1 00:00:05,849 --> 00:00:09,609 Speaker 1: Welcome to Copy Time, a podcast series on Markets and 2 00:00:09,619 --> 00:00:13,340 Speaker 1: Economies from D BS Group Research. I'm Tamara, be chief economist. 3 00:00:13,350 --> 00:00:16,779 Speaker 1: Welcoming you to our 120th episode 4 00:00:17,549 --> 00:00:21,569 Speaker 1: to the readers of Financial Times. Today's guest is likely 5 00:00:21,579 --> 00:00:24,569 Speaker 1: to be a familiar one. Just a few years ago, 6 00:00:24,579 --> 00:00:28,750 Speaker 1: Henny Sander was FTS chief correspondent for international finance and 7 00:00:28,760 --> 00:00:32,040 Speaker 1: I believe that was a 13 year stint. Henny has 8 00:00:32,049 --> 00:00:35,049 Speaker 1: also spent formative years with the Wall Street Journal and 9 00:00:35,060 --> 00:00:36,569 Speaker 1: Far Eastern Economic Review. 10 00:00:36,860 --> 00:00:40,479 Speaker 1: Uh but the journalist currier is one but in recent years, 11 00:00:40,490 --> 00:00:44,080 Speaker 1: he has served as managing director at Blackrock, a senior 12 00:00:44,090 --> 00:00:47,680 Speaker 1: advisor to the executive office in Asia. And presently she 13 00:00:47,689 --> 00:00:51,279 Speaker 1: is the founder of New York based Consultancy, Apsara Advisory. 14 00:00:51,750 --> 00:00:54,220 Speaker 1: Henny Sender. This has been a long time coming. A 15 00:00:54,229 --> 00:00:55,639 Speaker 1: warm welcome to coffee time. 16 00:00:56,860 --> 00:01:00,189 Speaker 1: Thank you so much. It's great to have you. Any. 17 00:01:00,200 --> 00:01:02,529 Speaker 1: You are talking to me from Hong Kong but you 18 00:01:02,540 --> 00:01:06,599 Speaker 1: were in Beijing till yesterday. What vibes did you pick up? 19 00:01:07,919 --> 00:01:11,300 Speaker 2: So I was only in Beijing for one day. It 20 00:01:11,309 --> 00:01:16,300 Speaker 2: was a glorious spring day for those people who remember 21 00:01:16,309 --> 00:01:22,290 Speaker 2: the pollution in Beijing years ago. It was a revelation 22 00:01:22,440 --> 00:01:26,059 Speaker 2: to see those blue skies and I do believe 23 00:01:26,154 --> 00:01:32,253 Speaker 2: is that China is absolutely committed to reducing the pollution 24 00:01:32,264 --> 00:01:37,584 Speaker 2: of its skies and its waterways, et cetera. Cherry blossoms, 25 00:01:37,595 --> 00:01:44,214 Speaker 2: peach blossoms. So it was delightful to be in Beijing. 26 00:01:45,519 --> 00:01:48,180 Speaker 1: And how was the overall mood? Was it getting uplifted 27 00:01:48,190 --> 00:01:49,019 Speaker 1: by the good weather? 28 00:01:50,129 --> 00:01:55,169 Speaker 2: I believe it was. And I did not go by 29 00:01:55,180 --> 00:01:59,010 Speaker 2: metro from the airport to the city which I used 30 00:01:59,019 --> 00:02:03,389 Speaker 2: to do. And there are very few bicycles on the 31 00:02:03,400 --> 00:02:08,029 Speaker 2: road in Beijing these days. And there are many, many 32 00:02:08,038 --> 00:02:15,740 Speaker 2: electric vehicles and this is the transition in Beijing, right? 33 00:02:16,258 --> 00:02:18,809 Speaker 2: And yet there is 34 00:02:20,240 --> 00:02:25,839 Speaker 2: a confidence issue and you speak to people all the 35 00:02:25,850 --> 00:02:32,299 Speaker 2: time and they don't feel optimistic about the future in 36 00:02:32,309 --> 00:02:36,839 Speaker 2: the way they used to do years ago. And as 37 00:02:36,850 --> 00:02:41,419 Speaker 2: my story better than anyone, Tamar, I had gone to 38 00:02:41,429 --> 00:02:45,500 Speaker 2: India as a student, spent many years of my life 39 00:02:45,508 --> 00:02:49,859 Speaker 2: in India. And the first time I went to China, 40 00:02:50,279 --> 00:02:53,638 Speaker 2: I felt that I was seeing it through Indian eyes 41 00:02:53,750 --> 00:02:58,779 Speaker 2: rather than New York City eyes and the sense of 42 00:02:58,788 --> 00:03:04,600 Speaker 2: confidence and pride and rightfully so and the sense that 43 00:03:04,610 --> 00:03:09,100 Speaker 2: their lives were all getting better in the last several years. 44 00:03:09,110 --> 00:03:15,539 Speaker 2: You don't hear that narrative anymore and the scars of 45 00:03:15,550 --> 00:03:18,380 Speaker 2: COVID are still very deep. 46 00:03:18,809 --> 00:03:22,220 Speaker 2: China is very good at not forgetting. 47 00:03:24,690 --> 00:03:29,228 Speaker 1: So when we talk about deep scars from the pandemic, 48 00:03:29,429 --> 00:03:32,758 Speaker 1: but when we try to square that with data uh 49 00:03:32,779 --> 00:03:36,770 Speaker 1: certainly in 2023 that scar was deep and we didn't 50 00:03:36,779 --> 00:03:41,059 Speaker 1: see a confident return to travel and tourism. But let me, 51 00:03:41,070 --> 00:03:43,580 Speaker 1: when we look at data from the first three months 52 00:03:43,589 --> 00:03:50,190 Speaker 1: of 2024 it seems like some vigor in interregional travel, 53 00:03:50,199 --> 00:03:52,270 Speaker 1: domestic tourism and so on. 54 00:03:52,509 --> 00:03:55,059 Speaker 1: So I I hear you when you say that compared 55 00:03:55,070 --> 00:03:59,289 Speaker 1: to those giddy days of strong confident China things look 56 00:03:59,300 --> 00:04:03,210 Speaker 1: subdued now. But the delta, the movement on the margin, 57 00:04:03,220 --> 00:04:05,279 Speaker 1: it seems to be on the upside as far as 58 00:04:05,289 --> 00:04:05,889 Speaker 1: you're concerned. 59 00:04:07,839 --> 00:04:13,539 Speaker 2: So it it depends when you wanna start and it 60 00:04:13,550 --> 00:04:19,899 Speaker 2: is obviously confidence is very subjective. From my point of view, 61 00:04:20,928 --> 00:04:24,359 Speaker 2: they have the same target for growth this year as 62 00:04:24,369 --> 00:04:27,950 Speaker 2: they did last year. But the base is much higher 63 00:04:28,320 --> 00:04:32,070 Speaker 2: in 24 than it was in 23 because the base 64 00:04:32,079 --> 00:04:37,160 Speaker 2: from the previous year was so depressed by COVID. So 65 00:04:37,170 --> 00:04:42,910 Speaker 2: you look at some indicators and they suggest better, but 66 00:04:43,369 --> 00:04:46,659 Speaker 2: there is a certain opportunity cost 67 00:04:47,089 --> 00:04:51,260 Speaker 2: in the measures they've adopted so far 68 00:04:52,299 --> 00:04:58,339 Speaker 2: and I respect the fact that you don't want bubbles, 69 00:04:58,720 --> 00:05:02,959 Speaker 2: but there's so much more they could be doing, especially 70 00:05:02,970 --> 00:05:08,559 Speaker 2: on the demand side. So rightly, you say there's been 71 00:05:08,570 --> 00:05:11,359 Speaker 2: too much speculation in housing, 72 00:05:12,549 --> 00:05:15,609 Speaker 2: but sales are down 30% 73 00:05:16,299 --> 00:05:20,059 Speaker 2: and the measures so far have been much less than 74 00:05:20,070 --> 00:05:26,890 Speaker 2: they could be, especially in rental housing and affordable housing. 75 00:05:27,350 --> 00:05:32,039 Speaker 2: So this government feels much more comfortable 76 00:05:32,880 --> 00:05:37,899 Speaker 2: reform, putting reforms on the supply side. So 77 00:05:38,859 --> 00:05:43,118 Speaker 2: if I'm a household in some second tier city, 78 00:05:44,178 --> 00:05:47,320 Speaker 2: I may have lost a lot of money in the 79 00:05:47,329 --> 00:05:50,760 Speaker 2: property market. I may have lost money 80 00:05:51,529 --> 00:05:53,279 Speaker 2: in the equity market. 81 00:05:54,160 --> 00:05:58,640 Speaker 2: And now I'm very conservative. I leave my money in 82 00:05:58,649 --> 00:05:59,299 Speaker 2: the bank, 83 00:06:00,010 --> 00:06:00,428 Speaker 2: but 84 00:06:01,619 --> 00:06:06,760 Speaker 2: I can't get much return on my deposits because the 85 00:06:06,769 --> 00:06:10,320 Speaker 2: government prefers to cut interest rates in the hope that 86 00:06:10,329 --> 00:06:16,308 Speaker 2: that will produce more borrowing, especially from state owned enterprises. 87 00:06:16,709 --> 00:06:18,399 Speaker 2: But I'm not earning anything 88 00:06:18,488 --> 00:06:22,529 Speaker 2: on my savings. And the measure so far to make 89 00:06:22,540 --> 00:06:28,929 Speaker 2: me feel good about spending trading in my old electrical 90 00:06:28,940 --> 00:06:33,950 Speaker 2: compli appliances isn't gonna do much for me. It seems 91 00:06:33,959 --> 00:06:38,790 Speaker 2: very marginal but forgive me. But let me ask you 92 00:06:38,839 --> 00:06:42,549 Speaker 2: what your analysis is as an economist. 93 00:06:43,589 --> 00:06:46,079 Speaker 1: And I think you will remember a conversation that you 94 00:06:46,089 --> 00:06:49,618 Speaker 1: and I had last week and my belief is among 95 00:06:49,630 --> 00:06:52,529 Speaker 1: the points that you made and spot on. And I 96 00:06:52,540 --> 00:06:55,100 Speaker 1: think the thing that needs to move first has to 97 00:06:55,109 --> 00:06:57,730 Speaker 1: be the stock market. The property market 98 00:06:58,529 --> 00:07:01,739 Speaker 1: adjustment will take years. We can't wait for the property 99 00:07:01,750 --> 00:07:04,309 Speaker 1: market to bottom out and that would be the lead 100 00:07:04,320 --> 00:07:08,320 Speaker 1: driver of sentiment and growth. Uh There has to be 101 00:07:08,329 --> 00:07:12,489 Speaker 1: excitement for entrepreneurs to build companies and brands and take 102 00:07:12,500 --> 00:07:16,829 Speaker 1: them public and become wealthy. And if that can happen, 103 00:07:17,359 --> 00:07:20,779 Speaker 1: even while the property market adjustment continues, I think it 104 00:07:20,790 --> 00:07:23,489 Speaker 1: will be a very good offset. And this year with 105 00:07:23,500 --> 00:07:24,790 Speaker 1: the likes of Xan 106 00:07:25,429 --> 00:07:28,260 Speaker 1: and perhaps even and financial, I don't know, there are 107 00:07:28,269 --> 00:07:31,730 Speaker 1: a couple of IP OS that could be generating some 108 00:07:31,739 --> 00:07:35,799 Speaker 1: degree of momentum, some degree of excitement. Um So I, I, 109 00:07:36,630 --> 00:07:39,750 Speaker 1: we, we compare with you about the depressed nature of 110 00:07:39,760 --> 00:07:44,268 Speaker 1: domestic sentiment. Uh I do think that the policy environment 111 00:07:44,279 --> 00:07:47,309 Speaker 1: is not in a state of paralysis, things are being done, 112 00:07:47,320 --> 00:07:49,170 Speaker 1: maybe not to the extent that you and I would like, 113 00:07:49,179 --> 00:07:51,899 Speaker 1: but it's getting done. Uh And I also think that 114 00:07:51,910 --> 00:07:54,869 Speaker 1: there are probably a couple of pipeline things in the 115 00:07:54,980 --> 00:07:57,890 Speaker 1: equity market that could help things on the margin. 116 00:07:58,130 --> 00:08:00,709 Speaker 1: Um But he I I the moment I start talking 117 00:08:00,720 --> 00:08:02,420 Speaker 1: about stock market, I need to, I feel like I 118 00:08:02,429 --> 00:08:04,799 Speaker 1: should spill over into Hong Kong, which I don't want 119 00:08:04,809 --> 00:08:06,040 Speaker 1: to do. I want to stay with China for a 120 00:08:06,049 --> 00:08:12,160 Speaker 1: little longer. Um your sense of strategy. We read a 121 00:08:12,170 --> 00:08:15,850 Speaker 1: lot about what the US strategy is. Republicans Democrats, there 122 00:08:15,859 --> 00:08:17,489 Speaker 1: is no daylight between them. They all want to beat 123 00:08:17,500 --> 00:08:20,230 Speaker 1: up on China and they want to create more restrictions 124 00:08:20,239 --> 00:08:23,359 Speaker 1: on market and tech access. We know all that. What 125 00:08:23,369 --> 00:08:24,829 Speaker 1: is the Chinese playbook 126 00:08:26,730 --> 00:08:28,390 Speaker 2: from the point of view of the US 127 00:08:29,570 --> 00:08:30,959 Speaker 2: or to deal with? 128 00:08:31,250 --> 00:08:35,119 Speaker 1: Right? For like China sees sort of relentless escalation of 129 00:08:35,130 --> 00:08:40,689 Speaker 1: trade and tech war and strategy is possible for the 130 00:08:40,700 --> 00:08:42,960 Speaker 1: Chinese to do in the in the middle of all this. 131 00:08:44,520 --> 00:08:50,590 Speaker 2: So it's it's very interesting because it's a return to 132 00:08:50,599 --> 00:08:54,599 Speaker 2: the 1st 50 years of the PR C. In my view, 133 00:08:55,369 --> 00:09:01,039 Speaker 2: the Chinese narrative, the Chinese history as they see it. 134 00:09:01,049 --> 00:09:07,380 Speaker 2: Post 1949 was we have to depend on ourselves all 135 00:09:07,390 --> 00:09:12,559 Speaker 2: about self reliance. And I was reading a history book 136 00:09:12,849 --> 00:09:18,799 Speaker 2: and there's a small footnote to that self reliance narrative, 137 00:09:19,559 --> 00:09:23,098 Speaker 2: which is that for 50 years, no one in the 138 00:09:23,109 --> 00:09:24,250 Speaker 2: world helped us 139 00:09:25,760 --> 00:09:30,000 Speaker 2: except for a nanosecond when we got aid from the 140 00:09:30,010 --> 00:09:34,000 Speaker 2: former Soviet Union and they cut us off at the knees. 141 00:09:34,450 --> 00:09:38,229 Speaker 2: And in fact that narrative isn't quite true when they 142 00:09:38,239 --> 00:09:44,719 Speaker 2: got a ton of aid, especially from European countries. But 143 00:09:44,729 --> 00:09:47,780 Speaker 2: that's the narrative they tell themselves 144 00:09:48,090 --> 00:09:52,229 Speaker 2: and most people don't realize. But sitting in Hong Kong, 145 00:09:52,239 --> 00:09:56,549 Speaker 2: we all realized that there was a debate in China 146 00:09:56,880 --> 00:10:01,380 Speaker 2: about the wisdom of joining the World Trade Organization in 147 00:10:01,669 --> 00:10:03,549 Speaker 2: December of 01. 148 00:10:03,880 --> 00:10:07,510 Speaker 2: And that debate was, can we trust the world if 149 00:10:07,520 --> 00:10:13,700 Speaker 2: we abandon self reliance? Will there be somebody who sells 150 00:10:13,710 --> 00:10:19,090 Speaker 2: us what we need? And China is not self sufficient 151 00:10:19,469 --> 00:10:22,599 Speaker 2: in either fuel or food? 152 00:10:22,989 --> 00:10:29,140 Speaker 2: So will somebody sell us soybeans? Will somebody sell us corn? 153 00:10:29,219 --> 00:10:36,309 Speaker 2: Will somebody sell us energy? So with these decoupling policies 154 00:10:36,320 --> 00:10:41,049 Speaker 2: from the US, which you point out rightly embrace both 155 00:10:41,059 --> 00:10:43,090 Speaker 2: trade and technology. 156 00:10:43,669 --> 00:10:48,159 Speaker 2: China's response is to say we were right not to 157 00:10:48,169 --> 00:10:53,119 Speaker 2: trust the world. The US means that we have to 158 00:10:53,130 --> 00:10:57,320 Speaker 2: return to our self reliance narrative 159 00:10:58,159 --> 00:11:04,179 Speaker 2: and we can't get semiconductors from the US anymore. We 160 00:11:04,190 --> 00:11:08,950 Speaker 2: can produce above seven and that's good enough for most 161 00:11:08,960 --> 00:11:11,340 Speaker 2: applications actually, 162 00:11:12,159 --> 00:11:17,719 Speaker 2: but we have to rely more on ourselves and it 163 00:11:17,729 --> 00:11:19,348 Speaker 2: comes at costs. 164 00:11:19,840 --> 00:11:26,409 Speaker 2: So one of the Chinese enterprises f sun or fluxing 165 00:11:26,419 --> 00:11:30,770 Speaker 2: in Mandarin, who had made all kinds of arrangements to 166 00:11:30,780 --> 00:11:35,750 Speaker 2: license MRN A vaccines from the West. They could never 167 00:11:35,760 --> 00:11:41,869 Speaker 2: get approval, but they used locally developed vaccines which weren't 168 00:11:41,880 --> 00:11:46,358 Speaker 2: as effective. And now that self reliance, 169 00:11:46,919 --> 00:11:51,169 Speaker 2: you can see it increasing in a host of technologies 170 00:11:51,179 --> 00:11:56,380 Speaker 2: including biotech. But the main thing is let's rely on 171 00:11:56,390 --> 00:12:01,539 Speaker 2: ourselves and their costs to it. But China is willing 172 00:12:01,549 --> 00:12:03,820 Speaker 2: to pay those costs at the moment, 173 00:12:06,669 --> 00:12:10,299 Speaker 1: not a great answer, but in terms of self reliance, 174 00:12:10,309 --> 00:12:12,559 Speaker 1: it doesn't mean an inward looking. 175 00:12:13,520 --> 00:12:17,219 Speaker 1: The policy as far as trade is concerned, China seems 176 00:12:17,229 --> 00:12:20,330 Speaker 1: to be still very keen on doing trade. And as 177 00:12:20,340 --> 00:12:22,358 Speaker 1: you and I read on a regular basis, there is 178 00:12:22,369 --> 00:12:26,130 Speaker 1: this fear now in the West, that new wave of 179 00:12:26,140 --> 00:12:30,169 Speaker 1: cheap Chinese manufacturing is about to flood the world from 180 00:12:30,179 --> 00:12:32,940 Speaker 1: evs to batteries and so on. So how do you 181 00:12:32,950 --> 00:12:36,450 Speaker 1: sort of reconcile? On one hand, look, we now become 182 00:12:36,460 --> 00:12:39,479 Speaker 1: again rudely aware of the fact that we can rely 183 00:12:39,489 --> 00:12:41,280 Speaker 1: on the goodwill of the rest of the world and 184 00:12:41,289 --> 00:12:41,939 Speaker 1: we will 185 00:12:42,450 --> 00:12:45,000 Speaker 1: focus on self reliance. But at the same time, we 186 00:12:45,010 --> 00:12:46,409 Speaker 1: believe in trade and we want the rest of the 187 00:12:46,419 --> 00:12:49,080 Speaker 1: world to buy our stuff. Is there a contradiction between 188 00:12:49,090 --> 00:12:50,070 Speaker 1: those two narratives. 189 00:12:51,760 --> 00:12:55,219 Speaker 2: Um I, I don't think so because the whole point 190 00:12:55,229 --> 00:13:01,339 Speaker 2: of relying on ourselves is to be less dependent, especially 191 00:13:01,349 --> 00:13:06,598 Speaker 2: to make ourselves strong. And that gives us competitive edges. 192 00:13:06,840 --> 00:13:09,340 Speaker 2: But we know that 193 00:13:09,710 --> 00:13:14,130 Speaker 2: the US used to be the number one importer of 194 00:13:14,140 --> 00:13:17,929 Speaker 2: goods from China and now they're in fourth place and 195 00:13:17,940 --> 00:13:26,190 Speaker 2: China does rely heavily on exports. But those exports and 196 00:13:26,200 --> 00:13:29,880 Speaker 2: their competitive advantages will be 197 00:13:30,690 --> 00:13:38,989 Speaker 2: much more reliant on self reliance rather than imported ingredients, right? 198 00:13:39,320 --> 00:13:44,109 Speaker 2: So the US and China knows now that 199 00:13:45,010 --> 00:13:50,530 Speaker 2: the old formulas of exporting have to change. So I 200 00:13:50,539 --> 00:13:55,909 Speaker 2: for example, India has a very complicated and tense relationship 201 00:13:55,919 --> 00:14:01,228 Speaker 2: with China. I went to see a renewables project in India. 202 00:14:01,239 --> 00:14:06,669 Speaker 2: It had 2.8 million solar panels. I said to the 203 00:14:06,679 --> 00:14:11,989 Speaker 2: founder of this company, where are these solar panels imported from? 204 00:14:12,000 --> 00:14:13,390 Speaker 2: And he said Malaysia, 205 00:14:15,000 --> 00:14:16,500 Speaker 2: Malaysia means 206 00:14:17,349 --> 00:14:24,109 Speaker 2: a Chinese subsidiary operating in Malaysia. So you see Chinese 207 00:14:24,119 --> 00:14:29,559 Speaker 2: setting up to export to the West but indirectly through 208 00:14:29,570 --> 00:14:34,380 Speaker 2: a Malaysia, given the inflation reduction act in the US 209 00:14:34,690 --> 00:14:38,330 Speaker 2: which many people in Singapore and Korea 210 00:14:38,414 --> 00:14:44,255 Speaker 2: and many other Asian countries feel like is American first protectionism. 211 00:14:44,484 --> 00:14:49,054 Speaker 2: The combination of NAFTA and IRA means a lot of 212 00:14:49,065 --> 00:14:53,434 Speaker 2: Chinese investment is going to Mexico. So they rely on 213 00:14:53,445 --> 00:15:00,835 Speaker 2: exports as a source of growth. But to make them 214 00:15:00,844 --> 00:15:05,265 Speaker 2: the competitive advantage that they are seeking, they rely on themselves. 215 00:15:05,275 --> 00:15:07,974 Speaker 2: So that's how I I look at it. 216 00:15:08,669 --> 00:15:10,559 Speaker 1: Yeah, I think I think that's pragmatic and I think 217 00:15:10,570 --> 00:15:13,849 Speaker 1: there is a limit of how many trade rules you 218 00:15:13,859 --> 00:15:17,650 Speaker 1: can come up with to prevent Chinese subsidiaries in Mexico 219 00:15:17,909 --> 00:15:21,429 Speaker 1: and Malaysia to stop trading with you. Uh It, it, 220 00:15:21,440 --> 00:15:23,549 Speaker 1: it would be uh let's put it this, I was 221 00:15:23,559 --> 00:15:26,030 Speaker 1: about to say it would be nearly impossible but if 222 00:15:26,039 --> 00:15:27,549 Speaker 1: there is a Trump two point or who knows, maybe 223 00:15:27,559 --> 00:15:30,369 Speaker 1: even that would be something on the cards. Um 224 00:15:30,734 --> 00:15:35,715 Speaker 1: Any earlier, you talked about this issue related to um chips, 225 00:15:35,724 --> 00:15:37,484 Speaker 1: you didn't say the word chip, but you said seven. 226 00:15:37,494 --> 00:15:39,085 Speaker 1: So I know that you were talking about seven nanometer 227 00:15:39,094 --> 00:15:42,854 Speaker 1: chips and below that. Uh but so let's just talk 228 00:15:42,864 --> 00:15:44,974 Speaker 1: about that for a second. I had Chris Miller who 229 00:15:44,984 --> 00:15:48,044 Speaker 1: wrote that excellent book on Chip War a couple of 230 00:15:48,054 --> 00:15:51,715 Speaker 1: years ago on my podcast last year. And Chris seemed 231 00:15:51,724 --> 00:15:52,664 Speaker 1: to think that 232 00:15:53,020 --> 00:15:57,070 Speaker 1: this, this goal to widen the tech gap between the 233 00:15:57,080 --> 00:16:00,809 Speaker 1: US and China is a pretty pressing concern for the 234 00:16:00,820 --> 00:16:05,200 Speaker 1: White House and Washington. And therefore they would lean on 235 00:16:06,130 --> 00:16:10,500 Speaker 1: uh lithography companies in Holland or materials companies in Germany 236 00:16:10,789 --> 00:16:14,909 Speaker 1: to not trade with China and prevent China from 237 00:16:15,710 --> 00:16:21,380 Speaker 1: going any further? Um How existential is this? Uh could 238 00:16:21,390 --> 00:16:25,109 Speaker 1: it sort of render Chinese military substantially vulnerable to us? 239 00:16:25,340 --> 00:16:29,840 Speaker 1: Military tech? Would it put a cap on China's tech progress? 240 00:16:29,849 --> 00:16:32,119 Speaker 1: If they can access faster chips, 241 00:16:33,599 --> 00:16:38,830 Speaker 2: it certainly will slow down the move up the value 242 00:16:38,840 --> 00:16:44,429 Speaker 2: added chain that is undoubted thought your podcast with him 243 00:16:44,440 --> 00:16:49,070 Speaker 2: was brilliant and the book is brilliant and he described 244 00:16:49,080 --> 00:16:53,270 Speaker 2: semiconductors as the ultimate globalized industry 245 00:16:53,520 --> 00:16:58,030 Speaker 2: because it's a series of technologies actually and you source 246 00:16:58,039 --> 00:17:03,109 Speaker 2: different parts of that value chain from different companies in 247 00:17:03,119 --> 00:17:08,030 Speaker 2: different countries, right? So the whole effort is to slow 248 00:17:08,040 --> 00:17:10,459 Speaker 2: down that effort. 249 00:17:11,140 --> 00:17:15,099 Speaker 2: And when I sit down with the most brilliant venture 250 00:17:15,109 --> 00:17:20,419 Speaker 2: capitalists in China, and I go through every technology is 251 00:17:20,430 --> 00:17:25,959 Speaker 2: the gap widening or narrowing. And before COVID and this 252 00:17:25,969 --> 00:17:29,839 Speaker 2: more intensified technological decoupling, 253 00:17:30,560 --> 00:17:34,979 Speaker 2: I really overestimated the speed at which China would close 254 00:17:34,989 --> 00:17:40,979 Speaker 2: the gap in some technologies. There are technologies where China 255 00:17:40,989 --> 00:17:45,139 Speaker 2: is moving up very quickly and becoming leading edge and 256 00:17:45,150 --> 00:17:47,889 Speaker 2: those include aerospace, 257 00:17:48,900 --> 00:17:50,119 Speaker 2: robotics 258 00:17:51,569 --> 00:17:58,869 Speaker 2: and a number of other technologies embracing the whole renewables efforts, 259 00:17:58,880 --> 00:18:04,989 Speaker 2: electric vehicles, batteries, solar, that whole constellation and there are 260 00:18:05,000 --> 00:18:08,729 Speaker 2: others where the gap is widening 261 00:18:09,660 --> 00:18:15,560 Speaker 2: and I would include biotech there which is rather surprising 262 00:18:16,180 --> 00:18:22,879 Speaker 2: and semiconductors. Everyone was surprised by the latest Huawei chips. 263 00:18:23,510 --> 00:18:29,160 Speaker 2: And it's interesting because there's so much human capital exchange 264 00:18:29,380 --> 00:18:36,379 Speaker 2: between TS MC and SM IC in Shanghai. And yet 265 00:18:36,880 --> 00:18:42,229 Speaker 2: China is behind and desperately trying to catch up in, 266 00:18:42,239 --> 00:18:44,689 Speaker 2: in that, right. So you have to look at it 267 00:18:44,699 --> 00:18:46,649 Speaker 2: in a more granular way, 268 00:18:47,869 --> 00:18:51,489 Speaker 1: right? I I fully agree and in terms of frontier technology, 269 00:18:51,500 --> 00:18:55,199 Speaker 1: there are things to do beyond the next fastest chip 270 00:18:55,209 --> 00:18:57,968 Speaker 1: in the sense that when we look at peer reviewed 271 00:18:57,979 --> 00:19:03,780 Speaker 1: journals in solid state physics or biotechnology. Chinese scientists are 272 00:19:03,790 --> 00:19:04,489 Speaker 1: publishing 273 00:19:04,819 --> 00:19:08,270 Speaker 1: uh and and getting published in top journals around the world. 274 00:19:08,339 --> 00:19:11,280 Speaker 1: So it seems like there are certain foundational technologies where 275 00:19:11,290 --> 00:19:14,219 Speaker 1: the hard work is bearing fruit. But in terms of 276 00:19:14,229 --> 00:19:19,469 Speaker 1: commercializing the leading edge of semiconductor, I think that's one gap, 277 00:19:19,479 --> 00:19:22,429 Speaker 1: China is certainly going to feel more and more in 278 00:19:22,439 --> 00:19:25,760 Speaker 1: the coming years. Uh He, you're talking to me from 279 00:19:25,770 --> 00:19:28,109 Speaker 1: a hotel room in Hong Kong, a city where you 280 00:19:28,119 --> 00:19:29,939 Speaker 1: have lived for a long time. And even now, although 281 00:19:29,949 --> 00:19:31,349 Speaker 1: you're based in New York, you spend a lot of 282 00:19:31,359 --> 00:19:32,060 Speaker 1: time in Hong Kong. 283 00:19:32,400 --> 00:19:35,339 Speaker 1: Um It's been a depressing few years for the city state. 284 00:19:35,349 --> 00:19:36,938 Speaker 1: Uh where do things stand now? 285 00:19:39,489 --> 00:19:43,109 Speaker 2: It it continues to be very depressing. 286 00:19:43,849 --> 00:19:48,750 Speaker 2: I don't think that you can entirely put the blame 287 00:19:48,760 --> 00:19:53,770 Speaker 2: on Beijing. I think the quality of the government and 288 00:19:53,780 --> 00:19:58,750 Speaker 2: the policies that would help put the life back into 289 00:19:58,760 --> 00:20:04,589 Speaker 2: Hong Kong are totally lacking. Many more people left 290 00:20:05,579 --> 00:20:11,290 Speaker 2: Hong Kong then came to Hong Kong over the long 291 00:20:11,300 --> 00:20:13,550 Speaker 2: weekend that we just had. 292 00:20:14,449 --> 00:20:16,989 Speaker 2: So Hong Kong 293 00:20:18,170 --> 00:20:22,989 Speaker 2: is a series of monopolies to me when I fly 294 00:20:23,000 --> 00:20:27,150 Speaker 2: from New York to Hong Kong, Cathay Pacific has a monopoly. 295 00:20:27,160 --> 00:20:31,459 Speaker 2: There's no other airline that flies nonstop. The fares they 296 00:20:31,469 --> 00:20:36,390 Speaker 2: charge have become a competitive disadvantage for Hong Kong. 297 00:20:37,390 --> 00:20:42,819 Speaker 2: When I go to Singapore. I'm amazed at how much 298 00:20:42,829 --> 00:20:46,319 Speaker 2: higher the quality of life is in Singapore than in 299 00:20:46,329 --> 00:20:50,930 Speaker 2: Hong Kong if you define like me the quality of 300 00:20:50,939 --> 00:20:55,780 Speaker 2: life as walking in a park and breathing clean air 301 00:20:55,939 --> 00:20:59,879 Speaker 2: by not living in Hong Kong. I'm saving so much 302 00:20:59,890 --> 00:21:06,760 Speaker 2: money because the supply of affordable housing is kept artificially low. 303 00:21:07,229 --> 00:21:10,689 Speaker 2: If you can build an airport on landfill, you can 304 00:21:10,699 --> 00:21:15,189 Speaker 2: build housing on landfill. When they moved the airport to 305 00:21:15,199 --> 00:21:19,050 Speaker 2: one of the outer islands. They were supposed to redevelop 306 00:21:19,060 --> 00:21:24,209 Speaker 2: the former airport land in Kowloon into affordable housing. They 307 00:21:24,219 --> 00:21:28,280 Speaker 2: haven't done that. There's so many things Hong Kong could 308 00:21:28,290 --> 00:21:32,930 Speaker 2: do to improve the quality of life of its people 309 00:21:33,300 --> 00:21:34,739 Speaker 2: and they haven't done that. 310 00:21:35,209 --> 00:21:37,339 Speaker 2: It, it's very sad to me. 311 00:21:38,400 --> 00:21:42,899 Speaker 1: Uh aren't there some projects in place toward affordable housing 312 00:21:42,910 --> 00:21:44,140 Speaker 1: capacity expansion? 313 00:21:45,589 --> 00:21:52,829 Speaker 2: They are so limited and actually most people in Hong Kong, 314 00:21:53,250 --> 00:21:57,930 Speaker 2: there was an article written in my former employer paper 315 00:21:58,060 --> 00:22:02,469 Speaker 2: by the former head of Morgan Stanley in Asia saying 316 00:22:02,479 --> 00:22:06,010 Speaker 2: Hong Kong is done and what he meant was more 317 00:22:06,020 --> 00:22:10,270 Speaker 2: than Hong Kong is done as an international financial center. 318 00:22:10,699 --> 00:22:12,449 Speaker 2: Most people in Hong Kong 319 00:22:13,020 --> 00:22:17,619 Speaker 2: don't have a sense that their life was improved by 320 00:22:17,630 --> 00:22:22,040 Speaker 2: having Hong Kong be an international financial center. And the 321 00:22:22,050 --> 00:22:27,040 Speaker 2: government made very little effort to insulate people from say 322 00:22:27,050 --> 00:22:30,920 Speaker 2: the rising cost of property in this city. 323 00:22:31,699 --> 00:22:35,280 Speaker 2: And to me, Hong Kong is a banking center, but 324 00:22:35,290 --> 00:22:41,800 Speaker 2: Singapore is far more truly a diversified financial center. 325 00:22:43,969 --> 00:22:48,709 Speaker 1: But when we talk about capital markets and I was 326 00:22:48,719 --> 00:22:53,619 Speaker 1: earlier referring to certain pipeline IP OS like the ones 327 00:22:53,630 --> 00:22:57,160 Speaker 1: of X. And um if they were to happen in 328 00:22:57,170 --> 00:23:00,979 Speaker 1: London or New York seem to suffer from some of 329 00:23:00,989 --> 00:23:03,979 Speaker 1: China fobia and chose not to host them. Wouldn't Hong 330 00:23:03,989 --> 00:23:06,889 Speaker 1: Kong then be the hotbed of all these big Chinese 331 00:23:06,900 --> 00:23:08,790 Speaker 1: IP OS and wouldn't that bring some vigor back? 332 00:23:10,030 --> 00:23:14,948 Speaker 2: I mean, if Hong Kong was to provide liquidity, liquidity 333 00:23:15,449 --> 00:23:18,569 Speaker 2: to these private companies trying to go public, it would 334 00:23:18,579 --> 00:23:22,290 Speaker 2: be huge for Hong Kong and it makes a lot 335 00:23:22,300 --> 00:23:27,010 Speaker 2: of sense and yet they're all caught. So the the 336 00:23:27,020 --> 00:23:31,020 Speaker 2: actual advantage that Hong Kong has always had is that 337 00:23:31,030 --> 00:23:34,719 Speaker 2: our stock market is so vibrant. But 338 00:23:36,030 --> 00:23:41,250 Speaker 2: we don't see I was talking recently to somebody who 339 00:23:41,260 --> 00:23:45,170 Speaker 2: runs credit hedge fund and if a Chinese company is 340 00:23:45,180 --> 00:23:50,089 Speaker 2: listed in Hong Kong, they're comfortable that Hong Kong has 341 00:23:50,099 --> 00:23:54,109 Speaker 2: done a good job scrutinizing them and there won't be frauds, 342 00:23:54,439 --> 00:23:59,729 Speaker 2: it is a competitive advantage but it is being caught 343 00:23:59,739 --> 00:24:02,589 Speaker 2: in decoupling and it's getting harder 344 00:24:03,250 --> 00:24:09,909 Speaker 2: for companies based in China to get approval to list 345 00:24:09,920 --> 00:24:12,310 Speaker 2: for one reason or another. 346 00:24:12,979 --> 00:24:19,160 Speaker 2: But for example, I see private sector firms going to 347 00:24:19,170 --> 00:24:24,899 Speaker 2: places like Jakarta and saying when you list, normally you 348 00:24:24,910 --> 00:24:27,869 Speaker 2: will list in Jakarta, you will not list in Singapore 349 00:24:27,920 --> 00:24:30,439 Speaker 2: but why not consider Hong Kong? 350 00:24:31,160 --> 00:24:34,709 Speaker 2: And slowly you see the HK MA going on road 351 00:24:34,719 --> 00:24:38,139 Speaker 2: shows say to the Middle East. But 352 00:24:38,949 --> 00:24:44,729 Speaker 2: when the private sector tries to engage in dialogues with 353 00:24:44,739 --> 00:24:50,410 Speaker 2: the government, they don't find that they have a receptive hearing. 354 00:24:52,099 --> 00:24:54,920 Speaker 1: Yeah, I I can sense that frustration, time to time 355 00:24:54,930 --> 00:24:58,810 Speaker 1: as well. But in addition to equity capital market where 356 00:24:58,819 --> 00:25:01,780 Speaker 1: I think you and I agree there is substantial room 357 00:25:01,790 --> 00:25:05,599 Speaker 1: for potential engagement. But right now, sentiments are not the 358 00:25:05,609 --> 00:25:10,040 Speaker 1: greatest but the regulatory environment, the legal environment still remain 359 00:25:10,050 --> 00:25:13,359 Speaker 1: a bit of a bedrock which ought to invite some 360 00:25:13,369 --> 00:25:16,479 Speaker 1: additional flows in the coming years. But on the debt 361 00:25:16,489 --> 00:25:16,719 Speaker 1: side 362 00:25:16,805 --> 00:25:19,665 Speaker 1: and I just read that the dim sum market, which 363 00:25:19,675 --> 00:25:24,025 Speaker 1: is Chinese entre companies issuing R and B denominated bonds 364 00:25:24,035 --> 00:25:26,685 Speaker 1: and offshore hubs by that. I really mean Hong Kong 365 00:25:26,925 --> 00:25:30,224 Speaker 1: that's taken on a bit of a momentum lately. There's 366 00:25:30,234 --> 00:25:33,145 Speaker 1: some advantages of issuing R and B bonds and 367 00:25:33,380 --> 00:25:37,379 Speaker 1: uh Hong Kong given the low onshore interest rates. Uh so, 368 00:25:37,390 --> 00:25:40,780 Speaker 1: so perhaps it's again not the greatest. I'm not trying 369 00:25:40,790 --> 00:25:44,198 Speaker 1: to sco the situation. But what I tried to push 370 00:25:44,209 --> 00:25:47,680 Speaker 1: back against is especially the articles like the one that 371 00:25:47,689 --> 00:25:50,160 Speaker 1: you were mentioning that the game is over. It seems 372 00:25:50,170 --> 00:25:51,969 Speaker 1: to me that it is premature to say the game 373 00:25:51,979 --> 00:25:54,319 Speaker 1: is over because Hong Kong still has a couple of 374 00:25:54,329 --> 00:25:58,280 Speaker 1: foundational aspects around its capital market which can still allow 375 00:25:58,689 --> 00:26:00,760 Speaker 1: hopefully for some upsides in the future. 376 00:26:03,290 --> 00:26:08,869 Speaker 2: I I completely agree with that. And our SFC for 377 00:26:08,880 --> 00:26:13,869 Speaker 2: the first time has a local head who's amazingly capable. 378 00:26:14,089 --> 00:26:20,589 Speaker 2: I don't want to overgeneralize. But o obviously the fallout 379 00:26:20,599 --> 00:26:25,949 Speaker 2: in China from property market and dollar issued bonds has 380 00:26:25,959 --> 00:26:26,510 Speaker 2: had 381 00:26:26,849 --> 00:26:31,510 Speaker 2: a chilling effect, especially in a world where a more 382 00:26:31,520 --> 00:26:35,550 Speaker 2: passive indexing has become more common. 383 00:26:36,400 --> 00:26:40,060 Speaker 1: Absolutely. Uh I I want to talk about the portfolio 384 00:26:40,069 --> 00:26:43,560 Speaker 1: manager's perspective on China and Hong Kong momentarily. But one 385 00:26:43,569 --> 00:26:47,209 Speaker 1: final point you were talking about earlier how during the holidays, 386 00:26:47,219 --> 00:26:49,069 Speaker 1: we had actually more people leave than come in. I 387 00:26:49,079 --> 00:26:51,468 Speaker 1: think we can generalize that observation to saying in the 388 00:26:51,479 --> 00:26:56,140 Speaker 1: last few years, we've seen a exodus of expatriate professionals 389 00:26:56,150 --> 00:26:57,459 Speaker 1: from Hong Kong. 390 00:26:57,739 --> 00:27:01,159 Speaker 1: Um But I I sometimes wonder when we talk about expats, 391 00:27:01,170 --> 00:27:04,959 Speaker 1: are we only talking about Western expats? Because given the 392 00:27:04,979 --> 00:27:06,670 Speaker 1: visa rules in Hong Kong, 393 00:27:07,579 --> 00:27:09,089 Speaker 1: at least, I would think that it would be a 394 00:27:09,099 --> 00:27:15,379 Speaker 1: draw for professionals from ASEAN Southeast Asia, North Asia, even 395 00:27:15,540 --> 00:27:19,150 Speaker 1: as long as some degree of affordability concerns are met. 396 00:27:19,189 --> 00:27:22,430 Speaker 1: But from a tax and regulatory perspective, from ease of 397 00:27:22,439 --> 00:27:26,489 Speaker 1: travel perspective. Um Would you say that some of this 398 00:27:26,969 --> 00:27:32,659 Speaker 1: Western exodus could be replaced by regional Asian uh talent 399 00:27:32,670 --> 00:27:33,540 Speaker 1: going into Hong Kong? 400 00:27:34,359 --> 00:27:40,699 Speaker 2: Absolutely. And and especially mainland talent and Hong Kong is 401 00:27:40,709 --> 00:27:47,530 Speaker 2: trying to offer incentives for say accountants, right? 402 00:27:48,160 --> 00:27:51,169 Speaker 2: And but on the other hand to me, 403 00:27:53,109 --> 00:27:56,989 Speaker 2: Singapore has a much more active outreach to the best 404 00:27:57,000 --> 00:28:01,569 Speaker 2: and brightest in Asia. They bring them to Singapore, they 405 00:28:01,579 --> 00:28:06,790 Speaker 2: educate them and it it's a much more vibrant program. 406 00:28:06,800 --> 00:28:10,849 Speaker 2: Whereas if you come to Hong Kong and you graduate 407 00:28:10,859 --> 00:28:15,448 Speaker 2: from a university here, you only have a few months 408 00:28:15,459 --> 00:28:19,089 Speaker 2: to find a job and then you're out of luck. 409 00:28:19,420 --> 00:28:23,979 Speaker 2: I think that Singapore has done much better outreach and 410 00:28:23,989 --> 00:28:28,239 Speaker 2: there are all kinds of indirect ways in which the 411 00:28:28,250 --> 00:28:33,750 Speaker 2: ridiculous land prices here discourage people. So, if you look 412 00:28:33,760 --> 00:28:39,469 Speaker 2: at the quality of dorms at HKU, they're horrible. But 413 00:28:40,089 --> 00:28:43,380 Speaker 2: it's because HKU is in the middle of the city 414 00:28:43,390 --> 00:28:47,949 Speaker 2: and the land price is horrendous. So, if you're local, 415 00:28:47,959 --> 00:28:50,329 Speaker 2: you don't wanna stay at home, but you can't get 416 00:28:50,339 --> 00:28:54,670 Speaker 2: into a dorm. And if you're coming from outside it, 417 00:28:54,680 --> 00:28:57,910 Speaker 2: it's just so much less attractive, 418 00:29:00,010 --> 00:29:02,099 Speaker 1: right? I mean, look, it was down to the quality 419 00:29:02,109 --> 00:29:05,670 Speaker 1: of life issue. Uh So no point, point, very well taken. 420 00:29:06,050 --> 00:29:08,790 Speaker 1: Uh He uh we, we'll come back to China, India 421 00:29:08,800 --> 00:29:11,930 Speaker 1: when we start talking about the perspective of global portfolio managers. 422 00:29:11,939 --> 00:29:15,430 Speaker 1: But I want to complete our travel through Asia with 423 00:29:15,439 --> 00:29:19,109 Speaker 1: your other favorite country. India. You're a long time India 424 00:29:19,119 --> 00:29:23,719 Speaker 1: watcher and you have this ritual of visiting India and 425 00:29:23,729 --> 00:29:26,469 Speaker 1: traveling through various states during the state elections, which is 426 00:29:26,479 --> 00:29:26,989 Speaker 1: a pretty 427 00:29:27,369 --> 00:29:32,030 Speaker 1: uh colorful, vibrant, noisy journey. Uh Tell me uh I, 428 00:29:32,040 --> 00:29:34,069 Speaker 1: I started this conversation by asking you what is the 429 00:29:34,079 --> 00:29:36,959 Speaker 1: vibe in China. Let's start with your take on the 430 00:29:36,969 --> 00:29:37,910 Speaker 1: vibe in India 431 00:29:38,489 --> 00:29:43,310 Speaker 2: for many years. I felt that both the country and 432 00:29:43,319 --> 00:29:49,979 Speaker 2: its people had an aspiration issue. They weren't ambitious, they 433 00:29:49,989 --> 00:29:54,640 Speaker 2: weren't hungry. And I think I told you about a 434 00:29:54,650 --> 00:29:56,550 Speaker 2: trip we made to West Bengal 435 00:29:57,500 --> 00:30:03,969 Speaker 2: and Tata Motors was planning to put a car factory 436 00:30:03,979 --> 00:30:08,349 Speaker 2: in West Bengal and make an affordable car called the 437 00:30:08,359 --> 00:30:13,040 Speaker 2: NANO that would retail for less than $2000 438 00:30:13,969 --> 00:30:17,369 Speaker 2: and it would create thousands of jobs. 439 00:30:19,180 --> 00:30:26,469 Speaker 2: And West Bengal has a history of rather dysfunctional economic 440 00:30:26,479 --> 00:30:27,400 Speaker 2: policies 441 00:30:28,260 --> 00:30:33,329 Speaker 2: and we're v visiting. And ultimately, Tata decided to put 442 00:30:33,339 --> 00:30:35,479 Speaker 2: this car plant in Gujarat. 443 00:30:37,079 --> 00:30:42,359 Speaker 2: And eight years after the decision not to open a plant, 444 00:30:43,560 --> 00:30:48,280 Speaker 2: I was visiting the village that would have been the 445 00:30:48,290 --> 00:30:53,949 Speaker 2: locust for this plant generating 2000 jobs with my election group, 446 00:30:53,959 --> 00:31:00,219 Speaker 2: which is led by a brilliant investor named Dr Shir Sharma. 447 00:31:00,229 --> 00:31:03,979 Speaker 2: And I'm the only foreign journalist that generally goes on 448 00:31:03,989 --> 00:31:04,939 Speaker 2: these Yatra 449 00:31:06,079 --> 00:31:07,180 Speaker 2: these trips. 450 00:31:07,969 --> 00:31:13,229 Speaker 2: And it's eight years later and the people who sold 451 00:31:13,239 --> 00:31:18,310 Speaker 2: land for the factory, which the government was collecting 452 00:31:19,390 --> 00:31:23,729 Speaker 2: had received the money even though the factory ultimately wasn't built. 453 00:31:24,280 --> 00:31:28,189 Speaker 2: And we're talking to somebody who had refused to sell 454 00:31:28,199 --> 00:31:29,050 Speaker 2: his land 455 00:31:30,099 --> 00:31:33,689 Speaker 2: and it was in Bengali. So there was a translator 456 00:31:33,699 --> 00:31:37,280 Speaker 2: because several, most of us don't speak Bengali. 457 00:31:38,349 --> 00:31:42,689 Speaker 2: And the 18 year old son of this person who 458 00:31:42,699 --> 00:31:47,130 Speaker 2: refused his to sell his land was sitting outside 459 00:31:47,900 --> 00:31:49,359 Speaker 2: with nothing to do. 460 00:31:50,359 --> 00:31:52,180 Speaker 2: And the father said, 461 00:31:52,920 --> 00:31:57,209 Speaker 2: if this land by which he meant a parcel of land, 462 00:31:57,219 --> 00:32:00,489 Speaker 2: that's the size of my hotel room is good enough 463 00:32:00,500 --> 00:32:03,660 Speaker 2: for my forefathers, it's good enough for me. 464 00:32:04,719 --> 00:32:08,910 Speaker 2: It's also good enough by implication for his son who 465 00:32:08,920 --> 00:32:13,780 Speaker 2: has no job, you will not find somebody in China 466 00:32:13,790 --> 00:32:17,569 Speaker 2: who thinks that way, everyone wants a better life for 467 00:32:17,579 --> 00:32:18,540 Speaker 2: their kids. 468 00:32:19,569 --> 00:32:22,140 Speaker 2: And it was so striking to me. So that's what 469 00:32:22,150 --> 00:32:26,829 Speaker 2: I mean by saying, a lack of aspiration and hunger. 470 00:32:27,430 --> 00:32:31,829 Speaker 2: And now that's slowly beginning to change in India. 471 00:32:33,170 --> 00:32:38,650 Speaker 2: My concern is the fact that the jobs that are 472 00:32:38,660 --> 00:32:41,709 Speaker 2: being created in India today 473 00:32:42,400 --> 00:32:43,819 Speaker 2: are mostly 474 00:32:44,729 --> 00:32:49,880 Speaker 2: in the digital sector and there's very few prospects for 475 00:32:49,890 --> 00:32:55,150 Speaker 2: upward mobility and there's no social safety net. So if 476 00:32:55,160 --> 00:33:02,310 Speaker 2: I'm a driver for the Indian equivalent of Uber or DD, 477 00:33:03,449 --> 00:33:05,380 Speaker 2: I have no social safety net, 478 00:33:06,579 --> 00:33:09,469 Speaker 2: I have no prospect of upward mobility. 479 00:33:10,489 --> 00:33:14,199 Speaker 2: I can work 20 hours a day. And that's still true. 480 00:33:14,829 --> 00:33:19,189 Speaker 2: I'm better off being a driver for the individual who 481 00:33:19,199 --> 00:33:23,579 Speaker 2: will look after me. And if my father has cancer, 482 00:33:23,589 --> 00:33:27,069 Speaker 2: he will help me get medical aid for my father 483 00:33:27,369 --> 00:33:32,270 Speaker 2: and he will help my Children get better educations. So 484 00:33:32,280 --> 00:33:39,550 Speaker 2: my concern is that has um there's a lovely economist 485 00:33:40,189 --> 00:33:41,479 Speaker 2: um in, 486 00:33:42,520 --> 00:33:46,270 Speaker 2: in uh Mumbai who said to me digital India happened 487 00:33:46,280 --> 00:33:50,660 Speaker 2: too soon by which he means that these service jobs 488 00:33:50,670 --> 00:33:54,369 Speaker 2: are very low end and that's where the growth in 489 00:33:54,380 --> 00:33:59,689 Speaker 2: jobs is. So that's my biggest concern for India and 490 00:33:59,699 --> 00:34:04,550 Speaker 2: now people are aspiring to more. And how does that 491 00:34:04,560 --> 00:34:08,429 Speaker 2: disappointment work out is a question mark, 492 00:34:10,010 --> 00:34:13,899 Speaker 1: right? Uh Very good point. Now, when we were talking 493 00:34:13,909 --> 00:34:17,620 Speaker 1: about China, you commented that how striking it was to 494 00:34:17,629 --> 00:34:21,770 Speaker 1: be on a blue sky clear day in Beijing. I've 495 00:34:21,800 --> 00:34:24,010 Speaker 1: been going to Delhi for a long time. I'm afraid 496 00:34:24,020 --> 00:34:28,379 Speaker 1: I really can't share that observation from Delhi. Um We 497 00:34:28,389 --> 00:34:30,840 Speaker 1: know that the Chinese have become very serious about climate 498 00:34:30,850 --> 00:34:33,529 Speaker 1: change and are doing all sorts of things from basic 499 00:34:33,540 --> 00:34:38,069 Speaker 1: research to implementation of um overhaul of their infrastructure. 500 00:34:38,540 --> 00:34:42,830 Speaker 1: Are you satisfied with the trajectory that India is taking 501 00:34:42,840 --> 00:34:44,379 Speaker 1: in preparing for climate change 502 00:34:46,239 --> 00:34:49,510 Speaker 2: in India needs to do much more. India is a 503 00:34:49,520 --> 00:34:53,620 Speaker 2: quarter of the world's population so the world cannot meet 504 00:34:53,629 --> 00:35:01,379 Speaker 2: its targets unless India does India is capital short compared 505 00:35:01,389 --> 00:35:05,260 Speaker 2: to a China. So it will need to depend on 506 00:35:05,270 --> 00:35:11,689 Speaker 2: external capital as well as domestic capital. But my concern 507 00:35:11,889 --> 00:35:12,699 Speaker 2: is 508 00:35:13,459 --> 00:35:19,580 Speaker 2: the speed and magnitude of climate change in India when 509 00:35:19,590 --> 00:35:22,830 Speaker 2: compared to the lack of resources to deal with it. 510 00:35:23,280 --> 00:35:27,800 Speaker 2: So we should tell your listeners about the story that 511 00:35:27,810 --> 00:35:33,060 Speaker 2: I I told you last week about extreme climate change 512 00:35:33,070 --> 00:35:39,080 Speaker 2: um with especially the challenge of water, not only 513 00:35:39,580 --> 00:35:45,908 Speaker 2: rising temperatures which can make the plains of India unlivable 514 00:35:45,919 --> 00:35:52,159 Speaker 2: in 20 years, but extreme water events. So I was 515 00:35:52,169 --> 00:35:55,000 Speaker 2: talking to you about a dam that burst in the 516 00:35:55,010 --> 00:36:00,159 Speaker 2: northeast with a combination of much more severe rain 517 00:36:00,520 --> 00:36:06,209 Speaker 2: and an earthquake in Nepal which triggered landslides in India 518 00:36:06,550 --> 00:36:11,459 Speaker 2: which caused a glacial lake to flood, which then sent 519 00:36:11,469 --> 00:36:14,540 Speaker 2: a wall of water into a dam and burst it 520 00:36:14,550 --> 00:36:18,620 Speaker 2: with the loss of dozens of lives. Now that dam 521 00:36:18,629 --> 00:36:25,760 Speaker 2: had insurance. But can a new dam get affordable insurance today? 522 00:36:26,030 --> 00:36:27,570 Speaker 2: Almost impossible 523 00:36:27,979 --> 00:36:33,479 Speaker 2: because of the severity and frequencies of these events. So 524 00:36:33,489 --> 00:36:39,330 Speaker 2: many farmers are discovering they can't afford crop insurance. So 525 00:36:39,340 --> 00:36:44,889 Speaker 2: now the states have to obtain crop insurance and subsidize 526 00:36:44,899 --> 00:36:49,040 Speaker 2: it for the farmers companies that are trying to build 527 00:36:49,050 --> 00:36:56,439 Speaker 2: resilience against rising sea levels. These challenges are hugely expensive 528 00:36:57,040 --> 00:37:02,780 Speaker 2: and there's a huge challenge for resources and the 529 00:37:03,669 --> 00:37:11,419 Speaker 2: the extrapolations, the dangers increase geometrically, not arithmetically. How do 530 00:37:11,429 --> 00:37:15,129 Speaker 2: you li electricity demand will explode 531 00:37:15,439 --> 00:37:20,439 Speaker 2: with rising temperatures because you need more air conditioning, you 532 00:37:20,449 --> 00:37:26,359 Speaker 2: will see many climate change refugees, right? So India is 533 00:37:26,370 --> 00:37:31,658 Speaker 2: so challenged and where will the resources come from to 534 00:37:31,669 --> 00:37:34,899 Speaker 2: meet those challenges? It's a huge concern, 535 00:37:36,320 --> 00:37:39,540 Speaker 1: right? So in a way, a lot of these climate 536 00:37:39,550 --> 00:37:45,610 Speaker 1: challenges and market failures would require very strong intervention from 537 00:37:45,620 --> 00:37:49,350 Speaker 1: the public sector. Uh Both in terms of, as you said, 538 00:37:49,360 --> 00:37:50,209 Speaker 1: underwriting 539 00:37:50,540 --> 00:37:54,760 Speaker 1: insurance that the private sector won't or trying to garner 540 00:37:54,770 --> 00:37:58,959 Speaker 1: FD I to build a better renewable infrastructure and so on. 541 00:37:59,179 --> 00:38:02,219 Speaker 1: Um So of course, the current government has been in 542 00:38:02,229 --> 00:38:05,179 Speaker 1: power for 10 years looks very likely that would get 543 00:38:05,189 --> 00:38:09,610 Speaker 1: re elected to rule for another five at least. And 544 00:38:09,620 --> 00:38:14,239 Speaker 1: uh has been fairly successful in galvanizing global investor sentiment. 545 00:38:14,550 --> 00:38:18,610 Speaker 1: Uh What's your sense uh from outside looking in? Um 546 00:38:18,699 --> 00:38:22,219 Speaker 1: large companies are finding India an attractive place to put 547 00:38:22,229 --> 00:38:22,649 Speaker 1: their money. 548 00:38:25,270 --> 00:38:32,409 Speaker 2: So India historically has relied much less on manufacturing. Now 549 00:38:32,419 --> 00:38:36,370 Speaker 2: it's trying to attract manufacturing. 550 00:38:37,110 --> 00:38:42,428 Speaker 2: It still lacks scale. And that's a huge challenge. China's 551 00:38:42,439 --> 00:38:44,089 Speaker 2: advantage wasn't 552 00:38:44,820 --> 00:38:50,209 Speaker 2: cheap labor, it was actually scale. And I've seen so 553 00:38:50,219 --> 00:38:56,669 Speaker 2: many companies in India who go from making India to 554 00:38:56,679 --> 00:39:00,250 Speaker 2: assemble in India instead of going the other way around 555 00:39:00,540 --> 00:39:06,638 Speaker 2: because it lacks scale. So that is a challenge today 556 00:39:06,989 --> 00:39:12,610 Speaker 2: and the government is trying to build the infrastructure that 557 00:39:12,620 --> 00:39:17,120 Speaker 2: it had lacked. So when I was a student in India, 558 00:39:17,129 --> 00:39:23,199 Speaker 2: I spent two months in Allahabad University which is eastern up. 559 00:39:23,860 --> 00:39:26,800 Speaker 2: And at the time I was a student, the trains 560 00:39:26,810 --> 00:39:31,919 Speaker 2: were like 22 kilometers an hour. And until a few 561 00:39:31,929 --> 00:39:36,639 Speaker 2: years ago, they were still 22 kilometers an hour. I 562 00:39:36,649 --> 00:39:39,790 Speaker 2: felt like I was still 20 years old because nothing 563 00:39:39,800 --> 00:39:44,320 Speaker 2: had changed. And now the government is trying to improve 564 00:39:44,330 --> 00:39:51,479 Speaker 2: the infrastructure, whether it's roads or railways or airports. Right. 565 00:39:51,820 --> 00:39:56,439 Speaker 2: And that is a critical piece as they try to 566 00:39:56,449 --> 00:40:00,909 Speaker 2: attract foreign companies scale. Right. 567 00:40:02,879 --> 00:40:06,860 Speaker 1: Right. And uh it'll, it'll be interesting to see whether 568 00:40:06,870 --> 00:40:10,510 Speaker 1: the make for India as an import substitution or make 569 00:40:10,520 --> 00:40:13,899 Speaker 1: India for export, which one wins out? I think uh 570 00:40:13,909 --> 00:40:18,189 Speaker 1: Rag Ram Rajan has written over the years about just 571 00:40:18,199 --> 00:40:21,409 Speaker 1: the import substitution part, just reduce trade deficit by building 572 00:40:21,419 --> 00:40:23,370 Speaker 1: more in India. Even if it means she is assembling. 573 00:40:23,379 --> 00:40:24,090 Speaker 1: It's a good step 574 00:40:24,360 --> 00:40:28,600 Speaker 1: uh and then aspire for exports. Um It, it will 575 00:40:28,610 --> 00:40:31,189 Speaker 1: be interesting to see how that pans out. Uh just 576 00:40:31,199 --> 00:40:33,860 Speaker 1: this morning, I was reading about uh Elon Musk uh 577 00:40:33,870 --> 00:40:36,629 Speaker 1: is being quoted by India and he might be opening 578 00:40:36,639 --> 00:40:40,669 Speaker 1: a Tesla manufacturing plant. Uh The way it has worked 579 00:40:40,679 --> 00:40:43,529 Speaker 1: out for Tesla in China. I'm curious to see whether 580 00:40:43,540 --> 00:40:46,300 Speaker 1: that's replicable in India or you would have to pursue 581 00:40:46,310 --> 00:40:48,439 Speaker 1: fundamentally different model. So 582 00:40:48,800 --> 00:40:49,699 Speaker 1: every time we talk about 583 00:40:50,320 --> 00:40:56,229 Speaker 2: up on that point, there's fierce competition opposition from local 584 00:40:56,239 --> 00:41:01,489 Speaker 2: very powerful conglomerates when foreign companies want to set up 585 00:41:01,500 --> 00:41:08,409 Speaker 2: in India. Because often the Indian companies do not have 586 00:41:08,419 --> 00:41:11,929 Speaker 2: leading edge technology, the quality of their products 587 00:41:13,429 --> 00:41:17,439 Speaker 2: is not competitive with the foreigners, but yet they will 588 00:41:17,449 --> 00:41:23,939 Speaker 2: use their local power to try and sabotage foreign companies 589 00:41:23,949 --> 00:41:28,770 Speaker 2: coming in, bringing scale and quality and higher technology. 590 00:41:31,209 --> 00:41:31,560 Speaker 2: Right? 591 00:41:32,669 --> 00:41:35,839 Speaker 1: No, no, no. It is completely related to that issue. 592 00:41:36,510 --> 00:41:42,209 Speaker 1: Any China from WTO onward for the last 25 years, 593 00:41:42,219 --> 00:41:44,189 Speaker 1: even if it has moved towards self reliance has been 594 00:41:44,199 --> 00:41:49,139 Speaker 1: very much pro trade. Uh India has decided not to 595 00:41:49,149 --> 00:41:53,510 Speaker 1: be super open, it hasn't joined the R ce F 596 00:41:53,520 --> 00:41:54,639 Speaker 1: which was something that, 597 00:41:54,725 --> 00:41:58,334 Speaker 1: that would have opened its markets to South Asia as 598 00:41:58,344 --> 00:42:01,844 Speaker 1: well as China and it is sending a few FTS 599 00:42:01,854 --> 00:42:05,364 Speaker 1: here and there. But by and large average tariff market 600 00:42:05,375 --> 00:42:10,424 Speaker 1: access issues certainly make India much less favorable to trade 601 00:42:10,435 --> 00:42:12,904 Speaker 1: than China has been over the last two or three decades. 602 00:42:13,520 --> 00:42:16,129 Speaker 1: Is this a deal rigor? Do you think India needs 603 00:42:16,139 --> 00:42:18,129 Speaker 1: to open up a lot or is it possible to 604 00:42:18,139 --> 00:42:23,620 Speaker 1: pursue its development paradigm without lowering tariffs or opening up 605 00:42:23,629 --> 00:42:26,419 Speaker 1: its domestic competitors to foreign competition too much. 606 00:42:26,969 --> 00:42:33,540 Speaker 2: It's a really important question. India's competitive advantage has always 607 00:42:33,550 --> 00:42:38,610 Speaker 2: been in services. India feared it would just be overrun 608 00:42:38,620 --> 00:42:42,520 Speaker 2: by cheap products from places like China 609 00:42:43,659 --> 00:42:48,580 Speaker 2: which would be affordable for a country where households don't 610 00:42:48,590 --> 00:42:53,659 Speaker 2: have income. I feel that India should have opened up. 611 00:42:53,669 --> 00:42:57,810 Speaker 2: So when Pasco wanted to put a plant in ERISA, 612 00:42:58,300 --> 00:43:01,959 Speaker 2: it would have raised the quality of steel, 613 00:43:02,899 --> 00:43:09,549 Speaker 2: upgraded, forced the whole country to upgrade Tesla. Shanghai is 614 00:43:09,560 --> 00:43:15,320 Speaker 2: so much more productive than Tesla, California. Tesla is constantly 615 00:43:15,330 --> 00:43:20,840 Speaker 2: sending people from Shanghai to try and improve efficiency 616 00:43:21,250 --> 00:43:27,629 Speaker 2: in its operations in California. I feel that India has 617 00:43:27,639 --> 00:43:33,509 Speaker 2: ill served its own population by making them dependent on 618 00:43:33,520 --> 00:43:39,570 Speaker 2: the prices of local conglomerates that have much lower quality 619 00:43:39,580 --> 00:43:41,620 Speaker 2: and are too expensive. 620 00:43:44,050 --> 00:43:47,859 Speaker 2: So I do feel India is among the most protect 621 00:43:47,870 --> 00:43:53,919 Speaker 2: protected markets and in ratings of think tanks that produce 622 00:43:53,929 --> 00:43:58,760 Speaker 2: these statistics, it ranks really, really poorly. 623 00:44:00,080 --> 00:44:03,100 Speaker 1: That's right. Uh I I think uh I very much 624 00:44:03,110 --> 00:44:06,799 Speaker 1: believe that lowering tariffs and align for more competition would 625 00:44:06,810 --> 00:44:10,620 Speaker 1: be net net a very big positive for India. Um 626 00:44:10,629 --> 00:44:13,859 Speaker 1: but uh seems like it's not likely in the very 627 00:44:13,870 --> 00:44:19,020 Speaker 1: near term uh times have changed. He uh on the 628 00:44:19,030 --> 00:44:22,989 Speaker 1: issue of global portfolio managers, you you spent a lot 629 00:44:23,000 --> 00:44:26,250 Speaker 1: of time advising very large asset managers in the US. 630 00:44:27,629 --> 00:44:29,889 Speaker 1: Of course, we know that in the last few years, 631 00:44:31,139 --> 00:44:34,819 Speaker 1: financial market return from China have not been good. There 632 00:44:34,830 --> 00:44:38,939 Speaker 1: has been a trend of reducing weight to allocating capital 633 00:44:38,949 --> 00:44:42,209 Speaker 1: to China. Uh And at the same time, we're seeing 634 00:44:42,219 --> 00:44:45,580 Speaker 1: increasing interest and increasing weight on India. So I want 635 00:44:45,590 --> 00:44:48,919 Speaker 1: to frame this question from the perspective of public and 636 00:44:49,149 --> 00:44:52,979 Speaker 1: private markets. Where do you see the the balance between 637 00:44:52,989 --> 00:44:55,929 Speaker 1: private and public markets in terms of the attitude to 638 00:44:55,939 --> 00:44:56,799 Speaker 1: India and China? 639 00:44:59,000 --> 00:45:04,199 Speaker 2: So politically, the question is almost irrelevant when it comes 640 00:45:04,209 --> 00:45:09,149 Speaker 2: to China, except for family offices. If we're talking about 641 00:45:09,820 --> 00:45:15,800 Speaker 2: us investors, you cannot invest in China. It's virtually unin 642 00:45:15,810 --> 00:45:20,459 Speaker 2: invests if you are even an endowment today. 643 00:45:20,820 --> 00:45:26,699 Speaker 2: So the only investors who can invest are wealthy individuals, 644 00:45:26,709 --> 00:45:31,540 Speaker 2: family offices, that kind of thing. I think the private 645 00:45:31,550 --> 00:45:38,000 Speaker 2: markets in China are very interesting today, precisely because there's 646 00:45:38,010 --> 00:45:41,000 Speaker 2: so much less money going into them 647 00:45:41,790 --> 00:45:47,600 Speaker 2: and bank credit is available and there's so much less 648 00:45:47,610 --> 00:45:54,209 Speaker 2: competition and China still has amazing world class companies. And 649 00:45:55,030 --> 00:46:00,620 Speaker 2: if you have dollar or Renminbi funds in China, you 650 00:46:00,629 --> 00:46:06,209 Speaker 2: can borrow money from Chinese banks very cheaply to invest 651 00:46:06,219 --> 00:46:09,929 Speaker 2: in those companies. So your equity check is less and 652 00:46:09,939 --> 00:46:12,020 Speaker 2: your debt check is much more. 653 00:46:12,679 --> 00:46:13,419 Speaker 2: And 654 00:46:14,209 --> 00:46:21,029 Speaker 2: interestingly, when China was growing 8% a year management wasn't critical, right? 655 00:46:21,810 --> 00:46:26,850 Speaker 2: But when China is slowing to five or less management 656 00:46:26,860 --> 00:46:34,000 Speaker 2: is critical. So these companies, these investment companies are focused 657 00:46:34,010 --> 00:46:39,729 Speaker 2: on introducing best management practice and making companies more profitable 658 00:46:40,110 --> 00:46:43,699 Speaker 2: and that means their exit becomes easier. 659 00:46:44,110 --> 00:46:48,199 Speaker 2: And one of the sources of equity these days is 660 00:46:48,209 --> 00:46:55,209 Speaker 2: state owned enterprises who wanna learn more efficient management. So 661 00:46:55,239 --> 00:46:59,279 Speaker 2: I can make a case that investing in private markets 662 00:46:59,290 --> 00:47:04,370 Speaker 2: in China is quite interesting, but it's only interesting to 663 00:47:04,379 --> 00:47:10,129 Speaker 2: a very small pool of capital coming from outside. 664 00:47:10,739 --> 00:47:15,080 Speaker 2: And historically, your exit was to list in the west 665 00:47:15,250 --> 00:47:20,520 Speaker 2: or sell to a Western strategic, which is much harder 666 00:47:20,530 --> 00:47:23,739 Speaker 2: to get approval for today. It's looked on as capital 667 00:47:23,750 --> 00:47:27,419 Speaker 2: flight flight. But the fact that you have local state 668 00:47:27,429 --> 00:47:31,540 Speaker 2: owned enterprises who have access to as much bank borrowing 669 00:47:31,550 --> 00:47:37,739 Speaker 2: as they possibly can use and need better management. It's 670 00:47:37,750 --> 00:47:40,360 Speaker 2: a very interesting dynamic. 671 00:47:40,979 --> 00:47:46,600 Speaker 2: Uh Now to India, Indian public market is on fire, 672 00:47:46,610 --> 00:47:49,389 Speaker 2: the valuations are very high. 673 00:47:50,010 --> 00:47:52,100 Speaker 2: And at the same time, 674 00:47:53,070 --> 00:47:59,610 Speaker 2: retail investment in the public market through borrowed money and 675 00:47:59,620 --> 00:48:02,729 Speaker 2: derivatives is massive. 676 00:48:03,959 --> 00:48:04,850 Speaker 2: So 677 00:48:05,800 --> 00:48:10,280 Speaker 2: a lot of foreigners say valuations are too high and 678 00:48:10,290 --> 00:48:15,889 Speaker 2: they still are going up in India. And despite fed 679 00:48:16,510 --> 00:48:19,639 Speaker 2: no longer having zero interest rates and the cost of 680 00:48:19,649 --> 00:48:22,639 Speaker 2: capital going up in the US, there still is a 681 00:48:22,649 --> 00:48:25,570 Speaker 2: lot of liquidity in the world and a lot of 682 00:48:25,580 --> 00:48:30,919 Speaker 2: liquidity coming from the US and total financial conditions are 683 00:48:30,929 --> 00:48:32,689 Speaker 2: not all that tight. 684 00:48:33,790 --> 00:48:39,129 Speaker 2: So I think there's huge opportunity in the private markets. 685 00:48:39,139 --> 00:48:43,320 Speaker 2: I've never seen as big a disconnect between private markets 686 00:48:43,330 --> 00:48:48,049 Speaker 2: and public markets as in India today. And there are 687 00:48:48,060 --> 00:48:53,590 Speaker 2: so many interesting start ups that raised a ton of 688 00:48:53,600 --> 00:48:58,689 Speaker 2: money from big players like Softbank in 21 689 00:48:59,370 --> 00:48:59,870 Speaker 2: and 690 00:49:00,709 --> 00:49:06,029 Speaker 2: now are looking at down rounds because big pools of 691 00:49:06,040 --> 00:49:10,090 Speaker 2: money are out of those markets. And I think there's 692 00:49:10,100 --> 00:49:16,250 Speaker 2: amazingly interesting opportunities and it's so much harder to raise 693 00:49:16,260 --> 00:49:19,770 Speaker 2: money in India that you see many brilliant Indian entrepreneurs 694 00:49:19,780 --> 00:49:24,010 Speaker 2: going to the west where they can raise money. And 695 00:49:24,020 --> 00:49:25,000 Speaker 2: so many 696 00:49:25,629 --> 00:49:35,069 Speaker 2: of these companies have very interesting ESG SOLUTIONS. I was 697 00:49:35,080 --> 00:49:35,639 Speaker 2: um 698 00:49:36,429 --> 00:49:40,529 Speaker 2: meeting an investment firm in Singapore 699 00:49:41,320 --> 00:49:48,060 Speaker 2: and their investors are big multinationals who have problems with 700 00:49:48,070 --> 00:49:55,600 Speaker 2: recycling waste, consumer companies that generate massive amounts of plastic 701 00:49:55,610 --> 00:50:00,009 Speaker 2: waste and are looking for solutions. And this investment firm 702 00:50:00,020 --> 00:50:03,459 Speaker 2: is very active in India. So for example, they had 703 00:50:03,469 --> 00:50:08,658 Speaker 2: invested in a company that figures out how to separate 704 00:50:08,669 --> 00:50:09,739 Speaker 2: manmade 705 00:50:10,590 --> 00:50:17,760 Speaker 2: synthetic fiber and nat natural like cotton, which makes it 706 00:50:17,770 --> 00:50:22,209 Speaker 2: much easier to recycle fast fashion. So it doesn't end 707 00:50:22,219 --> 00:50:26,839 Speaker 2: up in landfills. So I'm hugely optimistic about the private 708 00:50:26,850 --> 00:50:28,520 Speaker 2: markets in India. 709 00:50:30,360 --> 00:50:31,939 Speaker 2: How do you see it? You know, 710 00:50:32,979 --> 00:50:37,469 Speaker 1: fully concur? I remember reading this book by Tun Kanna 711 00:50:37,479 --> 00:50:40,560 Speaker 1: at Harvard about 67 years ago and the book was 712 00:50:40,570 --> 00:50:44,439 Speaker 1: called billions of entrepreneurs. And his point was that given 713 00:50:44,449 --> 00:50:48,000 Speaker 1: the number of constraints that an average Indian faces on 714 00:50:48,010 --> 00:50:49,919 Speaker 1: a day to day basis, it makes them very good 715 00:50:50,020 --> 00:50:55,290 Speaker 1: problem solvers, which itself is a key intrinsic entrepreneurial quality. 716 00:50:55,379 --> 00:50:57,929 Speaker 1: And hence India is a country of a billion entrepreneurs 717 00:50:57,959 --> 00:51:01,030 Speaker 1: at that time, it was like this is the way 718 00:51:01,040 --> 00:51:03,569 Speaker 1: the country can grow in spite of all the constraints. 719 00:51:03,679 --> 00:51:05,879 Speaker 1: But now I think as the constraints are getting removed, 720 00:51:05,889 --> 00:51:11,120 Speaker 1: it becomes a source of like a turbocharged momentum uh to, 721 00:51:11,129 --> 00:51:13,129 Speaker 1: to get all these problem solvers out there and build 722 00:51:13,139 --> 00:51:18,570 Speaker 1: interesting uh solutions for, as you said, environmental issues, consumer issues, 723 00:51:18,580 --> 00:51:19,448 Speaker 1: the full gamut. 724 00:51:21,429 --> 00:51:24,419 Speaker 1: Um Normally I like to end the podcast on a 725 00:51:24,429 --> 00:51:26,570 Speaker 1: positive note, but today it's not gonna be it because 726 00:51:26,580 --> 00:51:29,750 Speaker 1: my final question to you is about the other city 727 00:51:29,760 --> 00:51:31,850 Speaker 1: where you spend your time, not just Hong Kong, but 728 00:51:31,860 --> 00:51:33,408 Speaker 1: you spend most of your time actually in New York 729 00:51:33,419 --> 00:51:37,600 Speaker 1: these days. Uh So state of us politics in an 730 00:51:37,610 --> 00:51:41,279 Speaker 1: election year, maybe we end on that one. So tell 731 00:51:41,290 --> 00:51:42,209 Speaker 1: me a little bit about that 732 00:51:42,580 --> 00:51:46,389 Speaker 2: when I have dinner parties and the subject comes up 733 00:51:46,649 --> 00:51:49,799 Speaker 2: if at least half my guests don't leave in tears. 734 00:51:49,810 --> 00:51:53,589 Speaker 2: I feel the conversation has been incredibly superficial. 735 00:51:55,159 --> 00:52:00,580 Speaker 2: I'm embarrassed to be American when I travel abroad because 736 00:52:00,590 --> 00:52:01,810 Speaker 2: our presidents 737 00:52:02,889 --> 00:52:07,729 Speaker 2: have an impact on the whole world. And recently, I 738 00:52:07,739 --> 00:52:11,110 Speaker 2: can't say that impact has been benign. 739 00:52:11,820 --> 00:52:15,319 Speaker 2: And one of the points that I make is that 740 00:52:15,699 --> 00:52:21,610 Speaker 2: the electoral college determines the outcome, it's not popular votes 741 00:52:21,870 --> 00:52:27,270 Speaker 2: and it's very easy to game the electoral college and 742 00:52:27,280 --> 00:52:30,479 Speaker 2: that system should have been scrapped years ago. 743 00:52:31,370 --> 00:52:39,049 Speaker 2: And the combination of manipulating votes and gaming, the system 744 00:52:39,060 --> 00:52:44,149 Speaker 2: means the outcome can be totally distorted. So that's the 745 00:52:44,159 --> 00:52:47,969 Speaker 2: first point. The second point is that 746 00:52:49,250 --> 00:52:50,870 Speaker 2: these candidates, 747 00:52:51,639 --> 00:52:55,290 Speaker 2: you know, America has become so divided 748 00:52:56,469 --> 00:52:57,250 Speaker 2: and 749 00:52:58,370 --> 00:53:03,469 Speaker 2: it discourages the best people from even going into politics 750 00:53:03,479 --> 00:53:08,929 Speaker 2: and the quality of the debate gets worse and worse. 751 00:53:08,939 --> 00:53:14,310 Speaker 2: And I just don't see how you reverse 752 00:53:15,040 --> 00:53:17,199 Speaker 2: so that, that trend. 753 00:53:19,199 --> 00:53:23,419 Speaker 2: And it's very, very sad to me. So I feel 754 00:53:23,429 --> 00:53:27,229 Speaker 2: like I should apologize to everyone in the region. And 755 00:53:27,239 --> 00:53:31,219 Speaker 2: at one point, I was um asked about this in 756 00:53:31,229 --> 00:53:35,260 Speaker 2: India and I said we should outsource elections to you guys. 757 00:53:35,270 --> 00:53:38,379 Speaker 2: You can do a better job than we Americans can. 758 00:53:40,419 --> 00:53:46,120 Speaker 2: OK? But it's not a serious people aren't discussing the 759 00:53:46,129 --> 00:53:49,779 Speaker 2: most important issues, let alone 760 00:53:51,040 --> 00:53:53,580 Speaker 2: coming up with creative solutions. 761 00:53:55,379 --> 00:53:57,280 Speaker 1: So, so I won't turn it 762 00:53:57,290 --> 00:53:58,709 Speaker 2: on to you. But if it 763 00:54:00,040 --> 00:54:02,779 Speaker 1: now I hear your disappointment, but at the same time, 764 00:54:02,889 --> 00:54:06,449 Speaker 1: we are talking about a time in history when us 765 00:54:06,459 --> 00:54:11,419 Speaker 1: tech remains supreme, the new wave of artificial intelligence, all 766 00:54:11,429 --> 00:54:16,699 Speaker 1: the innovations uh the the products are coming from Silicon Valley. 767 00:54:16,879 --> 00:54:19,169 Speaker 1: Uh We are seeing the Inflation Reduction Act having a 768 00:54:19,179 --> 00:54:23,750 Speaker 1: pretty profound impact on green infrastructure in the country and 769 00:54:23,760 --> 00:54:26,810 Speaker 1: for better or for worse in the geopolitical space. They 770 00:54:26,820 --> 00:54:27,750 Speaker 1: are the big dog. 771 00:54:28,030 --> 00:54:33,149 Speaker 1: So how do you reconcile that dysfunctionality of domestic politics? 772 00:54:33,159 --> 00:54:38,060 Speaker 1: But at the same time on technology and military and 773 00:54:38,070 --> 00:54:41,290 Speaker 1: geopolitical power, it seems like it's almost like at an 774 00:54:41,300 --> 00:54:41,820 Speaker 1: all time 775 00:54:41,830 --> 00:54:47,050 Speaker 2: high. It's interesting um you're referring to what we call 776 00:54:47,060 --> 00:54:49,810 Speaker 2: short term us exceptionalism, right? 777 00:54:51,129 --> 00:54:58,000 Speaker 2: And two questions, is it lasting given the populism in 778 00:54:58,010 --> 00:55:03,839 Speaker 2: the states, the debt dynamics in the States? These are 779 00:55:03,850 --> 00:55:09,030 Speaker 2: real questions, how fundamental is us exceptionalism? 780 00:55:09,729 --> 00:55:10,350 Speaker 2: And 781 00:55:11,010 --> 00:55:17,699 Speaker 2: we are also raising questions about whether technology today and 782 00:55:17,919 --> 00:55:24,270 Speaker 2: generative A I are ultimately dystopian or benign. 783 00:55:25,360 --> 00:55:31,219 Speaker 2: And can the US government have the understanding 784 00:55:32,020 --> 00:55:37,449 Speaker 2: so that we have the best impacts of technology and 785 00:55:37,459 --> 00:55:43,000 Speaker 2: not the worst impacts of technology? Right? And, and that's 786 00:55:43,010 --> 00:55:48,969 Speaker 2: an open question, but we have amazing start ups. They're 787 00:55:48,979 --> 00:55:53,239 Speaker 2: changing the whole world. But there are all kinds of 788 00:55:53,250 --> 00:56:00,879 Speaker 2: new challenges that technology brings. And are our politicians 789 00:56:01,360 --> 00:56:07,319 Speaker 2: up to, are they capable of enlightened policies when it 790 00:56:07,330 --> 00:56:12,219 Speaker 2: comes to ensuring that we enjoy the benign effects, whether 791 00:56:12,229 --> 00:56:21,929 Speaker 2: it's in medical breakthroughs, for example, without the dystopian surveillance control, 792 00:56:22,350 --> 00:56:31,689 Speaker 2: income disparities, superfluous people with nothing, no jobs, no prospects. 793 00:56:31,699 --> 00:56:35,889 Speaker 2: So how do we deal with that? How lasting is 794 00:56:36,100 --> 00:56:41,209 Speaker 2: us exceptionalism? And if I'm ever invited back, I'll turn 795 00:56:41,219 --> 00:56:42,810 Speaker 2: the tables and ask you. 796 00:56:44,389 --> 00:56:47,560 Speaker 1: Um honey, it's been such a long time coming as 797 00:56:47,570 --> 00:56:50,330 Speaker 1: I said earlier and I look forward to having you 798 00:56:50,340 --> 00:56:55,370 Speaker 1: on podcast on copy time every year. Uh Again, I'm 799 00:56:55,379 --> 00:56:57,919 Speaker 1: very grateful to you for your time and insights. Thank 800 00:56:57,929 --> 00:56:58,569 Speaker 1: you so much. 801 00:56:59,149 --> 00:57:02,290 Speaker 2: Thank you. It was a pleasure and hope to do 802 00:57:02,300 --> 00:57:03,709 Speaker 2: it in person next time. 803 00:57:04,060 --> 00:57:07,570 Speaker 1: Yeah, absolutely. Uh Thanks to our listeners as well. Kobe Time. 804 00:57:07,580 --> 00:57:11,149 Speaker 1: Was produced by Ken Delbridge at Fly studios, Violet Lee 805 00:57:11,159 --> 00:57:14,979 Speaker 1: and Daisy Sharma provided positional assistance. It is for information 806 00:57:14,989 --> 00:57:16,370 Speaker 1: only and does not represent 807 00:57:16,465 --> 00:57:20,804 Speaker 1: any trade recommendations. All 120 episodes of copy time are 808 00:57:20,814 --> 00:57:24,965 Speaker 1: available on youtube and on all major podcast platforms including 809 00:57:24,975 --> 00:57:28,935 Speaker 1: Apple Google and Spotify. As for our research publications, webinars 810 00:57:28,945 --> 00:57:30,925 Speaker 1: and live streams, you can find them all by Googling 811 00:57:30,935 --> 00:57:33,645 Speaker 1: devious research library. Have a great day.