440 Speaker 1: what they did was that they really took this very 158 00:08:28,440 --> 00:08:30,960 Speaker 1: targeted approach. They broke up the entire city, you know, 159 00:08:31,040 --> 00:08:34,320 Speaker 1: by district by street, and they determined whether each place 160 00:08:34,400 --> 00:08:36,840 Speaker 1: was low risk, high risk, a medium risk, and they 161 00:08:37,240 --> 00:08:42,120 Speaker 1: lockdown areas very specifically, and then they also did huge 162 00:08:42,160 --> 00:08:45,880 Speaker 1: mass mass testing and they restricted people from leaving the 163 00:08:45,920 --> 00:08:48,600 Speaker 1: city depending on you know, how risk of their areas were. 164 00:08:49,040 --> 00:08:52,680 Speaker 1: But they did manage to maintain a large part of 165 00:08:52,840 --> 00:08:56,680 Speaker 1: normal activity. You know, shops and restaurants all remained open. 166 00:08:57,280 --> 00:09:00,280 Speaker 1: The main difference was that UM a lot of housing 167 00:09:00,280 --> 00:09:03,080 Speaker 1: compounds didn't allow visitors in and out, although some did 168 00:09:03,200 --> 00:09:06,440 Speaker 1: continue to do that. UM And also you know, by 169 00:09:06,480 --> 00:09:08,800 Speaker 1: now China's developed a lot of the tools that it 170 00:09:08,840 --> 00:09:12,280 Speaker 1: needs for contact tracing, so everyone has the ability to 171 00:09:12,440 --> 00:09:15,240 Speaker 1: check on their phone whether they've been in contact with 172 00:09:15,320 --> 00:09:18,480 Speaker 1: anyone who's a risk, or they've been to any risky areas, 173 00:09:18,559 --> 00:09:20,800 Speaker 1: or they've traveled. So as long as you're able to 174 00:09:20,800 --> 00:09:23,280 Speaker 1: show that you have that green call, you can basically 175 00:09:23,280 --> 00:09:27,120 Speaker 1: go anywhere. So I do think it's like much less 176 00:09:27,200 --> 00:09:29,600 Speaker 1: dramatic now when there are flare ups, like the government 177 00:09:29,640 --> 00:09:32,480 Speaker 1: has developed the ability to board test and contact trace 178 00:09:32,720 --> 00:09:36,880 Speaker 1: and be more targeted in its restrictions. Do you feel 179 00:09:36,920 --> 00:09:38,880 Speaker 1: I mean we should perhaps say that we were we 180 00:09:38,880 --> 00:09:41,560 Speaker 1: were hoping to play some clips from some of the 181 00:09:41,559 --> 00:09:43,760 Speaker 1: people you spoke to Wan who then said they didn't 182 00:09:43,800 --> 00:09:46,440 Speaker 1: feel comfortable and actually they've been discouraged from talking to 183 00:09:46,520 --> 00:09:49,880 Speaker 1: foreign media after the last time that you went there. 184 00:09:50,520 --> 00:09:53,800 Speaker 1: There's a lot of scrutiny on China at the moment 185 00:09:54,000 --> 00:09:56,280 Speaker 1: in terms of not just what's happened in Hong Kong. 186 00:09:56,320 --> 00:10:02,079 Speaker 1: But how how it's handled the pandemic. Do you feel 187 00:10:02,080 --> 00:10:06,400 Speaker 1: as a reporter that the restrictions are tighter or the 188 00:10:06,600 --> 00:10:08,520 Speaker 1: more limits on what you can do, or is this 189 00:10:08,559 --> 00:10:11,440 Speaker 1: more or less business as usual? I mean, you know, 190 00:10:11,480 --> 00:10:14,760 Speaker 1: for Bloomberg, we focus a lot on economic and financial news, 191 00:10:14,960 --> 00:10:17,720 Speaker 1: and you know, most of the time that's fine, but yeah, 192 00:10:17,720 --> 00:10:19,800 Speaker 1: I mean, the environment is changing. I mean, you look 193 00:10:19,800 --> 00:10:22,720 Speaker 1: at what's happening in Hong Kong obviously, and you know, 194 00:10:22,760 --> 00:10:25,880 Speaker 1: the Chinese government has also taken steps that seemed to 195 00:10:25,920 --> 00:10:31,199 Speaker 1: be moves towards silencing more criticism and being more focused 196 00:10:31,200 --> 00:10:34,920 Speaker 1: on making sure that social unrest doesn't take hold. Um. 197 00:10:34,960 --> 00:10:37,760 Speaker 1: You know, the President Jumping himself has said that social 198 00:10:37,800 --> 00:10:40,440 Speaker 1: stability is a concern in the wake of the virus, 199 00:10:40,440 --> 00:10:43,439 Speaker 1: and I think they are hyper aware of anything that 200 00:10:43,559 --> 00:10:46,760 Speaker 1: may kind of, you know, foment the same amount of 201 00:10:46,840 --> 00:10:50,160 Speaker 1: unhappiness that happened when the virus was really bad. And 202 00:10:50,200 --> 00:10:53,240 Speaker 1: you know about the whistleblowers who are silenced and all that, 203 00:10:54,160 --> 00:10:58,199 Speaker 1: and you know, simultaneously we're seeing this increasing tension between 204 00:10:58,720 --> 00:11:02,040 Speaker 1: China and the US word the media. So China kicked 205 00:11:02,040 --> 00:11:04,600 Speaker 1: out several reporters and the US has also been cracking 206 00:11:04,600 --> 00:11:07,839 Speaker 1: down on American news organizations. Then now we have this 207 00:11:07,920 --> 00:11:12,520 Speaker 1: spat between the UK and c GTN statement media about 208 00:11:12,679 --> 00:11:15,720 Speaker 1: airing force confessions and so, you know, I think as 209 00:11:15,800 --> 00:11:19,319 Speaker 1: China becomes more assertive, yeah, I mean, it definitely is 210 00:11:19,640 --> 00:11:24,080 Speaker 1: narrowing the scope from for us to act freely. Not 211 00:11:24,160 --> 00:11:27,080 Speaker 1: that it was free before, but yeah, well you still 212 00:11:27,200 --> 00:11:29,320 Speaker 1: do you still produce a lot of stories. Will you 213 00:11:29,360 --> 00:11:33,440 Speaker 1: have to do the same quarantine if you go to 214 00:11:33,520 --> 00:11:36,200 Speaker 1: Wuhan or is that now you just you just have 215 00:11:36,240 --> 00:11:39,880 Speaker 1: to show people your at your foot apple and your phone. Yeah. 216 00:11:40,000 --> 00:11:42,559 Speaker 1: And in fact, um, you know, Wuhan is considered a 217 00:11:42,600 --> 00:11:45,360 Speaker 1: low risk area. Now there's no cases and they've tested everybody. 218 00:11:45,520 --> 00:11:48,040 Speaker 1: So actually do you have you were saying they do 219 00:11:48,120 --> 00:11:52,199 Speaker 1: have floods they just can't break. They've now got people 220 00:11:52,280 --> 00:11:56,320 Speaker 1: dying from floods. Yeah, I mean there's floods. There's flooding 221 00:11:56,320 --> 00:11:58,880 Speaker 1: now in southern China. I mean it's a problem every year, 222 00:11:58,960 --> 00:12:02,439 Speaker 1: but this year it's one of it's it's really becoming 223 00:12:02,440 --> 00:12:06,920 Speaker 1: more severe. Um, so it's been tough for people in Well, Sharon, 224 00:12:06,960 --> 00:12:08,520 Speaker 1: I'm sure we might we might check in on you 225 00:12:08,600 --> 00:12:11,440 Speaker 1: again in in a few months, I mean time, Thank 226 00:12:11,480 --> 00:12:21,320 Speaker 1: you very much. Yeah, no problem. M Well, that was 227 00:12:21,360 --> 00:12:25,480 Speaker 1: the view this week from Beijing and Mouhan. Now, as 228 00:12:25,520 --> 00:12:27,640 Speaker 1: I mentioned at the start, we have the long view 229 00:12:27,679 --> 00:12:30,559 Speaker 1: on China from our chief economists, Tom Worlick. He's based 230 00:12:30,559 --> 00:12:33,640 Speaker 1: in Washington now, but he spent eleven years in Beijing, 231 00:12:33,840 --> 00:12:36,760 Speaker 1: and he's just published a book based on his time there, 232 00:12:36,880 --> 00:12:41,760 Speaker 1: at least in part, called China The Bubble That Never Pops. Tom. 233 00:12:41,840 --> 00:12:44,160 Speaker 1: Nice to have you back on the podcast. In your 234 00:12:44,240 --> 00:12:47,240 Speaker 1: recent piece for Business Week about your book, you started 235 00:12:47,280 --> 00:12:51,560 Speaker 1: with this line, don't tell Trump, but China's winning. Is 236 00:12:51,640 --> 00:12:55,560 Speaker 1: China winning everything or just the fight against COVID nineteen. 237 00:12:56,240 --> 00:12:59,559 Speaker 1: So COVID nineteen is is a kind of stress test 238 00:12:59,640 --> 00:13:04,800 Speaker 1: for for how economic systems function. And if you look 239 00:13:04,800 --> 00:13:07,480 Speaker 1: at how China and the US have performed in the 240 00:13:07,559 --> 00:13:11,280 Speaker 1: last six months, China is actually doing rather better. China's 241 00:13:11,280 --> 00:13:14,079 Speaker 1: got the virus under control. The US doesn't have the 242 00:13:14,160 --> 00:13:18,680 Speaker 1: virus under control. China managed to control unemployment, the U 243 00:13:18,840 --> 00:13:22,880 Speaker 1: saw unemployment rise to levels not seen since the Great Depression. 244 00:13:23,200 --> 00:13:26,920 Speaker 1: China's poised to get back to growth. Factories are already 245 00:13:26,960 --> 00:13:28,880 Speaker 1: in a better place than they were a year ago. 246 00:13:29,240 --> 00:13:33,760 Speaker 1: The US is still a long way underwater, so there's 247 00:13:33,760 --> 00:13:36,680 Speaker 1: a broader point there as well. I think the way 248 00:13:36,720 --> 00:13:40,280 Speaker 1: we look at the Chinese model is flawed. We only 249 00:13:40,360 --> 00:13:43,880 Speaker 1: see the downsides and the stresses. We don't see the 250 00:13:43,920 --> 00:13:47,440 Speaker 1: strengths and the sources of resilience well, and the general, 251 00:13:47,480 --> 00:13:49,160 Speaker 1: as you say, the general thesis of your book is 252 00:13:49,160 --> 00:13:53,320 Speaker 1: that China is stronger than it looks economically. Certainly. I 253 00:13:53,400 --> 00:13:55,120 Speaker 1: know when I was working in the investment world and 254 00:13:55,160 --> 00:13:57,480 Speaker 1: people would say, what are your top three or top 255 00:13:57,600 --> 00:14:02,040 Speaker 1: five risks for the year, And when you hear the 256 00:14:02,120 --> 00:14:04,000 Speaker 1: sort of strategist talk about it, if they had sort 257 00:14:04,040 --> 00:14:06,040 Speaker 1: of run out of one, they would just throw in 258 00:14:06,240 --> 00:14:08,320 Speaker 1: China blowing up, because it was sort of a standard 259 00:14:08,360 --> 00:14:12,720 Speaker 1: thing that you would expect China's debt issues and financial 260 00:14:12,720 --> 00:14:16,400 Speaker 1: problems to finally all come home to roost. You're saying 261 00:14:16,559 --> 00:14:20,400 Speaker 1: that we could carry on waiting quite a long time. Yeah, 262 00:14:20,920 --> 00:14:23,200 Speaker 1: so I was in I was in China for eleven years, 263 00:14:23,400 --> 00:14:26,400 Speaker 1: and for that entire time, there was this sort of 264 00:14:26,480 --> 00:14:30,680 Speaker 1: thread of pessimism, thread of doom, almost running through the 265 00:14:30,680 --> 00:14:35,280 Speaker 1: Western commentary on China. Yes, the story went tem percent 266 00:14:35,400 --> 00:14:38,320 Speaker 1: growth looks impressive, but if you pope beneath the surface, 267 00:14:38,680 --> 00:14:42,800 Speaker 1: it's all financed by debt. All the debt is being misallocated. 268 00:14:42,920 --> 00:14:45,280 Speaker 1: It's a bubble and it's going to blow up, and 269 00:14:45,320 --> 00:14:48,160 Speaker 1: of course it doesn't ever blow up. So my motivation 270 00:14:48,200 --> 00:14:51,040 Speaker 1: in putting pen to paper for this book was, of 271 00:14:51,040 --> 00:14:55,280 Speaker 1: course mainly fame and wealth beyond my wildest dreams, but 272 00:14:55,440 --> 00:14:59,000 Speaker 1: beyond that, I also wanted to explain why the bubble 273 00:14:59,040 --> 00:15:02,640 Speaker 1: never pops, and I think an important reason is we 274 00:15:02,680 --> 00:15:06,280 Speaker 1: look at the negatives, we don't consider the positives. And 275 00:15:06,320 --> 00:15:09,520 Speaker 1: on the financial system, what that means is we look 276 00:15:09,560 --> 00:15:11,600 Speaker 1: at the massive build up of debt. We look at 277 00:15:11,640 --> 00:15:16,000 Speaker 1: how the debt has been allocated to zombie firms and 278 00:15:16,200 --> 00:15:19,240 Speaker 1: real estate developers building ghost towns in the desert, and 279 00:15:19,240 --> 00:15:22,640 Speaker 1: those are big problems. But what we forget is for 280 00:15:22,680 --> 00:15:25,640 Speaker 1: bad loans to turn into a financial crisis, you also 281 00:15:25,680 --> 00:15:28,360 Speaker 1: need to have a funding problem for the banks. And 282 00:15:28,400 --> 00:15:31,400 Speaker 1: because China's saving rate is so high, and because it's 283 00:15:31,400 --> 00:15:33,920 Speaker 1: hard to take money out of the country, the funding 284 00:15:33,960 --> 00:15:37,280 Speaker 1: base for the banks is actually really solid. And as 285 00:15:37,280 --> 00:15:39,800 Speaker 1: you say, there's all the things that people identify that 286 00:15:39,840 --> 00:15:43,360 Speaker 1: a weaknesses. You know that debt exists um, But you're 287 00:15:43,400 --> 00:15:45,760 Speaker 1: saying that there is also that there is a corresponding 288 00:15:45,760 --> 00:15:48,640 Speaker 1: strength there which the government has room to support the 289 00:15:48,680 --> 00:15:51,760 Speaker 1: banks in a way they don't in other countries. I 290 00:15:51,800 --> 00:15:53,560 Speaker 1: think you know some one of a couple of your 291 00:15:53,560 --> 00:15:57,360 Speaker 1: other strengths that you point out is that state intervention 292 00:15:57,560 --> 00:16:01,080 Speaker 1: that you have there is actually effective and strength, not 293 00:16:01,200 --> 00:16:04,040 Speaker 1: just a question of of meddling in the economy and 294 00:16:04,080 --> 00:16:06,280 Speaker 1: getting in the way of markets. And you have the 295 00:16:06,640 --> 00:16:11,240 Speaker 1: sheer scale of the economy. That's also an advantage, isn't it. Yeah. 296 00:16:11,280 --> 00:16:14,080 Speaker 1: When we look at the state system in China from 297 00:16:14,080 --> 00:16:16,480 Speaker 1: our perspective here in the West, where we, you know, 298 00:16:16,560 --> 00:16:20,040 Speaker 1: firmly believe that free markets of the answer, we just 299 00:16:20,080 --> 00:16:24,280 Speaker 1: see corruption and we see inefficiency, and those are real problems. 300 00:16:24,320 --> 00:16:27,760 Speaker 1: If you look at return on assets for China's state firms, 301 00:16:27,960 --> 00:16:31,240 Speaker 1: they're much lower than return on assets for private firms. 302 00:16:32,000 --> 00:16:35,280 Speaker 1: But what we miss is that for countries that are 303 00:16:35,320 --> 00:16:40,040 Speaker 1: big and that have somewhat effective industrial planners and which 304 00:16:40,120 --> 00:16:43,360 Speaker 1: are still at an early stage in their development, state 305 00:16:43,360 --> 00:16:48,000 Speaker 1: ownership can be a powerful instrument of development. The state 306 00:16:48,040 --> 00:16:52,480 Speaker 1: banks can finance acquisitions of new technologies, the state and 307 00:16:52,640 --> 00:16:56,840 Speaker 1: enterprises can deploy those technologies at a massive scale, and 308 00:16:56,920 --> 00:17:00,280 Speaker 1: that becomes an instrument which can take China's on me 309 00:17:00,320 --> 00:17:03,640 Speaker 1: as a whole closer to the technology frontier and make 310 00:17:03,680 --> 00:17:07,159 Speaker 1: it more productive, even as the state sector itself is 311 00:17:07,480 --> 00:17:10,840 Speaker 1: inefficient when looked at from a sort of narrow balance 312 00:17:10,920 --> 00:17:14,680 Speaker 1: sheet accounting perspective. No, and obviously that's something we're being 313 00:17:14,720 --> 00:17:18,840 Speaker 1: reminded of in many countries of the important In some areas, 314 00:17:18,960 --> 00:17:22,480 Speaker 1: the government really is the only one that can intervene, 315 00:17:22,600 --> 00:17:25,520 Speaker 1: and boy if they've done so in response to COVID nineteen. Now, 316 00:17:25,600 --> 00:17:28,520 Speaker 1: obviously you've achieved one important thing. You've managed to get 317 00:17:28,520 --> 00:17:30,880 Speaker 1: this book out before the bubble pops, which I'm sure 318 00:17:31,000 --> 00:17:34,399 Speaker 1: was a concern for your publisher, But you probably weren't 319 00:17:34,440 --> 00:17:36,800 Speaker 1: expecting to have it come out in the middle of 320 00:17:36,800 --> 00:17:39,760 Speaker 1: a pandemic, which clearly has meant that you weren't able 321 00:17:39,760 --> 00:17:41,919 Speaker 1: to have any lavish book party. So I'm sorry, not 322 00:17:41,960 --> 00:17:45,320 Speaker 1: that Bloomberg would have thrown you any but has the 323 00:17:45,400 --> 00:17:47,800 Speaker 1: last few months changed your view on any of the 324 00:17:47,920 --> 00:17:49,879 Speaker 1: arguments you've made in your book or put them in 325 00:17:49,920 --> 00:17:53,639 Speaker 1: a different perspective. Perhaps it's it's an emotional roller coaster 326 00:17:53,680 --> 00:17:56,240 Speaker 1: being on this podcast. Stephanitiely, I thought you were offering 327 00:17:56,280 --> 00:17:58,200 Speaker 1: me a lavish book party, and then in the very 328 00:17:58,200 --> 00:18:02,440 Speaker 1: next sentence it was yanked away from me. Um. Fortunately, 329 00:18:02,480 --> 00:18:04,840 Speaker 1: I'm going to be working from home for the foreseeable future, 330 00:18:04,880 --> 00:18:06,719 Speaker 1: so no one will be able to see the disappointment 331 00:18:06,720 --> 00:18:09,639 Speaker 1: on my face. So so so covid' is a stress 332 00:18:09,680 --> 00:18:12,600 Speaker 1: test for the Chinese economy. And let's think about what 333 00:18:12,720 --> 00:18:15,000 Speaker 1: happened in the first six months of the year. So 334 00:18:15,480 --> 00:18:19,520 Speaker 1: real estate developers didn't sell any houses, state owned enterprises 335 00:18:20,200 --> 00:18:24,920 Speaker 1: saw their profits turn into losses. Local governments didn't sell 336 00:18:24,960 --> 00:18:28,320 Speaker 1: any land, and they saw their tax revenue collapse. And 337 00:18:28,359 --> 00:18:31,640 Speaker 1: who are the biggest borrowers in China's economy, Well, it's 338 00:18:31,680 --> 00:18:35,080 Speaker 1: the real estate developers, the state owned enterprises, and the 339 00:18:35,119 --> 00:18:37,800 Speaker 1: local governments. So if there was going to be a 340 00:18:37,840 --> 00:18:42,280 Speaker 1: financial crisis in China, presumably it would have just happened. 341 00:18:42,640 --> 00:18:45,520 Speaker 1: All of the biggest borrowers saw their income collapse, they 342 00:18:45,520 --> 00:18:48,359 Speaker 1: couldn't service their loans. This was the moment when we 343 00:18:48,400 --> 00:18:53,479 Speaker 1: should have seen a financial crisis, and clearly that didn't happen. Um. 344 00:18:53,520 --> 00:18:55,960 Speaker 1: And I think that's a reminder of some of the 345 00:18:56,000 --> 00:18:59,639 Speaker 1: sort of hiding in plain site sources of strength in 346 00:18:59,720 --> 00:19:02,919 Speaker 1: China as economy. In China's financial system, the banks have 347 00:19:02,960 --> 00:19:05,800 Speaker 1: a very strong funding base, and so they don't actually 348 00:19:06,160 --> 00:19:09,160 Speaker 1: need loans to be repaid on time. They can say 349 00:19:09,160 --> 00:19:11,399 Speaker 1: to the borrowers, you know what, we know this is 350 00:19:11,400 --> 00:19:14,160 Speaker 1: a really difficult quarter, maybe even a very difficult year. 351 00:19:14,600 --> 00:19:16,960 Speaker 1: You pay us back in the second half, or even 352 00:19:17,119 --> 00:19:21,760 Speaker 1: you pay us back in one Private businesses are going 353 00:19:21,800 --> 00:19:25,280 Speaker 1: to be letting go of workers and canceling investment projects. 354 00:19:25,760 --> 00:19:29,359 Speaker 1: But China has a massive state sector inefficient, but the 355 00:19:29,400 --> 00:19:32,080 Speaker 1: government can use the state sector as a kind of 356 00:19:32,200 --> 00:19:35,600 Speaker 1: a counter cyclical instrument and say to the state sector, 357 00:19:35,760 --> 00:19:39,080 Speaker 1: you know what, don't let any workers go, and accelerate 358 00:19:39,119 --> 00:19:42,600 Speaker 1: that investment project. And what that means is the economy 359 00:19:42,640 --> 00:19:45,800 Speaker 1: can climb out of the COVID hole a bit quicker 360 00:19:45,840 --> 00:19:55,879 Speaker 1: than it otherwise would. So we have obviously had the 361 00:19:56,000 --> 00:19:58,280 Speaker 1: events in Hong Kong, the passing of the legislation in 362 00:19:58,280 --> 00:20:00,480 Speaker 1: Hong Kong in the last few weeks, and and one 363 00:20:00,520 --> 00:20:03,760 Speaker 1: thing that has been very striking is the way that 364 00:20:04,080 --> 00:20:10,359 Speaker 1: along with the economic success and apparent resilience, the Chinese 365 00:20:10,359 --> 00:20:12,919 Speaker 1: government is sort of doubling down on some of the 366 00:20:13,000 --> 00:20:18,480 Speaker 1: more uncompromising aspects of its economic models. Shall we say, 367 00:20:19,040 --> 00:20:21,679 Speaker 1: you look at China and you know the major change 368 00:20:21,680 --> 00:20:23,960 Speaker 1: it has to have over the next few years, and 369 00:20:24,000 --> 00:20:26,360 Speaker 1: then the government is trying to achieve is to move 370 00:20:26,440 --> 00:20:30,360 Speaker 1: from being an export driven economy to a consumer driven economy. 371 00:20:30,640 --> 00:20:34,840 Speaker 1: And I guess the fond belief of many economists and 372 00:20:34,880 --> 00:20:38,600 Speaker 1: certainly many outside policymakers has always been that it's quite 373 00:20:38,760 --> 00:20:43,720 Speaker 1: hard to be a really successful kind of individualistic, consumer 374 00:20:43,840 --> 00:20:49,600 Speaker 1: driven economy when you're not giving those consumers rights as 375 00:20:49,680 --> 00:20:55,240 Speaker 1: citizens and moving towards a democracy. Is that being proved 376 00:20:55,280 --> 00:20:58,560 Speaker 1: wrong in China? So I don't want to come across 377 00:20:58,680 --> 00:21:01,720 Speaker 1: as um. I don't want to come across as as 378 00:21:01,760 --> 00:21:07,520 Speaker 1: like a Pollyanna on China's social system. Clearly there are 379 00:21:07,800 --> 00:21:14,200 Speaker 1: absolutely enormous costs to China's social system. The question is 380 00:21:14,200 --> 00:21:16,520 Speaker 1: is that going to be Is that going to translate 381 00:21:16,960 --> 00:21:21,520 Speaker 1: into economic costs? And the answer so far has been no. 382 00:21:22,160 --> 00:21:24,920 Speaker 1: And I think there's two reasons for that. Um. So 383 00:21:24,960 --> 00:21:28,199 Speaker 1: the first reason we sort of alluded to Stephanie is 384 00:21:28,800 --> 00:21:32,439 Speaker 1: China's position in the development process. Right, so, when do 385 00:21:32,440 --> 00:21:37,760 Speaker 1: you need freethinking innovators, Well, you really need freethinking innovators 386 00:21:37,760 --> 00:21:40,000 Speaker 1: when you get to the technology frontier and you need 387 00:21:40,040 --> 00:21:43,639 Speaker 1: to innovate, and that's not where China is. China's GDP 388 00:21:43,800 --> 00:21:45,800 Speaker 1: per capita is the third of the level in the 389 00:21:45,880 --> 00:21:49,359 Speaker 1: United States. There are a long way from the technology frontier, 390 00:21:49,800 --> 00:21:53,639 Speaker 1: and that means that for the next foreseeable future, growth 391 00:21:53,680 --> 00:21:56,200 Speaker 1: is going to be a process of catching up and copying, 392 00:21:56,760 --> 00:22:02,200 Speaker 1: not necessarily a process of pushing act and developing innovative 393 00:22:02,240 --> 00:22:07,680 Speaker 1: technologies themselves. The second reason I think is that actually 394 00:22:08,520 --> 00:22:13,240 Speaker 1: we have a somewhat we have a settled view of 395 00:22:13,280 --> 00:22:20,360 Speaker 1: the relationship between social systems and economic progress, which actually 396 00:22:20,480 --> 00:22:25,760 Speaker 1: China is challenging. Right. Um, we think that democracy, markets 397 00:22:25,760 --> 00:22:30,840 Speaker 1: and growth go together, right, And if you have markets, 398 00:22:31,200 --> 00:22:33,800 Speaker 1: then you will grow, and also also if you have markets, 399 00:22:33,800 --> 00:22:36,679 Speaker 1: that will be a driver of democracy. And actually what 400 00:22:36,720 --> 00:22:40,959 Speaker 1: we're seeing in China is that these relationships which seems 401 00:22:41,000 --> 00:22:45,720 Speaker 1: so settled in the West don't actually necessarily hold well. 402 00:22:45,760 --> 00:22:50,440 Speaker 1: These relationships kind of reassert themselves over the long term. 403 00:22:50,480 --> 00:22:53,400 Speaker 1: I think as we get closer to the technology front frontier, 404 00:22:53,720 --> 00:22:56,840 Speaker 1: the chances are that they will Is that going to 405 00:22:56,960 --> 00:23:01,040 Speaker 1: matter for China in the next three for five years 406 00:23:01,080 --> 00:23:03,040 Speaker 1: when g d P per capita is still a third 407 00:23:03,080 --> 00:23:05,439 Speaker 1: of the level in the United States. I think the 408 00:23:05,480 --> 00:23:08,919 Speaker 1: answer is probably no. But isn't the mess lesson of 409 00:23:09,000 --> 00:23:13,919 Speaker 1: the Huawei controversy and some of these others involving China 410 00:23:14,040 --> 00:23:17,280 Speaker 1: technology is that they are closer to that frontier than 411 00:23:17,359 --> 00:23:20,359 Speaker 1: we like to think. And indeed, in that sector that 412 00:23:20,480 --> 00:23:22,840 Speaker 1: they seem to be, they have one company that is 413 00:23:22,880 --> 00:23:26,160 Speaker 1: pretty much dominant. Yeah. I think there's two things there. 414 00:23:26,200 --> 00:23:33,320 Speaker 1: So the first thing is UM, technological progress is unevenly distributed, right, So, Yeah, 415 00:23:33,480 --> 00:23:38,159 Speaker 1: if you look at five G or AI or sustainable 416 00:23:38,240 --> 00:23:42,600 Speaker 1: energy for example, China is at or near or pushing 417 00:23:42,640 --> 00:23:46,280 Speaker 1: back the technology frontier. UM. If you look at other areas, 418 00:23:46,560 --> 00:23:49,880 Speaker 1: China still lags by a considerable margin. China can't make 419 00:23:49,960 --> 00:23:55,960 Speaker 1: competitive semiconductors, China can't make competitive airplanes for example. UM. 420 00:23:56,000 --> 00:23:57,960 Speaker 1: And then the second point I would make is that 421 00:23:58,200 --> 00:24:02,240 Speaker 1: sort of the success of Huawei UM and sort of 422 00:24:02,240 --> 00:24:05,080 Speaker 1: the advances they've made in five G I think goes 423 00:24:05,200 --> 00:24:08,960 Speaker 1: to UM the sort of confused approach that we have 424 00:24:09,040 --> 00:24:11,560 Speaker 1: to thinking about China in the West. Right, on the 425 00:24:11,560 --> 00:24:14,800 Speaker 1: one hand, we say state and enterprise is a huge 426 00:24:14,840 --> 00:24:18,200 Speaker 1: and inefficient and corrupt, and they are an impediment to 427 00:24:18,320 --> 00:24:22,120 Speaker 1: China's growth um And we also say Huawei is pretending 428 00:24:22,160 --> 00:24:25,280 Speaker 1: to be a private company, but secretly it's state and enterprise. 429 00:24:25,800 --> 00:24:28,919 Speaker 1: And then in the same breath we say Huawei is 430 00:24:29,359 --> 00:24:32,919 Speaker 1: dominating the next generation of the most critical technology for 431 00:24:32,960 --> 00:24:35,399 Speaker 1: the future of the world economy. So which is it 432 00:24:35,720 --> 00:24:39,080 Speaker 1: the state and enterprises? These kind of like corrupt, inefficient 433 00:24:39,119 --> 00:24:44,280 Speaker 1: dinosaurs who are dragging China down, or are they technology 434 00:24:44,320 --> 00:24:49,200 Speaker 1: innovators who are going to dominate the future of communication? 435 00:24:50,040 --> 00:24:53,560 Speaker 1: Can't be both right? Either argument stems from fear, and 436 00:24:53,600 --> 00:24:56,480 Speaker 1: I think that's probably the uniting force in in quite 437 00:24:56,520 --> 00:24:58,760 Speaker 1: a lot of the commentary around China these days. But 438 00:24:58,840 --> 00:25:02,720 Speaker 1: we have certainly done the long term view, and I'm 439 00:25:02,720 --> 00:25:06,160 Speaker 1: sure we'll talk about this again. I'm interested, just as 440 00:25:06,160 --> 00:25:10,000 Speaker 1: a final question, if the bubble had popped before you've 441 00:25:10,000 --> 00:25:12,000 Speaker 1: got this book out, had you and your publisher had 442 00:25:12,000 --> 00:25:14,640 Speaker 1: any conversation about changing the title or what what would 443 00:25:14,640 --> 00:25:20,320 Speaker 1: plan b So the bubble that took a long time 444 00:25:20,359 --> 00:25:23,320 Speaker 1: to hop with a quick with a new forward. So 445 00:25:23,400 --> 00:25:26,080 Speaker 1: clearly by publishing a book with this title, Stephanie, I 446 00:25:26,119 --> 00:25:30,520 Speaker 1: have tempted fate and increase the chances that the bubble 447 00:25:30,640 --> 00:25:35,080 Speaker 1: will pop. So what's absolutely critical is that list listeners 448 00:25:35,080 --> 00:25:38,639 Speaker 1: to the Stephonomics podcast go out immediately and buy a 449 00:25:38,680 --> 00:25:41,399 Speaker 1: copy of the book so I can enjoy some royalties 450 00:25:41,680 --> 00:25:45,679 Speaker 1: before my arguments and conclusions are falsified by events. To all, 451 00:25:45,840 --> 00:25:52,040 Speaker 1: thank you very much, Thanks Stephanie, thanks for listening to Stephanomics. 452 00:25:52,119 --> 00:25:54,159 Speaker 1: We'll be back next week with more on how COVID 453 00:25:54,240 --> 00:25:57,720 Speaker 1: nineteen is transforming the global economy. In the meantime, you 454 00:25:57,760 --> 00:26:01,040 Speaker 1: can find us on the Bloomberg Terminal, webs app or 455 00:26:01,080 --> 00:26:03,800 Speaker 1: wherever you get your podcasts, and for more news and 456 00:26:03,840 --> 00:26:07,320 Speaker 1: analysis from Bloomberg Economics, you just have to follow at 457 00:26:07,359 --> 00:26:11,359 Speaker 1: Economics on Twitter. This episode was produced by Magnets Hendrickson 458 00:26:11,840 --> 00:26:15,639 Speaker 1: special thanks to Sharon Chen and Tom Orlick. Lucy Meekin 459 00:26:15,760 --> 00:26:18,320 Speaker 1: is the acting executive producer of Stephonomics and the head 460 00:26:18,359 --> 00:26:20,840 Speaker 1: of Bloomberg Podcast is Francesca Levy.