1 00:00:10,240 --> 00:00:13,360 Speaker 1: Hello, and welcome to another episode of The Odd Lots Podcast. 2 00:00:13,480 --> 00:00:18,040 Speaker 1: I'm Joe, wasn't and I'm Tracy. It's good to have 3 00:00:18,120 --> 00:00:20,119 Speaker 1: you back. I think we haven't been together in the 4 00:00:20,200 --> 00:00:25,000 Speaker 1: last couple of episodes. I missed you quite a bit. 5 00:00:25,120 --> 00:00:28,040 Speaker 1: That that is. I, you know, like I can do 6 00:00:28,280 --> 00:00:30,720 Speaker 1: the podcast, I guess by myself as you can. But 7 00:00:31,080 --> 00:00:35,199 Speaker 1: it's definitely better when you're here. It's better with a 8 00:00:35,280 --> 00:00:39,600 Speaker 1: co host, exactly right. So in the spirit of you know, 9 00:00:39,720 --> 00:00:42,760 Speaker 1: you're in Hong Kong, I'm in the US, you know, 10 00:00:42,880 --> 00:00:47,360 Speaker 1: in the spirit of reuniting, uh, the two sides of 11 00:00:47,440 --> 00:00:50,640 Speaker 1: the Odd Lots Podcast. It makes sense that the topic 12 00:00:50,640 --> 00:00:53,880 Speaker 1: we're going to talk about is the current state of 13 00:00:54,240 --> 00:00:57,400 Speaker 1: US China trade talks, which as of right now, and 14 00:00:57,520 --> 00:01:02,040 Speaker 1: I should specify when we're talking, it is, uh, Tuesday, 15 00:01:02,320 --> 00:01:06,320 Speaker 1: March five. As of right now, people view that there's 16 00:01:06,520 --> 00:01:09,080 Speaker 1: a lot of progress being made on this front. Whether 17 00:01:09,160 --> 00:01:11,400 Speaker 1: that will be the case by the time this comes 18 00:01:11,440 --> 00:01:15,160 Speaker 1: out in a few days, we have no idea. M Well, 19 00:01:15,200 --> 00:01:19,200 Speaker 1: I appreciate your thoughtfulness, Joe, but you're right. The main 20 00:01:19,280 --> 00:01:21,480 Speaker 1: reason to talk about this issue right now is we 21 00:01:21,520 --> 00:01:23,440 Speaker 1: have a lot of breaking news, a lot of fast 22 00:01:23,520 --> 00:01:27,720 Speaker 1: moving news, and the big news over the weekend in 23 00:01:27,800 --> 00:01:30,640 Speaker 1: early March the first week of March was that the 24 00:01:30,720 --> 00:01:34,520 Speaker 1: US and China might be agreeing some sort of trade deal. 25 00:01:35,040 --> 00:01:38,119 Speaker 1: Still a lot of details to be hammered out, of course, 26 00:01:38,480 --> 00:01:41,560 Speaker 1: but all of that happening against the backdrop of one 27 00:01:41,600 --> 00:01:44,880 Speaker 1: of the biggest news events to take place in China, 28 00:01:45,040 --> 00:01:49,800 Speaker 1: and that is the National People's Congress, the big political 29 00:01:49,920 --> 00:01:53,680 Speaker 1: pow wow between the Chinese Communist Party members taking place 30 00:01:53,760 --> 00:01:56,480 Speaker 1: in Beijing. And we're getting all sorts of news on 31 00:01:56,560 --> 00:01:59,960 Speaker 1: not just the China economy but also it's policy outlook. 32 00:02:00,120 --> 00:02:02,840 Speaker 1: So both of these events combining to be a very 33 00:02:03,000 --> 00:02:06,280 Speaker 1: very big week for China in particular, right And obviously 34 00:02:06,440 --> 00:02:10,560 Speaker 1: people in the US, probably those who care uh somewhat 35 00:02:10,600 --> 00:02:13,560 Speaker 1: plugged in and aware of the trade talks going on 36 00:02:13,720 --> 00:02:17,560 Speaker 1: and the status of those. Probably for fewer people are 37 00:02:17,600 --> 00:02:21,040 Speaker 1: aware of the NPC and the implications of that and 38 00:02:21,080 --> 00:02:25,920 Speaker 1: the type of policies and projections to come from it. Yeah, 39 00:02:26,040 --> 00:02:28,760 Speaker 1: so we should definitely be talking about that. The big news, 40 00:02:28,880 --> 00:02:31,680 Speaker 1: by the way, it has to be China ratcheting down 41 00:02:32,040 --> 00:02:36,000 Speaker 1: its growth forecast to a range of six to six 42 00:02:36,040 --> 00:02:39,639 Speaker 1: point five per cent and in particular, the notion that 43 00:02:39,680 --> 00:02:42,520 Speaker 1: they're moving to a range as opposed to just a 44 00:02:42,639 --> 00:02:47,560 Speaker 1: single figure target, which is what they had previously, is well, 45 00:02:47,600 --> 00:02:50,280 Speaker 1: it sounds a little bit wonky. It's probably a detail 46 00:02:50,360 --> 00:02:53,600 Speaker 1: for most people, but it's interesting. It gives policymakers a 47 00:02:53,639 --> 00:02:57,519 Speaker 1: lot more fox flexibility to reach that target, and lots 48 00:02:57,560 --> 00:02:59,799 Speaker 1: of people are talking about it. And of course it's 49 00:03:00,320 --> 00:03:04,600 Speaker 1: directly into the trade discussions. Does China need to eke 50 00:03:04,639 --> 00:03:07,680 Speaker 1: out a trade deal to help prop up its growth 51 00:03:07,720 --> 00:03:10,840 Speaker 1: at a relatively challenging time? All right, well here to 52 00:03:10,960 --> 00:03:14,160 Speaker 1: discuss all of this is a prior guest on the 53 00:03:14,160 --> 00:03:17,480 Speaker 1: Odd Lots podcast, and excited to have him back, we 54 00:03:17,560 --> 00:03:20,200 Speaker 1: have Brad sets Are on today. He's a Senior Fellow 55 00:03:20,240 --> 00:03:23,440 Speaker 1: for International Economics that the Council on Foreign Relations. He 56 00:03:23,480 --> 00:03:27,520 Speaker 1: used to be a Treasury longtime economics blogger, and longtime 57 00:03:27,600 --> 00:03:32,440 Speaker 1: observer of all things trade and China and US trade relations. 58 00:03:32,440 --> 00:03:35,840 Speaker 1: So very timely guest, Brad, thank you very much for 59 00:03:35,920 --> 00:03:38,720 Speaker 1: joining us. It's a pleasure to be here. Uh, Brad, 60 00:03:38,800 --> 00:03:42,000 Speaker 1: let's start. Obviously we don't have a trade deal, but 61 00:03:42,160 --> 00:03:44,320 Speaker 1: from what you've been able to pick up an official 62 00:03:44,360 --> 00:03:48,760 Speaker 1: statements in the media, what's surprised you or hasn't surprised 63 00:03:48,800 --> 00:03:52,320 Speaker 1: you about the progress that's been made between the US 64 00:03:52,400 --> 00:03:55,200 Speaker 1: and China towards the deal. I guess uh. You know, 65 00:03:55,280 --> 00:03:59,000 Speaker 1: I obviously have been falling the negotiations fairly closely, and 66 00:03:59,040 --> 00:04:02,240 Speaker 1: I've been following in the various ideas that China has 67 00:04:02,280 --> 00:04:06,640 Speaker 1: floated UH fairly closely, and so in some sense, the 68 00:04:06,680 --> 00:04:09,920 Speaker 1: surprise to me is that the US more or less 69 00:04:10,000 --> 00:04:13,920 Speaker 1: was willing to accept the broad contours of a deal 70 00:04:14,400 --> 00:04:17,120 Speaker 1: that China has kind of been outlining at least for 71 00:04:17,120 --> 00:04:19,600 Speaker 1: the past six months, if not for a bit longer. 72 00:04:20,160 --> 00:04:23,720 Speaker 1: The center of that deal seems to be UH, a 73 00:04:24,279 --> 00:04:28,000 Speaker 1: Chinese commitment that's sort of slowly being unrolled to buy 74 00:04:28,040 --> 00:04:32,720 Speaker 1: a lot more agricultural products UH and to buy a 75 00:04:32,760 --> 00:04:36,720 Speaker 1: lot a lot more US energy to bring the bilateral 76 00:04:36,760 --> 00:04:41,280 Speaker 1: trade deficit down. And then I would say, there's some 77 00:04:41,360 --> 00:04:48,000 Speaker 1: add ons that sort of address some longstanding commercial disputes 78 00:04:48,600 --> 00:04:53,480 Speaker 1: and that create a process where some of the newer 79 00:04:54,279 --> 00:04:58,320 Speaker 1: UH fights could possibly be resolved or could possibly UH 80 00:04:58,480 --> 00:05:01,320 Speaker 1: not be resolved the easy things that got like or 81 00:05:01,320 --> 00:05:03,080 Speaker 1: that are likely to get fixed, or that some of 82 00:05:03,120 --> 00:05:06,839 Speaker 1: the joint venture caps will be lifted. We have effectively 83 00:05:06,880 --> 00:05:09,560 Speaker 1: already seen that in the auto sector. That's likely to 84 00:05:09,600 --> 00:05:13,360 Speaker 1: occur in the financial services sector. I think you'll see 85 00:05:13,400 --> 00:05:18,080 Speaker 1: some of the retaliatory tariffs that no one remembers were 86 00:05:18,120 --> 00:05:21,120 Speaker 1: put on rolled back. So you know, I think you're 87 00:05:21,120 --> 00:05:25,800 Speaker 1: going to get a mix of small uh settlements of 88 00:05:25,839 --> 00:05:29,320 Speaker 1: past disputes, and then some sort of process to keep 89 00:05:29,360 --> 00:05:33,640 Speaker 1: talking and try to reach a more serious agreement on 90 00:05:33,880 --> 00:05:38,800 Speaker 1: things like subsidies. So I'm curious if if China is 91 00:05:38,839 --> 00:05:43,440 Speaker 1: agreeing basically to import more agricultural goods and energy from 92 00:05:43,520 --> 00:05:46,960 Speaker 1: the US. I mean, they were going to import those 93 00:05:47,000 --> 00:05:50,159 Speaker 1: things from other countries anyway, so just shifting that to 94 00:05:50,200 --> 00:05:52,960 Speaker 1: the U S seems like it might not be that 95 00:05:53,080 --> 00:05:55,280 Speaker 1: big of a deal for them to do. And if 96 00:05:55,320 --> 00:05:57,799 Speaker 1: we're still going to see the US and China talking 97 00:05:57,839 --> 00:06:03,080 Speaker 1: about these bigger structural issue use like technology transfers and subsidies, 98 00:06:03,160 --> 00:06:06,479 Speaker 1: does it mean that China is sort of getting a 99 00:06:06,520 --> 00:06:10,400 Speaker 1: better deal here. China seems to be making the concessions 100 00:06:10,440 --> 00:06:13,840 Speaker 1: that were easiest for China to make. That's not a shock. 101 00:06:14,520 --> 00:06:18,560 Speaker 1: I suspect the Trump administration will say that China is 102 00:06:18,600 --> 00:06:22,800 Speaker 1: going to roll back all of its retaliatory measures immediately. 103 00:06:23,040 --> 00:06:26,680 Speaker 1: You know, the soybean tarrofts were introduced in retaliation for 104 00:06:26,720 --> 00:06:30,640 Speaker 1: the first round of US three oh one uh tariffs, 105 00:06:30,960 --> 00:06:34,320 Speaker 1: where it seems like the US will in the first 106 00:06:34,360 --> 00:06:37,920 Speaker 1: instance only roll back the twollion of tariffs and it 107 00:06:37,960 --> 00:06:44,880 Speaker 1: will keep on the fifty billion, pending more fulsome agreement 108 00:06:45,080 --> 00:06:49,359 Speaker 1: on all the all the details, and pending full implementation. 109 00:06:49,920 --> 00:06:52,320 Speaker 1: One of the things that's been observed is that from 110 00:06:52,440 --> 00:06:55,400 Speaker 1: the US perspective, we know that President Trump has been 111 00:06:55,480 --> 00:06:58,880 Speaker 1: very focused on that bilateral trade deficit. He thinks that 112 00:06:58,960 --> 00:07:02,160 Speaker 1: a trade deficit is a sign that you're losing, whereas 113 00:07:02,200 --> 00:07:06,320 Speaker 1: others in the administration take a probably more complex, nuanced 114 00:07:06,360 --> 00:07:10,040 Speaker 1: view and are less concerned about that and more concerned 115 00:07:10,120 --> 00:07:15,960 Speaker 1: about the subsidies and these deeper structural issues. Is China 116 00:07:16,160 --> 00:07:18,760 Speaker 1: able to get away with and again we don't have 117 00:07:18,840 --> 00:07:22,120 Speaker 1: a signed deal yet, but in the we see the 118 00:07:22,160 --> 00:07:26,480 Speaker 1: direction that it's going. In your view, is China, I 119 00:07:26,520 --> 00:07:30,240 Speaker 1: guess exploiting these internal divisions within the United States to 120 00:07:30,360 --> 00:07:32,800 Speaker 1: get the deal that's best for itself. Well, I mean 121 00:07:32,840 --> 00:07:37,480 Speaker 1: that that puts everything in such a negative like, but 122 00:07:37,520 --> 00:07:40,480 Speaker 1: I just exploiting in a bad sense. Perspective, But in 123 00:07:40,600 --> 00:07:44,240 Speaker 1: just like it's coming to the table and it obviously 124 00:07:44,240 --> 00:07:48,280 Speaker 1: it appears there our divisions in the US perspective, and 125 00:07:48,480 --> 00:07:53,520 Speaker 1: it's getting maximum benefit for itself from these divisions. I 126 00:07:53,560 --> 00:07:56,560 Speaker 1: think that you know, there's there's long been a tension 127 00:07:57,320 --> 00:08:02,280 Speaker 1: inside the US between different objectives. The easy way of 128 00:08:02,320 --> 00:08:05,640 Speaker 1: framing that tension is between the president's focus on reducing 129 00:08:05,640 --> 00:08:09,720 Speaker 1: the bilateral deficit and more structural measures. But even within 130 00:08:09,760 --> 00:08:13,160 Speaker 1: the structural measures, there are tensions. Should the US focus 131 00:08:13,200 --> 00:08:17,440 Speaker 1: on those Chinese barriers that limit US exports or is 132 00:08:17,520 --> 00:08:21,280 Speaker 1: what the US most interested in and the center of 133 00:08:21,280 --> 00:08:24,560 Speaker 1: the negotiations shouldn't be making it easier for US firms 134 00:08:24,600 --> 00:08:28,240 Speaker 1: to invest in China without giving up their technology as 135 00:08:28,280 --> 00:08:31,320 Speaker 1: a price for market entry. They're related, but they're not 136 00:08:31,440 --> 00:08:37,040 Speaker 1: exactly the same thing. I think the Chinese discovered that 137 00:08:37,120 --> 00:08:41,360 Speaker 1: the president was drawn to the their big commitments in 138 00:08:41,400 --> 00:08:45,720 Speaker 1: agriculture and energy UH, and because he was drawn to that, 139 00:08:45,720 --> 00:08:48,840 Speaker 1: that became a bigger part of the deal. The US 140 00:08:48,920 --> 00:08:52,000 Speaker 1: could have taken that off the table and just been 141 00:08:52,040 --> 00:09:00,360 Speaker 1: negotiating over liberalizing China's investment catalog, just been negotiating over 142 00:09:01,000 --> 00:09:05,000 Speaker 1: some of the subsidy issues related to China. You could 143 00:09:05,000 --> 00:09:07,920 Speaker 1: say that's would be a more productive way of going, 144 00:09:08,280 --> 00:09:10,440 Speaker 1: but it also probably would have reduced the space for 145 00:09:10,480 --> 00:09:14,640 Speaker 1: a deal. Well. Joe mentioned the trade deficit there, and 146 00:09:14,679 --> 00:09:17,280 Speaker 1: one of the interesting things we've seen in recent months 147 00:09:17,280 --> 00:09:21,040 Speaker 1: that is that the US trade deficit with China continues 148 00:09:21,080 --> 00:09:24,440 Speaker 1: to widen, even though you know, we ostensibly have all 149 00:09:24,480 --> 00:09:27,800 Speaker 1: these additional tariffs that have been enacted. And I've seen 150 00:09:28,360 --> 00:09:32,679 Speaker 1: a few analysts pinning this on currency moves, and specifically 151 00:09:32,679 --> 00:09:35,680 Speaker 1: that we've had a stronger dollar and a relatively weaker 152 00:09:36,040 --> 00:09:39,120 Speaker 1: when over that period of time, and the FX moves 153 00:09:39,160 --> 00:09:42,640 Speaker 1: have basically mitigated a lot of the impact that you 154 00:09:42,679 --> 00:09:46,360 Speaker 1: would have seen from tariffs. So I'm curious if if 155 00:09:46,400 --> 00:09:49,280 Speaker 1: we do get some sort of trade deal, does that 156 00:09:49,440 --> 00:09:53,880 Speaker 1: leave currencies as the next sort of fighting ground between 157 00:09:53,880 --> 00:09:57,680 Speaker 1: the two sides. Probably not. One component of the deal 158 00:09:57,800 --> 00:10:01,760 Speaker 1: seems to be some kind of n see peace, which 159 00:10:02,280 --> 00:10:07,120 Speaker 1: broadly speaking involves a Chinese commitment, I assume not to 160 00:10:07,200 --> 00:10:10,200 Speaker 1: let the yuan to appreciate further, whether that's not to 161 00:10:10,200 --> 00:10:13,600 Speaker 1: appreciate further against the dollar or not depreciate further against 162 00:10:13,600 --> 00:10:16,600 Speaker 1: the basket. Has been a left a little bit undefined. 163 00:10:17,120 --> 00:10:20,720 Speaker 1: But as long as China is comfortable keeping the yuan 164 00:10:20,960 --> 00:10:25,440 Speaker 1: at roughly as current level, within the the range it 165 00:10:25,520 --> 00:10:28,040 Speaker 1: has been for the last six months, I don't think 166 00:10:28,040 --> 00:10:30,959 Speaker 1: there's going to be a significant issue. On the other hand, 167 00:10:31,040 --> 00:10:34,520 Speaker 1: if China's economy weekends in China really wants a significantly 168 00:10:34,559 --> 00:10:38,560 Speaker 1: weaker currency, I think that would almost certainly upset the 169 00:10:38,640 --> 00:10:41,680 Speaker 1: basic framework for this deal. Something you said was that 170 00:10:41,800 --> 00:10:45,400 Speaker 1: even among the people who care about the deeper structural issues, 171 00:10:45,960 --> 00:10:50,360 Speaker 1: they all have different perspectives. Something we really saw literally 172 00:10:50,480 --> 00:10:54,880 Speaker 1: on display for everyone was the tension between President Trump 173 00:10:55,280 --> 00:10:58,440 Speaker 1: and Robert Ledheiser, where they're literally in the Oval Office 174 00:10:58,800 --> 00:11:02,360 Speaker 1: publicly disagreeing with each other about the significance of what 175 00:11:02,480 --> 00:11:06,200 Speaker 1: a m o U or memorandum of understanding means. Where 176 00:11:06,240 --> 00:11:10,880 Speaker 1: does Lightheiser fit in this camp? So Lightheiser is has 177 00:11:10,960 --> 00:11:16,559 Speaker 1: long been focused on the more structural impediments to fair 178 00:11:16,600 --> 00:11:19,920 Speaker 1: commerce with China. He hasn't been as focused on the 179 00:11:20,120 --> 00:11:24,920 Speaker 1: bilateral deficit, and he's wanted to make sure that any 180 00:11:24,920 --> 00:11:30,040 Speaker 1: any deal is enforceable, and he has prioritized I guess 181 00:11:30,080 --> 00:11:33,040 Speaker 1: as he should. The concerns were at that were at 182 00:11:33,080 --> 00:11:36,199 Speaker 1: the center of the section three oh one complaint so 183 00:11:36,440 --> 00:11:40,760 Speaker 1: concerns about the protection of U. S intellectual property. So 184 00:11:41,400 --> 00:11:45,360 Speaker 1: in your estimation, you know, we've been watching these trade tensions, 185 00:11:45,480 --> 00:11:48,320 Speaker 1: if not a full blown trade war play out on 186 00:11:48,400 --> 00:11:53,800 Speaker 1: either side. Who's suffered the most over this timeframe is 187 00:11:53,800 --> 00:11:55,680 Speaker 1: that the US or is it China? In terms of 188 00:11:55,720 --> 00:12:01,240 Speaker 1: economic fallout? Well, I think there's little doubt that an aggregate, 189 00:12:01,280 --> 00:12:03,959 Speaker 1: the impact has been bigger on China. You know, as 190 00:12:04,000 --> 00:12:06,679 Speaker 1: you noted, the U. S bilateral deficit has gone up. 191 00:12:07,120 --> 00:12:10,560 Speaker 1: US imports from China continue to go up, so it 192 00:12:10,640 --> 00:12:14,000 Speaker 1: doesn't seem like there has been a bigger impact on China. 193 00:12:14,480 --> 00:12:18,640 Speaker 1: But clearly the uncertainty created by the threat of further 194 00:12:18,840 --> 00:12:23,559 Speaker 1: escalation UH played a significant role in the broader slowdown 195 00:12:23,559 --> 00:12:27,240 Speaker 1: of trade that is now playing out in East Asia. 196 00:12:27,679 --> 00:12:30,800 Speaker 1: On the other hand, you know, one of the joys 197 00:12:30,880 --> 00:12:33,880 Speaker 1: of having a heavy state hand in your economy is 198 00:12:33,920 --> 00:12:36,200 Speaker 1: that when you decide not to import something, you don't 199 00:12:36,200 --> 00:12:40,880 Speaker 1: import it. So, in a narrow sense, China cut its 200 00:12:41,000 --> 00:12:44,960 Speaker 1: imports from the US much more than the US cut 201 00:12:45,000 --> 00:12:49,360 Speaker 1: its imports from China. Soybean exports essentially went to zero, 202 00:12:49,920 --> 00:12:53,640 Speaker 1: so did some other agricultural exports. So did energy exports. 203 00:12:53,679 --> 00:12:57,400 Speaker 1: So when when China wanted to show that it could 204 00:12:57,640 --> 00:13:04,199 Speaker 1: influence market outcomes, showed it could influence market outcomes very decisively. Brad, 205 00:13:04,280 --> 00:13:07,960 Speaker 1: you mentioned supply chains there and the uncertainty caused up 206 00:13:08,000 --> 00:13:12,400 Speaker 1: by this entire drama. I suppose if we get that 207 00:13:12,520 --> 00:13:15,640 Speaker 1: trade deal between the US and China, does that mean 208 00:13:15,679 --> 00:13:20,000 Speaker 1: that we are unlikely to return to the previous status quo? 209 00:13:20,120 --> 00:13:22,320 Speaker 1: Doesn't mean that there will always be an element of 210 00:13:22,400 --> 00:13:26,320 Speaker 1: uncertainty hovering over supply chains, that companies will be making 211 00:13:26,679 --> 00:13:29,719 Speaker 1: contingency plans, and that maybe we start to see a 212 00:13:29,800 --> 00:13:35,200 Speaker 1: sort of balkanization of trading regions between Asia and the 213 00:13:35,240 --> 00:13:39,480 Speaker 1: America's well, I think that's an interesting question. In some sense, 214 00:13:39,520 --> 00:13:44,920 Speaker 1: it will go to the basic question of how businesses 215 00:13:45,200 --> 00:13:48,680 Speaker 1: perceive this deal and whether they perceive this deal is 216 00:13:48,800 --> 00:13:52,920 Speaker 1: likely to stick or whether they think that this is 217 00:13:53,280 --> 00:13:56,080 Speaker 1: going to have more the character of a truce, and 218 00:13:56,120 --> 00:14:01,520 Speaker 1: they still have to plan for the possibility that broad 219 00:14:01,559 --> 00:14:05,920 Speaker 1: based tariffs could be introduced into the trading relationship at 220 00:14:05,960 --> 00:14:09,200 Speaker 1: some point in the future, whether by President Trump after 221 00:14:09,240 --> 00:14:13,000 Speaker 1: he feels disappointed by the outcome of his deal, or 222 00:14:13,000 --> 00:14:17,520 Speaker 1: by a future president. My view would be I'm gonna 223 00:14:17,520 --> 00:14:20,160 Speaker 1: have a really boring answer. To be honest, I think 224 00:14:20,160 --> 00:14:24,360 Speaker 1: there will be some companies that start reconsidering their supply 225 00:14:24,440 --> 00:14:28,000 Speaker 1: chain reliance on China and start to make initial moves 226 00:14:28,080 --> 00:14:33,280 Speaker 1: to rejigger operations. But at the current exchange rate, and 227 00:14:33,360 --> 00:14:36,160 Speaker 1: it if we go back to the old tariff rate, 228 00:14:36,800 --> 00:14:39,360 Speaker 1: I think China is still a very competitive location for 229 00:14:39,440 --> 00:14:44,000 Speaker 1: most manufacturers, so that that adjustment will be modest. Let's 230 00:14:44,360 --> 00:14:46,720 Speaker 1: shift gears and talk about the current state of the U. 231 00:14:46,760 --> 00:14:51,040 Speaker 1: S economy and the new domestic economic goals that the 232 00:14:51,200 --> 00:14:56,040 Speaker 1: Chinese government has set. Aside from the trade issue, what 233 00:14:56,120 --> 00:14:59,440 Speaker 1: do you see as the sort of central problem right 234 00:14:59,440 --> 00:15:03,200 Speaker 1: now the Chinese economy? Well, and the the central problem 235 00:15:03,200 --> 00:15:05,640 Speaker 1: of the Chinese economy is that it to exaggerate just 236 00:15:05,720 --> 00:15:09,760 Speaker 1: a bit. Growth stalled in the fourth quarter. I think 237 00:15:09,880 --> 00:15:14,960 Speaker 1: China has been stuck in cycles of leverage and cycles 238 00:15:14,960 --> 00:15:18,640 Speaker 1: of de leveraging. The past few de leveraging cycles have 239 00:15:19,440 --> 00:15:23,840 Speaker 1: ended in significant slowdowns. Why. I think that's because it's 240 00:15:23,840 --> 00:15:27,640 Speaker 1: actually hard to manage an economy that saves for his 241 00:15:27,760 --> 00:15:33,480 Speaker 1: GDP and without the stimulus provided by relatively loose off 242 00:15:33,480 --> 00:15:38,640 Speaker 1: budget fiscal policies and relatively loose credit policies, the internal 243 00:15:38,680 --> 00:15:42,320 Speaker 1: engines of China's economy tend to start to sputter. So 244 00:15:42,360 --> 00:15:45,040 Speaker 1: my interpretation of what happened last year is that China 245 00:15:45,640 --> 00:15:51,080 Speaker 1: started a fairly broad based policy tightening and credit through 246 00:15:51,120 --> 00:15:55,680 Speaker 1: the shadow financial system, so outside of the main banks 247 00:15:56,360 --> 00:15:59,840 Speaker 1: was tightened. And initially early in two thousand and eight, 248 00:16:00,920 --> 00:16:03,480 Speaker 1: there was a sense that wow, China had pulled off 249 00:16:03,600 --> 00:16:08,520 Speaker 1: the magic de leveraging, it had reduced financial risk without 250 00:16:08,520 --> 00:16:12,080 Speaker 1: slowing the economy. But by the end of it was 251 00:16:12,320 --> 00:16:19,320 Speaker 1: fairly clear that the policy tightening had led to a 252 00:16:19,480 --> 00:16:23,680 Speaker 1: very significant slowdown in activity, probably a more significant slowdown 253 00:16:23,680 --> 00:16:27,920 Speaker 1: in activity than was reflected in the Q four GDP data. 254 00:16:28,360 --> 00:16:31,440 Speaker 1: So for now I think the policy challenge for China 255 00:16:32,200 --> 00:16:36,840 Speaker 1: is to get the Chinese the internal growth engines in 256 00:16:36,920 --> 00:16:53,880 Speaker 1: China restarted. So now we have this big policy meeting 257 00:16:54,040 --> 00:16:58,520 Speaker 1: in Beijing, all these policy makers gathering to discuss this 258 00:16:58,720 --> 00:17:02,440 Speaker 1: very issue. Brad, you alluded to this earlier about you know, 259 00:17:02,480 --> 00:17:04,879 Speaker 1: one of the benefits of having a command economy is 260 00:17:04,920 --> 00:17:07,120 Speaker 1: that essentially you have a lot of levers to pull, 261 00:17:07,200 --> 00:17:10,840 Speaker 1: and you're able to pull them reasonably effectively. What's your 262 00:17:10,880 --> 00:17:14,920 Speaker 1: instinct telling you about which lever policymakers reach for now. 263 00:17:15,200 --> 00:17:19,800 Speaker 1: Is it going back to credit creation and sort of releveraging, 264 00:17:19,920 --> 00:17:23,200 Speaker 1: or is it maybe more fiscal stimulus. Well, it's it's 265 00:17:23,320 --> 00:17:27,640 Speaker 1: it's not either or there is going to be more 266 00:17:27,680 --> 00:17:31,719 Speaker 1: fiscal stimulus. There's been a range of tax cuts that 267 00:17:31,760 --> 00:17:36,119 Speaker 1: have been announced. The change in the central government's budget 268 00:17:36,160 --> 00:17:39,720 Speaker 1: balance is actually very modest. China, for some reason which 269 00:17:39,720 --> 00:17:43,879 Speaker 1: I really don't understand, seems to attach some importance to 270 00:17:43,960 --> 00:17:49,000 Speaker 1: the European monstrict three percent of GDP headline fiscal deficit number. 271 00:17:49,400 --> 00:17:52,360 Speaker 1: So it's going to keep the headline deficit at two 272 00:17:52,400 --> 00:17:55,080 Speaker 1: point eight. But you know, there's a credible argument that 273 00:17:55,160 --> 00:17:58,400 Speaker 1: the real central government fiscal deficit is a bit bigger, 274 00:17:58,520 --> 00:18:00,119 Speaker 1: which would be good. I mean, there's no read and 275 00:18:00,200 --> 00:18:04,160 Speaker 1: why the central government shouldn't have a bigger fiscal deficit. 276 00:18:04,840 --> 00:18:08,919 Speaker 1: But there's also been an increase in the quotas for 277 00:18:09,040 --> 00:18:13,720 Speaker 1: prevent for provincial and local borrowing UH an increasing improval 278 00:18:13,960 --> 00:18:17,679 Speaker 1: for a range of investment projects. So you're gonna probably 279 00:18:17,720 --> 00:18:22,199 Speaker 1: see an even bigger move in the broader measure of 280 00:18:22,280 --> 00:18:28,280 Speaker 1: China's fiscal deficit. And there's been an attempt to loosen 281 00:18:28,400 --> 00:18:32,600 Speaker 1: the screws a bit on the credit creation process, UH 282 00:18:32,640 --> 00:18:37,520 Speaker 1: to make credit more available to private firms, but without 283 00:18:37,800 --> 00:18:40,800 Speaker 1: sort of you know, to use the Chinese phrase opening 284 00:18:40,800 --> 00:18:45,439 Speaker 1: the floodgates and letting the water flow freely over the planes. 285 00:18:45,600 --> 00:18:49,800 Speaker 1: So it's UH an attempt to be somewhat calibrated in 286 00:18:49,880 --> 00:18:54,040 Speaker 1: the credit loosening. You could argue that without the trade deal, 287 00:18:54,280 --> 00:18:58,520 Speaker 1: these more calibrated measures might have been too small. So 288 00:18:58,560 --> 00:19:02,000 Speaker 1: I think China now is counting to some degree on 289 00:19:02,240 --> 00:19:07,160 Speaker 1: the lifting of trade uncertainty to combine with its policy 290 00:19:07,200 --> 00:19:09,840 Speaker 1: measures to help it get its growth target. I feel 291 00:19:09,840 --> 00:19:15,080 Speaker 1: like pretty much ever since I've started covering economics and 292 00:19:15,119 --> 00:19:18,320 Speaker 1: finance and all this stuff, there have been people warning 293 00:19:18,359 --> 00:19:22,159 Speaker 1: about the so called or they're coming hard landing in China. 294 00:19:22,440 --> 00:19:24,639 Speaker 1: Is there anything different? I mean, you just sort of 295 00:19:24,720 --> 00:19:26,600 Speaker 1: laid out this idea. It was like, yes, sometimes they 296 00:19:26,640 --> 00:19:29,560 Speaker 1: have deleveraging cycles, sometimes they have easy cycles. We saw 297 00:19:29,760 --> 00:19:33,120 Speaker 1: the leveraging cycle. Is there anything different about this one? 298 00:19:33,160 --> 00:19:36,480 Speaker 1: Because it does feel like there is some anxiety about 299 00:19:36,680 --> 00:19:39,440 Speaker 1: whether stimulus this time, whether it's on the credit channel 300 00:19:39,520 --> 00:19:43,000 Speaker 1: or the fiscal channel, will get traction. There seems to 301 00:19:43,040 --> 00:19:45,359 Speaker 1: be more concerned about whether it will work this time. 302 00:19:45,920 --> 00:19:48,639 Speaker 1: I find the arguments that China is pushing on a 303 00:19:48,720 --> 00:19:53,439 Speaker 1: string a little off. It's it's hard to think that 304 00:19:53,520 --> 00:19:59,119 Speaker 1: fiscal tightening led China's economy to slow significantly over the 305 00:19:59,119 --> 00:20:02,520 Speaker 1: course of twenty teen and then think that fiscal loosening 306 00:20:02,880 --> 00:20:06,960 Speaker 1: in nineteen will have absolutely no impact. So I think 307 00:20:07,000 --> 00:20:11,160 Speaker 1: that you know, on the purely fiscal channels, uh, they 308 00:20:11,200 --> 00:20:14,159 Speaker 1: basically they work, and they still work in China. Uh, 309 00:20:14,280 --> 00:20:17,960 Speaker 1: they're the central government is in no way over indebted. 310 00:20:18,160 --> 00:20:21,200 Speaker 1: It's got a lot of contingent liabilities. But central government 311 00:20:21,320 --> 00:20:26,760 Speaker 1: bonds are like Chinese GDP, there's scope there. I get 312 00:20:26,840 --> 00:20:28,840 Speaker 1: one of the questions, and it was a good Michael 313 00:20:28,880 --> 00:20:32,480 Speaker 1: Pettis piece in January about this, is like, well, sure, 314 00:20:32,480 --> 00:20:36,320 Speaker 1: you can always boost GDP by building a bridge, but 315 00:20:36,440 --> 00:20:38,800 Speaker 1: if it's a bridge to nowhere, it doesn't really do 316 00:20:38,840 --> 00:20:41,359 Speaker 1: anything for the economy. If it's a bridge to somewhere, 317 00:20:41,400 --> 00:20:45,320 Speaker 1: it will actually improve the productive capacity and actually improve things. 318 00:20:45,560 --> 00:20:48,400 Speaker 1: So I guess the question in my mind and in 319 00:20:48,440 --> 00:20:51,280 Speaker 1: your view, is like, Okay, they could boost the economy 320 00:20:51,320 --> 00:20:55,359 Speaker 1: with increased spending. Is their productive stuff in your view 321 00:20:55,880 --> 00:20:58,000 Speaker 1: for them still to be building or will it be 322 00:20:58,440 --> 00:21:04,240 Speaker 1: bridges to Nowhere, well bridges to Taibet. Look, I I 323 00:21:04,480 --> 00:21:10,280 Speaker 1: don't think that the process of coastal urbanization in China 324 00:21:10,440 --> 00:21:14,800 Speaker 1: is fully complete. I think the Woko process has limited, 325 00:21:15,200 --> 00:21:20,840 Speaker 1: for you know, understandable policy reasons, the capacity of residents 326 00:21:20,880 --> 00:21:25,879 Speaker 1: of some of the more inland or the northeastern provinces 327 00:21:25,920 --> 00:21:29,520 Speaker 1: from migrating. So I think that if you loosen some 328 00:21:29,680 --> 00:21:34,840 Speaker 1: of those restrictions on migration, there is still scope for 329 00:21:34,920 --> 00:21:39,400 Speaker 1: some of the bigger, more successful urban areas to expand. 330 00:21:39,680 --> 00:21:45,639 Speaker 1: So in that sense, there's scope to increase investment and 331 00:21:45,800 --> 00:21:51,320 Speaker 1: physical infrastructure. Productively, there is certainly scope to increase investment 332 00:21:51,720 --> 00:21:55,760 Speaker 1: in kind of the soft infrastructure, more public hospitals. So 333 00:21:55,840 --> 00:21:59,119 Speaker 1: I don't I don't think that China has reached the limit, 334 00:21:59,800 --> 00:22:04,000 Speaker 1: uh of where it really can't find incremental projects that 335 00:22:04,080 --> 00:22:08,760 Speaker 1: have some social utility. That said, you know, the fundamental 336 00:22:08,800 --> 00:22:11,479 Speaker 1: reason why China goes through the cycles and why they 337 00:22:11,520 --> 00:22:16,600 Speaker 1: don't become global crises is because China saves so much. 338 00:22:16,760 --> 00:22:19,439 Speaker 1: That's an advantage. It means that China goes through the 339 00:22:19,520 --> 00:22:23,440 Speaker 1: cycles without really borrowing from the world. It levers up internally, 340 00:22:23,480 --> 00:22:27,880 Speaker 1: it de levers internally the external debt, frankly is trivial. 341 00:22:28,600 --> 00:22:31,080 Speaker 1: China still has a very small but still has a 342 00:22:31,119 --> 00:22:34,520 Speaker 1: current account surplus. It has a net for an asset 343 00:22:34,560 --> 00:22:39,400 Speaker 1: position of considerable size, so it just becomes a domestic balance. 344 00:22:39,880 --> 00:22:43,600 Speaker 1: Flip side, though, is that with fort of GDP and savings, 345 00:22:44,520 --> 00:22:48,280 Speaker 1: it's hard to find investments that are great to accommodate 346 00:22:48,359 --> 00:22:51,440 Speaker 1: all of that savings. So I've always had the view 347 00:22:51,520 --> 00:22:53,920 Speaker 1: that the way for China to get out of this 348 00:22:54,560 --> 00:22:57,800 Speaker 1: leveraging and de leveraging cycle in a in a durable 349 00:22:57,840 --> 00:23:00,480 Speaker 1: way would be a set of policy measures that really 350 00:23:00,520 --> 00:23:04,520 Speaker 1: bring down China's very high UH savings rate, So more 351 00:23:05,080 --> 00:23:10,600 Speaker 1: money on public health, a higher basic pension. China really 352 00:23:11,200 --> 00:23:17,640 Speaker 1: under provides basic social services. In China under taxes personal 353 00:23:17,680 --> 00:23:21,399 Speaker 1: income and there's no property tax. It's a system with 354 00:23:21,600 --> 00:23:26,080 Speaker 1: very low tax on capital income. But as a result, 355 00:23:26,480 --> 00:23:29,679 Speaker 1: the state is a little starved for the kinds of 356 00:23:29,720 --> 00:23:35,560 Speaker 1: revenues that help boost consumption. So I mean, I think 357 00:23:35,560 --> 00:23:38,040 Speaker 1: there are there are ways of that China will get 358 00:23:38,040 --> 00:23:41,440 Speaker 1: out of this trap. And each leveraging and releveraging cycle 359 00:23:42,040 --> 00:23:46,000 Speaker 1: ratches up your internal debt to a somewhat higher level, 360 00:23:46,400 --> 00:23:50,080 Speaker 1: so it's not entirely healthy. But I am not convinced 361 00:23:50,119 --> 00:23:53,919 Speaker 1: that China is has hit the limit and can't go 362 00:23:54,040 --> 00:23:58,800 Speaker 1: through one more cycle or even two more cycles. Hm. Well, 363 00:23:58,840 --> 00:24:01,359 Speaker 1: on that note, I mean just going back to the 364 00:24:01,400 --> 00:24:04,960 Speaker 1: trade discussion we were having and the idea of structural reforms, 365 00:24:05,359 --> 00:24:10,440 Speaker 1: Is there any way that changes on things like technology 366 00:24:10,480 --> 00:24:14,520 Speaker 1: transfers or maybe opening up China's financial markets in various 367 00:24:14,520 --> 00:24:19,040 Speaker 1: ways could help alleviate that savings got You know, I 368 00:24:19,040 --> 00:24:23,080 Speaker 1: don't think that letting City Bank open up a branch 369 00:24:23,480 --> 00:24:29,720 Speaker 1: inside China fundamentally changes China's social insurance system. So I 370 00:24:29,760 --> 00:24:33,160 Speaker 1: don't think that there's sort of an easy win by 371 00:24:33,320 --> 00:24:36,840 Speaker 1: letting US financial services firms into China. I think they'll 372 00:24:36,840 --> 00:24:40,600 Speaker 1: be competing at the margin. Maybe they'll set an example 373 00:24:40,720 --> 00:24:45,280 Speaker 1: of more efficient intermediation without some of the crazy risk taking, 374 00:24:45,720 --> 00:24:53,160 Speaker 1: But I don't think that that fundamentally will transform China's 375 00:24:53,359 --> 00:24:57,959 Speaker 1: domestic economic structure. So what if you have big you know, 376 00:24:58,040 --> 00:25:01,879 Speaker 1: tech companies or multinational moles we start entering that market 377 00:25:02,000 --> 00:25:05,840 Speaker 1: because they feel that, you know, the forced technology transfer 378 00:25:05,960 --> 00:25:08,159 Speaker 1: isn't as much of an issue as it once was, 379 00:25:08,200 --> 00:25:10,560 Speaker 1: Assuming that we do get some sort of agreement on 380 00:25:10,640 --> 00:25:16,399 Speaker 1: that issue, well, I don't think big multinationals entering the 381 00:25:16,520 --> 00:25:23,040 Speaker 1: Chinese market suddenly changes the incentives for low wage Chinese 382 00:25:23,040 --> 00:25:25,960 Speaker 1: workers to save. So I don't think you can solve 383 00:25:26,640 --> 00:25:33,119 Speaker 1: the fundamental weaknesses in China's social insurance by liberalizing access 384 00:25:33,200 --> 00:25:36,560 Speaker 1: to China's market. Now, the technology transfer issue is a 385 00:25:36,600 --> 00:25:41,800 Speaker 1: complicated one. China maintains correctly that it doesn't legally require 386 00:25:42,040 --> 00:25:46,080 Speaker 1: as a condition for market entry technology transfer. There's no 387 00:25:46,160 --> 00:25:49,400 Speaker 1: law that says in order to get approval to make 388 00:25:49,400 --> 00:25:54,680 Speaker 1: an investment inside China, you have to transfer technology. There 389 00:25:54,680 --> 00:25:57,200 Speaker 1: are sectors where you have to enter into joint ventures, 390 00:25:57,880 --> 00:26:01,040 Speaker 1: and your joint venture partner may well ask you to 391 00:26:01,160 --> 00:26:04,919 Speaker 1: transfer technology, but China says that's just the result of 392 00:26:05,080 --> 00:26:10,680 Speaker 1: normal commercial negotiations. There are sectors where if you want 393 00:26:10,760 --> 00:26:14,439 Speaker 1: to get a contract from the Chinese government, uh the 394 00:26:14,560 --> 00:26:16,760 Speaker 1: Chinese governments, they say, well, you need to set up 395 00:26:16,800 --> 00:26:19,679 Speaker 1: shop in China and your local joint venture needs to 396 00:26:19,680 --> 00:26:23,000 Speaker 1: have some indigenous Chinese technology. That's just kind of the 397 00:26:23,040 --> 00:26:27,560 Speaker 1: way business is done. But that's technically a commercial negotiation 398 00:26:27,680 --> 00:26:33,680 Speaker 1: as well. China could certainly ratchet back the pressure that 399 00:26:33,760 --> 00:26:37,520 Speaker 1: has been placed on multinationals looking to invest in China 400 00:26:37,840 --> 00:26:44,280 Speaker 1: to also transfer technology. It certainly helps multinationals, it doesn't 401 00:26:44,359 --> 00:26:49,400 Speaker 1: obviously help US workers. One of the ironies of the 402 00:26:49,560 --> 00:26:53,280 Speaker 1: informal pressure for technology transfer is that has kept some 403 00:26:53,359 --> 00:26:56,399 Speaker 1: firms out of China and made them more reluctant to 404 00:26:56,520 --> 00:26:59,399 Speaker 1: use China as an export base. So if you really 405 00:26:59,440 --> 00:27:04,600 Speaker 1: lifted all the requirements on technology transfer, you could imagine 406 00:27:05,480 --> 00:27:09,680 Speaker 1: U S semiconductor firms with full control of their technology, 407 00:27:09,720 --> 00:27:13,000 Speaker 1: perhaps wanting to set up a fab or more fabs 408 00:27:13,040 --> 00:27:16,600 Speaker 1: inside China. So it's on one level, it is a 409 00:27:17,080 --> 00:27:21,240 Speaker 1: it is a clear case where Chinese practices have been egregious. 410 00:27:21,280 --> 00:27:25,919 Speaker 1: They've essentially violated the spirit, though not the letter, of 411 00:27:25,920 --> 00:27:29,760 Speaker 1: their w t O commitment, but ending the technology transfer 412 00:27:29,840 --> 00:27:33,560 Speaker 1: requirement on its own, while leaving some of the by 413 00:27:33,720 --> 00:27:38,679 Speaker 1: China preferences in place, while leaving China's state in charge 414 00:27:38,680 --> 00:27:42,399 Speaker 1: of making China state meaning the big state enterprises in 415 00:27:42,520 --> 00:27:46,280 Speaker 1: charge of deciding who bought it makes big capital investments. 416 00:27:46,400 --> 00:27:49,320 Speaker 1: It doesn't get rid of all the levers that China 417 00:27:49,680 --> 00:27:53,080 Speaker 1: can use to tilt the playing field and in some 418 00:27:53,160 --> 00:27:58,679 Speaker 1: cases to discourage imports before we go, So obviously we 419 00:27:58,760 --> 00:28:01,920 Speaker 1: don't have a trade deal yet. It signs are positive. 420 00:28:02,000 --> 00:28:04,480 Speaker 1: But you know, we just saw in Hanoi they thought 421 00:28:04,480 --> 00:28:07,120 Speaker 1: they were going to sign something between Trump and Kim 422 00:28:07,200 --> 00:28:11,480 Speaker 1: that didn't happen. Where would you be most anxious right 423 00:28:11,520 --> 00:28:14,320 Speaker 1: now based on what you've heard and sort of how 424 00:28:14,359 --> 00:28:19,280 Speaker 1: this could all still fall apart? H Well, uh, from 425 00:28:19,320 --> 00:28:24,040 Speaker 1: everything we've read, this deal has come together now because 426 00:28:24,040 --> 00:28:27,480 Speaker 1: the President decided he wanted a deal. So there's the 427 00:28:27,480 --> 00:28:32,680 Speaker 1: biggest single source of uncertainty is that the president reads 428 00:28:32,800 --> 00:28:36,560 Speaker 1: or hears something that leads him to conclude this isn't 429 00:28:36,840 --> 00:28:39,520 Speaker 1: the good deal, he thinks it is, and he changes 430 00:28:39,600 --> 00:28:42,720 Speaker 1: his mind, and then I guess probably the biggest risk 431 00:28:43,480 --> 00:28:46,880 Speaker 1: is that some of the areas of ambiguity that had 432 00:28:46,920 --> 00:28:49,520 Speaker 1: to get papered over in order to strike a deal. 433 00:28:49,880 --> 00:28:52,880 Speaker 1: There's a report in Politico that China is going to 434 00:28:53,000 --> 00:28:55,760 Speaker 1: commit to get rid of market distorting subsidies, which sort 435 00:28:55,800 --> 00:28:59,320 Speaker 1: of sounds great, but there isn't agreement on what actually 436 00:28:59,360 --> 00:29:04,760 Speaker 1: constitute a market distorting subsidy. Does China's big investment fund 437 00:29:04,840 --> 00:29:09,080 Speaker 1: for the semiconductor industry constitute a market distorting subsidy or 438 00:29:09,160 --> 00:29:13,680 Speaker 1: is it just making investments on market terms? Those kinds 439 00:29:13,720 --> 00:29:19,320 Speaker 1: of sort of difficult definitial issues probably haven't been sorted out, 440 00:29:19,880 --> 00:29:23,280 Speaker 1: and those could come back and emerge over the next 441 00:29:23,480 --> 00:29:26,760 Speaker 1: year or so as a source of significant attention. Bread. 442 00:29:26,800 --> 00:29:28,680 Speaker 1: I think that's a great note to wrap it up on. 443 00:29:28,760 --> 00:29:31,920 Speaker 1: We'll be following those things. I really appreciate you coming on. 444 00:29:32,480 --> 00:29:35,440 Speaker 1: Always feel like I learned a lot and understand current events. 445 00:29:35,440 --> 00:29:53,840 Speaker 1: But thanks and thanks raight well Trades. As I said there, 446 00:29:53,880 --> 00:29:57,720 Speaker 1: I always feel like if I want to understand current events, 447 00:29:57,760 --> 00:30:01,840 Speaker 1: particularly on the trade front and all, especially on trade 448 00:30:01,840 --> 00:30:05,120 Speaker 1: and China stuff, I always feel better after talking to Brad. 449 00:30:06,160 --> 00:30:09,400 Speaker 1: Oh absolutely, And I should say for anyone listening that 450 00:30:09,520 --> 00:30:12,280 Speaker 1: if you're interested in this issue, you should definitely follow 451 00:30:12,320 --> 00:30:16,560 Speaker 1: Brad on Twitter, where he tweets quite prolifically about trade 452 00:30:17,040 --> 00:30:19,200 Speaker 1: and various other things. But I have to say, like 453 00:30:19,280 --> 00:30:24,520 Speaker 1: I come away from that conversation thinking that the deal 454 00:30:24,880 --> 00:30:29,440 Speaker 1: currently on the table seems like it leaves a lot 455 00:30:29,520 --> 00:30:32,440 Speaker 1: of big issues still sort of out in the open, 456 00:30:32,560 --> 00:30:36,120 Speaker 1: particularly some of the definitional ones that Brad mentioned at 457 00:30:36,160 --> 00:30:38,240 Speaker 1: the very end of that conversation. And if you think 458 00:30:38,240 --> 00:30:41,240 Speaker 1: about trade agreements that my understanding is that the bulk 459 00:30:41,280 --> 00:30:44,280 Speaker 1: of the work is often about agreeing on definitions of 460 00:30:44,360 --> 00:30:48,320 Speaker 1: items and various other things. So it seems like there's 461 00:30:48,360 --> 00:30:50,640 Speaker 1: a lot still to work through. Yeah, and you know, 462 00:30:50,680 --> 00:30:53,240 Speaker 1: I also think, like both on the sort of trade 463 00:30:53,280 --> 00:30:57,200 Speaker 1: side and on just the state of China's economy, I 464 00:30:57,240 --> 00:31:01,160 Speaker 1: think journalists and observers and analysts we have this tendency 465 00:31:01,200 --> 00:31:04,520 Speaker 1: to always see turning points or this is a big moment, 466 00:31:04,800 --> 00:31:08,240 Speaker 1: or this is the end of the status quo, and 467 00:31:08,320 --> 00:31:12,280 Speaker 1: to perhaps downplay the possibility that the status quo could 468 00:31:12,360 --> 00:31:15,520 Speaker 1: exist for a lot longer. So you could imagine a 469 00:31:15,520 --> 00:31:18,880 Speaker 1: big trade deal happening, but in the end, the relationship 470 00:31:18,920 --> 00:31:21,960 Speaker 1: maybe doesn't look that different than it does now. And 471 00:31:22,000 --> 00:31:26,360 Speaker 1: you could imagine another Chinese releveraging or a stimulus cycle 472 00:31:26,920 --> 00:31:29,959 Speaker 1: that turns out to gain teeth and gains attraction and 473 00:31:30,000 --> 00:31:33,120 Speaker 1: the hard landing is put off a few years yet again, 474 00:31:33,520 --> 00:31:37,160 Speaker 1: and they could sort of expand the coastal cities. So 475 00:31:37,640 --> 00:31:40,720 Speaker 1: it is a good reminder, I think, to not be 476 00:31:40,880 --> 00:31:45,000 Speaker 1: too quick to call the death of whatever regime we're 477 00:31:45,000 --> 00:31:48,520 Speaker 1: currently looking at. Yeah, it definitely feels a lot more 478 00:31:48,600 --> 00:31:52,080 Speaker 1: nuanced than that. Well, we'll wrap it up there. This 479 00:31:52,120 --> 00:31:56,040 Speaker 1: has been another episode of the Box podcast on trick Yalloway. 480 00:31:56,120 --> 00:31:58,719 Speaker 1: You can follow me on Twitter at trick Yalloway and 481 00:31:58,760 --> 00:32:01,040 Speaker 1: I'm Joe Why Wasn't though, you can follow me on 482 00:32:01,080 --> 00:32:05,240 Speaker 1: Twitter at the Stalwart. Definitely you should follow Brad on Twitter. 483 00:32:05,360 --> 00:32:09,360 Speaker 1: He's at Brad Senser. Great source of information on all 484 00:32:09,400 --> 00:32:12,680 Speaker 1: this stuff, and be sure to follow our producer tofur 485 00:32:12,760 --> 00:32:16,320 Speaker 1: Foreheads on Twitter. He's at foreheads t as well as 486 00:32:16,360 --> 00:32:21,000 Speaker 1: the bloomberg head of a podcast, Prancesca Levie at Francesca Today. 487 00:32:21,040 --> 00:32:21,800 Speaker 1: Thanks for listening.