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- [00:00]
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Tracy Alloway
Bloomberg.
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Henry Wong
Audio Studios Podcasts Radio News.
- [01:47]
Joe Weisenthal
Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.
- [01:52]
Tracy Alloway
And I'm Tracy Alloway.
- [01:53]
Joe Weisenthal
I'm and Tracy, you know we talk all the time about US China relations multiple times a month. It seems for obvious reasons. We, you know, we usually get it from something resembling a US perspective. Not always, but I think it's a bit skewed.
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Tracy Alloway
Yeah, there is a geographic bias at play for sure.
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Joe Weisenthal
And a linguistic one.
- [02:12]
Tracy Alloway
Yes, but you're right, there is always a lot going on with US China relations and especially recently. Right. So we're recording this on September 16th and we have Chinese and American officials gathering in, I think it's Madrid to talk trade, try to hammer out some sort of deal on the tariffs. By the time this episode comes out, maybe US China relations will have changed completely, but somehow I doubt it.
- [02:36]
Joe Weisenthal
There's going to be some new era of peace. Everything is going to be solved. There's going to be no more anxiety about trade. A TikTok deal will have been made with the perfect algorithm that satisfies everyone. Everything. No, probably. Unlikely. Probably. We are going to be talking about some version of this for a long time. I Don't want to say, you know, it's not like our perspectives are just strictly, you know, we talked to Cameron Johnson who works in China regularly. So it's not none. But we obviously have to change the mix up.
- [03:04]
Tracy Alloway
I admire your efforts at being unpartisan.
- [03:08]
Joe Weisenthal
Well, cross border, you know, we have to still do it via zoom, obviously. But isn't this a long historic trend? You try to like build. Build dialogue between multiple sides and get multiple perspectives in the hopes of achieving something bigger.
- [03:22]
Tracy Alloway
All I'm going to say is we need to go to Beijing mostly for the food, but also for inter U S China dialogue.
- [03:30]
Joe Weisenthal
The dream is that in 2026 we host a live audience in Beijing. We're putting it out into the world right now in the hope that we can manifest it into existence.
- [03:39]
Tracy Alloway
Yes.
- [03:39]
Joe Weisenthal
All right. Well, I am really excited to say that in these efforts we really do have the perfect guest. We are going to be speaking with Henry Wong. He is the founder and president for the center for China and Globalization and it's the largest independent think tank in China. Someone perfectly placed to talk about all of these topics from a Chinese perspective that we don't usually get. So, Henry, thank you so much for coming on the podcast.
- [04:04]
Henry Wong
Thank you. Yeah, my pleasure.
- [04:06]
Joe Weisenthal
What is the center for China and Globalization? Why did you found it, what is its goal and what is this independent think tank that exists?
- [04:13]
Henry Wong
Yes, we actually founded since 2008 actually right after the Beijing Olympic. You know, at that time, you know, when we watched the Beijing Olympic, the slogan for the Olympics then was one world, one dream. So we thought that actually it's a globalization and China actually embarked on a globalization era. Because I think Olympic Beijing Olympics in 2008 was something that China started to really look globally. And so that's where we start to found this think tank. First I have to take out a lot of savings. I was doing a lot of business before, but we really want to start this. But I really have found this think tank to kind of combine my experience in the government, business and academic. And also since then, it's 17, 18 years now and we become one of the top 100 think tank in the world. Actually ranked four times in the top country by the University of Pennsylvania think tank and the Civil Society program. So CCG abbreviation for center for China. Globalization is a bridge, is a communication platform, dialogue platform, and also it's a research platform for big issues, policy issues regarding US and China, global governance, global economy, and of course global migration. So just to name a few. But since then we've been doing okay. We had about over 60, 70 people and we've been based in Beijing and Hangzhou and Guangzhou, a few places in China. And we've been very active. We're doing 100 events a year. We publish a dozen books and multiple reports. So thank you for asking that.
- [05:57]
Tracy Alloway
So you described the center as something of a bridge and I was reading an Economist article from a couple years ago where you yourself are described as something of a go between for technocratic government ministries, Chinese entrepreneurs and foreign embassies in Beijing. So my question is, how busy have you been lately?
- [06:17]
Henry Wong
We are pretty busy. I'll just give you a few examples. For example, last week I was in Xiamen attending September 8, the 25th annual China Investment and Business Forum and Expo there. The vice premier he Li Fong, who is now in Madrid talking with Scott Benson, was there opening up that forum. I was speaking as a keynote speaker at one of the BRICS Summit conference there. But also just Friday, center for China copy hold another conference at China International Service Expo held in Beijing where there's another hundred some countries come as well. And yesterday we had our 17th monthly VIP launching and we have 10ambassadors from European, from Japan, from Turkey, from many other countries, quite a number from European countries. And just yesterday with 50 people also IMF representative in China. We have a lot of multinational global media. And also of course last night I attended relevant reception the US Embassy hold reception welcoming the new deputy head of the mission, Mr. Greg. And he actually made an excellent speech there. He said China and the US Relation now rather than in the past. I mean, I know that in the past we had a lot of strategic rivalry, but the new deputy head of the US Mission here in China said now we should put strategic stability. He's not talking about strategic arrival. So strategic stability and you maintain a US China relation. And Secretary Rubio also said that in July. So it's very encouraging to see things going on. But that also shows how busy we are meeting other people and talking to other parties and business too.
- [08:15]
Joe Weisenthal
I get that various people might describe an ambition for stability. It does not typically feel like it. When I read the headlines that this is a stable relationship for various reasons, particularly the headlines that come out of the Trump administration, which strike me as volatile. Setting aside what you hear from officials, whether at the embassy or the State Department, does it feel like that is the trajectory? Because it certainly feels, especially over the last 10 years, that when I was younger the relationship felt something more like stability and that these days it's much more about rivalry and anxiety about potential conflict.
- [08:55]
Henry Wong
That's right. I agree with you. I think that basically because of this deterioration since the first Trump administration in 2017 and now eight years later, the region does really go down quite a lot already. And because in 2017, the National Security Committee of US has put out a strategic report and according to China, a strategic rivalry, number one. I mean, before Russia, actually. So we see that since then we had a trade war and a tariff war. But this second term, somehow I felt, well, in China a bit more, you know, getting used to this kind of a tariff trade war. And China is also better prepared than the other countries because we already experienced in the first Trump administration. So now I think also China economy is second only to the U.S. the two countries has too much independence among each other. And so because geopolitically we are really looking very bad. And then I think the consensus on both government is that we need to look for some stability because we can't change each other. We cannot wipe, delete each other. We have to coexist peacefully. And that's probably the conclusion that we're getting there. And so we have to seek a common ground and coexist, even though we are having a lot of different views and ideas.
- [10:23]
Tracy Alloway
So you mentioned just then the idea of the world's two biggest economies being more dependent on each other, perhaps less so nowadays, but over, I guess the decades of the early 2000s, certainly they grew more dependent on each other because of globalization. And this is something that I wanted to ask you you which is what exactly is China's definition or understanding of globalization? And I ask this because I think in the west, it's sort of generally thought of as this process of more countries trading with each other and again becoming more economically dependent on each other. But there's also this sort of social element that's also in there because I think the assumption was always that as countries trade more with each other, they're going to start sharing, you know, values, whether those are political or social. And I'm curious if globalization is thought of the same way in China.
- [11:20]
Henry Wong
Well, I think that in China, because it was a late comer. You know, for example, you see the globalization in the 19th century, which is, you know, Britain invented steam power. That led the industrial revolution in the 19th century and 20th century. American invented Internet, computers and digital, and US is led in the 20th century. I think 21st century China is also coming up now, for example, on the green power. China is leading on EVs, on the solar panels and also the wind power. And all the same. But in the globalization concept in the Chinese mind is really more referred to the economic globalization because that's the benefit they're getting substantially. For example, 800 million people has been lifted out of poverty since China embraced opening up. Basically embraced the globalization. Then you can see China now is the largest trading nation or major trading nation with 157 countries around the world. And also furthermore, China, since the opening up in the last 47 years, China has about almost 10 million students study abroad. I mean almost half of that in the United States. So that means globalization. I think there's a flow of people, flow of talent, flow of goods, Internet connectivities, fast stock market exchange listed with each other. And also business is doing. There are 70,000 U.S. company operating in China, generating 700 billion revenues here in China. And also Apple make 90% of its iPhone in China and Tesla make 50% of its EV cars in China. And Walmart purchases about 60% of its supplies from China. So I think that's probably the comparison. China felt the substantial benefit probably for both Chinese and also American consumers. They are less ideological, but they're more probably on the economic sense that globalization is really bringing them a lot of good and benefit. For example, since China joined the WTO in 2011, China's GDP has gone up 13, 14 times. So that really, I think in the minds of Chinese, when they talk about globalization, they're really talking about joint economic globalization rather than global securitization. They don't want to see the Aukus. They don't want to see the Quad. They don't want to see Camp David of Korea, Japan and all those security or NATO move into Asia. That kind of militarized globalization. They want to see more economic globalization.
- [14:25]
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- [16:08]
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- [16:39]
Joe Weisenthal
Huge personal beneficiary of the students abroad living in the East Village, where there's been an absolute explosion of amazing Chinese restaurants in my neighborhood of New York City because there are so many students there. So I'm personally very invested in this trend continuing. But let's talk a little bit more about the security angle. You've actually written somewhat recently that China could play some role in the eventual hopeful end of Russia's war with Ukraine. But we don't tend to associate the Chinese government with playing an active role in global conflicts, not directly near the borders, including Israel and Gaza, which we should talk about too. But when it comes to something, you know, when it comes to the Russia Ukraine war that tends to be focused on the Europeans, the role that US will play. Is there going to be a point in the near future or is there something we're missing where China sees this conflict that is far from its direct borders and wants to play a more activist role in bringing peace? Or is this something that is only associated with the sort of American style, Western led style of globalization?
- [17:49]
Henry Wong
Well, I think that's probably now the world is. I mean, I was at Munich Security Conference kickoff meeting Berlin earlier this year with the chairman of the Munich Security Conference. They issued a report I was discussing on that report they called multipolarity. So we are getting into multipolar war now. I mean China suddenly become one portal of this multipolar war. And then you can see what happened in the Russian Ukraine war there. It's getting nowhere. We had Alaska summit. That's why I published an op ed at Foreign Policy two days before the Alaska summit. Basically I suggest that if U.S. defense Secretary I heard him saying at the Munich Security Conference that they want peacemaking troops coming from European countries and non European countries. So what mean by non European countries? So I think that countries could be these BRICS countries from China, India, Brazil, you know, South Africa or Turkey, whatever BRICS countries. But basically again, you see that when Trump actually after alaska Talking to G7 at the White House, Putin actually talked to President Xi before his Alaska and talked to Alula, talked to Moody and talked to the president of South Africa after the Alaska. So I think that I recently seen Macron proposing that let's have 26 European countries troops placed into Ukraine. But that got very strong reaction from Russia that Putin said, okay, if that is the case, that we regard it as a NATO violation or something. So we see that the excuse for Putin to start a war is because the NATO troops are poaching Russian border. I mean after three and a half years fight, you have NATO European troops there. Again, I mean he will not probably ending that war easily. So I think a more extra guarantee for this peacemaking in addition to NATO, EU and also US that's got China, India, Brazil, those largest buyers of Russian energy product. And what else is really extra safekeeping for the border. And then by having Chinese peacekeeping force there, it will really make Russia difficult to violate that peace border because China has a lot of influence on Russia. Same for India, same for Brazil. So I think that we are in the risk. We're stuck in this. Trump says he started sanctioning again, you're not going anywhere. But I think by adding the China BRICS element, we probably see a more security piece that's going to happen.
- [20:28]
Tracy Alloway
What does China actually think its role in the world should be? And we talked about its role economically and the idea of globalization. But setting aside economies, when it comes to geopolitical security, what exactly does China want to be?
- [20:45]
Henry Wong
Yes, well, thank you. I think basically China is a large country, of course, but it's basically agriculture, culture. You know, it's basically you have 5,000 years history, I interrupt the civilization. It's based on agriculture economy. The farmers cultivate along the Yangtze river and the Yalu River. And Confucius said, if your parent alive don't travel far away and then you can only cultivate the land four seasons that they can grow enough vegetables and wheat and grain to feed yourself. So it's really that kind of a culture cultivated the culture of China. And they are not really a nation on the horses or like Mongolia. They're going to have expeditions or going to have colonialized any places. In the Min Dallas there is a marshal called Zheng he had a big expedition trips beyond almost to Africa also, you know, ASEAN countries, Southeast Asia, they never stayed anywhere, they never occupied any places. They all returned seven times. It was even earlier than Colombia. So you see that is really the culture China has until now. For the last 40 years China hasn't started any war, sent any soldier anywhere or colonized any place or invaded any other country. So I think geopolitically we had this big parade on September 3 to commemorate the Second World War. But I think China has produced enough deterrence so that you know, probably if they are in any hot conflict, they have enough defenses to deter that. So if we cannot have a nuclear or hard war to mutually assure destruction, then the only thing remains is peaceful competition on the economy, on the soft power, on culture, on the people to people exchanges. So I think China wants to really see, let's have a level playing field and let's really compete on economic. China now is having 70% of global speed railway, 60% of 5G networks of the world out of the 10 largest container ports, seven of them in China. China also has 30 million college graduates every year. And they have a lot of things that they're doing on their own. And also on the energy installation now the Electricity consumption is 2.5 times of us, 3 times of Europe now. And in terms of green power, China has produced 1516 million EV cars. Total number will be 30 million. And they have 16 million charge stations in China everywhere. You know, very convenient to charge your EV car now. So I think, you know, they want to probably compete in those areas rather than geopolitically. So I think maybe if China can play some, maintain some peacekeeping would be great. Because China is the largest peacekeeping budget contributor to the UN. China is the largest peacekeeping sending force among the P5 member countries. So China can do more peacekeeping. And also economically China launched many initiatives, Belt and Road initiative. China just did ESSO summit in Tianjin where they established ESSO bank, they have a BRICS bank, New Development Bank. So they're doing all this kind of economic stuff. I think that's how they view the world should be intertwined more economically business wise rather than we are really divided according to the ideological, divided according to democracy versus autocracy and divided by this east or West. So there's many things. I think China is thinking a little differently.
- [24:22]
Joe Weisenthal
You mentioned the United nations and there's sort of this crazy question about the relevance or the vitality of a lot of these western developed multilateral organizations, WTO being among them. But UN specifically in your vision. Maybe it's China's vision or maybe there's distinct. Is it important to breathe new life into these organizations or is there a new set of organizations, including some of the ones that China has set up itself, whether it's the BRI, whether we're talking about the BRICs, whether we're talking about some of these others, is the future more okay? If we're going to have this sort of new style of globalization, we actually genuinely need new organizations rather than the husks of the organizations that were sort of built out of the Western liberal order.
- [25:11]
Henry Wong
Absolutely. I think that's, that's quite true. I had that. I have recently, recently wrote a book about my dialogue with Graham Allison, the founding dean of Harvard Kennedy School, which become a very good sell in China now also English wise. Basically we find that in our dialogue we talk about US China relation as conjunct twins. We cannot separate each other. If we want to separate each other, we end up damaging ourselves. So that's the given. So we should avoid this hiitous trap that Grant Madison famously defined. But also on the other hand we should also avoid the Kinderberger trap which means that when a new rise in power starting to catching up existing number one power, there's a vacuum in the global public goods like when US was taking place. UK there's a lot of missing linking points. You know, we got big recession in the 1930s and things like that. So China actually is US has now put a bit back on its policy. Now it's become a mega, you know, make me first, make me great again. And rather than there's no country really is looking at the global public goods. So that's what China is now. China has not backed on the climate change agreement. China strongly support that. And China has developed a very climate friendly environment now and we reach carbon neutral and carbon peak ahead of time.
- [26:37]
Joe Weisenthal
But just to be clear, these legacy organizations specifically like the UN does China feel like these are, are there bets that China intends to make that these are going to be important institutions or are they fading like many legacy institutions and that this sort of new more stable order that you may envision doesn't have to be with a fresh set of multilateral international organizations.
- [27:02]
Henry Wong
No, I think China is a strong support of existing UN system. And as President Xi just recently proposed the Global Governance Initiative, I mean on five point, two or three point he was emphasized the UN principle of UN Charter of UN and also we can help to enhance improvement and make it better, but we should not restart. But on the other hand, we see UN also getting quite marginalized and there's been weakening and for example, China becoming the second largest donor to the UN budget close to us almost no difference now. And also when us pulling out of WHO China committed US$500 million to WHO and when WTO is marginalized, China is working with Europeans to do that. But furthermore, I think China is still the only public big country, one of the largest economies still proposing economic corporation like a Belt and Road initiative. For the last 1213 years, China invested over US$1 trillion for 3,000 projects. And also furthermore, China has started China Africa Economic Summit, China Latin American Economic Summit, China ASEAN Economic Summit and China Central Asia and China Arab Economic Summit. So it's all economic related. And furthermore, and while President Trump is raising 100 some country tariff, China announced they're going to reduce the tariff of 53 Least Developing Countries tariff zero for coming to China. So you can see the contrast there. So I think China is really providing enough public goods to fill some vacuum. US is backing off on development on the global south and on the UN system. US is pulling out the UNESCO. China is also a big support of UNISCO and so on and so forth. So I think China is doing a lot of that kind of activities now.
- [28:55]
Tracy Alloway
When it comes to US China relations. You mentioned that your book was so selling well in China. I'm really curious what is the biggest misunderstanding or the biggest concern that you hear from Chinese people on the ground when it comes to U.S. policy. And I realize it's a little bit unfair. We're treating you as a spokesman for an entire country. And China really don't intend to do that. We don't intend to do that. But I'd be curious, like what sort of questions do you get on a daily basis from the average Chinese person about America and what it's doing?
- [29:29]
Henry Wong
Well, I think the biggest thoring point basically that bothers ordinary Chinese that we see the US navies coming to Chinese Taiwan street or South China Sea or quite often we see airplane patrol in this part of the world. We never see Chinese aircraft or navy go to Hawaii or go to Caribbean. We never see that but we see the US military person is very strong. We had the 40,000 US military personnel in South Korea, just neighboring China and another, I don't know how many, it's quite 30, 40,000 in public in Japan and we have now in Philippines and then they have also missiles, mid range missiles placed there. And also they are going to place new missiles in Japan now and South Korea. So those things actually brought because China felt, you know, Taiwan is part of China. And certainly the people in the US say oh, China is a democracy, we have to defend that. But China has a Chinese style democracy meritocracy. It also works perfect, you know, not perfect, but at least work well for this most populous country in the world. So I think, you know, we all have a different governing style, but just because our governing style is with you. And then that's why you need to. Because Taiwan. Because the reason for protecting Taiwan is Taiwan is a democracy that we have to protect that. But I think, you know, China can also absorbing that. And you know, China promised that Taiwan, you know, no tax to be given to federal government, lot of autonomy. And China announced that Taiwan Taiwanese will be free to work in the mainland. No visa needed, no anything needed. We are already 2 million Taiwanese working in mainland and there's half a million husband wives married across the street. And then before Tsai Ing Wen, you know, former president of Taiwan, you know, there's 6 million mainland flooded Taiwan with tourism, sending the money spending, restaurant, hotels, you know, there was almost integrated already if not for the foreign interference. So I think the Chinese say okay, please maybe just let us peacefully unified like Germany, you had the East Germany, West Germany unified. And let's also hope North Korea, South Korea unified. So basically they were really looking for less interference on that. And so I think that would be greatly improving the region. Because in the communique that established three communique China US have it said very clear, US will not maintain, you know, we'll just maintain normal ties, no official ties. But then we see US officials, parliamentary Nancy Pelosi keep visiting Taiwan or Taiwanese leaders coming to the visiting US. So those things probably bother a bit of ordinary Chinese. But of course again we understand, of course US was a world placement for a long time. But now we see many countries also the governing model is not working perfectly. We have all the domestic issues, US has it, European has it, all the countries has that. But China on the other hand seems maintain a pretty good status and that's also keep lifting people out of poverty. So I think they should give China some credit. For doing that rather than okay, it always showed in front of China's doorsteps. And you have US parade of military muscles all the time. So that's a little bothering for the Chinese. Basically.
- [33:06]
Joe Weisenthal
When you think about China's relationship with the other BRICS countries, with African countries, with the global south countries, so to speak, have you seen substantive changes in those relationships Specifically since the wake of October 2023 and the start of the war on Gaza and countries sort of rethinking, you know, has this prompted a concrete rethinking about, you know, you said the US was the global policeman and a lot of people have perceived that. In the wake of this ongoing war, has there been a substantive change in the way countries want to have a relationship with China?
- [33:45]
Henry Wong
Well, absolutely, you can, you know, this year for the first time you see China ASEAN summit at the gcc. You know, Gulf countries all came to asean so you had the first China ASEAN GCC summit. And then you can see also the BRICS countries expanding that you had, you know, UAE was there and there's a lot of, you know, Middle east countries really coming to China. You also have the Shanghai Corporation summit recently. You had the Turkey, you had the Iranian president, you have a lot of people from that region. So I think China's role does play because China for example, a few years ago China clinched deal between Saudis and Iranians rather than we are seeing the current chaos going on. China also causing the 14 different fractions of Palestinian group had a Beijing Palestinian declaration and China could probably do more in making a peace promoting peace between Israel and the Palestinian. China also maintained good relation in the past with Israel. So I think that sooner or later probably those countries will realize that we cannot really let just what happened, the Gaza, the humanitarian crisis, the deaths of thousands of tens of thousands of people, what happened? You're living on a daily basis. I mean where is the children are dying and all those things. So that kind of justice, where is the justice now? So of course there's always problem to start with, but I think we cannot because two wrongs doesn't make a right. I really think that we should continue to have this international moral power that United Nations Security Council should really exercise rather than being vetoed all the time. So I'm thinking China probably could play more role in the future. But let's solve this Ukraine crisis if the BRICS country peacemaking can happen led by China and I'm sure that model could be applied to other conflicts in other regions. China also trying to, you can see Prime Minister Modi and Prime Minister of Pakistan was at the same table. A few months after fighting in China, we see Armenia and Azerbaijan President coming to so summit in Tianjin as well. So probably China is building up its mediating power and peacekeeping power as time goes on.
- [36:28]
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- [36:59]
Tracy Alloway
Going back to globalization for a second. I think everyone agrees and you've already talked about this, that China has been a huge beneficiary from globalization over time. But I get the sense that there is still a feeling within China that some aspects of the global economic order or trade agreements are unfair to China. How do you sort of square that tension? And where do you think the concern or the worries over unfairness actually comes from? And by the way, I could ask this question to American officials as well. Like the US is a massive beneficiary of the global economic order and yet the Trump administration clearly feels very aggrieved about America's place in the world. But when it comes to China, like where does the sense of unfairness actually come from?
- [37:46]
Henry Wong
Well, there's quite a few actually. You see one of the things that US was treating the pure deficit as the only reason they start the tariff war. I was giving a talk just last April, a few months ago at the UN Security Council where they called a special arena meeting in New York. 80 countries representative of the UN participated where I gave a speech there I was saying that for example US only looking at the goods deficit, merchandise deficit but out of that deficit was maybe 30, 40, 50% was produced by multinational 30% by US. For example, out of the 400 billion deficit that Trump is levy on China 300 some billion deficit he immediately waived 100 billion because a lot of the companies are made goods in China. Apple has to source their iPhone from India but it's not enough so they have to lift that sanctions on those deficit anyway. And there's a lot of intertwine but also US and joined $1 trillion trade surplus on the service trade. They are not counting that. And also the calculation about China's export. For example every phone we made in China iPhone made here China probably made a labor cost 80% was made by multinationals. EV car is the same. So while you just purely looking at the trade deficit numbers, a lot of money was not made in China was made by international multinational companies. So and they're not sending back to the country. So that's why I agree with President Trump to have more investment back to US because multinational made a lot of money in China and elsewhere, but they should really investment back rather than putting the tax havens. So that's why the global minimum tax proposed by OECD has graded by over 100 some countries but it's not practiced yet on that now. So that's one aspect. The other aspect I could say is the for example US is starting these sanctions on China, for example forbidden the use selling the chips to China. So that is really also they called in the Trump administration high fence, small yard and all those things. And there are 1,500 Chinese companies on the US entity list. I mean maybe China has a dozen or two dozen of US companies. But compared with magnitude of US is too much too many overuse of the security reasons to really restrict all the Chinese companies on that. So that's really become a problem. And so that's why China started to say okay, if chips can be the do use goods, right. You can say okay, can be used for security or military. Same is true for rare earth. Right. Rare earth can be making for airplanes, tanks, everything. So when China started a little bit on that, then us starting to relax on the sail of the chips now quite a bit. So you can see morally it's the same reason if the US doing things in the first term, China didn't respond like that. But now China starting to respond like that. So I think that's why we see quite a few agreement made between US and Chinese officials because China is much resilient now, much stronger. And also US has realized if they really sanction so hard on China, the Christmas shopping season will coming up their shelves will be empty and we could, you know, American consumer will suffer and then that's going to hurt the Trump space. That's why we keep extending it seems more they talk to each other more friendly than talk to India, Brazil and others. So I think they probably realize that two largest economy they can really agonize each other. They have to find a way to collaborate.
- [41:26]
Tracy Alloway
The Christmas shopping season is my personal Super Bowl.
- [41:29]
Joe Weisenthal
Yes. Earlier this year, actually not that long ago Bloomberg reported. So therefore it's absolutely true. It says quote, officials in Beijing verbally encouraged regulatory agencies and local governments to curb technology transfers and equipment exports. To India and Southeast Asia. And there were some stories about Foxconn engineers, for example, who may have been part of some sort of moving the supply chain of those Apple iPhones that you mentioned, part of the final assembly perhaps to India. And this report that Chinese officials may have been pushing back against it. I get like rhetorically, the existing system where American companies do a lot of manufacturing or in China has been incredibly beneficial. Is China totally comfortable with the fact that as part of this globalization some of this manufacturing may end up leaving or as you know, U.S. seeks to diversify its sources. Is China comfortable with this?
- [42:27]
Henry Wong
China's. I think it's pretty comfortable now. That's why China is more confident. For example, 2019, when before COVID US is largest trading partner of China and now US falling to the third place or even fourth place now because ASEAN become the largest place trading part of China since the RCEP Regional Comprehensive Partnership Agreement. And then that is actually happening because Vietnam become China's fourth largest trading partner now and Indonesia, Malaysia and now expanded to Latin American. You know, most Latin American countries, China is their largest trading partner. And also with Africa now China lifted all the tariff from Africa's products to come to China. You see a flood of African products coming to China. So I think, you know, that probably China doesn't mind. There's low, maybe a little bit labor enticer because the average labor workforce, migrant workers age is 43 years old now. It's getting old. China. So there's a lot of shoemaking or low income labor cost jobs went to Vietnam, went to asean. China really doesn't mind that China now is focused on the high end now, for example, China is focused on the green power transition.
- [43:40]
Joe Weisenthal
There's no curbs. There's no curbs. As far as from your perspective, there's no impulse of the government to curb moving some of these more advanced things. Again, talk about iPhones and such to a country like India.
- [43:53]
Henry Wong
Not really. I think China still encourages the investment. For example BYD or you know, Catl and I know quite a few companies still very bullish investing overseas. There may be sensitive military or rare earth stuff that China may be questioning a little bit. But on the general, I think things are still quite open. Yeah.
- [44:14]
Tracy Alloway
Is there an argument to be made that China should perhaps open its own economy further? If, you know, it actually desires more economic integration with the rest of the world? Because we're talking about globalization still. But China still has capital controls, still has currency controls, still has some restrictions on investment and things like that. Should it Be more open.
- [44:38]
Henry Wong
Absolutely, I agree with you. I think China should be more open and that's why we be that's our think tank role to promote that. For example, we promoting the visa now China has issued, unilaterally issued the visa for 40 some countries now. European countries, Australia, Japan, South Korea. I urge also you recommend China to policymakers to open visa for U.S. citizens for Canadian citizens coming to China free. But also on the trade policy, I think there should be more liberalization continuously. I know that the government is looking at that and the 15, 5 years plan will probably be even more open. Of course there's always rooms to improve. I totally agree. And they have opened the financial sector quite a long time ago. And as you say, maybe currency, they should be more convertible. And also on the investment in the culture, in other areas, pharmaceutical. And now China also welcome foreign universities come to China to open their branches and doing. I'm on the board of Duke Kunsan University in China, which is joint branch between Duke University and Wuhan University. We have so many international students there and NYU Shanghai is operating very well. So we hope to have more global exchanges. I agree with you. There are still more rooms. That's why I think this kind of talk between China and the U.S. now we see TikTok is almost maybe have a deal there and it's great. So this is the style. We should continuously talk and engage and reach agreement and open up further to accommodate each other.
- [46:19]
Tracy Alloway
First comes diplomacy through dance videos, Joe. And then comes an easing of currency restrictions.
- [46:25]
Joe Weisenthal
Well, podcast recordings have to be.
- [46:27]
Tracy Alloway
That's right.
- [46:28]
Joe Weisenthal
Just to be clear, you know, obviously we don't expect you to be the representative of the entire Chinese perspective. Tracy and I need to establish that we do not represent the entire United States. And the questions that we have. You mentioned the goods trade deficit. And of course one of the things is, you know, obviously China has gotten much richer thanks to the booming industrial sector. The US has benefited from a lot of less expensive, more sophisticated goods that it buys. But there is this source of concern, and I say this, you know, a couple weeks after that military parade, there is a source of concern that without a robust American manufacturing capacity that we can no longer be a powerful military country as well. And I know, I do not believe it is China's role to sort of help the US figure out its industrial capacity questions. Nonetheless, from the perspective, does the US concern make sense to you? Perhaps there are things that seem unfair. Certain technology transfer restrictions seem counter to the spirit of globalization, et cetera. But is the US Fundamentally wrong to be concerned that as more and more of the world's share, however you want to measure it, of manufacturing of advanced goods somehow becomes centered around China. That that long term weakens the national security position of the United States.
- [47:48]
Henry Wong
Well, I think we are now in a more intertwined world now and there's quite a bit of competitive advantage like David Recanto mentioned many years ago. So what I think US is still leading US is very good at inventing innovation. You see Silicon Valley, you see AI. By the way, Jason Huang said half of the AI talent is coming from China. US is a big harvester of Chinese talent too. And that's why I was saying several million Chinese students went to the United States. I mean probably half of them returned still have remain. That greatly benefited the US economy. So what I think that is really US is good at doing 0 to 1. And maybe China is good at 1 to 100 of the world, 100 universities top 50 still in the United States. The reason China did all those manufacturing because as I mentioned China has 70% of the global speed railway, 60% of global 5G networks, 10 largest container ports, 7 of each other. They have the infrastructure. So this is a value chain supply chain for the world, not for China. So Made in China is made for the world. I think US only worry about if you cannot make big ships or aircraft now they go to South Korea to do that now. So they still find a way to do that. But I don't think that you have to depend totally on the manufacturing. So if we are living in the pre trade war era where we buy so much chips from us, 70% of China energy depends on import. China spend more money buying the chips than China importing energy. So now you are saying they are not selling to China. Then the US company losing a big profit center and then they are really reduced their R and D budget and China is forced to do reinvent well and there's a lot of waste there. So we see this separation is really no good. All unsecured reasons. We should not over securitize and we should really display our own each other's competitive advantage.
- [49:53]
Joe Weisenthal
I want to ask one more question about security philosophy. Obviously when Russia invaded Ukraine, the US imposed all kinds of sanctions on Russia and tried to constrain its ability to trade at all or make any money going back to Israel's war in Gaza. And you expressed the horror that you see from that and the sort of response to that. But China still trades with Israel as the US does in the future in a Sort of different global world order. Would it ever be part of China's diplomatic arsenal to take a more heavy hand in some of these conflicts and say, oh, we're not gonna trade you. We're not gonna sell you advanced technology that you need to run your economy or run your military, et cetera. Because so far, despite the sort of concerns or the response, there hasn't been any change in the trading relationship. Could it ever get to that point where China views its sort of diplomatic, commercial power that way in conflicts that it's not directly involved in?
- [50:53]
Henry Wong
Well, I think China certainly would like to do more like what happened on the who. China has already fulfilled its obligations too. I think the key is really we need to restore the UN authority and principle, particularly the US Security Council. Maybe we should also reform that too. Maybe we should add G20 members, other 16, G20 members as associate permanent member of UN and we should really not let the unilateral single veto be abused. For example, since the founding of UN, Russia abused, used the veto 100, sometimes 20, 40 times, US 100 times, China 20 times. We need to really control that. So I think a reform UN to reflect this multipolar world, and in the future, if there's any problem happen, let's send the UN peacekeeping force to do that. And so if the old security member have a big majority and General assembly have a big majority, we should make that happen. So I think reform this multipolar world. We also need to reform UN to reflect that because the world no longer fits the superstructure, does not fit the reality to the United States.
- [52:06]
Joe Weisenthal
All right, Henry Wong, founder and president for center for China and Globalization. So fantastic to have you on the show. Can we do a live odd lots in Beijing with you at some point?
- [52:16]
Henry Wong
Yeah, yeah, please. We welcome that.
- [52:18]
Joe Weisenthal
All right, we are gonna come as soon as we get off this call. We are gonna begin the preparations to figure out how we're gonna make this happen. So great chatting with you. Thank you for staying up late in your time to talk with us and hope to talk to you again.
- [52:31]
Tracy Alloway
So thank you.
- [52:32]
Henry Wong
Thank you so much, both of you. Thank you so much.
- [52:47]
Joe Weisenthal
Tracy. I really enjoyed that conversation. It was interesting thinking about, you know, this idea that rhetorically, there are a lot of people on both sides of the aisle who say things like, oh, we need to get out of this sort of competition framework, etc. It doesn't really feel like anything is actually happening on that front.
- [53:07]
Tracy Alloway
Yes. One thing that struck me from the conversation was, I guess, how economically oriented it feels like all of Chinese policy actually is. And I suppose maybe that gets back to this idea. This is an old idea now, but that social contract idea about the ccp. So as long as people feel that their lives are getting better, then the CCP has strong support. I think the economic focus really came through in that conversation.
- [53:36]
Joe Weisenthal
I think, you know, obviously from the US perspective, there is this view that, you know, Henry used the word global policeman and a lot of people would say, yes, absolutely. And that a big role of the US Navy specifically is enforcing the fact or freeing the world for trade. Right. That part of the reason that the.
- [53:59]
Tracy Alloway
World could trade freely, that that's like a public good provided by the good.
- [54:03]
Joe Weisenthal
And Adam Posen has talked about this and others have talked about this idea that these things go hand in hand. And it's interesting because so Henry talked about this impulse for continuation of global trade, including with the us Et cetera. They're clearly, to my mind, seems to be less of an appetite from China to like, it's not obvious that there.
- [54:26]
Tracy Alloway
Is to fill the gap.
- [54:28]
Joe Weisenthal
Yeah. Or that, you know, and I guess there's question like, does the world need such muscle to trade? Right. Does could you have a world of trade where there is not one entity that has a truly global military footprint? I think these are really interesting questions Henry, of course, talked about, especially in that last answer, restrengthening the un, et cetera.
- [54:49]
Tracy Alloway
Restructuring.
- [54:50]
Joe Weisenthal
Restructuring the un Exactly. It's not entirely obvious to me that these institutions as they're constructed can really be revived. Even with lots of Chinese money going into them. I think that's still kind of tbd.
- [55:05]
Tracy Alloway
Well, I think this is it. Right. Even if you restructured the Security Council so that you wouldn't have one powerful member vetoing stuff all the time, even if people agreed to do things, what is the UN actually going to do?
- [55:17]
Joe Weisenthal
Right, right. What is the UN actually going to do? I don't. We didn't get into it that much, but like the idea of a sort of more, I don't know, brics composed peacekeeping force. I bet there are a lot of people in the US who would love that. They're like, yeah, let's have peace, let's.
- [55:31]
Tracy Alloway
Have a someone else take care.
- [55:32]
Joe Weisenthal
Let's have a ceasefire in Russia and Ukraine and also let's not have it be particularly dominated by Western peacekeepers shouldering that burden. I bet a lot of people in the US would love that. I would, you know, had more time. I would love to really explore like, what the constraints on that actually happening are there, but I thought that was a very useful sort of overview of some of these questions from the Chinese perspective.
- [55:56]
Tracy Alloway
Absolutely. Don't explore the constraints, Joe. Just take credit for solving US China tensions on the podcast. Okay, in less than an hour. Shall we leave it there?
- [56:04]
Joe Weisenthal
Let's leave it there.
- [56:05]
Tracy Alloway
This has been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracee Alloway.
- [56:11]
Joe Weisenthal
And I'm Joe Weisenthal. You can follow me at the Stalwart. Follow our producers Carmen Rodriguez at CarmenArmen, Dash O' Bennett and Dashbot, and Kale Brooks at Kale Brooks. For more Odd Lots content go to bloomberg.com odd lots where the daily newsletter and all of our episodes and you can chat about all of these topics 24. 7 in our Discord Discord GG odd.
- [56:32]
Tracy Alloway
Lots and if you enjoy Odd Lots, if you want us to go to Beijing and talk to more people on the ground, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad free. All you need to do is find the Bloomberg Channel on Apple Podcasts and follow the instructions there. Thanks for listening.
- [57:25]
Bloomberg Green Announcer
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