1 00:00:00,360 --> 00:00:03,560 Speaker 1: If it's like getting a concert ticket, but you cannot 2 00:00:03,600 --> 00:00:07,200 Speaker 1: book it, you cannot purchase in online. What happens is 3 00:00:07,320 --> 00:00:10,160 Speaker 1: they have you have no idea when when it is 4 00:00:10,200 --> 00:00:13,680 Speaker 1: going to be on sale, So once it's available, there's 5 00:00:13,720 --> 00:00:16,079 Speaker 1: suddenly be a price and either you take it or 6 00:00:16,120 --> 00:00:20,360 Speaker 1: the container will be gone. Um, it's creating a lot 7 00:00:20,440 --> 00:00:30,240 Speaker 1: of pressure for US. Hello and welcome to Stephanomics, the 8 00:00:30,240 --> 00:00:33,440 Speaker 1: podcast that brings the global economy to you. You heard 9 00:00:33,440 --> 00:00:36,479 Speaker 1: there was a Hong Kong based exporter discovering his corner 10 00:00:36,479 --> 00:00:40,960 Speaker 1: of the global economy. Overbooked from Singapore to Rotterdam, ships 11 00:00:41,040 --> 00:00:44,480 Speaker 1: are queuing to get into port and exporters are struggling 12 00:00:44,479 --> 00:00:48,040 Speaker 1: to book space for their freight. Satellite photos show there 13 00:00:48,080 --> 00:00:52,519 Speaker 1: are currently around three dozen container ships anchored outside the 14 00:00:52,560 --> 00:00:56,000 Speaker 1: twin ports near l A, the busiest gateway for US 15 00:00:56,080 --> 00:01:00,000 Speaker 1: goods trade, still waiting for births. A major car manufact 16 00:01:00,160 --> 00:01:03,360 Speaker 1: was like Volkswagen and Honda are cutting production in the 17 00:01:03,480 --> 00:01:05,959 Speaker 1: US and Europe because of a struggle to get part 18 00:01:06,680 --> 00:01:09,680 Speaker 1: We thought it was a short term mismatch between demand 19 00:01:09,720 --> 00:01:13,560 Speaker 1: and supply caused by the pandemic, but there are fears 20 00:01:13,600 --> 00:01:16,960 Speaker 1: that these supply chain issues could now stop the global 21 00:01:17,000 --> 00:01:21,120 Speaker 1: recovery in its tracks. Our senior Asia Economy correspondent and 22 00:01:21,280 --> 00:01:24,120 Speaker 1: the Current gives us his take down at the docks 23 00:01:24,120 --> 00:01:32,160 Speaker 1: in Hong Kong in a few minutes. But first, some 24 00:01:32,360 --> 00:01:35,240 Speaker 1: breaking news from the US. We have a new president 25 00:01:35,319 --> 00:01:38,800 Speaker 1: sitting in the Oval Office, Joe Biden. Almost as important 26 00:01:38,800 --> 00:01:41,920 Speaker 1: for at least some listeners to this podcast. We have 27 00:01:42,280 --> 00:01:45,360 Speaker 1: a new Treasury Secretary to sitting across the road at 28 00:01:45,400 --> 00:01:49,880 Speaker 1: fift hundred Pennsylvania Avenue, Janet Yellen. Now she's not exactly 29 00:01:49,920 --> 00:01:52,320 Speaker 1: a new face. She was head of the US Central 30 00:01:52,320 --> 00:01:55,760 Speaker 1: Bank until Trump decided to replace her with j Powe. 31 00:01:56,680 --> 00:02:00,240 Speaker 1: She was on the Stephanomics talking to me at the 32 00:02:00,280 --> 00:02:03,440 Speaker 1: New Economy Forum a few months ago, and we've got 33 00:02:03,440 --> 00:02:06,200 Speaker 1: a sneak preview of what her reign at the Treasury 34 00:02:06,200 --> 00:02:09,240 Speaker 1: Department might be like. Earlier this week in her confirmation 35 00:02:09,320 --> 00:02:13,720 Speaker 1: hearing before the Senate Finance Committee, and Bloomberg reported Chris 36 00:02:13,760 --> 00:02:17,160 Speaker 1: Condon listened to every word of it. Chris, thanks for 37 00:02:17,280 --> 00:02:20,280 Speaker 1: joining you. You know, Janet Yellen evolved from covering the 38 00:02:20,320 --> 00:02:23,640 Speaker 1: Federal Reserve. You're now moving from being a Fed reporter 39 00:02:24,600 --> 00:02:26,959 Speaker 1: to being a Treasury We're going to send you there 40 00:02:26,960 --> 00:02:30,520 Speaker 1: to cover Janet Yellen and tell us about the hearings. 41 00:02:30,520 --> 00:02:32,600 Speaker 1: I mean, I guess you didn't get as much from 42 00:02:32,639 --> 00:02:35,400 Speaker 1: them as you would a normal hearing because a lot 43 00:02:35,440 --> 00:02:38,280 Speaker 1: of it was remote. Hi, there's definitely yeah, you're you're 44 00:02:38,320 --> 00:02:42,280 Speaker 1: absolutely right. Like much of these things these days, it 45 00:02:42,480 --> 00:02:46,000 Speaker 1: was largely a virtual hearing. Some of the lawmakers were 46 00:02:46,080 --> 00:02:49,240 Speaker 1: there in the room in the hearing room, some of 47 00:02:49,240 --> 00:02:52,400 Speaker 1: the lawmakers were doing it remotely from their officers, and 48 00:02:52,520 --> 00:02:56,400 Speaker 1: Janet Yellen did it remotely from her home. So that's 49 00:02:56,440 --> 00:02:59,680 Speaker 1: the first reason why it wasn't really your normal can't 50 00:02:59,680 --> 00:03:03,800 Speaker 1: from mean hearing. The second, interestingly, I think, is that 51 00:03:03,840 --> 00:03:06,320 Speaker 1: there's no question that Jenne Yellen is going to be 52 00:03:06,440 --> 00:03:10,040 Speaker 1: confirmed by the U. S. Senate. She has very broad 53 00:03:10,080 --> 00:03:13,240 Speaker 1: support on both sides of the political aisland. In fact, 54 00:03:13,240 --> 00:03:16,520 Speaker 1: many of the Republicans who had a lot of critical 55 00:03:16,520 --> 00:03:20,160 Speaker 1: things to say about the Biden administration welcomed her and 56 00:03:20,160 --> 00:03:23,280 Speaker 1: said they look forward to working with her when she 57 00:03:23,400 --> 00:03:26,720 Speaker 1: was at the Treasure So there's no question. Uh So, 58 00:03:27,320 --> 00:03:30,639 Speaker 1: without that sort of vetting process to to go on 59 00:03:30,919 --> 00:03:35,840 Speaker 1: in the hearing, it turned largely into a discussion and 60 00:03:35,920 --> 00:03:41,800 Speaker 1: debate over the merits of Biden's stimulus package, and Yellen 61 00:03:42,040 --> 00:03:44,640 Speaker 1: began doing her first job, which is to sell that 62 00:03:45,360 --> 00:03:49,120 Speaker 1: two lawmakers, both to the Republicans and to some of 63 00:03:49,160 --> 00:03:54,040 Speaker 1: the somewhat more conservative Democrats in the Senate whose support 64 00:03:54,160 --> 00:03:56,360 Speaker 1: is going to be needed. So and she seemed to 65 00:03:56,360 --> 00:03:59,720 Speaker 1: get off on a pretty good start there. She's she's 66 00:03:59,760 --> 00:04:03,560 Speaker 1: no strangers to these types of things. She's very well 67 00:04:03,640 --> 00:04:07,400 Speaker 1: prepared and very well spoken, and uh, I think she 68 00:04:07,440 --> 00:04:09,840 Speaker 1: had a pretty good first day. Yeah, so we're going 69 00:04:09,880 --> 00:04:12,400 Speaker 1: to hear actually a couple of things that she said 70 00:04:12,440 --> 00:04:15,440 Speaker 1: on the on those topics. I mean, she has to obviously, 71 00:04:15,520 --> 00:04:18,599 Speaker 1: there's a there's a balance that someone who has to 72 00:04:18,640 --> 00:04:21,400 Speaker 1: make sure that US carries on paying back all this 73 00:04:21,560 --> 00:04:26,239 Speaker 1: debt has to strike between sounding suitably concerned about this 74 00:04:26,800 --> 00:04:29,800 Speaker 1: mountain of federal debt that's been run up just in 75 00:04:29,839 --> 00:04:33,400 Speaker 1: the last twelve months, but also talking about the need 76 00:04:33,480 --> 00:04:36,200 Speaker 1: for stimulus. And actually, when she did talk for the 77 00:04:36,200 --> 00:04:39,400 Speaker 1: Bloomberg New Economy for him a few months ago, when 78 00:04:39,400 --> 00:04:41,960 Speaker 1: she was just being talked about as a Treasury secretary, 79 00:04:42,400 --> 00:04:46,279 Speaker 1: she talked about the FED pleading for fiscal relief, wanting 80 00:04:46,320 --> 00:04:49,320 Speaker 1: to get more stimulus for the economy. So so let's 81 00:04:49,360 --> 00:04:52,240 Speaker 1: hear what she said first about worrying about the debt, 82 00:04:52,240 --> 00:04:56,720 Speaker 1: but also on the need for stimulus. It's essential that 83 00:04:56,800 --> 00:05:03,880 Speaker 1: we put the UM federal budget on a path that's sustainable. 84 00:05:05,040 --> 00:05:08,640 Speaker 1: But the most important thing, in my view, that we 85 00:05:08,680 --> 00:05:12,440 Speaker 1: can do today to put us on a path of 86 00:05:12,520 --> 00:05:18,360 Speaker 1: fiscal sustainability is to defeat the pandemic, to provide relief 87 00:05:18,400 --> 00:05:22,760 Speaker 1: to American people, and then to make long term investments 88 00:05:22,800 --> 00:05:29,080 Speaker 1: that will help the economy grow and benefit future generations. UM. 89 00:05:29,120 --> 00:05:33,240 Speaker 1: To avoid doing what we need to do now to 90 00:05:33,360 --> 00:05:37,960 Speaker 1: address the pandemic and the economic damage that it's causing 91 00:05:38,760 --> 00:05:42,960 Speaker 1: UM would likely leave us on in a worse place 92 00:05:43,800 --> 00:05:48,240 Speaker 1: fiscally and with respect to long our our debt situation. 93 00:05:49,080 --> 00:05:52,679 Speaker 1: UH then taking the steps that are necessary and doing 94 00:05:52,720 --> 00:05:59,160 Speaker 1: that through deficit finance. So so we heard that the 95 00:05:59,600 --> 00:06:03,120 Speaker 1: quiet a full throated call for more stimulus, even as 96 00:06:03,160 --> 00:06:07,000 Speaker 1: she was concerned about the long term path of the debt. 97 00:06:07,360 --> 00:06:12,159 Speaker 1: But I gathered the Republicans did score some points in 98 00:06:12,640 --> 00:06:16,200 Speaker 1: pointing out some of the weaknesses in Joe Biden's plan. 99 00:06:16,320 --> 00:06:19,160 Speaker 1: I mean, how does she do that? A bit mixed? 100 00:06:19,279 --> 00:06:23,000 Speaker 1: I would say, first of all, she tries to present 101 00:06:23,080 --> 00:06:26,000 Speaker 1: herself as you heard as someone who will still be 102 00:06:26,040 --> 00:06:29,320 Speaker 1: a voice of reason inside the Biden administration. She is 103 00:06:29,560 --> 00:06:33,239 Speaker 1: very conscious of the long term need too, as she said, 104 00:06:33,720 --> 00:06:40,080 Speaker 1: keep the budget on a sustainable path, but now is 105 00:06:40,120 --> 00:06:43,240 Speaker 1: not the time to worry about that too much. In fact, 106 00:06:43,600 --> 00:06:45,400 Speaker 1: if you don't do the things you need, if you 107 00:06:45,440 --> 00:06:49,680 Speaker 1: don't spend aggressively now to contain the virus to help 108 00:06:49,720 --> 00:06:53,040 Speaker 1: Americans who are suffering because of it, you're going to 109 00:06:53,120 --> 00:06:56,840 Speaker 1: be in a worse place in the longer run. And 110 00:06:56,839 --> 00:07:00,480 Speaker 1: and there she's got a lot of backing. Um, A 111 00:07:00,560 --> 00:07:03,760 Speaker 1: lot of economists would agree with her, Um that that 112 00:07:03,880 --> 00:07:07,360 Speaker 1: is a very good case to make now where I 113 00:07:07,400 --> 00:07:12,560 Speaker 1: think the Biden plan has greater weakness and yelling in 114 00:07:12,640 --> 00:07:16,520 Speaker 1: her heart of hearts really must recognize this is when 115 00:07:16,520 --> 00:07:20,720 Speaker 1: we talk about these additional checks that will go out 116 00:07:20,960 --> 00:07:25,760 Speaker 1: to so many American households. Um. An economist just yesterday 117 00:07:25,800 --> 00:07:29,360 Speaker 1: told me that he estimated about eight of those households 118 00:07:29,520 --> 00:07:32,920 Speaker 1: don't have any employment issues. So you're gonna be sending 119 00:07:32,960 --> 00:07:36,280 Speaker 1: a lot of money to a lot of Americans who 120 00:07:36,320 --> 00:07:41,760 Speaker 1: really aren't being directly damaged by the by the pandemic. 121 00:07:42,520 --> 00:07:44,480 Speaker 1: Is that really the wisest thing to do? So this 122 00:07:44,720 --> 00:07:48,600 Speaker 1: idea of how well targeted are some of these measures 123 00:07:48,680 --> 00:07:52,240 Speaker 1: was the strongest point that some Republicans made, and they 124 00:07:52,280 --> 00:07:56,160 Speaker 1: made it very strongly and repeatedly. She did not have 125 00:07:56,240 --> 00:08:00,280 Speaker 1: a great answer for that. Of course, she's not, you know, 126 00:08:00,360 --> 00:08:04,560 Speaker 1: a nonpartisan economist anymore. She can't say, well, you have 127 00:08:04,680 --> 00:08:06,480 Speaker 1: a point here, you have a point there. No, no, 128 00:08:06,640 --> 00:08:09,240 Speaker 1: she has to be a good soldier and stick with 129 00:08:09,280 --> 00:08:12,120 Speaker 1: what the boss is proposing. So she kind of had 130 00:08:12,160 --> 00:08:16,120 Speaker 1: to dodge that a bit um. It didn't come across 131 00:08:16,240 --> 00:08:18,880 Speaker 1: very badly for her, but clearly she did not have 132 00:08:19,960 --> 00:08:23,400 Speaker 1: a fully prepared comeback for that question of how well 133 00:08:23,440 --> 00:08:26,760 Speaker 1: targeted the aid is in some cases. So one area 134 00:08:26,800 --> 00:08:30,280 Speaker 1: where the economics and the politics maybe go together, at 135 00:08:30,320 --> 00:08:33,800 Speaker 1: least in terms of the merits, is the increase in 136 00:08:33,840 --> 00:08:36,520 Speaker 1: the minimum wage, which arguably also would be a bit 137 00:08:36,559 --> 00:08:40,280 Speaker 1: better target to the people who have suffered most in 138 00:08:40,320 --> 00:08:45,080 Speaker 1: this pandemic. The Democrats, many of the Democrats and Joe 139 00:08:45,120 --> 00:08:50,680 Speaker 1: Biden focused on increasing the minimum wage significantly, up to 140 00:08:50,760 --> 00:08:54,040 Speaker 1: fifteen dollars an hour. Let's see what she said about that. 141 00:08:55,440 --> 00:08:59,480 Speaker 1: Right now, we have millions of American workers who are 142 00:08:59,520 --> 00:09:03,600 Speaker 1: putting our lives on the line. Uh to keep their 143 00:09:03,679 --> 00:09:10,840 Speaker 1: communities functioning, and sometimes even working multiple jobs aren't turning 144 00:09:10,960 --> 00:09:14,160 Speaker 1: enough to put food on the table, and raising the 145 00:09:14,240 --> 00:09:19,600 Speaker 1: minimum wage would really help many of those workers. That's 146 00:09:19,640 --> 00:09:22,640 Speaker 1: the reason for doing it now. In terms of potential 147 00:09:22,880 --> 00:09:27,439 Speaker 1: job laws, there's now a large economics literature on this, 148 00:09:28,240 --> 00:09:35,040 Speaker 1: and the findings are that the job lass is very minimal, 149 00:09:35,240 --> 00:09:38,960 Speaker 1: if if anything. So, what do you think, Chris is 150 00:09:38,960 --> 00:09:40,720 Speaker 1: is there a chance we're going to double the federal 151 00:09:40,760 --> 00:09:43,719 Speaker 1: minimum wage to fifteen dollars an hour under the Biden administration? 152 00:09:44,400 --> 00:09:47,640 Speaker 1: I think there certainly is a chance. UM. A couple 153 00:09:47,679 --> 00:09:54,120 Speaker 1: of things to note about this, About almost thirty states 154 00:09:54,160 --> 00:09:58,920 Speaker 1: plus the District of Columbia already have minimum wage levels 155 00:09:58,960 --> 00:10:03,480 Speaker 1: that are well above the federal minimum UM. And there 156 00:10:03,520 --> 00:10:07,120 Speaker 1: are big employers like Amazon and Walmart that has set 157 00:10:07,200 --> 00:10:10,880 Speaker 1: minimum pay above the federal minimum. So it's not like 158 00:10:10,920 --> 00:10:14,400 Speaker 1: the entire country is going to see this sweeping doubling 159 00:10:14,800 --> 00:10:18,520 Speaker 1: of the minimum level of pay available. It's not quite 160 00:10:18,559 --> 00:10:23,600 Speaker 1: that dramatic, um, And there is quite a bit of evidence, 161 00:10:23,679 --> 00:10:26,960 Speaker 1: as Yelling pointed out, supporting the idea that there won't 162 00:10:26,960 --> 00:10:29,400 Speaker 1: be a lot of job destruction because of it. Now, 163 00:10:29,559 --> 00:10:33,040 Speaker 1: can it pass the Senate. Uh. One interesting thing to 164 00:10:33,160 --> 00:10:35,760 Speaker 1: note is how many votes do you need to get 165 00:10:35,760 --> 00:10:40,400 Speaker 1: it through? If they can go through the budget reconciliation process, 166 00:10:40,440 --> 00:10:44,400 Speaker 1: you just need fifty plus one, but it has to 167 00:10:44,480 --> 00:10:50,040 Speaker 1: pass the test of affecting spending or revenue raising. And 168 00:10:50,120 --> 00:10:52,960 Speaker 1: now you can make the argument that by raising the 169 00:10:53,000 --> 00:10:58,000 Speaker 1: minimum wage, you're going to raise tax revenue because people 170 00:10:58,040 --> 00:10:59,560 Speaker 1: at that end are going to be paid more and 171 00:10:59,600 --> 00:11:02,240 Speaker 1: thus be their employment taxes are going to be more 172 00:11:02,920 --> 00:11:07,400 Speaker 1: um But the last time a legislator piece of legislation 173 00:11:07,440 --> 00:11:10,600 Speaker 1: tried to do this in two thousand nineteen, the Congressional 174 00:11:10,679 --> 00:11:14,880 Speaker 1: Budget Office scored it as neutral on the budget and 175 00:11:14,960 --> 00:11:19,679 Speaker 1: did not allow it to go through the budget reconciliation process. 176 00:11:19,720 --> 00:11:22,000 Speaker 1: So they have a test there. If they need to 177 00:11:22,040 --> 00:11:26,640 Speaker 1: get sixty votes to to the outside the reconciliation process 178 00:11:26,679 --> 00:11:30,800 Speaker 1: to stop, you know, to to to bring a debate 179 00:11:30,920 --> 00:11:34,520 Speaker 1: to an end, that will be a much more serious test, 180 00:11:34,640 --> 00:11:38,440 Speaker 1: and they may seriously struggle to get ten Republican senators 181 00:11:38,480 --> 00:11:41,240 Speaker 1: on board. We're going to hear about this again and again. 182 00:11:41,280 --> 00:11:43,680 Speaker 1: It sounds like an arcane point, this point about the 183 00:11:43,679 --> 00:11:46,840 Speaker 1: reconciliation process, but it is. It's if you've got at 184 00:11:47,200 --> 00:11:50,679 Speaker 1: It is absolutely fundamental that you can that. Really the 185 00:11:50,920 --> 00:11:53,360 Speaker 1: administration is only going to be confident of being able 186 00:11:53,400 --> 00:11:55,880 Speaker 1: to get through things that can go in that process. 187 00:11:55,880 --> 00:11:58,959 Speaker 1: And as you say, there are rules that limit what 188 00:11:59,080 --> 00:12:09,160 Speaker 1: kind of thing can be in there. Well, bit of 189 00:12:09,360 --> 00:12:13,080 Speaker 1: wages before or against is definitely a main Street issue. 190 00:12:13,120 --> 00:12:15,080 Speaker 1: I guess what you might call more of an interest 191 00:12:15,120 --> 00:12:18,000 Speaker 1: to Wall Street is what she said about the dollar. 192 00:12:18,120 --> 00:12:20,280 Speaker 1: And I think here we we did have a big 193 00:12:20,320 --> 00:12:23,559 Speaker 1: contrast with with Donald Trump. Let's let's hear what she 194 00:12:23,600 --> 00:12:27,880 Speaker 1: said and then unpack the differences between her and her predecessor. 195 00:12:29,840 --> 00:12:33,800 Speaker 1: I believe in market determined exchange rates. The value of 196 00:12:33,880 --> 00:12:37,720 Speaker 1: the US dollar and other currencies should be determined by 197 00:12:37,800 --> 00:12:43,280 Speaker 1: markets markets ad just to reflect variations in economic performance 198 00:12:43,800 --> 00:12:49,400 Speaker 1: and generally facilitate adjustments in the global economy. The United 199 00:12:49,480 --> 00:12:54,800 Speaker 1: States does not seek a weaker currency to gain competitive advantage, 200 00:12:55,360 --> 00:13:00,600 Speaker 1: and we should oppose attempts by other countries to do so. So, Chris, 201 00:13:00,679 --> 00:13:02,520 Speaker 1: what was the big difference in what she said about 202 00:13:02,520 --> 00:13:06,800 Speaker 1: the dollar? Well, the Trump administration really kind of flipped 203 00:13:06,800 --> 00:13:10,720 Speaker 1: all around on this issue, didn't they. Trump loved the 204 00:13:10,760 --> 00:13:13,079 Speaker 1: idea of a strong dollar. It sounded good to him. 205 00:13:13,120 --> 00:13:17,840 Speaker 1: But then, of course he realized that a weaker dollar 206 00:13:17,880 --> 00:13:20,800 Speaker 1: would help American exporters, and I think they tried to 207 00:13:21,400 --> 00:13:27,160 Speaker 1: jaw bone the dollar in some instances. Um, you're not 208 00:13:27,200 --> 00:13:29,520 Speaker 1: going to get that from Janet Yell. And she knows 209 00:13:29,600 --> 00:13:33,640 Speaker 1: that the market in the long term sets exchange rates anyways, 210 00:13:33,720 --> 00:13:38,160 Speaker 1: And I think she fell into the classic Treasury secretary 211 00:13:38,200 --> 00:13:43,400 Speaker 1: speak on this. Uh. American officials, when they, you know, 212 00:13:43,400 --> 00:13:46,400 Speaker 1: when they know what they're talking about, always accept a 213 00:13:46,559 --> 00:13:50,520 Speaker 1: stronger dollar as a consequence of good, positive things that 214 00:13:50,559 --> 00:13:53,920 Speaker 1: are happening. It means that the economy is probably growing 215 00:13:54,040 --> 00:13:59,240 Speaker 1: faster than the economies of other major trading part partners, 216 00:13:59,240 --> 00:14:02,680 Speaker 1: and it's acting investment, it's attracting purchases of your goods. 217 00:14:03,000 --> 00:14:07,760 Speaker 1: But you don't seek it um as a policy that 218 00:14:07,800 --> 00:14:12,280 Speaker 1: can backfire on you, of course, and nor she knows 219 00:14:12,320 --> 00:14:16,120 Speaker 1: as well that seeking a weaker dollar to help exporters 220 00:14:16,400 --> 00:14:19,920 Speaker 1: can really backfire if they're looking to keep an eye 221 00:14:19,920 --> 00:14:23,920 Speaker 1: on other countries and prevent them from from weakening their 222 00:14:23,960 --> 00:14:27,720 Speaker 1: own currencies. And not to mention that it can backfire 223 00:14:27,760 --> 00:14:30,400 Speaker 1: in the sense that other countries may accuse the Federal 224 00:14:30,480 --> 00:14:34,400 Speaker 1: Reserve of seeking to weaken the US dollar through massive 225 00:14:34,520 --> 00:14:39,360 Speaker 1: quantitative easing. So best in all worlds is to step 226 00:14:39,360 --> 00:14:42,520 Speaker 1: back and say, look, the market determines these things, will 227 00:14:42,560 --> 00:14:45,880 Speaker 1: be quite happy. If the economy does well, the currency 228 00:14:45,920 --> 00:14:49,120 Speaker 1: will probably strengthen as a natural result. But we'll let 229 00:14:49,160 --> 00:14:53,320 Speaker 1: the market do its thing. It's back to the old 230 00:14:53,320 --> 00:14:55,240 Speaker 1: It's back to my old days at the U. S. 231 00:14:55,280 --> 00:14:58,800 Speaker 1: Treasury under Robert Reuben. I don't know how many times 232 00:14:58,800 --> 00:15:01,320 Speaker 1: I heard him say a strong dollars in the national interest, 233 00:15:01,400 --> 00:15:03,240 Speaker 1: and then the key thing was that that was all 234 00:15:03,240 --> 00:15:06,800 Speaker 1: he would say. But I suspect Yellen will be moving 235 00:15:06,840 --> 00:15:09,800 Speaker 1: in that direction as well well. Finally, I guess we 236 00:15:09,840 --> 00:15:12,960 Speaker 1: should talk about the one area where perhaps there was 237 00:15:13,120 --> 00:15:19,800 Speaker 1: least change from Treasury sectary minution and the Trump administration, 238 00:15:19,960 --> 00:15:24,160 Speaker 1: and that was on China. Quite tough talk from Janet 239 00:15:24,200 --> 00:15:27,360 Speaker 1: Yellen on that subject. Let's see what she said. We 240 00:15:27,880 --> 00:15:33,320 Speaker 1: need to take on China's abusive, unfair and illegal practices. 241 00:15:34,040 --> 00:15:40,520 Speaker 1: China's undercutting American companies by dumping products, erecting trade barriers, 242 00:15:40,880 --> 00:15:46,120 Speaker 1: and giving illegal subsidies to corporations. It's been stealing intellectual 243 00:15:46,320 --> 00:15:51,280 Speaker 1: property and engaging in practices that give it an unfair 244 00:15:51,400 --> 00:15:59,800 Speaker 1: technological advantage, including force technology transfers, and these practices, including 245 00:16:00,320 --> 00:16:06,560 Speaker 1: China's low labor and environmental standards, are practices that we're 246 00:16:06,640 --> 00:16:10,720 Speaker 1: prepared to use the polar ray of tools to address. 247 00:16:11,080 --> 00:16:13,960 Speaker 1: Very of course, it is important OVID time to work 248 00:16:13,960 --> 00:16:18,600 Speaker 1: with our autifies. So Chris, obviously there's going to be 249 00:16:18,600 --> 00:16:21,200 Speaker 1: other members of the administration whose main job it is 250 00:16:21,240 --> 00:16:24,920 Speaker 1: to think about US China relations, not least the Secretary 251 00:16:24,960 --> 00:16:27,640 Speaker 1: of State Tony B. Lincoln. But but what did you 252 00:16:27,720 --> 00:16:33,240 Speaker 1: take from that quite harsh language from Janet Yellen. I 253 00:16:33,280 --> 00:16:37,640 Speaker 1: think that's an area where she is taking direction directly 254 00:16:37,720 --> 00:16:41,160 Speaker 1: from the President elect and his close advisors. That's what 255 00:16:41,200 --> 00:16:44,600 Speaker 1: they want, That's is the policy they want to implement. 256 00:16:45,160 --> 00:16:49,200 Speaker 1: It's politically driven. I think it's practically speaking, there are 257 00:16:49,200 --> 00:16:53,160 Speaker 1: also some obviously very serious issues to address with China, 258 00:16:54,000 --> 00:16:59,520 Speaker 1: but the politics wrapped up into it are are really pressing. 259 00:17:00,080 --> 00:17:02,760 Speaker 1: So there's no room for Jenney Yellen to do anything. 260 00:17:02,800 --> 00:17:05,960 Speaker 1: But even if she wanted to tow the line and 261 00:17:05,960 --> 00:17:08,880 Speaker 1: give a very strong message about all of the different 262 00:17:08,920 --> 00:17:14,320 Speaker 1: fronts in which the Biden administration wants to confront China, 263 00:17:15,040 --> 00:17:18,000 Speaker 1: I think underneath, of course, the manner in which they 264 00:17:18,040 --> 00:17:22,520 Speaker 1: do it, and the tone of the language they use 265 00:17:22,720 --> 00:17:27,480 Speaker 1: will be quite different from the Trump administration, But as 266 00:17:27,520 --> 00:17:30,000 Speaker 1: a a signpost that they want to put out on 267 00:17:30,080 --> 00:17:33,160 Speaker 1: day one, they are just as you say, We're putting 268 00:17:33,240 --> 00:17:36,560 Speaker 1: up very strong language to signal how they want to 269 00:17:36,600 --> 00:17:39,800 Speaker 1: stand on this and if anything on the national security 270 00:17:39,840 --> 00:17:44,160 Speaker 1: issues actually a bit tougher than Donald Trump was, well 271 00:17:44,880 --> 00:17:48,040 Speaker 1: we'll have We'll have plenty more to say about Jenneyellen 272 00:17:48,240 --> 00:17:51,040 Speaker 1: and others in the new administration over the next few 273 00:17:51,040 --> 00:17:53,160 Speaker 1: weeks and months. But in the meantime, Chris Condin, thank 274 00:17:53,160 --> 00:18:02,960 Speaker 1: you very much, very happy to be here, Thanks very much. Now, 275 00:18:02,960 --> 00:18:04,520 Speaker 1: it hasn't been a good start of the year for 276 00:18:04,560 --> 00:18:07,359 Speaker 1: people in the business of transporting goods from country A 277 00:18:07,520 --> 00:18:11,320 Speaker 1: to country B. In our first episode of one we 278 00:18:11,440 --> 00:18:13,679 Speaker 1: heard about the trouble at the UK port of Dover, 279 00:18:14,080 --> 00:18:18,520 Speaker 1: even before Britain fully departed the European Union. Brexit related 280 00:18:18,600 --> 00:18:22,080 Speaker 1: red tape has caused a lot more trouble since January one, 281 00:18:22,480 --> 00:18:25,000 Speaker 1: with Scottish fishermen being forced to throw away millions of 282 00:18:25,040 --> 00:18:28,280 Speaker 1: pounds worth of fish and new barriers to trade, causing 283 00:18:28,359 --> 00:18:32,480 Speaker 1: shortages in supermarkets in Northern Ireland. But it isn't just Brexit, 284 00:18:32,840 --> 00:18:36,119 Speaker 1: the global shipping industry is struggling to deliver what the 285 00:18:36,119 --> 00:18:39,399 Speaker 1: world wants to buy, and exporters and importers everywhere are 286 00:18:39,440 --> 00:18:43,240 Speaker 1: feeling the pain. Are Hong Kong based Senior Asia Economy 287 00:18:43,240 --> 00:18:45,960 Speaker 1: of correspondent and the current went down to the docks 288 00:18:46,000 --> 00:18:57,240 Speaker 1: to see for himself. That's the sound of ships being 289 00:18:57,240 --> 00:19:00,520 Speaker 1: loaded and unloaded here at Hong Kong Port, as huge 290 00:19:00,560 --> 00:19:04,679 Speaker 1: crane stack twenty foot containers like lego bricks onto vessels 291 00:19:04,720 --> 00:19:08,320 Speaker 1: that will deliver goods around the world. While it appears 292 00:19:08,320 --> 00:19:11,119 Speaker 1: to be business as usual here, a shortage of shipping 293 00:19:11,119 --> 00:19:14,879 Speaker 1: containers around the world is choking an exports boom that 294 00:19:14,920 --> 00:19:18,080 Speaker 1: has helped to drag the global economy from its pandemic 295 00:19:18,119 --> 00:19:22,000 Speaker 1: into slump. Manufacturers complained they're unable to ship goods or 296 00:19:22,040 --> 00:19:25,879 Speaker 1: take new orders. That's because of surging prices for containers, 297 00:19:25,960 --> 00:19:30,040 Speaker 1: as global restrictions to stem the coronavirus tie knots and 298 00:19:30,080 --> 00:19:34,000 Speaker 1: supply chains. The crunch around the world has been building 299 00:19:34,000 --> 00:19:37,239 Speaker 1: for months. It's now being compounded by a race by 300 00:19:37,359 --> 00:19:40,720 Speaker 1: Chinese factories to get goods shipped ahead of the nation's 301 00:19:40,760 --> 00:19:47,520 Speaker 1: annual New Year's holidays. So when this UH issue starts 302 00:19:47,520 --> 00:19:50,760 Speaker 1: to kicks in it. We really starts to panic quite 303 00:19:50,760 --> 00:19:54,440 Speaker 1: a bit. Kenway. Lamb runs a firm that makes packaging 304 00:19:54,440 --> 00:19:58,720 Speaker 1: machinery used for everything from cookies to granola. He depends 305 00:19:58,760 --> 00:20:01,639 Speaker 1: on ocean freight to the liver his bulky equipment to 306 00:20:01,840 --> 00:20:05,120 Speaker 1: clients around the world. Last month, he was all set 307 00:20:05,119 --> 00:20:07,600 Speaker 1: to load the shipment banned for a customer who had 308 00:20:07,640 --> 00:20:11,080 Speaker 1: agreed the deal and the shipping costs months earlier. What 309 00:20:11,200 --> 00:20:14,479 Speaker 1: should have been a home drew routine of farying goods 310 00:20:14,520 --> 00:20:18,520 Speaker 1: from factory to port became a logistical nightmare. When Lamb 311 00:20:18,560 --> 00:20:21,919 Speaker 1: was told there were no containers available, we are like, 312 00:20:22,119 --> 00:20:26,280 Speaker 1: what really, what's happening? If we're already freaking out. Lamb, 313 00:20:26,400 --> 00:20:30,200 Speaker 1: who is managing director of Hong Kong based Kazoo Packaging Machinery, 314 00:20:30,520 --> 00:20:34,080 Speaker 1: whose manufacturing is completed in Guangdong and Taiwan, has had 315 00:20:34,119 --> 00:20:37,560 Speaker 1: to watch as prices for containers surge on a weekly basis. 316 00:20:38,600 --> 00:20:42,119 Speaker 1: It's like getting a concert ticket, but you cannot book it, 317 00:20:42,480 --> 00:20:45,679 Speaker 1: you cannot purchase it online. What happens is they have 318 00:20:46,359 --> 00:20:48,440 Speaker 1: you have no idea when when it is going to 319 00:20:48,520 --> 00:20:52,280 Speaker 1: be on sale, so once it's available, there suddenly be 320 00:20:52,320 --> 00:20:54,680 Speaker 1: a price and either you take it or the container 321 00:20:54,720 --> 00:20:59,280 Speaker 1: will be gone. Um. It's creating a lot of pressure 322 00:20:59,640 --> 00:21:07,439 Speaker 1: for US. Factory owners say containers that once would have 323 00:21:07,480 --> 00:21:10,440 Speaker 1: cost two thousand dollars to send are now being quoted 324 00:21:10,480 --> 00:21:14,000 Speaker 1: at anything up to ten thousand dollars or more. The 325 00:21:14,080 --> 00:21:17,880 Speaker 1: shortage is ricocheting through supply chains as manufacturers are left 326 00:21:17,880 --> 00:21:21,280 Speaker 1: holding goods they haven't been paid for. Inventory is piling 327 00:21:21,359 --> 00:21:24,280 Speaker 1: up and cash flows are taking a hit. Some factories 328 00:21:24,320 --> 00:21:29,080 Speaker 1: complain they can't consider new orders. Sydney News firm Prime 329 00:21:29,160 --> 00:21:34,560 Speaker 1: Success Enterprises Limited makes educational and recreational products such as 330 00:21:34,600 --> 00:21:38,680 Speaker 1: tents for children and tps and bats for pets. After 331 00:21:38,720 --> 00:21:41,280 Speaker 1: booking two containers from Europe for a ship in the 332 00:21:41,400 --> 00:21:44,639 Speaker 1: last month from the antientins then he was later told 333 00:21:44,640 --> 00:21:47,360 Speaker 1: he could only get one. When we go to the 334 00:21:47,400 --> 00:21:51,880 Speaker 1: container terminal to collect the container, they said, sorry, there's 335 00:21:51,960 --> 00:21:54,439 Speaker 1: not nothing available either for you, so you have to 336 00:21:54,480 --> 00:22:00,560 Speaker 1: wait for the nix nix wipment or until for a test. 337 00:22:00,560 --> 00:22:04,080 Speaker 1: That's a big, big progress. In another instance, you had 338 00:22:04,119 --> 00:22:07,199 Speaker 1: secured a container for shipping, only to be told there 339 00:22:07,280 --> 00:22:10,960 Speaker 1: was no room left on the ship. When we arrive 340 00:22:11,040 --> 00:22:14,720 Speaker 1: at the terminal, they said Oh sorry, there's nothing available 341 00:22:14,760 --> 00:22:20,200 Speaker 1: for you, you know. So we try our our trying 342 00:22:20,200 --> 00:22:23,520 Speaker 1: to accompany. Try the next day. Still sorry, no more, 343 00:22:23,600 --> 00:22:25,840 Speaker 1: you know so so so you have to wait for 344 00:22:25,880 --> 00:22:29,080 Speaker 1: the next next week vessel and see what we can do. 345 00:22:29,600 --> 00:22:35,359 Speaker 1: So it's been a terrible situation. The pandemic put a 346 00:22:35,480 --> 00:22:39,840 Speaker 1: rocket on their exports. From Asia's manufacturing powerhouses, China, South 347 00:22:39,960 --> 00:22:43,640 Speaker 1: Korea and Taiwan also urgent demand for work from home 348 00:22:43,680 --> 00:22:48,280 Speaker 1: technology and healthcare kit the boom health China wind market 349 00:22:48,280 --> 00:22:51,040 Speaker 1: share of world trade and to become the world's only 350 00:22:51,160 --> 00:22:54,720 Speaker 1: major economy to grow last year, while Taiwan and South 351 00:22:54,800 --> 00:22:59,200 Speaker 1: Korea's experts are also gaining. Jackie Im runs Life in Motion, 352 00:22:59,440 --> 00:23:03,280 Speaker 1: a hunk On based lighting company. It makes portable ultraviolet 353 00:23:03,359 --> 00:23:06,760 Speaker 1: lights that kind of eliminate bacteria and viruses. This year, 354 00:23:06,800 --> 00:23:11,040 Speaker 1: we're still seeing a quite huge demand for our products 355 00:23:11,040 --> 00:23:13,119 Speaker 1: and of a lot of people send us a request 356 00:23:13,160 --> 00:23:18,119 Speaker 1: for distribution of our products around the world. Like other manufacturers, 357 00:23:18,440 --> 00:23:20,920 Speaker 1: Jim is doing what he can to keep costs down 358 00:23:21,240 --> 00:23:24,800 Speaker 1: and to look for workaround solutions. So that's why we 359 00:23:24,840 --> 00:23:28,880 Speaker 1: have to negotiate and see how we can share the 360 00:23:28,960 --> 00:23:32,119 Speaker 1: increase of the cost right now, So there are lots 361 00:23:32,160 --> 00:23:35,640 Speaker 1: of we have to be constantly talking to getting get 362 00:23:35,640 --> 00:23:38,480 Speaker 1: in touch based with our customers in overseas as well. 363 00:23:38,560 --> 00:23:43,640 Speaker 1: So um, well, hopefully you know, after the Chinese New Year, uh, 364 00:23:43,760 --> 00:23:47,800 Speaker 1: we will see the that the situation will hopefully east 365 00:23:47,840 --> 00:23:52,840 Speaker 1: down a little bit. There's a lot of riding on 366 00:23:52,920 --> 00:23:57,920 Speaker 1: manufacturing to continue powering the global economic recovery, as services 367 00:23:57,920 --> 00:24:01,760 Speaker 1: sector industries such as tourism and will remain in the Belgiums. 368 00:24:02,440 --> 00:24:06,040 Speaker 1: The World Bank this month warned that their rebound from 369 00:24:06,080 --> 00:24:09,280 Speaker 1: the deepest recession since World War Two would be slightly 370 00:24:09,359 --> 00:24:14,800 Speaker 1: slower than previously expected as virus cases surge across advanced economies. 371 00:24:15,560 --> 00:24:19,280 Speaker 1: The Washington based Lander also trimmed its global trade volume 372 00:24:19,320 --> 00:24:23,320 Speaker 1: growth forecast to five percent this year, following a nine 373 00:24:23,359 --> 00:24:27,240 Speaker 1: point five percent contraction last year. As Jackie And mentioned, 374 00:24:27,480 --> 00:24:31,120 Speaker 1: the big hope for exporters is that the bottleneck eases 375 00:24:31,200 --> 00:24:34,480 Speaker 1: once the annual Chinese New York Holiday is over, the 376 00:24:34,520 --> 00:24:38,280 Speaker 1: biggest annual holiday in the world's second largest economy, and 377 00:24:38,400 --> 00:24:41,560 Speaker 1: as vaccines stained the virus roll out on a larger scale. 378 00:24:41,960 --> 00:24:46,359 Speaker 1: Bloomberg Economics Chief Asia economist Chiang Chu expects conditions to 379 00:24:46,440 --> 00:24:52,399 Speaker 1: improve after the first quarter. I expect the impact is 380 00:24:52,680 --> 00:24:57,440 Speaker 1: relatively limited. They might not be a huge impatch on 381 00:24:57,600 --> 00:25:02,399 Speaker 1: the production side and on the good price site. I 382 00:25:02,440 --> 00:25:08,639 Speaker 1: think the disruption will be relatively temporary and over time 383 00:25:09,480 --> 00:25:23,480 Speaker 1: well ease as vaccines allow countries to open up the economy. 384 00:25:25,480 --> 00:25:27,840 Speaker 1: Not that you would notice any of these issues here 385 00:25:27,880 --> 00:25:30,560 Speaker 1: at the Hong Kong Port, one of the world's busiest 386 00:25:30,600 --> 00:25:34,560 Speaker 1: shipping hubs that can handle around twenty million containers a 387 00:25:34,640 --> 00:25:40,960 Speaker 1: year onliners that are heading to over four destinations. For exporters, 388 00:25:41,280 --> 00:25:45,480 Speaker 1: a return to normality can't come soon enough. I've been 389 00:25:45,520 --> 00:25:50,639 Speaker 1: in this business for sixteen around sixteen years. This is 390 00:25:50,720 --> 00:25:54,680 Speaker 1: something that I have never since in my career running 391 00:25:54,680 --> 00:26:12,560 Speaker 1: export for all these years. M thanks for listening to Stephanomics. 392 00:26:12,840 --> 00:26:16,000 Speaker 1: We'll be back next week with more on all things economic, 393 00:26:16,359 --> 00:26:19,600 Speaker 1: and remember you can always find us on the Bloomberg Terminal, website, 394 00:26:19,720 --> 00:26:22,800 Speaker 1: app or wherever you get your podcasts. And for more 395 00:26:22,840 --> 00:26:25,480 Speaker 1: news and analysis from Bloomberg Economics, you just have to 396 00:26:25,520 --> 00:26:29,359 Speaker 1: follow at Economics on Twitter. This episode was produced by 397 00:26:29,400 --> 00:26:33,560 Speaker 1: Magnus Hendrickson, with special thanks to Christopher Condon Ender Current 398 00:26:33,880 --> 00:26:37,000 Speaker 1: and Yang Yang. Lucy Meekin is the executive producer of 399 00:26:37,040 --> 00:26:40,639 Speaker 1: Stephonomics and the head of Bloomberg Podcast is Francesca Levy.