WEBVTT - The Struggle for Taiwan, Fintech VC 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio news. 0:00:07.040 --> 0:00:11.520 This is Bloomberg BusinessWeek with Carol Messer and Tim Stenebeck 0:00:12.039 --> 0:00:13.240 on Bloomberg Radio. 0:00:13.600 --> 0:00:16.400 Today, President Joe Biden is hiking tariffs on a wide 0:00:16.440 --> 0:00:20.319 range of Chinese imports, including semiconductors, batteries, solar cells, and 0:00:20.360 --> 0:00:23.800 critical minerals, in an election year bid to bolster domestic 0:00:23.880 --> 0:00:28.400 manufacturing and critical industries. The moves represent Biden's most comprehensive 0:00:28.440 --> 0:00:31.200 update to the China tariffs first imposed by his predecessor, 0:00:31.440 --> 0:00:34.839 former President Donald Trump, and a recognition that a hawkish 0:00:34.920 --> 0:00:39.640 approach to trade with Beijing remains popular with US voters. Still, 0:00:39.640 --> 0:00:43.640 Biden must strike a careful balance. Additional tariffs risk increasing 0:00:43.680 --> 0:00:46.960 prices for consumers already HEARDing from inflation and inspiring the 0:00:47.000 --> 0:00:50.360 ire of China, which could choose to retaliate in Kime. 0:00:50.920 --> 0:00:54.120 And then there's Taiwan. Today, the US and Taiwan navies 0:00:54.160 --> 0:00:56.960 conducted joint drills in the Western Pacific in April. This 0:00:57.160 --> 0:01:00.920 was coming from Reuters reporting that out citing for unidentified 0:01:00.920 --> 0:01:03.440 people briefed on the matter. This is China's military has 0:01:03.520 --> 0:01:06.440 ramped up its activities in and around Taiwan over the 0:01:06.480 --> 0:01:08.640 past few years. As we like to say, I say 0:01:08.640 --> 0:01:11.120 it a lot. It's complicated, and that's what a new 0:01:11.120 --> 0:01:14.399 book gets into. Joining us is Siman Khan. He's professor 0:01:14.440 --> 0:01:18.280 and Dennison Chair in History and International Relations at Tuff's University. 0:01:18.400 --> 0:01:21.360 He's a historian his new book, The Struggle for Taiwan, 0:01:21.560 --> 0:01:24.640 A History of America, China and the Island Caught Between. 0:01:25.040 --> 0:01:29.479 He joins us right now from Boston. Silman, so great 0:01:29.480 --> 0:01:31.679 to have you here with us. When we talk about 0:01:31.760 --> 0:01:36.240 geopolitical concerns right now. Yes we talk about Russia and Ukraine. 0:01:36.440 --> 0:01:39.000 Yes we talk about the Middle East, but we also 0:01:39.080 --> 0:01:43.480 talk about the complicated, increasingly complicated relationship the US has 0:01:43.760 --> 0:01:47.520 with China, and a big reason is Taiwan. First of all, 0:01:48.320 --> 0:01:50.760 when you sat down to write this book, what was 0:01:50.840 --> 0:01:52.920 top of mind for you? Was it to give us 0:01:52.920 --> 0:01:54.360 all a history? Lesson? 0:01:54.400 --> 0:01:55.040 What was it? 0:01:56.160 --> 0:01:58.760 Thank you for having me, Carol. There was a lot 0:01:58.800 --> 0:02:01.520 on my mind. I simply wanted people to understand how 0:02:01.520 --> 0:02:05.920 we got to this point. I wanted a legislator or 0:02:05.920 --> 0:02:08.440 an official flying to Taiwan to be able to read 0:02:08.440 --> 0:02:11.200 the book on the plane and say, Okay, I know 0:02:11.240 --> 0:02:14.120 what's behind all this. Because we're now at a point 0:02:14.200 --> 0:02:19.680 where there are large numbers of ships floating too close 0:02:19.720 --> 0:02:22.760 to one another, too many planes in the sky, and 0:02:22.840 --> 0:02:25.080 the US and China seemed to my mind to be 0:02:25.280 --> 0:02:29.280 one accident and a bad decision away from something that 0:02:29.320 --> 0:02:32.600 could go horribly, horribly wrong for all of us. And 0:02:32.680 --> 0:02:35.560 going through the history shows you both how we got here, 0:02:35.600 --> 0:02:38.960 but also that there were various ways out along the way, 0:02:39.760 --> 0:02:41.560 and there are moments that we can look to and 0:02:41.639 --> 0:02:44.360 learn from and that might help us better navigate the future. 0:02:44.560 --> 0:02:46.720 Well, it's interesting that you say that, and I do 0:02:46.840 --> 0:02:51.360 wonder it always feels so delicate, if you will, And 0:02:51.400 --> 0:02:54.600 I think about going back to when Nancy Pelosi what 0:02:54.680 --> 0:02:56.919 was it the summer of twenty twenty two, and took 0:02:56.960 --> 0:02:59.160 a visit she was then what US House speaker, and 0:02:59.200 --> 0:03:03.799 she went to visit Taipei. That was not a great situation, 0:03:03.919 --> 0:03:05.000 to say the least. 0:03:05.680 --> 0:03:08.000 It was not a great situation. And if you cast 0:03:08.040 --> 0:03:10.440 your mind back to that, you might remember who she Jin, 0:03:10.520 --> 0:03:14.080 who was the editor of a tabloid, saying her plane 0:03:14.120 --> 0:03:19.240 should be shot down, which was remarkable. It's not something 0:03:19.720 --> 0:03:23.560 that you would expect to be said, because usually Beijing 0:03:23.560 --> 0:03:26.519 has been quite good at controlling the level of vitriol 0:03:26.560 --> 0:03:29.480 that gets into propaganda. But you think about it, and 0:03:29.520 --> 0:03:32.000 then you cast your mind back to the Heinan spyplane 0:03:32.000 --> 0:03:37.360 incident that kicked off George W. Bush's presidency, and you say, 0:03:37.400 --> 0:03:40.320 you know, a Chinese plane collided with an American plane. 0:03:40.520 --> 0:03:42.560 But we all managed to walk away from that alive. 0:03:43.280 --> 0:03:46.200 That was partly because there was an interest in both 0:03:46.240 --> 0:03:49.400 Beijing and in Washington and getting along and in not 0:03:49.560 --> 0:03:53.960 going to roar. When Pelosi went to Taiwan, the thought 0:03:54.000 --> 0:03:56.720 that kept going through my mind was if this goes wrong, 0:03:56.880 --> 0:04:00.200 do we have that mutual commitment to getting out of it? 0:04:00.240 --> 0:04:03.280 A life is still intact. And the answer seemed to 0:04:03.280 --> 0:04:06.440 be uncertain, which is not something you want to think 0:04:06.480 --> 0:04:09.680 about when there are two great powers armed with nuclear weapons. 0:04:10.040 --> 0:04:11.600 You know, it's interesting. I feel like we have that 0:04:11.640 --> 0:04:14.119 conversation a lot about, you know, both of us, kind 0:04:14.120 --> 0:04:17.479 of whether it was the Middle East with Iran and Israel, 0:04:17.880 --> 0:04:20.799 about walking away and saying, wait a minute, the risks 0:04:20.839 --> 0:04:25.240 of moving forward are escalating. Are just it's too much 0:04:25.279 --> 0:04:28.440 that's at stake. But when you look at what's happening 0:04:28.440 --> 0:04:32.120 in Taiwan and the US and China. Is that willingness 0:04:32.160 --> 0:04:37.520 to walk away and preserve some calmness if you will? 0:04:38.200 --> 0:04:41.800 Is that willingness kind of waning if you will. 0:04:43.440 --> 0:04:46.719 I think it's waxing and waning, to be honest, it 0:04:46.760 --> 0:04:50.839 depends in any given moment. It was heartening to see 0:04:51.279 --> 0:04:56.159 some commitments with both Joe Biden and she Thing reaching 0:04:56.160 --> 0:04:58.159 out to one another and saying, can we walk away 0:04:58.160 --> 0:05:01.480 from this? It was heartening to an extent to see 0:05:01.920 --> 0:05:05.760 some recognition that while China might be a competitor, we 0:05:05.880 --> 0:05:09.600 don't want to go all the way into cataclysm in 0:05:09.640 --> 0:05:12.520 some contact with Chinese officials to that effect. What was 0:05:12.600 --> 0:05:16.840 not heartening, however, was the fact that the waxing happened too. 0:05:17.720 --> 0:05:21.159 So you mentioned the terroriffs just now, you mentioned the 0:05:21.240 --> 0:05:25.839 possibility of you mentioned the drills, And it's an election year, 0:05:25.880 --> 0:05:28.360 and in an election year, everybody advis to get tough 0:05:28.400 --> 0:05:31.520 on China. One of the things Donald Trump did was 0:05:31.560 --> 0:05:34.479 to forge a bipartisan consensus around the idea that we 0:05:34.600 --> 0:05:35.800 needed to get. 0:05:35.520 --> 0:05:36.800 Tough on China. 0:05:37.680 --> 0:05:40.159 And that's something that in an election year will lead 0:05:40.240 --> 0:05:42.039 to what to my mind amounts to a lot of 0:05:42.040 --> 0:05:46.560 fosturing and a lot of dangerous bosturing, because the sensitivities 0:05:46.560 --> 0:05:48.880 in Beaging are such that you don't know when things 0:05:48.880 --> 0:05:49.599 will go wrong. 0:05:50.080 --> 0:05:52.320 Well well as you know, getting tough, the United States 0:05:52.360 --> 0:05:55.520 getting tough on China right, maybe through tariffs, and then 0:05:55.560 --> 0:05:58.839 there's something different. I feel like when it comes to Taiwan. 0:05:59.400 --> 0:06:01.359 Is that fair to say that that is a whole 0:06:01.360 --> 0:06:03.960 other level in terms of what China, how it's use 0:06:04.000 --> 0:06:05.360 Taiwan and the importance of it. 0:06:06.720 --> 0:06:08.839 I think it's certainly a whole other level to Beijing. 0:06:09.560 --> 0:06:14.120 I think Taiwan is one of those spots that hurts 0:06:14.960 --> 0:06:17.839 and that they felt they had a commitment from the 0:06:17.960 --> 0:06:21.960 United States to a one China principle that the United 0:06:22.000 --> 0:06:26.560 States still says we do not challenge that. But if 0:06:26.600 --> 0:06:30.880 you look at things like trying to bolster Taiwan's diplomatic partnerships, 0:06:31.520 --> 0:06:34.640 if you look at things like Belosi's visit to Taiwan 0:06:34.720 --> 0:06:38.000 and other senior lawmakers visits to Taiwan, you really do 0:06:38.080 --> 0:06:41.640 have to wonder, especially if you're sitting in Beijing, how 0:06:41.680 --> 0:06:44.680 committed is the United States to that principle that's being 0:06:45.520 --> 0:06:47.159 you know, in some ways at the core of the 0:06:47.200 --> 0:06:50.240 relationship between the two countries since Nixon and Kissinger went 0:06:50.279 --> 0:06:54.200 to China. If that is being challenged, it opens up 0:06:54.200 --> 0:06:58.240 a can of worms that's just far more sensitive than 0:06:58.360 --> 0:07:01.039 even a trade dispute would be. And that's one of 0:07:01.080 --> 0:07:03.719 the reasons this is so dangerous because I don't think 0:07:03.880 --> 0:07:09.039 even now there's sufficient understanding within the United States about 0:07:09.080 --> 0:07:11.840 just what Taiwan means to China. That's not to say 0:07:11.920 --> 0:07:15.520 that Taiwan shouldn't enjoy the fruits of a democracy. It's 0:07:15.560 --> 0:07:19.000 worked very hard to get to. It just means that 0:07:19.080 --> 0:07:21.320 some caution and some prudence would be in order. 0:07:21.920 --> 0:07:22.800 Why did you know? 0:07:22.800 --> 0:07:25.520 It feels like with President g the one country two systems, 0:07:26.000 --> 0:07:32.040 you know, policy that seemed to work. It doesn't feel 0:07:32.040 --> 0:07:33.040 like it does anymore. 0:07:35.080 --> 0:07:38.320 So one country two systems is a fascinating concept, and 0:07:38.440 --> 0:07:41.440 Bunshapping was actually the person who came up with it, right, 0:07:41.480 --> 0:07:43.720 And when Dun comes up with it, it's interesting he 0:07:43.840 --> 0:07:44.680 actually wants. 0:07:44.480 --> 0:07:45.760 It to work like two systems. 0:07:46.560 --> 0:07:49.480 He's very explicit about saying, you know, when Hong Kong 0:07:49.600 --> 0:07:52.880 comes back under one country two systems, I don't want 0:07:52.920 --> 0:07:56.360 to tamper with the second system. It's the goose that 0:07:56.480 --> 0:07:59.440 lays the golden eggs. Why would I change something that's working, 0:08:00.960 --> 0:08:03.400 and that actually starts off a huge debate in Taiwan 0:08:03.480 --> 0:08:05.840 at the time. Maybe one country, two systems is the 0:08:05.880 --> 0:08:10.240 way to go. What changes under Chijinbang, of course, is 0:08:10.280 --> 0:08:14.040 that the second system bit gets left out. Hong Kong, 0:08:14.120 --> 0:08:17.920 if you look at it today, is not a place 0:08:18.040 --> 0:08:22.560 that it was even ten years ago, even twenty years ago, 0:08:22.600 --> 0:08:26.680 when you could commemorate the Tianeman Square massacre, when you 0:08:26.720 --> 0:08:28.920 could criticize the government in Beijing, when you can do 0:08:28.960 --> 0:08:32.080 all sorts of things that you know mainland China proper, 0:08:32.120 --> 0:08:35.080 you probably could not have got away with. That's not 0:08:35.160 --> 0:08:38.720 the case anymore. So what Chijin Bang has demonstrated is 0:08:39.000 --> 0:08:42.680 that one country, two systems is a nice concept, but 0:08:42.760 --> 0:08:46.160 it can change with the people charged. 0:08:45.840 --> 0:08:46.960 With implementing it. 0:08:47.720 --> 0:08:50.440 And if you're sitting in taipe Ai and you say, look, 0:08:50.480 --> 0:08:54.280 we worked really hard to get to a democracy where 0:08:54.280 --> 0:08:58.680 there have been peaceful transitions of power, one country, two 0:08:58.720 --> 0:09:01.480 systems doesn't look all that attractive anymore. 0:09:02.160 --> 0:09:04.760 I want to get back to Suman Khan, professor and 0:09:04.920 --> 0:09:08.160 share in history and international Relations at TUF's University. He's 0:09:08.200 --> 0:09:10.360 got a new book out, The Struggle for Taiwan a 0:09:10.440 --> 0:09:14.160 history of America, China and the island caught between. He's 0:09:14.160 --> 0:09:17.640 still with us from Boston, Soman. How do we get 0:09:17.640 --> 0:09:21.360 here where Taiwan is caught between the United States and China, 0:09:21.480 --> 0:09:25.280 and we know that it's a nation that Beijing covets, 0:09:25.360 --> 0:09:29.480 protects ownership. You see it very clearly, and yet as 0:09:29.520 --> 0:09:31.960 you note, it wasn't historically Chinese. 0:09:33.720 --> 0:09:37.640 Historically it starts off being its own weird level waste 0:09:37.640 --> 0:09:43.400 station between East Asia and Southeast Asia maritime terms, and 0:09:43.440 --> 0:09:46.400 then the Qing dynasty conquers China. 0:09:46.200 --> 0:09:48.560 Along with other parts of the world. 0:09:48.240 --> 0:09:54.079 And conquerors Taiwan. That dynasty then loses Taiwan to the 0:09:54.160 --> 0:09:57.640 Japanese Empire in the War of eighteen ninety four to five, 0:09:58.000 --> 0:10:03.880 and Taiwan is ceded to in perpetuity. Perpetuity lasts till 0:10:03.960 --> 0:10:08.199 the end of World War Two, and the United States 0:10:08.240 --> 0:10:13.160 at the Cairo Declaration says that Taiwan is going to 0:10:13.200 --> 0:10:17.080 be restored to the Republic of China. Problem with that 0:10:17.120 --> 0:10:20.240 declaration being there's many different China's at the time, including 0:10:20.280 --> 0:10:23.720 of course the Communists and the civil war that erupts 0:10:23.760 --> 0:10:26.760 between the Communists and the nationalists that would be, the 0:10:27.240 --> 0:10:27.920 nationalists would be. 0:10:27.960 --> 0:10:29.320 The Republic of China. 0:10:29.600 --> 0:10:32.320 Is one that the United States is not sure where 0:10:32.320 --> 0:10:32.920 it stands on. 0:10:33.000 --> 0:10:35.960 It wants to wash its hands of the nationalists. 0:10:35.840 --> 0:10:38.360 And when the nationalists are eventually beaten back to the 0:10:38.360 --> 0:10:42.280 island of Taiwan, the betting money is sooner or later, 0:10:42.400 --> 0:10:43.040 this too, is. 0:10:42.960 --> 0:10:45.120 Going to become part of the People's Republic of China. 0:10:45.840 --> 0:10:48.079 What the nationalists set up on Taiwan is a police 0:10:48.080 --> 0:10:50.280 state by the way, that has a whiff of settler 0:10:50.280 --> 0:10:54.679 colonialism to it, so there's not much sympathy for it. 0:10:54.760 --> 0:10:57.480 But when the Korean War breaks out, Truman sends the 0:10:57.480 --> 0:11:00.040 Seventh Fleet to the Taiwan Street and that begins the 0:10:59.880 --> 0:11:06.080 separation of the island from the government that is governing China. 0:11:06.240 --> 0:11:09.960 For much of the next few decades, the United States 0:11:10.040 --> 0:11:12.880 is going to be stopped trying to choose between two Chinas. 0:11:13.400 --> 0:11:16.280 And it's only when Henry Kissinger and Richard Nixon decide 0:11:16.320 --> 0:11:18.760 to make peace with the PRC in nineteen seventy one 0:11:19.559 --> 0:11:23.240 that the United States once again has a modus vende 0:11:23.360 --> 0:11:26.840 with Beijing. But that leaves the fate of Taiwan uncertain 0:11:27.040 --> 0:11:29.920 because for domestic reasons, the United States feels it cannot 0:11:30.000 --> 0:11:34.319 come to a definitive handing over as it were, of 0:11:34.360 --> 0:11:39.120 Taiwan to the PRC. But the One China principle acknowledges 0:11:39.200 --> 0:11:41.959 that Chinese on both sides of the Taiwan Strait maintained 0:11:41.960 --> 0:11:44.040 that there is but one China, that Taiwan is a 0:11:44.080 --> 0:11:46.760 part of China. That the United States does not dispute 0:11:46.760 --> 0:11:47.520 this formulation. 0:11:49.400 --> 0:11:51.920 That is more or less. 0:11:51.800 --> 0:11:55.959 The situation that attains still normalization of relations between the 0:11:56.040 --> 0:12:00.880 United States and the PRC with Jimmy Carter overseasation comes 0:12:00.880 --> 0:12:03.920 with the Taiwan Relations Act, which means that the President 0:12:04.000 --> 0:12:07.640 is supposed to think about the defense of Taiwan, that 0:12:07.920 --> 0:12:11.960 being in the interests of the United States, which of 0:12:11.960 --> 0:12:14.839 course has Beijing howling mad. But that is where we are, 0:12:15.679 --> 0:12:19.920 and as a result, Taiwan has maintained a separation from 0:12:20.000 --> 0:12:21.040 China to this day. 0:12:22.200 --> 0:12:25.319 Well, you know, it's interesting, so you give that that history, 0:12:25.320 --> 0:12:27.400 and I feel like it's been a tortured relationship a 0:12:27.440 --> 0:12:30.439 little bit on the part of US and US politicians 0:12:30.480 --> 0:12:34.680 about what the US role is right in terms of 0:12:34.679 --> 0:12:35.600 protecting Taiwan. 0:12:37.800 --> 0:12:40.240 It remains a tortured relationship, you know, if you look 0:12:40.240 --> 0:12:42.360 at the Taiwan Relations Act and ask how is this 0:12:42.440 --> 0:12:45.719 consistent with the one China principle? Right, and so it 0:12:45.760 --> 0:12:50.360 doesn't look all that consistent, But one can talk one's 0:12:50.360 --> 0:12:53.760 way into thinking of it that way. If the United 0:12:53.760 --> 0:12:57.320 States remains committed to the defense of Taiwan at some level, 0:12:57.400 --> 0:12:59.520 that is saying we have an interest in what is 0:12:59.559 --> 0:13:02.320 happening here and we're willing to tell China what to 0:13:02.360 --> 0:13:05.720 do about it. So to maintain that that is somehow 0:13:06.880 --> 0:13:09.319 consistent with the idea that Taiwan is part of China 0:13:09.360 --> 0:13:13.240 seems to me to be untenable. Why is the United 0:13:13.280 --> 0:13:15.160 States committed to this? I think there's a whole host 0:13:15.160 --> 0:13:19.440 of reasons. There is partly credibility. One wants to show 0:13:19.559 --> 0:13:24.280 China one can be tough. There is domestic political consideration. 0:13:25.400 --> 0:13:29.600 One doesn't want to appear weak on China before one's constituents. 0:13:31.559 --> 0:13:33.800 There is I. 0:13:33.720 --> 0:13:37.600 Think among some people now there is some consideration, and 0:13:37.640 --> 0:13:39.960 this is probably what should be the argument if one 0:13:40.000 --> 0:13:41.280 we're going to make an argument, this is. 0:13:41.200 --> 0:13:42.720 Why the United States should defend Taiwan. 0:13:43.080 --> 0:13:47.520 Taiwan did everything right despite the United States foisting a 0:13:47.559 --> 0:13:50.880 police state on it. It made the transition to democracy. 0:13:51.320 --> 0:13:53.280 You know, that's an example for us in some ways 0:13:53.920 --> 0:13:56.320 on how to hand power over peacefully and how to 0:13:56.320 --> 0:13:59.400 deal with disinformation and what has been created on that 0:13:59.480 --> 0:14:03.440 island something that excites some sympathy. 0:14:03.880 --> 0:14:07.360 Well, so you know what I was thinking is I'm 0:14:07.400 --> 0:14:09.440 listening to you and I'm thinking, and I've thought about 0:14:09.440 --> 0:14:12.640 this a lot when we talk about Taiwan, is that 0:14:12.880 --> 0:14:17.440 what does Taiwan want and what's its own kind of 0:14:17.480 --> 0:14:20.440 independent thought in all of this? And I think about 0:14:20.440 --> 0:14:23.200 it especially. We spend so much time, as you would imagine, 0:14:23.200 --> 0:14:28.360 talking about semiconductors, the importance of TSMC, how important it 0:14:28.400 --> 0:14:32.880 is to the world, the global world of semiconductors. But 0:14:33.000 --> 0:14:35.560 I do think about what does Taiwan want in all 0:14:35.600 --> 0:14:38.640 of this? What can it do independently if anything? 0:14:39.960 --> 0:14:42.920 So I think what Taiwan wants. And you actually saw 0:14:42.960 --> 0:14:46.720 a consensus on this in the elections earlier this year. 0:14:48.520 --> 0:14:51.400 There doesn't seem to be any rush to unify with China. 0:14:53.360 --> 0:14:56.480 The three parties that were contesting the election mainly we're 0:14:56.520 --> 0:14:59.880 all pretty much agreed on that there is a fact 0:15:00.360 --> 0:15:04.760 that wants to declare independence outright. What's weighing against that 0:15:04.880 --> 0:15:08.560 of course is if one declares independence outright, one is 0:15:08.560 --> 0:15:11.520 stuck with a situation where that might provoke China into 0:15:11.560 --> 0:15:15.640 destroying such independence de facto independence as exists at the moment, 0:15:16.840 --> 0:15:19.000 and there's no guarantee that the United States would do 0:15:19.080 --> 0:15:21.880 the right thing there. One never knows what the United 0:15:21.920 --> 0:15:24.360 States will do or not do at a given moment. 0:15:25.040 --> 0:15:27.760 So I think if you asked what is the one 0:15:27.840 --> 0:15:30.920 thing most people in Taiwan are agreed on, it would 0:15:30.920 --> 0:15:33.760 be we don't want to jeopardize what we have. How 0:15:33.840 --> 0:15:36.080 one goes about that as a separate thing. Does it 0:15:36.160 --> 0:15:39.720 come with a commitment to declaring independence? Maybe some point 0:15:39.760 --> 0:15:43.160 down the line, if one has prepared one's defenses to 0:15:43.200 --> 0:15:46.160 the point where they could withstand or at least cost 0:15:46.280 --> 0:15:48.720 China a lot if there were to be assault. 0:15:49.200 --> 0:15:49.800 And one of the. 0:15:49.760 --> 0:15:52.200 Things that has sharpened this conversation in Taiwan is what 0:15:52.280 --> 0:15:56.440 happened in Ukraine. It looked like the reason the United 0:15:56.480 --> 0:16:00.120 States was willing to commit money to Ukraine and or 0:16:00.360 --> 0:16:03.520 Ukraine was the fact that the Ukrainians, against quite a 0:16:03.560 --> 0:16:06.680 bit of the betting money, stood up for themselves. Would 0:16:06.720 --> 0:16:09.160 Taiwan be willing to do that? And one of the 0:16:09.280 --> 0:16:11.840 interesting things about studying the past and studying how wars 0:16:11.880 --> 0:16:13.560 break out in the past and what people do is 0:16:13.560 --> 0:16:16.240 you never know till the last moment. There's an element 0:16:16.280 --> 0:16:18.520 of choice that comes into it. But it is a 0:16:18.560 --> 0:16:21.320 conversation that's being had over there, and it's a conversation 0:16:21.400 --> 0:16:23.240 that's being had with increasing intensity. 0:16:23.760 --> 0:16:26.640 Just thirty seconds, and I need you to be quick 0:16:26.680 --> 0:16:30.120 if I can, if I may the driver's seat. Who's 0:16:30.120 --> 0:16:32.880 in the driver's seat in this triangular relationship US, China 0:16:33.000 --> 0:16:33.520 or Taiwan. 0:16:34.640 --> 0:16:37.480 Nobody everybody has the illusion they're in the driver's seat, 0:16:37.560 --> 0:16:39.280 but they're all jostling for the steering wheel. 0:16:40.480 --> 0:16:43.760 That can cause issues, as we know. I hope we 0:16:43.800 --> 0:16:46.000 can continue this conversation in the future because I do 0:16:46.040 --> 0:16:48.200 feel like this is an important issue. And you're absolutely 0:16:48.240 --> 0:16:51.080 right with what's going on in Russia Ukraine right now, 0:16:51.560 --> 0:16:55.000 very very topical and very very relevant. Congratulations on the book. 0:16:55.560 --> 0:16:58.600 Suman Khan, Professor and Dennison Chair in History and International 0:16:58.640 --> 0:17:02.840 Relationships relations excuse me at Tufts University. His new book 0:17:02.880 --> 0:17:06.120 that is out, The Struggle for Taiwan, A History of America, 0:17:06.359 --> 0:17:09.359 China and the Island Caught Between. And you can if 0:17:09.359 --> 0:17:10.800 you missed any of it, be sure to catch it 0:17:10.800 --> 0:17:13.760 on our podcast feed. You're listening and watching Bloomberg Business Week. 0:17:13.760 --> 0:17:16.040 I'm Carol Masser, and this is Bloomberg. 0:17:21.240 --> 0:17:25.639 This is Bloomberg Business Week inside from the reporters and 0:17:25.800 --> 0:17:29.399 editors who bring you America's most trusted business magazine plus 0:17:29.480 --> 0:17:33.399 global business, finance and tech news as it happens. Bloomberg 0:17:33.440 --> 0:17:38.520 Business Week with Carol Messer and Tim Stenebek on Bloomberg Radio. 0:17:38.880 --> 0:17:41.200 All right, everybody, this is Bloomberg Business Week. Carol Masser. 0:17:41.200 --> 0:17:44.080 Tim Stenevik is off today. He should be back tomorrow, 0:17:44.119 --> 0:17:47.639 I believe, cross my fingers miss him very much. We 0:17:47.680 --> 0:17:48.800 do want to get to some news out of the 0:17:48.800 --> 0:17:52.560 global fintech space today and Groups quarterly earnings falling nineteen 0:17:52.640 --> 0:17:55.240 percent as a Chinese fintech pioneer founded by Jack Ma, 0:17:55.680 --> 0:17:59.480 struggling to find new drivers of growth, falling regulatory clamp 0:17:59.520 --> 0:18:02.120 downs at home. We know the Chinese market very specific, 0:18:02.119 --> 0:18:04.520 so there's a lot going on. I will say more 0:18:04.560 --> 0:18:07.159 generally when it comes to growth. AI Digital Crypto all 0:18:07.200 --> 0:18:10.200 top of mine. When it comes to those in the 0:18:10.240 --> 0:18:13.040 fintech space and trying to think about how they fuel 0:18:13.080 --> 0:18:16.480 growth and ongoing innovation. Our next guest has some thoughts 0:18:16.520 --> 0:18:19.879 on all of it. Stephanie Chwo is partner at Portage Ventures, 0:18:19.960 --> 0:18:22.560 a global fintech platform. They've got over two billion in 0:18:22.560 --> 0:18:25.200 assets under management, and she is joining us from San 0:18:25.240 --> 0:18:28.399 Francisco with a beautiful backdrop. Steph, Hey, good to have 0:18:28.480 --> 0:18:29.280 you here with us. 0:18:29.280 --> 0:18:29.760 How are you? 0:18:30.880 --> 0:18:32.920 I'm great, Thanks for having me, Carl, Well, listen for 0:18:33.160 --> 0:18:33.440 the track. 0:18:33.680 --> 0:18:35.760 Well, We're excited to have you here because I do 0:18:35.800 --> 0:18:37.440 feel like I feel like there is go back a 0:18:37.480 --> 0:18:39.080 couple of years and all we talked about was fintech 0:18:39.119 --> 0:18:40.879 and fintech innovation, and I feel like it got a 0:18:40.920 --> 0:18:44.160 little millow, but we're back at it. First of all, 0:18:44.200 --> 0:18:46.480 for our audience, tell us a little bit more about 0:18:46.480 --> 0:18:48.560 your firm. Fill in kind of the holes and specifically 0:18:48.560 --> 0:18:49.560 what you guys are up to. 0:18:50.960 --> 0:18:52.800 Two and a half billion dollar fintech platform. 0:18:52.920 --> 0:18:55.399 We've got an early stage fund that focuses on Series 0:18:55.440 --> 0:18:58.400 A and Series B investing five to twenty five million 0:18:58.440 --> 0:19:00.560 dollar lead checks. We've got a late stage each fund 0:19:01.000 --> 0:19:04.879 as well, and all we do is fintech across payments, banking, 0:19:04.920 --> 0:19:09.600 wealth management, insurance. So we have been at this for 0:19:09.640 --> 0:19:12.520 about the last decades, so have seen the rise and 0:19:12.640 --> 0:19:14.960 fall over the last little while. 0:19:15.920 --> 0:19:18.359 All right, so where are we in the cyclone? What's interesting? 0:19:18.440 --> 0:19:20.879 What's kind of really innovation? What is just like, Okay, 0:19:20.880 --> 0:19:23.560 here's a tweak on something that's already out there, but 0:19:23.600 --> 0:19:25.560 we can do it a little bit a little better, and 0:19:25.640 --> 0:19:29.200 it's just kind of you know, kind of maybe general business, 0:19:29.200 --> 0:19:31.200 if you will. 0:19:31.240 --> 0:19:33.840 The numbers are actually pretty study. I was looking at 0:19:33.880 --> 0:19:37.120 them earlier today. We're nowhere near the all time highs. 0:19:37.160 --> 0:19:39.520 In twenty twenty one, we're one and every four dollars 0:19:39.920 --> 0:19:43.639 was going into fintech. We're now looking at about seven 0:19:43.720 --> 0:19:47.360 billion dollars of fintech investing in Q one of the 0:19:47.760 --> 0:19:51.440 about sixty billion dollars the venture dollars going into the market, 0:19:51.640 --> 0:19:53.960 so it's now more like one in every eight dollars. 0:19:54.000 --> 0:19:57.160 But it's been pretty study the last four quarters. 0:19:57.359 --> 0:19:59.240 We're now kind of close to where we were in 0:19:59.320 --> 0:20:02.679 twenty seven teen terms in terms of where the fintech 0:20:02.720 --> 0:20:06.080 market is. But I think overall we're still super bullish 0:20:06.080 --> 0:20:08.639 on the market. Financial services is still a twelve and 0:20:08.680 --> 0:20:12.280 a half trillion dollar industry of which we're still scratching 0:20:12.320 --> 0:20:16.640 the surface. Only two percent of the total dollars flowing 0:20:16.680 --> 0:20:20.679 into financial services actually is flowing through FinTechs today. I 0:20:20.720 --> 0:20:24.320 think we're still in the opening innings despite being at 0:20:24.400 --> 0:20:29.160 a kind of plateau in the market for now. 0:20:29.359 --> 0:20:31.040 Well it's interesting too, you know, And we were just 0:20:31.040 --> 0:20:33.639 talking with some very senior members over at Wells Fargo. 0:20:33.720 --> 0:20:36.840 I do feel like the financial establishment still is very 0:20:37.040 --> 0:20:41.480 involved in everything and anything in the financial world. Having 0:20:41.560 --> 0:20:44.000 said that, you guys have a pretty big portfolio, tell 0:20:44.000 --> 0:20:45.679 me a little bit about some of the companies and 0:20:45.920 --> 0:20:47.840 what's kind of interesting, what's new, what do you think 0:20:47.920 --> 0:20:49.919 is kind of a trend of the future when it 0:20:49.960 --> 0:20:51.520 comes to this space. 0:20:52.640 --> 0:20:55.040 So I think the thing that everybody's talking about right 0:20:55.040 --> 0:20:59.280 now is AI. I think that will be the biggest 0:20:59.280 --> 0:21:01.880 pops in the market in terms of valuation, in terms 0:21:01.920 --> 0:21:04.800 of what investors are looking at right now, is AI. 0:21:04.880 --> 0:21:07.080 Within financial services. I think the. 0:21:07.640 --> 0:21:11.560 First early use cases that we're seeing across our portfolio, 0:21:11.600 --> 0:21:13.640 and we have a number of portfolio companies that are 0:21:13.960 --> 0:21:18.520 spending time in this space, are efficiency use cases. So 0:21:18.840 --> 0:21:22.000 how you work with large corporates today, I think every 0:21:22.040 --> 0:21:25.720 board is thinking about the efficiency use case. On the 0:21:25.840 --> 0:21:30.960 cost side, customer service, how to think about coding, how 0:21:30.960 --> 0:21:36.879 to think about the below the line marketing dollars. I 0:21:36.880 --> 0:21:41.679 think all of that is very clearly improvements in underwriting, 0:21:41.720 --> 0:21:44.640