Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: The US presidential election is a week away, and the
Speaker 2: contest between Donald Trump and Kamala Harris could not be tighter.
Speaker 2: The two candidates are going head to head on everything
Speaker 2: from the economy to immigration, but one area they agree
Speaker 2: on is the need to curb China's rise.
Speaker 3: We've got hundreds of billions of dollars just from China alone,
Speaker 3: and I haven't even started yet.
Speaker 4: But tarifs are two things if you look at it.
Speaker 4: Number one is for protection of the companies that we
Speaker 4: have here.
Speaker 5: In any policy about China should be in making sure
Speaker 5: the United States of America wins the competition for the
Speaker 5: twenty first century, which means focusing on the details of
Speaker 5: what that requires, focusing on relationships with our allies, focusing
Speaker 5: on investing in American based technology.
Speaker 2: So how is the US doing versus China, which superpower
Speaker 2: is leading the race for dominance of the twenty first century?
Speaker 2: Rebecca Chung Wilkins, Bloomberg's Asia Government and Politics correspondent, says
Speaker 2: a good way to try to answer this question is
Speaker 2: by looking at the key emerging technologies that China identified
Speaker 2: as its priority back in twenty fifteen when it announced
Speaker 2: its Made in China twenty twenty five plan.
Speaker 3: Our host came.
Speaker 2: And when you look at that plan now, nearly a
Speaker 2: decade later, new research by Bloomberg Economics and Bloomberg Intelligence
Speaker 2: shows that Made in China twenty twenty five has largely
Speaker 2: been a success.
Speaker 4: So of the thirteen key technologies tracked by Bloomberg researchers,
Speaker 4: China has achieved a global leadership position in five of
Speaker 4: them and is catching up fast in seven others.
Speaker 2: Welcome to the Big tich Asia from Bloomberg News. I'm wanh.
Speaker 2: Every week we take you inside some of the world's
Speaker 2: biggest and most powerful economies and the markets, tycoons and
Speaker 2: businesses that drive this ever shifting region. Today on the show,
Speaker 2: how did China get ahead in key technological advances despite
Speaker 2: US efforts to prevent that from happening? And would a
Speaker 2: Harris or Trump administration change that? Rebecca says back in
Speaker 2: twenty fifteen, when the Maiden China Plan was announced by
Speaker 2: the Chinese Communist Party, it was all about helping the
Speaker 2: country achieve two big goals.
Speaker 4: One is this self sufficiency, not wanting to be reliant
Speaker 4: on other countries. And is preparing for any kind of
Speaker 4: scenario where, for example, China might be cut off from
Speaker 4: say its energy supply or whatever it might be. And
Speaker 4: China more broady, does have a sort of preoccupation or
Speaker 4: prevailing concern with preserving its own security, so standing on
Speaker 4: its own two feet, and the second is becoming increasingly
Speaker 4: competitive and in fact a global leader in some of
Speaker 4: these key strategic areas. So there's both a sort of
Speaker 4: inward and an outward element to the Maiden in China plan.
Speaker 2: The plan highlighted ten priority sectors for the nation to
Speaker 2: focus on, including aerospace equipment, energy saving cars, biomedicine, and
Speaker 2: high end machine tools and robots. And now almost ten
Speaker 2: years later, according to the analysis by Bloomberg, China has
Speaker 2: in fact become a global leader in many of these
Speaker 2: key areas.
Speaker 4: So those sectors include solar panels, unmanned aero vehicles, those
Speaker 4: are drones, graphene which is a coating material that's using
Speaker 4: tons and tons of sectors, high speed rail, and electric vehicles.
Speaker 2: Now, does China have any natural advantages that makes it
Speaker 2: possible that it's been able to take leading positions in
Speaker 2: these sectors or is this simply by design? And the
Speaker 2: world of Beijing.
Speaker 4: Well as worth saying that even in twenty fifteen, China,
Speaker 4: as we determine, was already a global leader in three
Speaker 4: of these sectors, in graphene, solar panels, and in unmanned
Speaker 4: area vehicles, so they had a sort of somewhat of
Speaker 4: a headstart in any case. But the other important element
Speaker 4: here to remember, I think, is that when Beijing does
Speaker 4: signal out an area for support, when it signals out
Speaker 4: a key policy priority, it really is able to throw
Speaker 4: the full weight of its economy essentially behind that. So,
Speaker 4: for example, if it decides that electric vehicles are a priority,
Speaker 4: say it can ask banks to lend it credit cheaply.
Speaker 4: It can get local governments to lease it land cheaply
Speaker 4: or perhaps even at no or low cost. It can
Speaker 4: also get large state owned enterprises to use the sort
Speaker 4: of full force of its resources, it talents, and direct
Speaker 4: it towards those industries. So you know, Beijing has an
Speaker 4: incredibly sort of powerful basis here, an incredibly powerful set
Speaker 4: of resources to direct towards these industries when it has
Speaker 4: selected these priorities.
Speaker 2: But there is one key area where China hasn't caught
Speaker 2: up to the US, and that's in advanced semiconductors. That's
Speaker 2: in part because of some key things the US has
Speaker 2: done to keep its rival from catching up.
Speaker 4: There's sort of three big tools for economic statecraft that
Speaker 4: we've seen. One of them is tariffs, imposing these high
Speaker 4: costs for imports coming into the US, sometimes prohibitively high.
Speaker 4: The second are export controls, essentially trying to prevent the
Speaker 4: transfer of US technology, goods, services overseas to other parts
Speaker 4: of the world. And the final part of that are
Speaker 4: financial sanctions. The big area where we can say that
Speaker 4: some of the US export controls and so on had
Speaker 4: been more effective is in sort of high advanced semiconductors.
Speaker 4: And it's important to remember in this context it's just
Speaker 4: a handful of companies involved in this kind of really
Speaker 4: advanced semiconductor tech manufacturing. And it's fair to say the
Speaker 4: Biden administrations they have been successful in building consensus among allies,
Speaker 4: among other countries trying to contain China's access to semiconductors,
Speaker 4: and so we saw Dutch companies, Japanese companies essentially falling
Speaker 4: in line in preventing China from accessing the actual products
Speaker 4: needed to manufacture these types of chips.
Speaker 2: And in light of that of the US having allies
Speaker 2: to support its approach to trade on China and its
Speaker 2: approach to contain China, what has China done to make
Speaker 2: sure it has access to the technologies it needs.
Speaker 4: China's actually has been stoppiling like that. That's the sort
Speaker 4: of fundamental basis of this. They're stopped piling a record
Speaker 4: amount of semiconductor equipment, and that includes these high end
Speaker 4: video chips. It's preparing essentially for a number of further curbs.
Speaker 4: It's looking further out thinking if we see these kind
Speaker 4: moves accelerate, if they're expanded, where will we be and
Speaker 4: how do we try and future prefagainst that.
Speaker 2: But it's not just semiconductors where the US is trying
Speaker 2: to use export controls to slow China down. After the break,
Speaker 2: a look at the other tools the US is using
Speaker 2: and will a new administration keep them going. The US
Speaker 2: has leaned on its allies to limit China's access to
Speaker 2: advanced technologies like semiconductors. Meanwhile, the US is also concerned
Speaker 2: about its ability to be a leader in other sectors
Speaker 2: as well. Some of these areas were outlined back in
Speaker 2: twenty twenty two by National Security advisor Jake Sullivan.
Speaker 6: Computing related technologies, biotech, clean tech are true force multipliers
Speaker 6: through the tech ecosystem, and leadership in each of them
Speaker 6: these areas is a national security imperative. We're investing in
Speaker 6: the industries of the future and strengthening the resilience and
Speaker 6: security of our supply chains.
Speaker 2: Sullivan calls these technologies a national security imperative. Bloomberg's Rebecca
Speaker 2: Chung Wilkins says that's an important thing to take note
Speaker 2: of because over time she's seen a change in the
Speaker 2: way the US talks about the need to restrain China.
Speaker 4: Yeah. I think in the early days of the trade war,
Speaker 4: a lot of the focus was on the sort of
Speaker 4: wrongdoing as they alleged of Chinese companies, But over time
Speaker 4: that has really morphed into this whole discussion over national
Speaker 4: security and increasingly this focus on China's preparedness for a war.
Speaker 4: And in fact, we've almost seen the true real concerns
Speaker 4: at the heart of some of these economic policies over
Speaker 4: sort of military might. Essentially, it's this question of deterrence
Speaker 4: whether or not Beijing and Washington will essentially adopt this
Speaker 4: idea that the costs of this trade conflict and trade
Speaker 4: war and the costs of this increasing competition are worth
Speaker 4: it or not. It comes sort of, I suppose, to
Speaker 4: this fundamental question of to what extent both sides feel
Speaker 4: that their own national security is fundamentally at risk.
Speaker 2: On the campaign trio, Trump and Harris have advocated different
Speaker 2: approaches towards China, even as both agree on the need
Speaker 2: to thwart its rise. I asked Rebecca what Trump currently
Speaker 2: has in mind here, Well, we just.
Speaker 4: In a way have just seen an amplification, perhaps unsurprisingly,
Speaker 4: of some of his previous policies. He's mentioned this possibility
Speaker 4: of sixty percent tariffs across all Chinese imports into the US.
Speaker 2: That would be crazy high.
Speaker 4: That would be crazy high, and it would really hurt
Speaker 4: the Chinese economy. One Bank, for example, estimates that it
Speaker 4: could essentially harm of Chinese GDP growth. So it would
Speaker 4: really be a significant hit to China, but also a
Speaker 4: significant hit to the US if that then results in
Speaker 4: a higher cost of goods.
Speaker 2: Lumberg's editor in chief, John Mickelsweet pressed Trump on that
Speaker 2: point in an interview earlier this month.
Speaker 3: You're talking about sixty percent trade on that sixty perent
Speaker 3: tariffs on that you're talking, as you said, one hundred
Speaker 3: two hundred percent of things you don't really like. You're
Speaker 3: also talking about ten to twenty percent tariffs on the
Speaker 3: rest of the world. That is going to have a
Speaker 3: serious effect on the overall economy. And yes, you're going
Speaker 3: to find some people who were gained from individual tariffs.
Speaker 3: The overall effect could be massive.
Speaker 4: I agree, it's going to have a massive effect. Positive effect.
Speaker 4: It's going to be a positive not let me just no, no,
Speaker 4: let me committed. The other thing to remember with Trump
Speaker 4: is that he has taken a more protectionist stance. Writ large,
Speaker 4: He's not just concerned about Chinese imports, but he's concerned
Speaker 4: about imports from everyone, including, for example, the European Union.
Speaker 2: What do we know about hair approach?
Speaker 4: If she wins Will Harris's approach, we expect to be
Speaker 4: more consistent with the Biden administrations. I will say, she
Speaker 4: too has focused on this idea of jobs and sort
Speaker 4: of American industrial policy, trying essentially to build up some
Speaker 4: of those of manufacturing bases. Again, she's been critical of
Speaker 4: Trump's proposed tariffs, but she has been quite firm on
Speaker 4: some of the national security risks that the US faces.
Speaker 2: So Rebecca is either approach really doing a great job
Speaker 2: in containing China's tech development.
Speaker 7: Well, if we look at the success of the Biden
Speaker 7: administration and we look just going back to the beginning
Speaker 7: at some of those maiden China targets, for example, we
Speaker 7: can see that actually they aren't successful, or they haven't
Speaker 7: been successful in certain key areas if we exclude semiconductors.
Speaker 4: Actually trade has found a way to get through sanctions
Speaker 4: haven't been hugely successful. So that's one quest for Harris
Speaker 4: that this need to perhaps recalibrate the approach.
Speaker 2: Despite the US efforts to slow down China, the world
Speaker 2: outside the US is increasingly driving Chinese evs, surfing on
Speaker 2: Chinese smartphones, and powering their homes with Chinese solar panels,
Speaker 2: and Rebecca says there might be better approaches for the
Speaker 2: US to maintain its competitiveness.
Speaker 4: One approach to thinking about what would be more effective
Speaker 4: than sanctions is this idea that Adam Posen from the
Speaker 4: Peterson Institute has mentioned, which is suction not sanctions. Essentially
Speaker 4: that the US should be making use and taking up
Speaker 4: talent resources innovation coming from China and partnering with it
Speaker 4: in order to advance its own industries and its own
Speaker 4: key sectors, so.
Speaker 2: Basically taking away all the talents so that the US
Speaker 2: makes use of.
Speaker 4: It, taking the best of what China has developed, and
Speaker 4: then building on that to develop and innovate at a
Speaker 4: faster pace.
Speaker 2: This is the big take Asia from Bloomberg News. I'm
Speaker 2: wan ha. If you'd like to hear more about Bloomberg's
Speaker 2: research on the Maiden China Plan, check out the conversation
Speaker 2: on Odd Lots with my colleagues Joe Weisenthal and Tracy Alloway.
Speaker 1: The other thing that happened that I think was actually
Speaker 1: a bigger deal from the Chinese perspective was when the
Speaker 1: US added Huawei to the Commerce Department's entity list in
Speaker 1: early twenty nineteen, because what that signal was that the
Speaker 1: United States was effectively trying to kill what was arguably
Speaker 1: China's best global technology company. The US would say, we're
Speaker 1: not trying to kill it, but the restrictions are pretty draconian,
Speaker 1: and there's very much that vibe.
Speaker 2: And check out our last episode where you can hear
Speaker 2: more about one critical market that China's focusing on EVS
Speaker 2: and how one Chinese carmaker BYD is dominating the Electric
Speaker 2: auto market globally. That's on our Big Take, Asia Feet.
Speaker 2: This episode was produced by Young Young, Jessica Beck and Naomi.
Speaker 2: It was mixed by Alex Suguera and fact checked by
Speaker 2: Eddie Dwan. It was edited by Caitlin Kenny and Daniel
Speaker 2: ten Kate Naoy Shaven as our senior producer, Elizabeth Ponso
Speaker 2: is our senior editor, Nicole Beamster Bower is our executive producer,
Speaker 2: and Sage Bauman is Bloomberg's head of podcasts. Please follow
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Speaker 2: next time.