0:00

You're listening to an Airwave

0:02

Media Podcast. Deep

0:07

into COVID, I was in New

0:09

York, watching from afar as China

0:11

enacted its zero COVID policy, placing

0:13

millions of people under forced

0:16

quarantine. The Chinese

0:18

economy was in turmoil. And

0:20

amid the ups and downs in the market,

0:22

one of my former colleagues at the New

0:25

York Times Bureau in Beijing wrote an article

0:27

that fascinated me. It

0:29

was about a growing feeling among the

0:31

Chinese youth. This

0:34

is Elsie Chen. Young people should be

0:36

free to pursue what they want, pursue

0:39

what they like, their dreams or the

0:41

lifestyle they want, instead of

0:44

just fulfilling all these

0:46

social pressure and

0:48

expectations. Out of

0:50

this feeling, a silent movement bubbled up in

0:52

China. It's basically quiet

0:55

quitting. But instead of

0:57

checking out at work and taking it

0:59

easy, Chinese youth are simply

1:01

checking out of work and not

1:03

showing up at all. There's

1:06

a Chinese word for this. Tangping,

1:08

which literally translates as lie

1:11

down and very flat. Lying

1:14

flat, meaning disregarding

1:16

traditional expectations. Lying

1:18

flat is like a spectrum, like how

1:21

flat you want to lie. So some

1:23

people are lying like completely flat, right?

1:25

Like they quit their job and then

1:27

they just like minimize

1:29

their desire. They're not getting married

1:31

or not having a children. Like

1:33

they just live really simply. But

1:36

the term can also be less

1:39

extreme, just used to describe an

1:41

attitude towards life in general, similar

1:43

to the American mantra, work-life balance.

1:46

The term has gone viral on the

1:48

internet. People are like printing shirts

1:50

or kind of merch, like

1:53

with the slogan of lying flat. Someone

1:56

even wrote a song and recorded a

1:58

music video about lying flat. In.

2:00

The video the musician Genes

2:02

in Mean sings and plays

2:04

guitar or lying flat. Of

2:06

course. In

2:09

do you do the. Tone

2:13

been done. A good booth. Ah.

2:18

Lazy. The

2:20

lyrics were like really fun as they

2:22

all lie down now so you never

2:24

for down. lying down means never falling

2:27

down. Even Lc Ten,

2:29

my former colleague, quit her job at

2:31

the times and moved to the tourist

2:33

town of Die. In Southern

2:35

China just to chill,

2:37

know schedule, know schedule,

2:40

and. Yellow line completely flat.

2:42

I yeah, I guess so.

2:45

Beijing isn't exactly happy about

2:47

the. Lying Flat Trend: In fact,

2:50

the turn has been censored, but

2:52

was some economists estimating. That use

2:54

unemployment is hovering around twenty five

2:57

percent. Is. Lying flat more than

2:59

just a trend. And what does

3:01

this mean for the bigger picture

3:03

of the world's second largest economy?

3:06

Tommy. Di su. Bo.

3:19

I'm Jane Perlez and this his

3:21

face off a podcast exploring the

3:23

relationship. Between the worlds to leading

3:26

economies, The. Us and China. On.

3:29

Today's episode we're going to talk

3:31

about exactly that: The economy class

3:33

run emitter will join me at

3:35

the end of the episode to

3:38

break things down. China's

3:44

economy is not the juggernaut. It

3:46

once was. Is a

3:49

major housing crisis, deflation

3:51

and sky high unemployment.

3:53

At. This year's Annual Congress. They.

3:56

Were no big decisions about what the

3:58

Chinese leadership would do to get. Out

4:00

of this current front. So.

4:02

What now? And what is

4:04

China's slowing economy mean for

4:06

Us? China? Relations? To

4:11

talk this through, my guess

4:13

today is kay you just

4:15

see by the way is

4:17

definitely not lying flat. She.

4:19

Has a be A, Am, A,

4:21

and Phd in economics from Harvard.

4:24

She's a professor at the London. School

4:26

of Economics. And. Author of

4:29

the New China Playbooks.

4:32

So. You welcome, thank you. It's great

4:34

to be with you. delighted to have

4:36

you on the soda you specially since

4:38

I interviewed your father to a tune.

4:41

Who's ahead of the Asian infrastructure investment

4:43

banks? He had the best office library

4:45

of anyone I know. This end of

4:47

this will not. All to do

4:49

with economics. We always talked about English

4:52

poetry which he what is It had

4:54

two volumes. I think yes. and he's working

4:56

on some more works on Shakespeare. Excellent.

4:59

I. Wanted to start with your background. You.

5:02

Have a very special understanding of

5:04

the Us China equation. Because.

5:06

As a teenager you list Beijing to

5:08

come and study in the U S.

5:11

You. Into Horace Mann High School in

5:14

New York. In the late nineties. Why

5:16

did you come? To. Horace Mann, how

5:18

did you find out about it? They found

5:20

me rather than the other way around. or

5:23

there was a very visionary had mastered and

5:25

he was a scholar of Chinese history. He

5:27

was looking for a Chinese students and. Different.

5:31

Incidentally, he found me and he brought

5:33

me to to New York and I

5:35

was their first Chinese exchange students and

5:37

back that I guess who are a

5:40

few of us really directly from mainland

5:42

China as exchange students aren't? They were

5:44

very very interested, very interests and China

5:46

but their. Understanding of time rested on

5:49

pretty much what the headline news of

5:51

the New York Times was and I

5:53

thought wow, jeez, that's really completely different

5:56

from what we're experience in China back

5:58

then everything was so exciting. The were

6:00

bidding for the Olympics. Ah, it

6:02

was a lot about you know,

6:05

opportunity and chance that but that

6:07

the kind of picture they depicted

6:09

about China was oppression and quite

6:11

bleak. And that was just. you

6:14

know, to system diametrically different from

6:16

reality. I can't resist asking, do

6:18

you think there's much difference between

6:20

then and now in people's perceptions

6:22

in the United States and Britain?

6:25

Way you're talking from in their

6:27

perceptions of China's compared to then.

6:30

A really surprisingly it's then what?

6:32

Twenty years even more than that,

6:34

undies and I'm not much has

6:36

changed. To be frank, there are

6:38

for saw six different versions of

6:41

the China Collapse stoy since the

6:43

late nineteen eighties and we have

6:45

a recent one peak China and

6:47

a keeps on coming back in

6:49

again. The lenders the particular perspective

6:51

on the used to evaluate China's

6:54

always almost always their own how

6:56

they look at China, not what

6:58

the reality is. Ah so. The

7:00

using the same lens asking the same

7:02

kind of questions when as the system

7:04

going to collapse, when is the world's

7:07

gonna be over? Ah, what has there

7:09

been a be democracy and the presumption

7:11

that somehow the majority people are just

7:13

so very unhappy that hasn't changed at

7:15

all that you know, China has. Changed.

7:18

So much the last forty years. and

7:20

what I find kind of remarkable and

7:22

disquieting is that the reality is even

7:25

though China Us are deathly in others,

7:27

it's still a between them for out

7:29

of the five most downloaded apps and

7:32

the you as to they are Chinese.

7:34

Ah, and when you read Jake Sullivan

7:36

recent. Speech On how to restore American.

7:38

Competitiveness to that sounds a

7:41

lot like the China model

7:43

meaning government subsidies it's exact

7:45

science acts, inflation reduction at

7:47

and put uncle on apologetic

7:49

use of. The. Government

7:52

and industrial policies well.

7:54

That. Is that sounds a lot

7:56

like China? I think perceptions have

7:58

remained the same. But there are

8:01

lots of things that are going

8:03

on that suggest otherwise. I sometimes

8:05

wonder if this bleak few of

8:07

China, particularly peak China's it's become

8:10

fashionable in Washington is tinged with

8:12

some. Wish Fulfillment A really

8:14

interesting. Way enough right about

8:16

the January Dallas time I

8:18

think as and see said

8:20

We wish. The. Us.

8:23

Prosperity. And great

8:25

developments going forward and

8:27

I hope that the

8:29

U S wishes the

8:31

same for China. Certainly

8:34

question. Cast: From

8:36

the chase perspective of whether that

8:38

is true login, I think all

8:40

evidence points out that. It's

8:43

been great globalization in in some

8:45

ways of massive convergence of developing

8:47

countries too advanced economies are we

8:49

have never seen in the past

8:51

history the fact that China itself

8:53

through benefited hugely. Not just the

8:56

you as a as a whole

8:58

but. But. A lot of the

9:00

developing countries around the just from a

9:02

purely economic a point of view I

9:04

understand are lots of distributional consequences are

9:06

lots of a winners and losers at

9:09

the same time but from an economic

9:11

perspective of that has been true. So

9:13

when see came into power. In

9:15

Twenty twelve, the economy was it double

9:17

digit growth in the middle class. Was

9:20

expanding what went right in the

9:22

first eight years. There's more to.

9:24

The country than just gdp

9:27

growth in investments, the environments,

9:29

this and a huge emphasis

9:31

on environmental protection. I mean

9:34

we see blue skies everyday in

9:36

Beijing which was extraordinary. yeah exactly

9:38

i even ten years ago

9:41

and an emphasis on on

9:43

people are consumers not just

9:45

on firms and companies and

9:48

up production and capacity but

9:50

on protecting data tackling the

9:52

monopolies and some issues around

9:55

technology companies and so forth

9:57

and and also the antics

10:00

corruption drive, I think, was very, very

10:02

important. And I got huge support.

10:04

Can you describe that a little bit?

10:06

I mean, I think something like

10:08

4 million people in the Communist

10:10

Party and other places have been

10:12

basically, old-fashioned word of purged. Yeah,

10:14

let's say millions were

10:16

charged one way or another. But

10:19

the important thing, it's not just very senior

10:21

leaders, lower level Communist

10:24

Party employees were charged. But it

10:26

wasn't just the numbers. You can

10:28

see it everywhere around you. The

10:31

public sector spending was huge before,

10:33

just the whining, dining, karaoke. All

10:36

that suddenly just disappeared. I mean, I've been to

10:38

a few working lunches with

10:40

different institutions that it's literally $4

10:42

budget lunch boxes. Very

10:46

boring. Concentrates the mind,

10:48

I guess. It does. It was

10:50

not for the meal. That has changed a lot.

10:52

And that has received a lot of

10:55

popular support. But in all seriousness,

10:57

don't you think that purging

10:59

so many people does run a

11:01

risk of some instability? There certainly

11:03

is a lot of opposition. I'd

11:06

say also the cost is reduced

11:08

growth because incentives.

11:11

And I talk about in my book about

11:13

the mayor economy and how the local officials

11:15

were really in charge, but also responsible for

11:17

this enormous, remarkable growth, not

11:20

just reforms, but innovation, building

11:22

unicorns around the country, many

11:24

Silicon Valley's. When there's

11:26

too much emphasis on monitoring, on

11:29

surveillance, on accountability of

11:31

the very micromanagement, that it does

11:33

reduce incentives to take risks and

11:36

be entrepreneurial. And even

11:38

if they were interested in their own

11:40

personal gains, by and large, they were really

11:43

interested in helping local jurisdictions develop. You

11:45

kind of have demotivated some of them a

11:47

bit. I think that was a

11:49

tremendous and probably one of the very important factors

11:52

of growth slowed down today. And

11:54

talking about purges, if I may, I

11:57

think one of the things that's really striking

11:59

for those of us in the United

12:01

States who pay attention is the

12:03

kind of purge at the top of

12:05

the tech companies. So Bao Fan,

12:07

for example, I remember going to meet him

12:09

in Beijing in 2016, did a lot of

12:13

banking for the tech companies. He disappeared more

12:15

than a year ago, nothing's been heard from him,

12:18

and he's somewhere in the freezer.

12:20

I mean, this has got to be a

12:23

big disincentive to people wanting to do

12:25

high flying business, isn't it? I

12:27

agree. This has caused a

12:29

lot of investor uncertainty, a lot of

12:32

the really smart people being

12:34

a bit concerned about

12:36

what they can do. But

12:39

the flip side is this. If we look at

12:41

really the numbers as a whole, they're

12:44

20 million, per se. Not

12:46

all of them are the very, very top

12:48

echelon. Yes, there's been a

12:50

cleansing, a total cleansing from the health sector

12:52

to the tech sector to the financial sector.

12:55

I completely agree that has rattled

12:57

investor confidence. Not to say there

12:59

weren't issues, there were really major issues of all

13:02

sorts. I do believe the system

13:04

needed a bit of more

13:06

corporate governance and law and all that.

13:09

But if you look at the young people

13:11

today, are they demotivated? I don't think so.

13:13

I think they're more devoted by the macroeconomic

13:17

environment and the lost

13:19

opportunities rather than thinking

13:21

that these are important examples that

13:23

they're going to try to avoid. There

13:27

are lots and lots of

13:29

other very top entrepreneurs that

13:31

are potentially more subservient. That's

13:33

a personal choice. I think

13:35

it has affected investment

13:38

mood to a

13:40

certain degree, but it hasn't demotivated

13:42

entrepreneurship. Yes, but talking

13:44

about young people, there is now

13:46

this amazing phenomenon which I just

13:49

find hard to believe and I'm very

13:51

interested to hear how you

13:53

explain the lying flat

13:56

phenomenon, 20 something

13:58

people just deciding to. Aka

14:00

any twenty five percent

14:02

unemployment among college graduates.

14:05

Why is this as a No Jobs

14:07

or a people just disaffected that they

14:09

don't want to work in the kind

14:12

of jobs that are available. or first

14:14

of all, in the last ten or

14:16

fifteen years as than one hundred million

14:19

additional college graduates because of the right

14:21

wow fans. And yes, of secondary and

14:23

higher education it's almost too many edward

14:26

as it is too many precisely for

14:28

the structure of China's economy was still

14:30

predominantly manufacturing and also time as far

14:33

as to be a smart manufacturer. Of

14:35

the future, Not the finance allies, knowledge,

14:37

property, economy like the you as that,

14:40

a bigger and smarter Germany. And what

14:42

that means is that there's gonna be

14:44

a lot of jobs still in those

14:46

sectors manufacturing. So it's not like there

14:49

are no jobs, right? It's just that

14:51

these highly educated Chinese use prefer to

14:53

do something else they don't want to

14:55

line up, factories are doing production. They

14:58

might have not have the skills to

15:00

operate these machines and be technical. That

15:02

workers. I think you're talking about one

15:04

three hundred thousand job vacancies in the

15:07

semiconductor industry, for example. Absolutely. That said,

15:09

that's another example that I like to

15:11

use. but there are many, many, many

15:13

sectors that have many jobs that they

15:16

don't have the right skills, so it

15:18

is a skill. Education mismatch

15:20

and guess what An economic downturns

15:22

to use our the last to

15:24

be higher in the first to

15:26

be fired and yeah silly right.

15:28

It's also that the use you

15:31

know having been brought up and

15:33

relative more prosperity certainly than past

15:35

generations probably with of more well

15:37

to do parents, their reservation, wage

15:39

or in other words the waves.

15:42

Below which they're not willing to

15:44

work has really gone up by

15:46

a lot arm, so they'd rather

15:48

just stay home and wait for.

15:50

The. Kind of job they want to

15:52

do. That said, we're forgetting. A.

15:54

Really big swath of the

15:56

population, which is the rural.

15:59

Use. And the rural people

16:01

in general. They are vastly under

16:03

educated on the i'm not lying

16:05

flat if you just look around,

16:07

the delivery guys at the migrant

16:09

workers the migrant use the are

16:11

working harder than ever arm and

16:13

so when we look at China's

16:16

a whole, it's very easy to

16:18

be drawn to. A few anecdotes

16:20

and I do believe youth unemployment

16:22

is a major issue. We can't

16:24

forget that there's a vast population

16:26

outside of the cities that have

16:28

a very different problem. And

16:30

are facing different challenges. But I think

16:32

about the. Unemployment in the

16:34

city's K U among the

16:37

educated unemployed in wonder what

16:39

this means Fool political stability

16:41

of. It. Is something that the

16:44

leadership as all the time and then

16:46

they probably crack down. A. Bit more

16:48

which which might make unemployed thus

16:50

the. Educated. People a little bit

16:52

irritated. The main issue today is sad

16:54

that that they call him he is

16:57

in poor shape. Ah the wage growth

16:59

is of even the employed people have

17:01

been falling many real wages or even

17:03

declining if we don't look at just

17:06

official numbers. getting the economy back is

17:08

a for sort important to think it

17:10

can be. I think it's the right

17:13

policies were chosen. It could be done

17:15

but I don't believe the right policies

17:17

are chosen and in a killer. There's.

17:20

A lot of talk about structural problems.

17:22

Just like the Europeans, it's all structural.

17:24

Just like the Japanese when they have

17:26

a big demand problem, they set out

17:28

to structural problem and guess what happened?

17:30

They did not do enough demand stimulus

17:33

the kind that you that Us and

17:35

Uk like to pursue. It actually made

17:37

a lot of difference. During the pandemic,

17:39

they're not choosing to do old style

17:41

old fashioned kings in stimulus. Season

17:43

thing is choosing not to. Why were. the

17:45

leadership believes that these things don't

17:47

work in china i'd i don't

17:49

agree with that they they believe

17:51

that handing out cash or stimulated

17:54

consumption even vouchers are not sustainable

17:56

because people don't see a wage

17:58

growth but this is kim In

18:00

economics, once you get them spending, the

18:02

companies will do better and then they

18:04

will start to hire. Just

18:06

plain old demand problems. But what I

18:09

wanted to say about the youth is,

18:11

even before the youth unemployment is a

18:13

much bigger political headache, and that's

18:15

real estate. Why? Because everybody

18:17

owns a property. Or more. Absolutely. But

18:19

not everybody has a 20 year old

18:22

without a job. Right? So

18:25

I think the property sector and the wealth

18:27

effect that comes from this decline

18:30

is going to pose a more imminent,

18:32

let's say social stability problem than even

18:35

the youth unemployment. And

18:37

how do you see that playing out, Kaye? It's

18:40

a long term painful

18:43

adjustment to some equilibrium,

18:46

because right now there is, what,

18:48

400 million square meters

18:51

of vacant housing to be filled.

18:53

Over time, I do

18:56

believe that in the long run, there is

18:58

enough demand, because again, it comes back to

19:00

the fact that China's urbanization is

19:03

still 10, 15

19:05

percentage points off of where it's going.

19:07

And you mean there's more urbanization to

19:09

be done. Yeah, more urbanization. So lots

19:11

of people living in rural

19:14

areas want an apartment in the urban

19:16

areas because of access to social

19:19

infrastructure. Everybody dreams of having an apartment

19:21

in a city, and that's going to

19:23

continue. That's going to take

19:25

time. It's going to take time to

19:27

fill up these empty units. I

19:30

don't see a real estate collapse,

19:33

because the government is not going to allow that to

19:35

happen. I do see

19:37

still a lot of room to stimulate

19:39

demand. You can reduce down payments, lower

19:41

interest rate. There's still enough room. China's

19:44

in a little bit of a credit paralysis.

19:47

There's no confidence in the economy, so nobody

19:49

wants to buy, nobody wants to invest. And

19:51

that is kind of the vicious circle that

19:53

China needs to prevent from being like a

19:55

Japan. It's going to be

19:57

a painful, long-run kind of adjustment. some

20:00

kind of ideological barrier to

20:02

the stimulus that you're suggesting?

20:05

You know, it's not Marxist Leninism to do that.

20:07

It's not Marxist Leninism, it's just

20:10

a belief that the

20:12

resources should be harnessed to pursue high-tech.

20:14

And when you hand people cash, either

20:16

they just don't spend it or it's

20:18

not going to be really helping China

20:20

in to pursue a higher quality

20:22

growth or high-tech growth. But I find

20:24

a lot of developing countries to have the

20:26

same mentality and I think they're wrong. Yes,

20:29

there are cultural differences between an American and

20:31

a Chinese, but there are lots of ways

20:34

to get around it, like just give them

20:36

expiring consumer vouchers. They're definitely going to have

20:38

to spend it. I think

20:40

there is a reluctance to just have

20:42

people just start spending, but that's

20:44

kind of jump-starting the good economic

20:47

engine that they're not aware of,

20:49

I think. So you mentioned this

20:51

a little earlier and it's something

20:54

that quite fascinates me, is China

20:56

actually becoming the superpower

20:58

of renewables, electric vehicles, solar panels,

21:00

wind turbines. I mean, China

21:03

is exporting EVs until there's no

21:05

tomorrow they're going to surpass, or

21:07

maybe they already have surpassed Germany

21:10

in this sector. What

21:12

difference can this renewable industry make

21:15

to the state of the overall

21:17

economy? The future plan is

21:19

to strive to dominate emerging

21:21

technologies where there are no

21:24

clear technological leadership and

21:26

incumbents from the West. Renewable is definitely

21:29

one of the big important sectors, but

21:31

even in quantum and AI and

21:34

digital economy, lots of the new

21:36

biotech areas, I think there's room

21:38

for China to be at least

21:40

neck and neck with the

21:43

US. But it's very, very risky. Why?

21:45

Because in the past, China was a

21:47

close follower, and all the first

21:49

movers can make all kinds of mistakes, and you can

21:51

avoid the mistake by not being the first mover. Now

21:53

China wants to be the first mover in a lot

21:56

of these areas. That's kind of a

21:58

risky plan, but that is the plan. It's

22:00

interesting that we're talking. About the new

22:02

industries semiconductors are not saying Knew

22:05

that they are incredibly important for

22:07

our future. The Bind administration is

22:09

doing everything they can to stop

22:12

China being a leader in these

22:14

industries in particular semiconductors and I

22:17

think you said you think that's

22:19

going to has the potential to

22:21

backfire Rights. To think it will

22:23

backfire in the end. Or do you think the

22:26

United States will just managed to keep that When I

22:28

guess is when I'm kiss and told us what? five

22:30

years. Ahead all the time

22:32

of China, Has

22:34

already that fire to some extent

22:36

although the outcome may not be

22:39

is a easily measured on just

22:41

yet. for instance ah all the

22:43

semiconductor companies are other demands that

22:45

sets right which was more than

22:47

they spend on oil. All that

22:49

went back to China Chinese companies

22:51

so tiny something have seen six

22:54

fold increase in their profits and

22:56

revenue and the putting them all

22:58

and research and development and innovation

23:00

investments. And we've also seen

23:02

quite a few companies spring up on

23:04

trying to leapfrog in the sense of

23:06

circumventing some of these restrictions that coming

23:08

up with new designs, completely new designs

23:11

and thinking out of the bought this

23:13

would have never never happened. Because if

23:15

you look if you ask, all these

23:17

are companies that definitely prefer to import

23:19

comfortably in of that he hips and

23:21

so forth. But not so much going

23:23

forward because they think it's an existential

23:26

threats are you don't know when it's

23:28

gonna be cut off so they're directing.

23:30

All their demand back to the domestic

23:32

companies sushi. look at China today. all

23:35

the Ai companies that he these and

23:37

lots of companies. To

23:41

think when you comfortable. Comfortably.

23:43

Importing something without too much competition. There's

23:45

no pressure and to that to that

23:48

extent as already backfire, especially if we

23:50

see some leapfrogging going on in the

23:52

Sarah advanced a much for industry. I

23:55

think is we're talking It's good to

23:58

remember. that in your book

24:00

you refer to China being

24:02

a $10,000 per capita income

24:04

nation and it needs to get to $30,000

24:08

per capita. How long do

24:11

you think that will take

24:13

especially given the current circumstances

24:16

of a downward-turning economy? As

24:20

China becomes bigger and bigger,

24:22

it's going to be harder and harder to grow.

24:24

When you say bigger and bigger, you mean? It's

24:27

the size, the economic size is just

24:29

bigger than ever before. So just in

24:31

comparison to India, even if

24:33

China grows 4 percentage

24:35

points slower than India until 2030,

24:37

it's still going to contribute

24:39

$128 trillion more to

24:41

the world than India is. Let's

24:43

not forget that China is just

24:46

much more massive than it was

24:48

before when it was growing at 8% or 9%.

24:51

But the real question is, is it

24:53

going to become a higher-income country? Now

24:56

there's a difference of it that makes

24:58

me convinced that it will. There are

25:00

many, many cities in China that are

25:03

pretty much close to South Korea levels.

25:06

And we feel we're not talking about Beijing, Shenzhen, Shanghai,

25:08

but many, many small cities in terms

25:10

of income. It's above $30,000 per capita income.

25:12

If we look at the US, between 19th

25:15

century to now, there's been

25:17

massive convergence across states in the

25:19

US. And so that disparity

25:21

has shrunk over time. So it's a matter of time.

25:24

If China can do it on some eastern coast

25:26

and lots of cities, not just big cities, that

25:28

I think over time, it will gradually pull up

25:31

to other places. Interesting.

25:34

If you don't mind, KU, I'd like to

25:36

ask you a couple of sort of politically

25:39

tinged questions. You

25:41

understand China, you understand the US and

25:43

Britain. What do you

25:46

think the Chinese authorities are most

25:48

concerned about when it comes to

25:50

the US? I think that it's

25:52

not about Chinese trade.

25:54

It's about technology in the end.

25:56

It's about Chinese applications. I

25:59

think the great China's concern is

26:01

still about trying to stop

26:04

China from reaching its

26:06

developmental and technological goals. So

26:09

is China really scared now? Actually

26:12

it's like you put a frog in

26:14

a boiling water and they're expecting it

26:16

to come left and right and if

26:18

and when if Trump comes around and

26:20

there will be more tariffs, it's almost

26:22

going to be expected. What they're afraid

26:24

or they're concerned about is also miscalculations

26:27

that could really push them into

26:29

a corner and that could obviously lead

26:32

to a huge amount of instability. I think that

26:34

is the greatest concern with the US. So

26:36

which do you think suits China

26:39

best, Biden or Trump, given that

26:41

Trump is threatening 60% tariffs

26:43

which is going to reduce trade to almost nothing?

26:46

I think from the Chinese perspective, in

26:48

the short run, Trump is

26:50

better than Biden but not

26:53

in the long run. In the long run, it would

26:55

be an absolute disaster. And the

26:57

reason I say this is it's not about trade.

26:59

Even if it stops on tariffs, Americans are paying

27:01

the tariffs. That's what we've seen with the last

27:03

round of trade wars. And all the

27:06

trade is just going to be rerouted through other countries. The

27:09

irony is the end supplier and demand are still

27:12

China and US. It's just going through a

27:14

longer route and with greater trade costs, whether

27:16

it's from Mexico or Vietnam. But

27:19

Trump has the ability to not work well

27:21

with the allies. What

27:23

China's most concerned about is a

27:25

unified front against China. The Biden

27:28

technology policies and its ability

27:30

to work with Europe is a little

27:32

bit more threatening. However, in the long

27:34

run, it's much worse

27:37

to have Trump because the things that Trump will

27:39

do, the things that Trump and his administration will

27:41

say, the anger towards China,

27:43

the potential demonization of China is

27:46

just going to spark an unprecedented level

27:48

of nationalism that is going to force

27:50

the Chinese government into a corner. And

27:52

so we might see a return of

27:54

great, great aggressive rhetoric and maybe even

27:56

really tough and undesirable

27:59

kind of. diplomacy. Well

28:01

listen KUJIN, I should say formally thank

28:03

you so much KU. No thank you thank

28:06

you so much for it, it was really fun to talk

28:08

to you. KUJIN

28:10

is a professor at the London School

28:12

of Economics. She really

28:14

does have a unique view of both

28:17

sides of the China-US equation. Another

28:20

person with a very unique

28:22

point of view, my friend

28:24

China historian Ranamitta. Ranamitta

28:27

and I'll be right back to

28:29

discuss my conversation with KU. Ranamitta

28:57

is with me. So Ranamitta, KU presented

29:00

a fairly grim picture of the economy

29:18

but in fact the economy is probably in

29:20

even worse shape than she portrayed. There

29:22

are so many unfinished empty apartments

29:24

enough to house the entire population of

29:27

Germany. Rana, how dire do you think

29:29

the economic situation is? Well

29:31

Jen, I suppose that depends whether we can

29:33

imagine half the population of Düsseldorf deciding they

29:36

actually want to move to China. I don't

29:38

know if anyone's put the option to them.

29:40

Look, I think it's really important to acknowledge

29:42

what KU said in that interview which is

29:44

that the property sector crash is strong. I

29:46

mean for some of the big companies evergrande

29:48

amongst them I think that's a fair description.

29:50

In other areas it's more like you know

29:52

a trampoline where the air is being let

29:54

out very slowly and it's clear that the

29:57

kind of bounce that it gave to the

29:59

Chinese economy far five, ten years ago, just

30:01

is not coming back. But in terms of what

30:03

it means for the future, I

30:05

would want to know, is this a

30:08

moment essentially where we've seen peak China

30:10

and now it's all about slowly deflating?

30:13

Or is it actually about transition?

30:15

The optimistic scenario is that essentially

30:17

China uses its undoubted ability to

30:21

provide large-scale technological solutions to create

30:23

new forms of employment. Now, you

30:25

and I know that one of

30:27

the reasons that China has that

30:29

extraordinary capacity to innovate is that it's

30:31

just as interested in military innovations as

30:33

it is in civilian ones. And the

30:35

ability to actually combine those in a

30:37

way that liberal societies are just not

30:39

allowed to do gives China a certain

30:41

sort of advantage. I think the difficulty

30:43

though is in the next few years,

30:46

I think I can see over time,

30:48

maybe in 10 years, that technological solution

30:50

providing new alternative forms of employment. But

30:52

for next year, the year after, I

30:54

think those are more difficult, really even

30:56

dangerous moments because there's a lot of,

30:58

you know, you were talking about this

31:00

to cut you, unemployed, well-educated young people

31:02

who think that they deserve a better

31:04

job than the job they're being offered.

31:06

And quite often, the job they're being

31:08

offered now is rural maths teacher in

31:11

a province they've never been to, in conditions

31:13

they think are not appropriate to young urban

31:15

Chinese. And that's the real social problem, the

31:18

employment problem that I don't yet see the

31:20

party being able to solve. You know, we

31:22

talked a little bit with KU

31:24

about the presidential election, and

31:26

she reckons that Trump

31:29

is a big fear for the regime

31:31

because of the fears that will stir

31:33

a lot of nationalism. But I think

31:35

that nationalism will only be able to

31:37

express itself if the regime gives permission.

31:40

It's not going to just flower on

31:42

the streets. What do you think? At

31:44

the moment, it's not clear to us precisely

31:46

what the preferred option in the presidential election

31:48

is across all of the Chinese government. I

31:50

mean, it's not an elected government, it's an

31:52

authoritarian state. But actually, there are different views.

31:54

You know, there are people who I'd say

31:56

were the equivalent of the kind of slightly

31:58

starchy state department type. three-piece suit. At

32:01

least some people have expressed the view that those people might like

32:03

Joe Biden to be re-elected on the ground so that they

32:06

don't like him. He's predictable, they know what

32:08

his kind of administration would do. Oh sure,

32:10

and since you're painting quite old people they're

32:12

probably familiar with him since Joe's been around a long

32:15

time and been to China a few times. Well exactly

32:17

that and even you know hasn't met much in

32:19

people many occasions. But be that as it may,

32:21

I think that there are a variety of things

32:23

that are not going to change regardless

32:26

of who's elected. This seems a bit strange maybe

32:28

if you're listening from the United States because it

32:30

seems you know from that point of view so

32:32

clear that there is a very stark domestic choice

32:35

in terms of politics. But in terms of the

32:37

relationship with China, I

32:39

can't see any US government

32:41

deciding that it's going to you

32:44

know open up the markets again

32:46

on high-quality semiconductor chips or in

32:48

terms of the highest technology. There's

32:51

going to be continued attempts on

32:53

both sides actually to persuade other

32:56

states swing actors to side with one side or the

32:58

other and try not to kind of ride along the

33:00

middle. And to that extent I

33:02

wonder how much actually it's

33:04

going to make a real difference

33:07

unless as at least

33:09

some Chinese have told me you know on

33:11

the policy side there's the idea that maybe

33:13

there's a big grand bargain of some sort

33:16

to be made and their thinking I think

33:18

is that it's possible that a Trump administration

33:21

might be all willing to kind of do

33:23

something very unexpected compared to a second term

33:25

for the Biden administration. Especially if a

33:27

grand bargain involves the United States

33:30

withdrawing or softening

33:32

its alliances in Asia

33:34

which China feels are there to contain

33:37

them. They feel very strongly that the

33:39

alliances are a containment strategy and in

33:41

that way some Chinese have told me

33:44

that they see Biden as the longer

33:46

term threat because he is absolutely determined

33:48

to keep those alliances firm. I think

33:51

that sounds that you're right I mean elsewhere in

33:53

this podcast series we are chatting about Taiwan which of course

33:55

is one of the issues that sits at the heart of

33:57

that but if we step back from Taiwan specifically and look

33:59

at the the wider point of principle,

34:01

it's very unclear at the moment

34:03

quite what a second Trump

34:06

administration, if there is one elected, really

34:08

wants to do about questions like Ukraine,

34:10

NATO, Europe, those sorts of issues. But

34:13

there's no doubt that other countries in

34:15

China will be one of them, withdraw

34:17

lessons, they'll draw parallels, they'll draw examples

34:20

from what they see happening in terms

34:22

of the way that Trump administration creates

34:24

the allies of the United States. And

34:27

I think if they're in a position essentially

34:29

to say that American power, which

34:31

has been a very,

34:34

very constant element of shaping order

34:36

in both Europe and East Asia

34:38

for what, 80 years

34:40

or something now, is definitively changing,

34:42

that that story is now over and that

34:44

something new is coming in which China can

34:46

take a role, I think they're

34:48

very likely to seize that opportunity with all hands going. I

34:52

agree. Thank you, Rana,

34:54

that was great as always and I

34:56

can't quite believe it. We've just got

34:58

one more episode left. See you next

35:00

week. Looking forward to it, Jane. Next

35:09

time on Face Off, for our

35:12

final episode of this season, we are

35:14

going to talk about Taiwan. Why

35:17

is an island 8,000 miles from the

35:19

United States a point of

35:21

alarm for Washington and Beijing? I'm

35:24

not trying to ruin your day or give you

35:26

nightmares, but the idea of nuclear

35:28

war over Taiwan is for real.

35:31

Taiwan next time. Thanks

35:42

so much for listening to Face Off. If

35:44

you like what you hear, please recommend

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