WEBVTT - John Liu on Covid-Zero (Audio)

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<v Speaker 1>Alright, we'll China ordering a seven day lockdown of the

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<v Speaker 1>area around fox Kon's main iPhone plant in Jengaile. This comes.

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<v Speaker 1>It's trying to reiterates its firm adherence to a COVID

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<v Speaker 1>zero policy. Joining us now is John LOEU Bloomberg, Senior

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<v Speaker 1>Executive Editor for Greater China. I mean, there wasn't too

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<v Speaker 1>much of a reaction in terms of what we saw

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<v Speaker 1>from the hon high share price yesterday in Taiwan. But

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<v Speaker 1>but this is just another example of how we're continuing

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<v Speaker 1>to see this COVID zero enforcement. Just tell us the

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<v Speaker 1>latest here, John, So the latest, Julia is that the

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<v Speaker 1>lockdown in Ginger has actually expanded. So we have the

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<v Speaker 1>area around the iPhone plant in lockdown for seven days. Uh.

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<v Speaker 1>More broadly, the city center is being locked down for

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<v Speaker 1>three days. Traffic is being limited, trains are being stopped,

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<v Speaker 1>businesses are being closed. That comes after yesterday there was

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<v Speaker 1>a spike. The number of infections tripled to about three fifty,

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<v Speaker 1>slightly lower today the numbers I think it was about

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<v Speaker 1>a hundred and sixty or so, And so obviously a

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<v Speaker 1>lot of people on edge and the authorities they're trying

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<v Speaker 1>to take measures as they see fit. What did you

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<v Speaker 1>make of the National Health Commission telling official state committed

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<v Speaker 1>to COVID zero. It seems a reaffirmation, perhaps not that new,

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<v Speaker 1>but it is um But it does come after a

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<v Speaker 1>period when the market rallied because of thoughts of something

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<v Speaker 1>different going forward. I think it was, or at the

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<v Speaker 1>very least, the market seems to be taking it as

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<v Speaker 1>a signal of of what policymakers are thinking. That meeting

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<v Speaker 1>at the National Health Commission that happened as sort of

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<v Speaker 1>UH post party congress a couple of weeks ago, the

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<v Speaker 1>the officials they're got together to study sort of the

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<v Speaker 1>outcomes of that congress. But from in the statement post meeting,

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<v Speaker 1>they did reiterate that China is committed to COVID zero,

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<v Speaker 1>the officials around the country should be executing COVID zero.

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<v Speaker 1>And so in the midst of all this UH excitement

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<v Speaker 1>about potentially some rollback or exit from that policy, I

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<v Speaker 1>think that statement is telling markets it calmed down. You know,

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<v Speaker 1>you might be getting ahead of yourselves. Yeah, and and

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<v Speaker 1>tell us what the feeling is like on the ground.

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<v Speaker 1>I mean, there must have been quite a lot of exuberance,

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<v Speaker 1>because we certainly saw that reflected in market activity on

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<v Speaker 1>those reopening hopes or rumors. But it really does seem

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<v Speaker 1>like they're saying, hold on, we're not We're not there yet,

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<v Speaker 1>and we may not even be there yet until March

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<v Speaker 1>or later. I think the pain that COVID zero has

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<v Speaker 1>inflicted economically, socially on businesses, on the citizenship is very pronounced,

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<v Speaker 1>and it is not especially it's not a popular policy,

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<v Speaker 1>and I think a lot of people would like the

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<v Speaker 1>country to exit the policy. And so what you see

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<v Speaker 1>there was an obvious excitement about potentially there being a

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<v Speaker 1>reopening of the economy of the country's borders. Uh, and

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<v Speaker 1>the markets responded in tune. I think that looking forward realistically,

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<v Speaker 1>if there is an exit, it's not going to come soon,

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<v Speaker 1>and it will come gradual, step by step, and way

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<v Speaker 1>off into the future. John, I know you're the perfect

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<v Speaker 1>person to ask this sort of esoteric question too, but

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<v Speaker 1>because I know you'll handle it well. Um, it's a

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<v Speaker 1>it's a line from a piece that Tom Freeman wrote

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<v Speaker 1>in The New York Times two the year China lost America. Uh. Potentially, Um,

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<v Speaker 1>I think you could have that could have happened much earlier.

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<v Speaker 1>I think you know, the relationship has been strained, and

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<v Speaker 1>you know it probably uh that strange sort of came

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<v Speaker 1>to the four with the Trump presidency, But I think

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<v Speaker 1>no matter who was elected president in sixteen, I think

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<v Speaker 1>the relationship would have been very tense and difficult. You

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<v Speaker 1>know what, does it make it a lot tougher question

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<v Speaker 1>if we rephrased it a little and said, is two

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<v Speaker 1>the year China lost the West? I think there's a

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<v Speaker 1>I think it might be, but I think the reason

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<v Speaker 1>there was a real shift in attitudes in the West

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<v Speaker 1>towards China probably extends from Russia's invasion of Ukraine more

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<v Speaker 1>so than anything that China did. I think that that

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<v Speaker 1>war has really focus people's attention on Taiwan on how

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<v Speaker 1>much they can countries in the West should be relying

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<v Speaker 1>on countries with different forms of government, and that that

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<v Speaker 1>debate is more public than it's ever been. Getting back

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<v Speaker 1>to to the lockdown too, And from fox CON's point

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<v Speaker 1>of view, I mean, does this make having factories in

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<v Speaker 1>China seem less desirable when you when you can't really

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<v Speaker 1>control whether or not you can continue to manufacture. Absolutely.

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<v Speaker 1>I think the bigger risk here for the Chinese economy

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<v Speaker 1>is that that these COVID lockdowns are going to push

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<v Speaker 1>companies to diversify, to look for other places where they

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<v Speaker 1>can establish manufacturing. It's not going to happen very quickly

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<v Speaker 1>because China has some very disadvantages. Fox God has huge plants.

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<v Speaker 1>There are lots of workers, but lots of component suppliers

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<v Speaker 1>around them, and so you can easily get the things

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<v Speaker 1>that you need to put together the latest iphon, the

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<v Speaker 1>latest laptop, whatever you're trying to produce. In the longer term, though,

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<v Speaker 1>those things are movable, and you've seen Apple beginning to

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<v Speaker 1>make phones in India for example. Yeah, lots of other

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<v Speaker 1>companies thinking about these types of things. Some on a

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<v Speaker 1>more positive note, the PBOC governor Egan yesterday sounded a

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<v Speaker 1>kind of optimistic outlook, although he did say he hoped

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<v Speaker 1>for a soft landing with the property market, but he

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<v Speaker 1>said that the economy remains broadly on track. Your thoughts

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<v Speaker 1>on that interpretation, I think there are a lot of

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<v Speaker 1>fundamental things that that remain in China's favor, uh. I

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<v Speaker 1>think key among those is the fact that China, relatively speaking,

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<v Speaker 1>is still poor when you compare it to the US.

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<v Speaker 1>Too many countries in Europe on a per capita basis,

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<v Speaker 1>and so that that leaves a lot of room for

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<v Speaker 1>ketchup uh and catch up is obviously easier to do

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<v Speaker 1>to generate growth from than being at the cutting edge

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<v Speaker 1>of technology, for example, a sorry finish your third No.

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<v Speaker 1>That being said that the situation globally is turning against

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<v Speaker 1>China technolog alright. Always great reporting, John Loe, Thank you Blomberg,

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<v Speaker 1>Senior executive editor for Greater China with us in our

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<v Speaker 1>Beijing studio